Faculty : Prof.

Joffi Thomas

Case Analysis Note : Precise Software Solution

Name : Karan Aggarwal

Roll Number : EPGCMM -11-020
Organization : Varroc Polymers Pvt. Ltd.
(Manufacturer of Automotive Plastic Injection molded parts)
Designation : Manager (Business Development)
Ques: What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS
during the past five years?
Ans:

 Infosys reduced the no of people operating in five maintenance project from 250 to 100 and
redeployed the other 150 people on to other projects of PFS with no extra charge which gave
them a benefit of the costs of a full-time equivalent (FTE)3 are $8,000 per month (Rs. 368,000)
in the US and $3,200 per month (Rs. 147,200) in India, the resource reductions represent a
significant benefit for PFS.
 Under the data corruption prevention subroutine by writing a new record comparison algorithm
they could reduce the incidents per year from 24 to 0 and in the bargain saved cost of three
programmers which was an FTE rate of $45 (Rs. 2,070) per hour per person, one technical
support person at an FTE rate of $40 (Rs. 1,840) per hour and at PFS, 125 employees for four
hours at an FTE rate of $42 (Rs. 1,932) per hour per person. Apart from this running program to
reconstitute the corrupted data would take about 15 seconds at a central processing unit (CPU) at
a time rate of $ 0.39 (Rs. 18.0) per second.
 They reduced the cash reserve ratio in had to pay disability claims by $14 million (Rs 645
million) by streamlining and reengineering both the claim submission and payment process, with
cost of capital at 10% it saved them enormous money

Ques: What "knowledge transfer time” cost savings can PFS expect from sole sourcing the Ariba e-
Procurement System project?
Ans:
Benefits of sole sourcing. “PFS will reap significant benefits from sole sourcing the project to Infosys,”,

 Getting involved from day one of the project, Infosys will be able to forgo the ‘knowledge
transfer time’ required to bring programmers up-to-speed on technical details of the system had
they entered at the maintenance stage.
 The project will take 12 weeks’ time with 5 programmers to master the Ariba e-procurement
system and the work should be done in Dallas. The FTE cost will be $8000. During the
maintenance phase, Infosys should accrue additional savings and it would be in an advantageous
position to address any software issues quickly, but it will be difficult to predict those issues now
and asses any cost savings for the solutions.
Ques 3. How can Infosys' PFS Account Team persuasively sell the firm's ability to deliver a superior end-
to-end solution for the Ariba e-Procurement System project?

 In the past Infosys has always exceeded the expectation of the customer in terms of Quality,
timeliness and reliability all they have to do is exhibit that they can handle the strategic and
conceptual consulting as they are already exposed to all aspects of PFS IT system That will
translate into better work more quickly which will yield significant cost savings for PFS.
  The competitors Excalibur and Merrimac have weakness in IT systems maintenance. Their labour
rates have been non-competitive. Further they had a tendency to avoid low value and low profit
projects such as maintenance and therefore did not have requisite expertise.
 Infosys have been hiring well-seasoned people from other top consulting firms and also from top
business schools worldwide.
 Infosys was bolstering their consulting resources and the inhouse training.
 Infosys should show case the three end-to-end Ariba e-procurement system projects which it had
done (One in health care and two in retail segment) along with the savings which the health care
company has received $100,000 (Rs4,600,000) by way of switching the change order procedure
system which was an manual converted to online software based system.
 During the proposed visit of PFS vendor management team to Bangalore, Infosys should make
arrangements to demonstrate the capabilities in the by making them visit the training center where
members who were associated with PFS had undergone five training on JAVA and also facilitate
meeting with consulting group in the E&R block.
 The Estimated cost of the project is $2 million (Rs. 92 Mn) and for the maintenance portion it
will be $400,000 (Rs18.4Mn) and the work has to be done in Dallas so the costs will be similar to
other two competitors. Average profitability of Infosys is around 30% so in this project they even
cut up to 15% of the profits considering the future potential of obtaining projects on CRM and
Financial management system from PFS

Cost SAVINGS
1) Re Engineering Project assignment
$12.9 Mn By transfer people to India in 3rd year –
250-75x8000x12-250x3200x12= $7200000
Reassigning of the personal $ 575600
2) Data Corruption
$518060 total=0.5 Mn
Programmer $ 12960=24x3x4x$45
Tech assistant $960=24x1x1x$40
3) Cost saving from idle time
$504000-=24x125x$42
CPU cost saving-$140=24x15x0.39
Record algorithm
$ 43200-time reporting=.04million
4) Reduction in disability claims
Data and assumption- $1400000$
Cash reserve reduction =0.1x 14 million=1.4 million

Total Savings12.9 + 0.5 +.04 + 1.4 = $14.9Mn