Analyze Project Alternatives Using PW and FW
The CIO has asked you to conduct an FW analysis to inform their decision on renewing the contract for hosting the corporate website cluster with the current local vendor or replacing the current vendor with Amazon Web Services (AWS). Recently, the local vendor has been having issues with climate control and site security. The move needs to be done ASAP. You need to develop courses of action that includes FW analysis to compare the two alternatives, local vendor, or AWS. This work was not included in the current budget, so you will need to also propose adjustments to the currently forecasted budget, as well. You will want to include budget Excel spreadsheets and cash-flow diagram(s).
You are given the following information:
Current Vendor: Starting next year, renewing the contract with the current vendor will require a $1,000,000 capital investment in the current vendor’s firm for each year for a period of 8 years. Googolplex is expected to earn 14% per year on this capital investment expense due to contract incentives from the vendor.
AWS: Starting next year, initiating a contract for hosting services with AWS will require a payment of $800,000 per year for 8 years. Googolplex is expected to earn 10% per year on this capital investment expense due to contract incentives from AWS. AWS will also provide a $50,000 credit at the end of the contract if Googolplex renews its contract at that time.
Conduct FW analysis on each of the two alternatives. Use this analysis to offer a recommendation based on your comparative FW findings. Include recommendations for:
Budget reductions in other areas.
Both economic and non-economic project alternative attributes.
Future cash flows to fund the project.
Linkage to strategic plans with vision, mission, goals, and objectives.
Ensure your recommendation conveys linkages to Googolplex strategic priorities. Show your analysis, to include your cash-flow diagrams.