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Anacomp

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1. Identify all the economic entities involved in the development of Anacomp’s CIS software system.

Anacomp, a limited partnership: RTS Associates - BANKSERV 10000, CEFT, CDA and CIBS, thirteen major banks including the National Bank of North America in New York, the Shawmut National Bank in Boston, Provident National Bank in Philadelphia and the First national Bank in Kansas City as advisory banks.

2. i. Describe the contractual arrangements between the economic entities involved in the CIS development.
Anacomp would develop the CIS system on behalf of the partnership. In return, the four banks collectively contributed $6 million and 24 software development people for 2 years to the project. The same considerations were present in each of the four subsequent partnerships. Each partnership assumed development risks; except for BANKSERV 10000. Any product developed becomes the property of the partnership. Upon completion of the development of the CIS system, Anacomp agreed to market CIS for 5 years on a commission basis. Anacomp also had the option to acquire all rights to the CIS system at the greater of its appraised fair market value or RTS’s investment plus a fixed profit but is under no obligation to exercise this option. RTS had the right to extend Anacomp’s 5-year marketing agreement an additional 5 year or to cancel it if Anacomp did not use its best efforts to market CIS. If the CIS development expenses exceed $6 million, the RTS was required to pay further development fees, Anacomp agreed to loan RTS, without recours

For the thirteen advisory banks, they had to pay a nonrefundable fee of $150,000 each in order to participate. Then, they were permitted to review the project during development and provide input regarding changed to enhance the ultimate marketing of CIS.

ii. Who bears the majority of the risk of failure of the development effort?…...

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