Cost Analysis

Currently, Walmart utilizes SAP’s Supply Chain management system. In terms of SAS, we recommend using the “Supply Chain Intelligence” module. This module is broken down into several products which include : Asset Performance Analytics, Collaborative Planning workbench, Field Quality Analytics, Forecast Analyst Workbench, Inventory Optimization Workbench, New Product Forecasting, OnDemand: Suspect claims detection, Product quality analytics, Quality Analytic Suit, Service Parts Optimization and Service Operations Optimization (SAS 2016).

The cost of this suite is determined by the size of the business or corporation. SAS breaks the size down into three options; Individuals, Small and midsize businesses and enterprise. For Walmart due to its extensive footprint, it would be classified as enterprise and the SAS Software purchased will reflect the analytical capability to handle. For an individual option, the SAS Software costs $9200.00 (SAS Store, 2016) For the Small and midsize business and for the enterprise package, depending on the size of the cooperation, it can go from $10000 to as much as $140000 per year.

Due to the uncertainty of the product price in the enterprise option, we chose to average the cost of the product at $100000. Laurence Sinclair, CEO of East Agile explains that SAS usually charges you a big up front cost, followed by about 28% of that amount as an ongoing license fee every subsequent year. (Quora 2013). According to John Gallagher author of Information Systems, Fixed costs are costs that do not vary according to the production volume (Gallaugher 58), whereas Variable costs are those that respond directly and proportionately to changes in activity level or volume, such as raw materials, hourly production wages, sales commissions, inventory, packaging supplies, and shipping costs. (Variable Costs & Fixed Costs, 2015). Our fixed costs stem from the set wages employees have who are working in direct relation to SAS (See estimated chart below).

 Variable costs for the SAS integration into Walmart include:

Requirements Analysis/Definition of Scope

Installation

Configuration

Integration

Data Migration

Data Conversion

Customization

Reporting

Testing

Training

Documentation

Project Management

Project Costs	Investment
Computer Hardware Cost	$140,000
Software Cost	$292,000
Implementation cost	$2,400,000
Employee Cost	$460,000
Total	$3,292,000

Return on Investment (ROI) is one of the most important measure or metrics used in business analysis. To calculate ROI, the return of an investment is divided by the cost of the investment; the result is expressed as a percentage or ratio. So, for supply chain management, ROI is used to calculate for finding the profit earned from the induction of SAS. There were some metrics used to calculate ROI which is given below:

Fig: Cost of SAS

The total investment is thus $3,584,000 is simply an estimate based on costs estimated on the Total Cost of Ownership table. See breakdown in our table below.

Reference

Marketing Team, S. (n.d.). Supply Chain Intelligence. Retrieved June 8, 2016, from http://www.sas.com/en_us/software/supply-chain.html#view-all-products

Sales Team, S. (n.d.). SAS® Analytics Pro. Retrieved June 8, 2016, fromhttps://www.sas.com/store/software/analytics-pro/prodPERSANL.html

Sinclair, L. (2013, July 18). How much does SAS cost? Retrieved June 8, 2016, from https://www.quora.com/How-much-does-SAS-cost

Fixed and Variable Expenses. (2015). Retrieved June 5, 2016, from http://www.inc.com/encyclopedia/fixed-and-variable-expenses.html

Gallaugher, J. (2014). Information systems: A manger's guide to harnessing technology (2.0). Washington, DC: Flat World Knowledge.

ERP Panel Papers: How to Budget the Cost of ERP Implementation Services. ERP Software Blog (2012). Retrieved October 16, 2015, http://www.sherwood.com/downloads/files/