1. Group D – Project 1B Financial Considerations for Blackboard vs. Self-Created System July 18 th 2005 Financial Management in Online Course Design and Implementation @ New York University

2. GROUP D Project 1B Presented by Group D: Matt Carbone Tushar Mehta Ann Powers Jessica Strahl

3. GROUP D Project 1B Agenda  Introduction  Financial Considerations  Break-Even Analysis  Capital Budget  Summary  Q&A

4. GROUP D Project 1B Introduction The university CommunityU and the corporation ZippityZ are reviewing the financial aspects (using break-even and cash-flow analysis) regarding their decisions to purchase a new Learning Management System (LMS) sold by the Blackboard Corporation (proprietary) or a self-created (In- House) system.

5. GROUP D Project 1B Financial Considerations Types of Financial Considerations:  Inflow  Ongoing costs  Upfront costs

6. GROUP D Project 1B Financial Considerations  Inflow  Revenue: $1500 / student per class  Start-up Grant from NY State  Ongoing costs  Helpdesk / Publisher Support Costs  Professional Development Costs  Maintenance/Replacement/License upgrade costs  Network Maintenance  Maintenance of Enterprise SQL/Web Servers  LMS Maintenance  Server/OS Licensing Maintenance  Connectivity Costs  Software/Course Development Costs  Depreciation

7. GROUP D Project 1B Financial Considerations  Upfront Costs  Network Cost Estimates  Firewall  Proxy Server  Hardware & Operating Server Cost Estimates  Web Server (Equipment)  Enterprise SQL Server (Software)  Operating System/Client License  LMS Costs  LMS/LCMS System  Configuration Costs  Installation Fees  Training Costs  Professional Development Costs  Software/Course Development Costs

8. GROUP D Project 1B Break-Even Analysis Based on $1,500 per student per class (Using CommunityU Financials) Based on the Break-Even Analysis results above, BLACKBOARD is favored over the IN-HOUSE System BlackboardIn-House

9. GROUP D Project 1B Capital Budget The following Capital Budget is based on the financial criteria below:  200 Students per year  ROI of 10%  3 Yr Life for the Blackboard System  5 Yr Life for the In-house (self-created) system  0% Tax

10. GROUP D Project 1B Cash Flow Estimates Blackboard Proprietary system Based on 3 Years (Using CommunityU Financials) PVIF Rate = 10% 218,682

11. GROUP D Project 1B Cash Flow Estimates Self-Created (In-House) system Based on 5 Years (Using CommunityU Financials) PVIF Rate = 10% 269,401

12. GROUP D Project 1B Analysis of Net Present Value In comparing the above two Net Present Values the NPV for the In-house system is favored over Blackboard mainly because of the additional two years of income. PVIF Rate = 10% 269,401 218,682 Blackboard In-House

13. GROUP D Project 1B Factoring 1,500 Students 1 “Server” capacity has two components: a) Hardware and b) Software. In our project only server software licenses is variable while hardware is set to meet the capacity of 1,500 students to manage scalability – it is a fixed cost. The estimated capital budget was based on 200 students. To measure the range of possible outcomes for decision making we will factor in a server 1 and maintenance costs with a capacity of 1,500 students.

14. GROUP D Project 1B Summary We continue to recommend Blackboard as the Learning Management System (LMS/LCMS) for CommunityU.  Break-Even  NPV ~ not enough

15. GROUP D Project 1B Thank You! Q?AQ?A