B2B Marketing

Case Analysis Note

Infosys Growing Share of a Customer Business

Case Analsysis on Infosys

About Infosys They are an End to end solution provider with ERP/SCM, Consulting, Product & service vendors, Maintenance contracts and Business process outsourcing The Key strengths are Demonstrating value, consulting capability, Gaining trust, and adaptability to work in different cultures and finally position them as End to End solution provider. The revenue of Infosys is Rs35 billion ($750 Mn) and profits exceeding Rs9 billion ($200 Mn) About PFS They were the leading providers of Individual life, Group life, medical and dental and long term and disability insurance company in the US. Started in 1882 with an objective” to provide reasonably priced, reliable, long term shelter and security for families”

The revenues are over $27 billion (Rs1.2 trillion) and it serves 50 Mn customers. Objective of the Project Infosys has revenue of $30Mn and 65 projects from PFS. PFS perceives Infosys as a Low cost maintenance provider with less domain expertise. PFS wanted to outsource their e-procurement system to reduce cost. The current cost $78 per order against $ 45. They are currently 10000 different items from 1200 suppliers which they want to bring it down to 300 along with bringing in uniform purchase practices across the company. Competitors: Excalibur and Merrimac Consulting firms Case Analysis Questions: 1. Looking beyond the immediate Ariba e-Procurement System project, what challenging issues related to global marketing does this case pose for Infosys? 2. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS during the past five years? 3. What “knowledge transfer time” cost savings can PFS expect from sole sourcing the Ariba e-Procurement System project? 4. How can Infosys‟ PFS Account Team persuasively sell the firm‟s ability to deliver a superior end-to-end solution for the Ariba eProcurement System project?

People Involved In PFS Chief Information Officer (CIO), Robert Peters & Purchasing Vice President, Kay Bryan,

For Infosys Engagement manager, Rahul Dev, the Account manager, Jaspal Singh, the Delivery manager Lalitha and Senior Programmer Ravi Kiran Gowda -------------------------------------------------------Q I Challenges 1) Infosys has successfully increased the number of major IT projects it conducts for PFS to 65, but has managed to capture only US $ 30 million (i.e., Rs. 1.38billion Indian rupees) in annual business out of PFS annual IT total spend of $1billion (Rs. 46 billion) even though it could ideally handle up to 45 per cent of that total spend. 2) They are trying to secure higher value addition and profit in the business. 3) They have to show that they can handle the strategic and conceptual consulting Infosys maintenance. 4) Most of the projects that it had undertaken have been low value added and price sensitive business. 5) Ariba requires an end-to-end solution. If it could win it and deliver a high quality solution, they can gain a greater share of more profitable, high value-added business . ------------------------------------Q II Five years ago, they had selected Infosys whose work exceeded expectations both in the areas of quality and timeliness, and reliability ( refer Exhibit 2.)‟ Infosys demonstrated that they are focused on “Employee productivity” in reducing cost rather than moving the people off shore as was being practiced by their competitors  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

Question III 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. Question IV  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 the area of 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 in house training.

Value Delivery
 Infosys should demonstrate to PFS that they have exceeded their expectations not only on quality but also by providing Value added services.  Infosys should demonstrate that they can handle end to end solution especially those which fall outside the traditional IT system maintenance activities.  They need to present logical arguments to convince PFS that the entire eprocurement system should go to a single vendor.  Infosys would assist the PFS account management team by assigning a number of support personnel to the project in the form of a program manager, three business analysts, technical specialist on Ariba program, product specialist on e- procurement software along with a development and technical analyst.  In addition, the team skilled in executing the company‟s award winning „Package Implementation Methodology‟ will be deployed to would ensure that the Ariba e-procurement software is up and running in a flawless manner in short order.

 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 upto 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
Infosys Case B2B Marketing
Giorgi Japaridze

Infosys® Technologies Ltd.: Growing Share of a Customer’s Business

1. Looking beyond the immediate Ariba e-Procurement System project, what challenging issues related to global marketing does this case pose for Infosys?

In contrast to competing firms, Infosys has an advantage -- Infosys personnel diligently and rigorously gather, document, and analyze data on an ongoing basis. There are some factors by which they can compete with two main competitors in this field Excalibur and Merrimac Consulting. First, they should demonstrate to PFS managers that Infosys performance has exceeded their expectations over five years of their collaboration. They can do this by documenting not only quality of efforts but also the added value that Infosys has delivered. Second, They will have to provide evidence that Infosys can handle all aspects of an end-to-end solution, and in particular, those that fall outside of their traditional IT system maintenance activities. Third,

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they are going to present logical arguments that convince PFS managers that the entire e-procurement system project should go to a single vendor.

Excalibur and Merrimac have an outstanding reputation for operations consulting. They will have to demonstrate that they can deliver the maintenance portion of an end-to-end solution to PFS. Infosys, on the other hand, clearly does outstanding maintenance work. They will have to show that they can handle the strategic and conceptual

consulting portion of the project. This was decided by PFS executives and main issue for Infosys is to show them they can handle all aspects of this project.

2. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS during the past five years?

There are three main dimensions by which companies are evaluated for the project – quality, timeliness, and reliability. During the past five years Infosys has Infosys has exceeded PFS targets by a wide...

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