Group D – Project 1B Financial Considerations for Blackboard vs. Self-Created System

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

2. Presented by Group D: Matt Carbone Tushar Mehta Ann Powers Jessica Strahl

3. Agenda • Introduction • Financial Considerations • Break-Even Analysis • Capital Budget • Summary • Q&A

4. 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. Financial Considerations Types of Financial Considerations: • Inflow • Ongoing costs • Upfront costs

6. 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. 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. Break-Even Analysis Based on $1,500 per student per class (Using CommunityU Financials) Blackboard In-House Based on the Break-Even Analysis results above, BLACKBOARD is favored over the IN-HOUSE System

9. 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. Cash Flow Estimates Blackboard Proprietary systemBased on 3 Years(Using CommunityU Financials) PVIF Rate = 10% 218,682

11. Cash Flow Estimates Self-Created (In-House) systemBased on 5 Years(Using CommunityU Financials) PVIF Rate = 10% 269,401

12. Analysis of Net Present Value Blackboard 218,682 In-House 269,401 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%

13. Factoring 1,500 Students The estimated capital budget was based on 200 students. To measure the range of possible outcomes for decision making we will factor in a server1 and maintenance costs with a capacity of 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.

14. Summary We continue to recommend Blackboard as the Learning Management System (LMS/LCMS) for CommunityU. • Break-Even • NPV ~ not enough

15. Thank You! Q?A