1. From What to How Physical Physical Logical Logical Current System New System “ What” “ How” 1 2 3 4 5 We are here
2. The Geometric Truth Cheap Now Right Emphasizing quality generally diminishes the likelihood of cost minimization and fast delivery. Emphasizing cost minimization or delivery time generally diminishes the quality. Emphasizing quality and delivery generally diminishes the likelihood of significant cost minimization.
3. Transition From Logical to Physical Design Prepare a detailed development plan for the physical design Identify a physical design which meets the requirements Document the physical design in detail Assess the feasibility of the physical design across all dimensions Recommend based on the outcome of the feasibility assessment
7. Evaluating Outsourcing Terms of reference document that sets out the objectives, scope and approach of the evaluation Strategic business plan (where does the organization want to be?) Analysis of how outsourcing integrates with the purchaser's strategic plan Business analysis and feasibility study (the high level requirements and how the process would work) Human resources impact assessment (may require the assistance of employment law specialists at an early stage) Request for information (RFI) (seeking suitable services and indicative costs) Cost-benefit analysis (what are the economics?) Risk analysis and business impact (what are the risks?) Business case and recommendation to management Specification of requirements (detailed statement of services and service levels required) Call for proposals from suppliers known as a request for proposal (RFP) Evaluation of proposals
8. Typical Tangible Benefits Benefit Category Common Examples Cost Reduction Reduction in labor or headcount Less paperwork Reduction or elimination of overtime Efficiencies in distribution Consolidation of jobs or employee roles Less need for travel Reduction in supply usage Less maintenance Smaller inventory needs or carrying costs Lower costs of hardware and/or software Increase in product/process quality Improved production throughput or costs Reduction in overall cost of funds Efficient use of utilities Improved subcontractor or external vendor control Reduction in or improved effectiveness of training Revenue Increase Introduction of new products Improved product quality Increased efficiency in sales processes Product enhancements Improved advertising support and target marketing Development of, or access to, new markets Decreased time to market Effective bidding tools
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10. Typical System Costs Cost Category Common Examples Tangible Development Development personnel Data conversion costs Analysis and design consulting fees Pre-development training Vendor installation and consulting Materials and supplies Hiring costs for new operating personnel Hardware and software acquisition or development Physical plant acquisition and/or conversion Tangible Operating Maintenance and upgrades (hardware and software) End-user training Annual or renewable software licenses Operational personnel Repairs (hardware and software) Depreciation of system assets Connectivity and communication charges Materials and supplies Equipment lease payments Intangible Potential disruption to existing productivity and environment Loss of customer goodwill Reduction in employee morale Diversion of attention to daily responsibilities
