Infosys Technology Ltd.

:
Growing Share of Customer
Business

Case Study

Submitted by:
Vikas Suman|| PGP/21/244
Section D
This case describes an opportunity that Infosys Technologies Ltd., has received, to bid for a new project
involving an end-to-end solution in the e-procurement area with one of their major current clients—Prairie
Four Square Insurance (PFS) — a large, US-based insurance company.
Five years ago, PFS had selected Infosys as a sole supplier for outsourcing IT maintenance and had awarded
it three pilot contracts. The contracted work involved routine tasks such as cleansing corrupted data,
correcting software flaws, and running programme and system tests. Infosys had performed so well in these
initial projects, that over the next five years, it had received a total of 65 contracts from PFS which covered
higher value maintenance work like application development, business process reengineering, installation
of some packaged solutions, etc.
Although Infosys had an excellent reputation at PFS in the area of maintenance projects, it had yet to make
an entry into the prestigious, high margin, end-to-end “consulting” projects with this client. PFS had
hitherto favoured a “best of breed” approach under which it awarded IT systems work only to those firms
that it perceived as the most competent in the concerned categories (system analysis, design, installation,
and maintenance).

Q1. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS during
the past five years?

The case provides data on four projects in which Infosys has offered cost savings to PFS over and above the
contract terms. Let us calculate these cost savings by examining the projects one by one (A to D).

Re-engineering Project Assignment:

In the course of the teleconference between the key members on the PFS team at Infosys, Jaspal Singh
mentioned that he was particularly proud of the way the team had redesigned project assignments so that
fewer personnel were required over the years starting from year 2 of the project. Table 2 provides the
calculation of the savings to PFS through reengineering project assignments which work out to a substantial
sum of $12,960,000

Data Corruption Prevention Subroutine

Infosys engineers had written a subroutine to shut down the PFS batch programmes at 5 a m. Earlier, PFS
faced problems whenever their batch processing continued beyond 5 a m as this corrupted data and online
shutdown system led to idling of about 125 PFS employees for up to four hours. Calculations regarding the
benefits of the Infosys’ initiative to PFS are shown in Table 3.

Record Comparison Algorithm

Infosys engineers working on the PFS projects have written an algorithm which improved the PFS record
comparison processing efficiency by 56 per cent and processing time by eight hours. This helps PFS in
timely submission of reports to state insurance commissions and reduces the probability of PFS being fined
for late submissions. Table 4 shows the savings to PFS from the record comparison algorithm

Reduction in Disability Claims Reserves

Infosys has helped PFS to reduce the cash reserves required for paying the disability claims. This was
achieved by streamlining and reengineering the claims submission and claims payment process. The
reduction in cash reserves was to the extent of $14 million. The savings to PFS in this regard are shown in
Table 5.
Q2. What “knowledge transfer time” cost savings can PFS expect from sole sourcing the Ariba e-
Procurement System project?

In case PFS decides to award the Ariba e-procurement project to Infosys on a sole-sourcing basis, Infosys
will be involved with the Ariba software right from the beginning of the project and will therefore not
require any knowledge transfer time to update their programmers on the technical aspects of the system as
they enter the maintenance phase. Since it roughly takes 5 programmers about 12 weeks to master an
Ariba system installed by someone else, the savings from the elimination of knowledge transfer time are
expected to be 5 x (12/4 months) x $8,000 per month which is equal to $120,000.

Q3. 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?

An analysis of the case data gives the impression that although Infosys has offered great value to PFS in the
course of its current projects, its share in the PFS’ IT business is quite small. A stretch goal for Infosys may
be to capture at least 50 per cent of PFS’ IT spend. In order to achieve this, Infosys must be seen as a major
partner by PFS.
The sales approach required for achieving a partnership relationship between a client and a vendor has
been termed as Enterprise Selling. The enterprise selling approach requires immense trust between both
parties based on a clear understanding that partnering will bring significant mutual benefits.
Enterprise partnerships are usually successful when there is some match between the cultures of the two
parties. Such partnerships are also more successful when the top managers of both firms are in touch and
trust each other. Based on the stretch goals Infosys has in mind for its business from PFS, a case could be
made that Infosys must use enterprise selling techniques in getting the Ariba e-procurement order.
The top management of Infosys has an opportunity to meet senior PFS managers during their forthcoming
visit to the Infosys campus in Bangalore. Infosys board members must use this opportunity to forge closer
links with the PFS President and discuss the formation of a long-term partnership between the two firms.
At the same time, the onsite duo of Rahul Dev and Jaspal Singh must highlight to PFS in Dallas that the two
firms have many value-based similarities and that the savings of nearly $15 million for PFS over and above
the contract terms are an indication of the quality of concern for its client that Infosys brings into a
relationship.
The Ariba project can also be seen as a situation where a consultative selling approach needs to be used.
Consultative selling occurs when the salesperson brings superior knowledge and problem-solving
capabilities to the sales opportunity in order to create superior value for the client. Superior value is
created by thoroughly understanding the client’s processes, constraints, and needs and developing
appropriate solutions. Such activities are akin to consulting and therefore this approach is called the
Consultative Sales Approach. Rahul Dev and Jaspal Singh must convince PFS that Infosys has the required
capabilities in the consulting arena to provide an end-to-end solution using the Ariba software.
Their presentation must highlight the backgrounds and project experience of Infosys consultants who will
be assigned to the Ariba project. They must highlight the fact that the large number of maintenance
projects that Infosys has carried out for PFS over the past five years have provided Infosys employees with a
great deal of knowledge about how PFS operates, knowledge that will come in extremely handy in the
consulting phase of the project. Additionally, Dev and Singh must highlight the expertise that Infosys has
acquired on Ariba software in the three ongoing projects for other clients.
Finally, Infosys must quote the right terms while seeking an order and use transactional selling tactics.
The major items of discussion will be the terms comprising price, time schedule for completion, important
milestones, and proposed commitment of staff both onsite and offshore. Infosys will need to consider the
rising rupee while presenting the pricing for implementation and maintenance. It may consider a hike in the
implementation price to about $2,075,000 and the maintenance of the end-to-end solution to around
$410,000 per annum.