Total Cost of Ownership (tco) Case Study

I have reviewed the Total Cost of Ownership (TCO) modeling for Synchronus Systems and Predictive Analytics Inc. Synchronus Systems and Predictive Analytics Inc. both meet Micron's minimum core requirements. The break down of each software application's estimate TCO is as follows:

Synchronus Systems' software up front program fee is $341,000 due at acceptance and acquisition, usage and end of life costs over the two year of $633,000. Synchronus Systems estimate TCO is $$974,000 before the 15% NPV of $138,000 totaling $836,000.

Predictive Analytics Inc.'s software up front program fee of $280,000 with 20% ($56,000) due at the time of acceptance, the remaining 80% ($224,000) due upon go-live date (approx. 180 days after acceptance) and acquisition, usage and end of life costs over the two year period of $733,000 minus a savings of $21,000 for phasing out old niche special-purpose software totaling $711,000. The Predictive Analytics Inc. estimate TCO is $992,000 before the 15% NPV adjustment of $170,000 totaling $822,000.

The estimated TCO for the agreed two year period between the two providers differ by $14,000 there are pros and cons for both. One of the pros that may be seen for Synchronus System is the source codes offered at the end of the two year program, though at a substantial cost. I believe this would be a con, because an additional allocation of costs for extensive training will be required for Micron's software engineers to maintain the system. Sychronus Systems also comes with some non-essential features bundled with the core functions. These features do not add meaningful value to Micron, therefore I can not justify paying for an over bundled program. Predictive Analytics Inc.'s general approach is to offer the basics and bolt-on applications/functionality as upgrades as seen fit. Though Predictive Analytics Inc. does not offer source codes at the end of the two year program I see this as a pro as Micron will only incur one cost of converting to an alternative service provider allowing Micron's supply chain management to make adjustments and advances to the system as needed. I am making my recommendation for Predictive Analytics Inc. I believe this is the right choice for Micron's immediate and future needs to continue to meet the demand of our customers through visibility through out Micron's whole supply chain.

Best Regards,