Question

Last year, your company purchased a site license to the accounting software suite CookTheBooks® for $10,000. Yesterday, your IT department discovered that the software erroneously calculates 2 + 2 = 5 and suggested purchasing a replacement software, BeanCounter®, for $15,000. How should your company assess or quantify the cost of the decision to replace its software?

Answer 1

When it comes to evaluating or quantifying the cost of replacing the software, the first step is to analyze the benefits and drawbacks of purchasing Bean Counter.

The total cost of replacing the software can be assessed by comparing the total cost of ownership (TCO) of the two accounting software solutions. In doing so, both direct and indirect costs must be considered.

Finally, the amount of time it takes to get employees used to the new system should be factored in when calculating TCO. It will take time to master the new system, which may result in a decrease in productivity in the short term.