Development costs 2: Setup costs 3: Operational costs 4: Direct benefits 5: Assessable indirect benefits 6: Intangible benefits Question: Brightmouth College are considering the replacement of the existing payroll service, operated by a third party, with a tailored, off-the-shelf computer-based system. List some of the costs and benefits they might consider under each of the six headings given above. For each cost or benefit, explain how, in principle, it might be measured in monetary terms.

Sol45:

2. Development costs:

• Cost of software development
• Cost of hardware and infrastructure setup
• Cost of staff training
• Cost of hiring new personnel, if required

These costs can be measured in monetary terms by estimating the expenses for each item, such as the cost of software development team and their hourly rates, cost of infrastructure, and cost of training programs.

2. Setup costs:

• Cost of installing and configuring the new system
• Cost of migrating data from the old system to the new one
• Cost of hardware and software licenses

These costs can be measured by estimating the expenses for each item, such as the cost of IT personnel who will install and configure the system, cost of data migration tools, and the cost of software licenses.

2. Operational costs:

• Cost of ongoing maintenance and support
• Cost of hardware and software upgrades
• Cost of ongoing personnel training

These costs can be measured in monetary terms by estimating the cost of ongoing maintenance and support, cost of upgrading hardware and software, and the cost of personnel training programs.

2. Direct benefits:

• Cost savings from using a new system instead of outsourcing payroll
• Reduced error rates in payroll processing
• Improved efficiency in payroll processing

These benefits can be measured in monetary terms by estimating the cost savings from not outsourcing payroll, estimating the reduction in error rates and the cost savings associated with it, and estimating the efficiency improvements and cost savings associated with them.

2. Assessable indirect benefits:

• Improved accuracy of payroll data
• Reduced time spent on payroll processing
• Improved employee morale and job satisfaction

These benefits can be measured in monetary terms by estimating the reduction in time spent on payroll processing and the associated cost savings, and estimating the improvements in employee morale and job satisfaction and their impact on productivity and turnover rates.

2. Intangible benefits:

• Improved data security
• Improved company image and reputation
• Improved compliance with payroll regulations

These benefits cannot be easily measured in monetary terms, but their value can be estimated by considering the potential impact on the company\'s reputation, legal compliance, and overall business success.

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