Compare build, buy, and partner options using total ownership cost.

Instruction: Calculate the comparable three-year totals and recommend how to make the sourcing decision.

Context:

All costs are fictional, in thousands of dollars, with no discounting or taxes. Build: upfront 300, annual operations 150 in each of three years, exit 60. Buy: upfront 80, annual fees and administration 210 in each year, exit 40. Partner: upfront 180, annual service and internal oversight 170 in each year, exit 100. Each option has the same three-year useful life and expected business benefit. These estimates already include the listed staffing and support costs, but security, quality, integration feasibility, and exportability have not been validated.

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Buy is the leading financial candidate at $750,000 over three years, compared with $790,000 for partner and $810,000 for build. I would recommend buy if it clears the same security, quality, integration, and export requirements as the alternatives...

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