You are helping the IT team at Game Technology study several software acquisition options for their Customer Contact Care system (C3). First, you review Chapter 7 of your systems analysis textbook and the material on financial analysis tools, including the Video Learning Sessions. The IT team is considering two commercial software packages and an in-house development option. They prepared the following summary

Study the summary carefully and prepare spreadsheet templates. You should assume that all three options require a six-month period for acquisition or development, installation, configuration, and data loading. This period is called Year 0. Actual operation begins in Year 1. Now complete these tasks: Task 1. Perform ROI and NPV analysis of the Software Solutions package. Use an 8% discount factor. Task 2. Perform ROI analysis of the in-house development option. After you complete Task1 and task 2, you learn about new developments at Game Technology. It seems that the Game Technology team liked your work, and asked you to perform some additional tasks. Task 3. Perform ROI and NPV analysis of the CRM package. Use an 8% discount factor. Task 4. Perform NPV analysis of the in-house option. Use an 8% discount factor

Option Description Costs Benefits Software package $8,000 to purchase $9,000/yr. through Four-year useful life $1,500 to install and positive customer Less flexible than in- configure $2,500 to response. Cannot house system load existing data predict other specific Some customizing $1,000 additional savings. Increased needed hardware needed sales, improved $2,000 annual customer care, and support fee after better productivity first year free are expected. CRM Corp. Same as above Software package $7,000 to purchase Five-year useful life $2,500 to install and Less flexible than in- configure $2,000 to house system load existing data Moderate $4,000 additional customizing needed hardware needed Runs slower than $1,200 annual other options support fee in all five years Develop C3 system in-house In-house system $15,000 to develop, Same as above Six-year useful life, install, and configure can use our software $1,000 to load and hardware existing data Existing Easiest to update staff can handle and maintain support