further develop skills in problem solving, analysis, critical thinking $($S$1)$ and argumentation$/$decision making $($S$2).$

Part $1$

Context

Imagine you work as Project Manager in an organization that plans to implement a new IT System. For instance the system of the case study which was discussed in the first set of lectures. You have been assigned to manage the project. The organization has decided to acquire a $3^{rd}$ party product$/$package $($Product A$)$ for the implementation of the IT system at hand. The following cost elements are known for Product A$.$

Product A consists of $4$ components that are all required for the new IT system. Each of these components has its own software licensing model.

Component A $1$ is licensed on a per user basis, costing $100$ per end$-$user that will have access to the system.

Component A$2$ is licensed on a per user basis, costing $130$ per end$-$user that will have access to the system.

Component A$3$ is licensed based on the number of CPUs that are installed on the application server that the component will run, costing $12000$ per installed CPU.

Component A$4$ is licensed based on the number of CPUs that are installed on the application server that the component will run, costing $13000$ per installed CPU.

$1$

It is estimated that in order to be able to perform adequately in the production$/$live environment, Product A requires $2$ CPUs for up to $200$ end$-$users, $4$ CPUs for $201$ to $500$ end$-$users and $8$ CPUs for $501$ to $1000$ end$-$users.

Additionally, the new system will have a disaster recovery site for which the license cost for Product A is calculated as $40\%$ of the license of the production site, with the assumption that the production site license fee is calculated with $0($zero$)$ end$-$users. Note that, given its purpose, the disaster site should have the appropriate processing power in order to be able to accommodate the same number of endusers as the production environment.

Furthermore, the new system will have a UAT environment for which the licensing cost is $10\%$ of the production site license.

Moreover, starting from the second year, for Product A$,$ the organization will pay the product vendor an annual $20\%$ maintenance fee over the final product license fee $-$ the final product license fee includes the production, the disaster recovery and the UAT environment license.

Finally, the implementation$/$customizations fee that the vendor will apply for Product A is fixed and equal to $250000$; starting from the second year, the vendor will apply an annual $15\%$ maintenance fee over the implementation$/$customizations fee.

H$/$w

Each CPU $($H$/$W$)$ of the production and disaster environments is acquired at a cost of $5,000$ and has an annual maintenance fee of $10\%$ over the acquisition cost. The CPU's $(\frac{H}{W})$ maintenance fee starts from the second year. The CPU cost for the UAT environment is zero as an existing infrastructure will be used.

Part $1$ Questions

Q$1\mathrm{.}1.$ Devise the mathematical formula, i$.$e$.$ a single formula, to calculate the $5-$year Total Cost of Ownership $($TCO$)$ for the new IT system as a variation of the number of end$-$users, i$.$e$.$ variable $N,$ and the number of CPU's, i$.$e$.$ variable M$.$ The time value of money should not be taken into account in your calculations. You should provide a single TCO formula for each of the products, e$.$g$.$ TCO $($Product$)=aN+bM+c$

Mark: $25\%$

Q$1\mathrm{.}2.$ Based on the previous analysis and formula, use Excel to produce a diagram of the $5-$year TCO of the new IT system as a variation of the number of end$-$users. The diagram's vertical axis should represent the $5-$year TCO, whereas the horizontal axis denotes the number of end$-$users ranging from $100$ to $1000,$ in intervals of $50$ end$-$users.

Mark: $15\%$

Q$1\mathrm{.}3.$ Complete the following table, assuming a total number of $400$ end$-$users. Indicate explicitly the costs elements that should be considered as CAPEX and as OPEX.

$2$