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For any
organization decision making is an important aspect for long term success and
it is imperative for the company to take the decision-making process seriously
to get good results. In this paper, there would be discussion about the
decision of a company regarding their software system. The shareholders of the
company have diverse opinions regarding making the decision about either
upgrading the legacy system or building a new software system. It is now a
matter of concern for the company to go for the most optimal solution that
proves good for the company. There are many of the alternative solutions are
here for the company, out of which the company has to choose the most favorable
solution
In this paper after detail analysis of all
alternative solution for the company, the best optimal solution would be
suggested to the company. In this case, it can be seen that company has three potential
alternative solutions for the problems first is to upgrade the legacy system,
second is to build a new in-house system, and third is to outsource the new
software from an expert company, so there are fewer chances for failure. The
cost and profitability of these three solutions are also different
Part a:
The payoff for two alternatives
|
Payoff Table |
|||
|
Cost |
Possible Profit |
Possible loss |
|
|
Decision Alternatives |
|||
|
Building New Software |
$500,000
|
$900,000
|
$50,000
|
|
Upgrading legacy
Software |
$100,000
|
$0 |
$0 |
As can be seen in
the payoff table, there are two alternative solutions for the organization one
is to build new software and second is to upgrade the existing software in the
company. The organization had to keep in mind different aspects of both
alteration and chose the solution that has more potential to payoff the company
in the future. There is decision analysis criterion that needed to be
considered while making the decision about organizations software. The five
decision analysis criterion that is needed to consider are as follow
Goal/ Objective of Organizations Software
The goal of the
organization is to increase the efficiency of its software to improve its
annual production and profitability.
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