CASE 2:

Vinsun Infra Engineering: ERP

on Premise or on Cloud
Q1) What are the current challenges that
VINSUN is facing?
VINSUN has been using the traditional methods of data
collection, analysis and storage viz. MS-Office tools. This
has led to inefficiency in the operations of the company.
This inefficiency is getting visible as the company is
growing in size both in terms of business and employees.
Lack of a data analytics and decision enabling tools has
taken toll on the profitability and consistency of the
decisions. Following are the mentioned problems which
has aroused in VINSUN:
Information Overload has made management of
information very difficult.
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Data stored in MS-Excel and the compilation of the data is

done manually which requires enormous effort.

'

Lack of data integrity, redundancy and incompleteness.

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No data backup means data lost can never be retrieved

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Data analysis almost impossible as the historic data

limited due to size.

'

Mixed feelings amongst employees towards ERP system

with some employees feeling threatened of losing the job
due to ERP.

'

ERP was very expensive and VINSUN was a small

organization. (ERP was very expensive; much more than 2
3 % of the annual revenue set aside by Mr. Satav)

Q2) Evaluate TCO over a period of ve years

for the options available to VINSUN?

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Q3) What are the advantages and

disadvantages associated with each option
that VINSUN is evaluating?

Bluechip ERP on premise

'
ADVANTAGES:
'

Reliability of service and quality of product

'

High credibility of the agency due to extensive prior

experience in the domain

'

No internet connectivity required resulting in secure

operations

'

Lower security concerns as data is stored on own

database

'

Customization options available

'

DISADVANTAGES:
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High initial investment, much higher than the budget

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Yearly costs also higher than other alternatives

'

Unnecessary features in the product presently

'

Database not available for onsite workers

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Not scalable easily during growth phase

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Codeautomation ERP on premise

ADVANTAGES:
'

Low investment and maintenance cost

'

Customizable solutions

'

No internet connectivity required resulting in secure

operations

'

Lower security concerns as data is stored on own

database

'

DISADVANTAGES:
'

Concerns of Unreliable service due to lack of

experience

'

Product quality is questionable as it is a startup

'

Database not available for onsite workers

'

Not scalable easily during growth phase

'

Codeautomation ERP on cloud

ADVANTAGES:
Low initial investment
'

Easily scalable during expansion of rm

'

Database available for onsite workers

'

Flexibility of storage space during growth and

recession phases

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Operational risk lies with service provider

DISADVANTAGES:
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High recurring annual costs
'
'
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High Security Concerns due to data transfer via

internet and data storage on service provider database
Employees may not be tech-saavy
Concerns over service as it as a startup and the
cloud technology is also new

Q4) What are the people issues underlying

the ERP implementation? How should Satav
tackle them?

The first decision point for Vinsun is whether to implement

ERP or not. The objective of Vinsun is to find a way to

access accurate information more rapidly. The main

concerns about implementing ERP are employee
resistance to change and whether the benefits will be
actually realized. As a group we feel that Satav should go
ahead with implementing ERP. Vinsun is growing at a
stupendous rate and as it continues to grow, the need for
proper data maintenance and accessibility will become
more acute. ERP system will ensure proper data
maintenance and easy accessibility, which will help in
integrating the various activities and departments of the
organization. Also resistance to any change is inevitable
but when employees are trained in the new system and
become cognizant of its advantages, the implementation
will be smoother. So with an eye towards future bene t,
Satav should go ahead with implementing ERP.
The second decision point is whether to choose the
company and type of ERP package to implement. Satav
plans to allocate 2-3% of the annual turnover to IT
expansion, i.e. upto Rs.13.5 lakh in FY 2010-11 Bluechips
ERP on premise package is too expensive, costing about
128% more than Codeautmations ERP on premise
offering. This we feel may be an unnecessary strain on the
companys financial resources. The ERP on cloud
package has high recurring costs and so though the initial
investment is lower, it is more expensive in the long term.
Besides considering that the situation is being
contemplated in 2010 when internet usage was much
lower than today, concerns over security are quite grave.
Codeautomation is a startup, so building the trust and
reliability to entrust it with all data to store on their servers

is di cult. So we feel that Codeautomations ERP on

premise will be the best alternative for Vinsun because the
total cost is lowest over the long term, security issues are
less due to internal database, the opportunity to customise
the package to have an optimum mix of current practices
in the company and industry best practices and the
technology is well-proven.

Q5) Given your analysis, would it make

sense for VINSUN to choose ERP on cloud?
No it does not make sence because Cost analysis has
been done above.
From, it is evident that VINSUN should go for ERP on
premise platform provided by Codeautomations. The
reason being long-term view, customization, less business
disruption during integration of business is kept in mind.
Though the initial cost for ERP on premise is higher, it can
be recovered in few years and the annual maintenance
cost is constant. On the other hand, the maintenance cost
for ERP on cloud increases every year.