COMPREHENSIVE SYSTEM DEVELOPMENT

COMPREHENSIVE SYSTEM DEVELOPMENT

Using Apple, Inc. assume your company has decided to develop an online tool for their clients. To implement the new information systems (IS) function, your company has contracted with a vendor to create a system to allow consumers to manage their interaction with the selected company online.

The three-year contract requires an initial payment of $1,450,000 and yearly payments of $75,000. Each year, the contract will save $1,750,000 in salary, benefits, and equipment costs for your selected company. There is a $50,000 one-time charge for adding the new function to the existing interactive Web site, but doing so will save $160,000 a year. Your company’s cost of capital is 9 percent. Note: All numbers are hypothetical for the purpose of this assessment.

Assume you are the leader of a systems development team in the company you chose who is working with the vendor on this project.

Part 1: Systems Development Team

Your team has just acquired a new intern to assist you in your role and you have been asked be their mentor. You need to introduce them to the rest of system development team and help them become familiar with the function and roles of the executive-level systems development committee. To help them understand what the team is working on right now, you will also describe the issues related to physical security of data your team is facing and evaluate the steps your team is taking to mitigate risks.

Based on the scenario above, complete the following:
•Describe the function of an executive-level systems development committee and roles or job functions typically serving on the committee.
•Describe the job functions typically serving on a systems development team.
•Describe the issues the team is facing related to physical security of data.
•Evaluate the steps taken by a systems development team in the system analysis phase of a project and recommend next steps.
•Support recommendations with relevant sources.

Part 2: Capital Budgeting

Calculate the following capital budgeting metrics for the scenario above:
•Payback period.
•Net present value (NPV).
•Internal rate of return (IRR).

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