global business communication systems final business case march 16, 1993

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Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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Page 1: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

Global Business Communication Systems

FINAL BUSINESS CASE

March 16, 1993

Page 2: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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1993 Gemini Consulting Company

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Findings Indicate That A Re-Investment Model Is Appropriate

ITS benefits become one of the “sources” of funds to attain operations benefits.

ITS benefits become one of the “sources” of funds to attain operations benefits.

GBCS

ANALYSIS

OperationsFindings

Y

ITS Findings

Y

N

Y

“Cash out” ITS benefits, immediate shareholder profit

“Re-Invest” ITS benefits, shareholder

value growth

Business Case

OpportunitiesIdentified

OpportunitiesIdentified

Systems Related

OperationsBenefits

Business Case

N

N

Page 3: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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Benefits Of Project Will Be Both Financial And Intangible

INFORMATION

ITS will leverage the closing of the MOI gapITS will leverage the closing of the MOI gap

Financial

Intangible

Profit Growth

AssociateSatisfac-

tion

MOI

$(44 MM)‘92

$252 MM‘95

ShareholderValue

CustomerValue

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Intangible Benefits Will Drive Associate Satisfaction

• Enhance relationship/trust between ITS and users

– Foster teamwork

– Understand internal customer needs

– Establish accountability

– Provide clarity in roles and responsibilities

– Facilitate expectation meeting

• Transfer skills

• Understand external customer needs

• Reduce ITS organizational frustration level

• Focus initiative efforts throughout the company to optimize impact

Page 5: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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ITS Can Impact Most Of The Levers Which Drive Customer Satisfaction

Source: Strategic Marketing Information Used To Focus Business Process - Why Improving Quality Doesn't Improve Quality, Kordupleski et..al.

Impact On

Overall Quality

PRODUCT SALES INSTALLATION REPAIR BILLING

30% 30% 10% 15% 15%

• Reliability• Ease of Use• Features / Functions

• Knowledge• Response• Follow-up

• Delivery Interval• Does Not Break• Installed on Time

• No Repeat Trouble• Fixed Fast• Kept Informed

• Accuracy / No Surprises

• Resolved First Call• Easy to Understand

ON

OFF

Page 6: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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The Following Opportunity Streams Have Been Identified

XXXX Opportunities

ITSOpportunities

OperationsOpportunities

Redeployment

Effectiveness / Efficiency

Sales Force Effectiveness

Provisioning / Billing/Service Effectiveness

MOI

ITS

Page 7: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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The Majority Of “Information” Opportunities Exist In Business Operations

ITS benefits will provide part of the “funds” to attain operations opportunitiesITS benefits will provide part of the “funds” to attain operations opportunities

• Redeployment• Effectiveness

• Sales Resource Productivity

• Tools Utilization

Sales Force Effectiveness

ITS Opportunities

Operations Opportunities

Total Opportunitiy

$220MMAnnually

++

• Provisioning / Billing Support• Installation / Service Costs

$140MM$20MM

$60MM

Provisioning/Billing/ServiceEffectiveness

++

Page 8: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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ITS Could Make $20MM Available For Re-Investment

Re-investment model assumes that other spending will remain at current levelsRe-investment model assumes that other spending will remain at current levels

Source: 1993 ITS Budget

Assumptions:• FTE as of beginning of 1993• Based on $130MM ITS budget• $100K fully loaded cost per FTE• Includes 56 contract programmers• Excludes Dyer organization• All amounts are annualized

Maintenance

Production Support

Development

Management/Clerical

TOTAL

236

154

98

100

588

BaselineITS People CostsRange of

OpportunityFTE $ %Realizable Benefit

$ 23.6MM

15.4

9.8

10.0

$ 58.8MM

$ 11.3

2.3

3.9

1.5

$ 19.0

16.5MM

3.9

5.4

2.5

28.3MM

$ 11.3MM

2.3

3.9

2.5

$ 20.0MM

48%

15%

40%

25%

34%

-

-

-

-

-

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Focusing on Maintenance Will Drive Significant Benefits

Range of Opportunity

• 20 - 25% of NSSD maintenance are “enhancements”

• 10 - 15% of SBD maintenance are “enhancements”

• Excluding “enhancements” 20 - 30% of maintenance is avoidable

• Activity analysis / Organizational alignment findings suggests a 15 - 25% improvement attainable

$23.6MM

NSSD enhancements $3.0 - 3.8MMSBD enhancements .8 - 1.2Maintenance (both) 4.0 - 5.6

Range of opportunity $11.3- 16.5MMRealizable Benefit

Anticipate attainment of conservative opportunity $11.3MM

Activity analysis /

Organizational alignment

Redeployment

Effectiveness

Baseline

Spending

Redeploy

3.5 - 5.9

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Production Support Improvements Will Result In A Benefit Of $2.3 To 3.9MM

Range of Opportunity

• Activity analysis / Organizational alignment findings indicate a 15 - 25% improvement attainable

Realizable Benefit

Anticipate attainment of conservative opportunity $2.3MM

$2.3 - 3.9 MM$15.4MM Baseline

SpendingActivity Analysis/

Organization AlignmentEffectiveness

Note: Includes user, technical and operations support

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Improvements To The Development Environment Will Result In A $3.9MM BenefitRange of Opportunity

• 25 - 30% of effort in development group is wasted due to frequent stop/starts due to ineffective budgeting, prioritization and lack of business case support

• Activity analysis / Organizational alignment findings indicate a 15 - 25% improvement attainable

Realizable Benefit

Anticipate attainment of conservative opportunity $3.9MM

$9.8MM

Wasted development efforts $2.4 2.9MM

Activity analysis / 1.52.5

Organizational alignment

-

Range of Opportunity $3.9 5.4MM

Baseline

Spending

Redeployment

Effectiveness-

-

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ITS Management And Clerical Opportunities Exceed $2.5MM

Range of Opportunity

• Activity analysis / Organizational alignment findings indicate a 15 - 25% improvement attainable

Realizable Benefit

Anticipate attainment of high end of opportunity band $2.5MM

$1.5 - 2.5 MM$10.0MM Baseline

SpendingActivity Analysis/

Organization AlignmentEffectiveness

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Sales Resource Productivity

$100MM

Tools Utilization$40MM

Provisioning/ Billing Support

$ 40MM

Installation / Service Costs

$20MM

ITS Investment In Operations Improvement Will Help Deliver Significant Returns

Sales Force Effectiveness

$140MM

Provisioning / Billing/Service Effectiveness

$60MM

OperationsProductivity Improvements

$200MMAnnually

• Increase value added work of sales force (“face-time”)

• Cost reduction in support activities

• Better information for sales force

• Increased effectiveness of targeting tools

• Enhance lead quality

• Reduction of low-value added work

• Significant $ spent on inspecting, reconciling, tracking, and expediting

• High degree of manual efforts

• Overtime $ reduction

• Travel cost reduction

• Productivity increases also possible

PRODUCT SALES INSTALLATION REPAIR BILLING

30% 30% 10% 15% 15%

• Reliability• Ease of Use• Features /

Functions

• Knowledge• Response• Follow-up

• Delivery Interval• Does Not Break• Installed on Time

• No Repeat Trouble

• Fixed Fast• Kept Informed

• Accuracy / No Surprises

• Resolved First Call

• Easy to Understand

ON

OFF

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Sales Resource Productivity

$100MM

Tools Utilization$40MM

Provisioning/ Billing Support

$ 40MM

Installation / Service Costs

$20MM

ITS Investment In Operations Improvement Will Help Deliver Significant Returns

Sales Force Effectiveness

$140MM

Provisioning / Billing/Service Effectiveness

$60MM

OperationsProductivity Improvements

$200MMAnnually

PRODUCT SALES INSTALLATION REPAIR BILLING

30% 30% 10% 15% 15%

• Reliability• Ease of Use• Features /

Functions

• Knowledge• Response• Follow-up

• Delivery Interval• Does Not Break• Installed on Time

• No Repeat Trouble

• Fixed Fast• Kept Informed

• Accuracy / No Surprises

• Resolved First Call

• Easy to Understand

ON

OFF

Page 15: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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AEs Armed With More Time And Better Tools Will Enable MOI Attainment

Sales Resource Productivity

$100MM

Tools Utilization

$40MM

Provisioning and Billing Flexibility

Impact Not Quantified

• Activity analysis indicates that significant time spent on non-value work is driven by system deficiencies

• Improved utilization of targeting tools will enhance lead quality

NSSD Revenue MOI

-- 5$132MM $53MM

$132MM $58MM

7.5% AE productivity increase

30% Support productivity increase

SBD

$100MM

$100MM $40MM6.0% AE productivity increase

$232MM $100MM SBD Total

--

$42MM

30% Support productivity increase 2

Assumption: Revenue to MOI conversion at 40%, assuming 50% gross margin plus 10% variable selling costs.

Total

NSSD Total

NSSD$ 14MM $ 5MMSOS potential 100% lead increase

LOOT potential 40% lead increase

$109MM $40MM Total

95 35

See Appendix for detail computations.

Revenue MOI

SBD

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ITS Will Provide Critical Time and Tools to AEs to Attain Financial Targets

• Enhanced targeting

• Improved customer database/access

• Enhanced inter-divisional coordination

• Streamlined configuration and pricing

• Improved information access/inquiry resolution

• Streamlined support databases (STS,PARMS)

Critical Time Enablers : Critical Tool Enablers:

Page 17: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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Significant Productivity Improvement Will Be Obtained Through System Enhancements

• AE’s estimate that 25-30% improvement in productivity through improved access to information and streamlining of system interfaces

• Branch administrative support positions are forced to compensate for the lack of information and integration of systems

• Branch managers have estimated as much as 15% of cost structure is driven by inefficient information and systems support

– Excessive manual work / redundant data entry

– Manual invoice tracking

– Excessive clerical work gathering data

20% 25% 10% 5% 5%30%

Customer Inquires and Problem Solving

OrderProcessing

Sales Tracking,

Forecasting and Admin

Direct CustomerInterface

Configuration/Pricing/

ProposalDevelopment

Lead Gen-

eration

Potential Productivity Improvement

Support ClerkMarket Analyst* BPA ParmsBPA

Compensations*Finance

Manager*Contract Manager

Percent

0

20

40

60

80

100

Activity Analysis

Activity Analysis

- Revenue impact of productivity improvement of $250 - 500MM

- Potential benefits on annual cost savings of $7MM

AEs spend more time reworking information issues than dealing with customers

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Utilizing Proper Targeting Tools Will Greatly Increase AE Productivity

SBD

• Suppling SBD branches with tools to more effectively target leads can generate revenues over $90 MM

NSSD

• Ready access to accurate customer information can improve SOS lead quality by 100% representing an additional $14MM in revenue

Estimated "Hot" Leads Generated Per Year Per TSM:

Actual

Potential

60 Leads/Year

120 Leads/Year

Estimated Annual Revenue Impact (Conservative):

Actual

Potential

$14M

$28M

AE Generated Leads

Sales

Leads

Increase in sales byattaining

Best-In-Classbenchmark

75th Perc

entile H

it Rate

}

0

200

400

600

800

1000

1200

1400

0 2000 4000 6000

Page 19: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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The Stakes Are High If Customer Needs Are Not Addressed

Total “At Risk” Revenue: $490 million

Customers said 29% of their budget would be up for bid over next 3+ years

Annual71%

“At Risk”29%

Total Equipment Revenue: $1.7 billion

NewOpportunity

17%

NewOpportunity

17%

Customers said AT&T’s “share of wallet” (i.e. their budget) could increase 17% if

overall service quality improved

New Opportunity Revenue: $870 million (over plan horizon)

New Opportunity Revenue: $290 million (annual)

++

Customer Needs

• Equipment Reliability

• Service / Installation Responsiveness

• AE Knowledge of Account

• Billing and Order Efficiency

• Few Points of Contact

ITS Impact

Low

High

High

High

Medium

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“What's My Service Level”

Sears response: “How can you help us when you don’t even know what equipment you sold us?”

Sears response: “How can you help us when you don’t even know what equipment you sold us?”

“What's My Installed Base”

ROLM Reports

• Provided information requested on a regular monthly report

AT&T Report

• Only provided part of information

• Required 6 people several months to tabulate

Summary of Equipment for

Business Groups

Equipment Type

_____

_____

_____

_____

Model

_____

_____

_____

_____

Quantity

_____

_____

_____

_____

ROLM Report

• Service incidents• Adds, changes, drops• Response time (repair)• Dispatches per alarm• Cost of materials • Time to repair

ROLM Reports• One day turnaround• Consolidated Sears and individual business units• Accurate and complete

AT&T Report• Did not foot• Took months to create• Inaccurate:

– Equipment already removed– Some equipment not shown

Field’s Perception That Inability To Provide InformationAt Sears Contributed To Loss Of Primary Supplier Status

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Information Limitations Contributed To A $12 Million Lost Opportunity To Become JC Penny’s Primary Supplier

XXXX has not committed to cleaning up JC Penny’s records until the fourth quarter of 1994

XXXX has not committed to cleaning up JC Penny’s records until the fourth quarter of 1994

• XXXX lost bid to GTE for two reasons:- Inability to coordinate efforts with Consumer Products Division on Trimline phones- Inability to provide accurate information

• XXXX has still not solved these information issues according to JC Penny contacts:

Source: Focus Group with JC Penny

“AT&T can’t find their own records”

“Please handle your internal issues transparently”

“There’s not enough time to do business with AT&T”

“Why can’t AT&T provide the final bottom line to me on purchases?

JC Penny

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Montgomery Ward Has Three People Cleaning Up Their AT&T Equipment Records

“If we had accurate information on what Montgomery Ward has we could sell them at least

$120K more per year!”

“If we had accurate information on what Montgomery Ward has we could sell them at least

$120K more per year!”

• Montgomery Ward NAM:- “I still can’t tell them what they are leasing, renting or own”- “They realize we don’t have the people to clean up their records so they’re doing it

themselves. ”

West Central East

Page 23: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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ITS Has Not Been Able To Remedy This Situation

Entire Sears contract will be rebid in the next 12-18 months. What has been done to address their concern

on quality of information they review?

Entire Sears contract will be rebid in the next 12-18 months. What has been done to address their concern

on quality of information they review?

“...Nothing has happened to resolve this problem. ITS keeps changing (reorganizing). I don’t even know who at ITS to contact

anymore...”

Page 24: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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One Of The Factors Contributing To Not Bidding On Government Contracts Was Inability To Meet Billing Requirements• XXXXs Customer Billing System (CBS) unable to meet most government

contract requirements for customer line item number (CLIN) billing

• XXXX has decided not to bid on FAA VTS contract (1990) worth $100MM

• Would have cost $3 - 4MM (at minimum) to build a billing system capable of meeting RFP -- project deemed risky

• Integration with other AT&T units an issue

• GTE won the contract

• Probability of winning if no billing problems: 50%

• ...as well as GSA ASP contract (1990) worth $50MM• Partnered with NYNEX, they were to create billing system -- killed bid due to

• $10MM cost to process the billing

• Pac Bell won the contract

• Probability of winning if no billing problems: 50%

“Billing alone has never kept me from bidding, but the added cost has at times has made me uncompetitive.”

- Federal Region Program Director

“Billing alone has never kept me from bidding, but the added cost has at times has made me uncompetitive.”

- Federal Region Program Director

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Separate Billing Systems Will Have To Be Created To Meet The Contract Requirements

RFPs XXXX Planning to bid on Estimated Cost Of Billing System

Navy VMS contract $30MMGSA ASP contract $10MM

$1.0MM$0.6MM

If AT&T wins these contracts, it will have to absorb the cost of the new billing systems.

If AT&T wins these contracts, it will have to absorb the cost of the new billing systems.

• “I know for a fact that our competitors like NTI and GTE don’t have to create separate billing systems to fulfill these types of contracts”

Federal Region Program Director

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Sales Resource Productivity

$100MM

Tools Utilization$40MM

Provisioning/ Billing Support

$ 40MM

Installation / Service Costs

$20MM

ITS Investment In Operations Improvement Will Help Deliver Significant Returns

Sales Force Effectiveness

$140MM

Provisioning / Billing/Service Effectiveness

$60MM

OperationsProductivity Improvements

$200MMAnnually

PRODUCT SALES INSTALLATION REPAIR BILLING

30% 30% 10% 15% 15%

• Reliability• Ease of Use• Features /

Functions

• Knowledge• Response• Follow-up

• Delivery Interval• Does Not Break• Installed on Time

• No Repeat Trouble

• Fixed Fast• Kept Informed

• Accuracy / No Surprises

• Resolved First Call

• Easy to Understand

ON

OFF

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% Time % Time

Provisioning and Billing Resources Were Mapped to the Key Activities Identified in the Brown Papers

RESOURCES

# of People # of People

Billing

Activities Activities

Provisioning

This analysis provided a method for determining an approximate cost of each activityThis analysis provided a method for determining an approximate cost of each activity

Approach: Cost Reduction Opportunities

Page 28: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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We Used Value Analysis To Assess The Value Of Each Activity To The Process

BVA and NVA are activities that do not contribute to meeting customer requirements . These could be eliminated without considerable disruptions to the process. Customers are not willing to pay for these activities

Is it necessary to produce an output?

Do we use it to

manage our business?

Real Value Added (RVA)

Business Value Added (BVA)

No Value Added (NVA)

Do we need to perform this activity to meet external customer

requirements?

RVA are activities that must be performed to meet specific customer requirements & customers are willing to absorb the additional cost

Does it contribute toBusiness Functions?

YES NO

NO

YES

NONOYES YES

Approach: Cost Reduction Opportunities

Activity

Page 29: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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We Identified Activity Attributes To Facilitate Cost Analysis Of Various Types Of Work

Approach: Cost Reduction Opportunities

Inspection Expediting

TrackingManual

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The Cost Of Low Value Work In Provisioning And Billing Is $95MM

MM MM MM

SBD

65.1

NSSD

81.9

Combined

930

70,000

1,170

70,000

2,100

70,000

147.0$ $

MM MM MM45.0 50.0 95.0$ $ $

%69.1

18.37.5

2.49.5

7.3

•Expediting

• Total cost of Associates $

• # Associates involved in support provisioning & billing processes (excludes techs)

• Fully loaded cost / employee

•Inspecting•Reconciling•Tracking

•Other

• Cost of low value added

61.1% 64.6%

22.58.0

7.04.0

8.5

40.815.5

9.413.5

15.8

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SBD

7.3

$45.0MM

$18.3MM

7.5

2.4

9.5

NSSD

8.5

$50.0MM

$22.5MM

8.0

7.0

4.0

Inspections And Expediting Are The Key Drivers Of Low Value Activities

Combined

• Other 15.8

$95.0MMTOTAL

• Inspecting–Sales package–Orders–Invoices

$40.8MM

• Reconciliations–Billing Records–Completion Reports

15.5

• Tracking–Scheduling Status–Shipment Status–Missing Products–Staffing Status

9.4

• Expediting 13.5

Is it necessary to produce an output?

Do we use it to

manage our business?

Real Value Added (RVA)

Business Value Added (BVA)

No Value Added (NVA)

Do we need to perform this activity to meet external customer

requirements?

Does it contribute toBusiness Functions?

YES NO

NO

YES

NONOYES YES

Activity

Page 32: Global Business Communication Systems FINAL BUSINESS CASE March 16, 1993

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$___MM Of The Total Cost Of Low Value Activities WillBe Realized In The Project

Total

SBD NSSD COMBINED

$ MM

$ MM$ MM

$ MM

TotalCost $

45.0 $ MM

Realizable- Benefit -

%

$ MM

TotalCost $

50.0 $ MM

Realizable- Benefit -

%

$ MM

TotalCost $

95.0

Realizable- Benefit -

%

Inspecting % % %18.3 22.5 40.8

Reconciling 7.5 8.0 15.5

Tracking 2.4 7.0 9.4

Expediting 9.5 4.0 13.5

Other

$ MM MM

7.3 8.5 15.8

$ MM

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Automation And Availability And Access To InformationWill Result In $__ MM Of Benefits For Value Added Activities

Cost of Low Value Activities

Cost of Business & Real Value Activity

Total Billing / Provisioning

MM$ MM$

MM$ MM$

SBD NSSD Combined

45.0

20.1

50.0

30.5

95.0

50.6

4.0 6.0 10.0MM$

MM MM MM65.1 80.5 145.6$ $$

MM$

Realizable Benefit@ 20%

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Sales Resource Productivity

$100MM

Tools Utilization$40MM

Provisioning/ Billing Support

$ 40MM

Installation / Service Costs

$20MM

ITS Investment In Operations Improvement Will Help Deliver Significant Returns

Sales Force Effectiveness

$140MM

Provisioning / Billing/Service Effectiveness

$60MM

OperationsProductivity Improvements

$200MMAnnually

PRODUCT SALES INSTALLATION REPAIR BILLING

30% 30% 10% 15% 15%

• Reliability• Ease of Use• Features /

Functions

• Knowledge• Response• Follow-up

• Delivery Interval• Does Not Break• Installed on Time

• No Repeat Trouble

• Fixed Fast• Kept Informed

• Accuracy / No Surprises

• Resolved First Call

• Easy to Understand

ON

OFF

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Analysis Identified $46MM In ITS Related Opportunities In Service / Installation

50 10 4 10 3 23

Direct Basic Product Hours Overtime

Admin.

Travel

Training

Vacation/Sick/Others

SBD%

NSSD%

44 9 9 19 3 16

Direct Basic Product HoursOvertime Admin. Travel

TrainingVacation/Sick/

Others

POTENTIAL ITS IMPACT

$14MM + $14MM + $16MM $30MM $46MM

Cost Reduction

Pro-ductivity Total

$32MM =

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System Deficiencies Represent 26% Of Overtime Costs

Total Cost $31MM

Root Cause Of Overtime NSSD SBD

•Customer Demands (recovered) 4% 5%

•Improper Scheduling by System 3% 2%

•Uneven Distribution Of Work Load 2% 1%

•Inefficiency of Technician 1% 12%

Total Time 10% 9%

$23MM

Improper scheduling by system results in bad routing

Improper scheduling by system results in bad routing

Assumptions - 5,440 technicians @ $100K fully loaded cost, 3,100 in NSSD and 2,340 in SBD

Information Impact

$14MM

NSSD$9MM

SBD$5MM

$54MM

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System Deficiencies Are Also A Major Cause Of Travel Time

Total Cost(People & Expenses)

$66MM

Root Cause Of Travel Time NSSD SBD

•Geographic Disbursement / Technician Density 6% 12%

•Scheduling Algorithm 3% 9%

•Training of Technicians 2% 3%

•Performance Measurement Process 2% 3%

•Wrong Location Data 2% 3%

Total Time 15% 30%

$87MM

Information Impact

$30MM

NSSD$9MM

SBD$21MM

$2MM

NSSD$.5 MM

SBD$1.5MM

$153MM

Finish

Productivity

Cost

•Start

Assumptions - 5,440 technicians @ $100K fully loaded cost, 3,100 in NSSD and 2,340 in SBD

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$ MM $ MM

$ MM $ MM

$ MM

ITS Could Enable $20MM In Cost Reduction AndProductivity Improvements in Installation / Service

Cost

$ MM54 --• Overtime

Total %Cost

Reduction Productivity

14 26%

• Travel

117 -- 30– People 30 26%

36 2 --– Expenses 2 6%

153 2 30• Total Travel 32 21%

207 30Total 46$ MM 22%

Benefit from productivity improvement could be used to reduce backlog and deal with planned growth of business

Benefit from productivity improvement could be used to reduce backlog and deal with planned growth of business

$ MM

16

14

• Realizable Benefit

• Benefit %

$ MM8 $ MM12 $ MM20 10%

44%40%50%

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The Proposed Project Will Address Some Key Hurdles To Plan Attainment

1992START

$(44)MM

ITS Effectiveness Sales Force

EffectivenessProvisioning /

Billing Effectiveness

Installation / Service

Effectiveness

$20MM$140MM

$40MM$20MM

1995 FINISH

$252MM

$220MM

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APPENDIX

AT & T

AT&T

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Sales Force Productivity Improvement & Tools Utilization Will Enable Revenue Enhancement Of Over $340MM Annually

Revenue to MOI conversion at 40%, assuming 50% gross margin, and 10% variable selling costs.Note: See Gemini Market Focus Assessment (2/25/93) for detailed assumptions behind cost/benefit estimates

NSSD

SBD

Possible Support Productivity

SOS Potential to Increase Leads

Possible Support Productivity

Loot Potential To Increase Hit Rate

Possible AE Productivity

Conservative Factor

Subset of Support Headcount

Current LeadsYear

Subset of Support Headcount

Current AnnualLead Volume

Revenue/AE

Conservative Factor

PotentialRevenue

$14

$146MM

Potential MOI

(30%) (.5) $2.2MM (.5) $132MM $53MM

(30%) (220)

-- $5

$5

(100%) 60$63MM

Possible AE Productivity

ConservativeFactor

Revenue/AE

Conservative Factor

(25%) (.5) ($1.1Million) (.5)

$100MM $40MM

(30%) (90)

$95

$2

(5.3%) (232,000)

Compensation

Compensation

Sale (1992)Revenue Per

Annual All In

Revenue Per

Annual All In

Lead (1992)

NSSDAEs

(800)

75,000

$233,000

SBDAEs

(1460)

75,000

$7,700

$35

$77MM

X

X

X

X

X

X

X

X

X

X

XX

X

X

X

=

=

=

=

=

=

XXXXRevenue/MOI

$341/$140MM

$195MM

X

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NSSD Can Expect To Reduce Provisioning/Billing Costs By $42MM

$40MMProvisioning / Billing

Costs

$82MM

$32MM

$50MM

Value-Added Activities

Low/Non Value-Added Activities

$42MMCost

Avoidance

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IT Will Have A Significant Impact On The Enhancement Of Provisioning / Billing Activities

%

ACTIVITY CATEGORY IMPROVEMENT POTENTIAL ENHANCEMENT

Communications To Customer Accurate Customer Data 25 - 50

Package or Information Review Reliable and Accurate Data 80 - 100

Status Tracking Information Available On-Demand 90 - 100

Internal Communications Reliable, Online, Available Data 80 - 100

Expediting Optimized Operations 90 - 95

Calculations Automate Task 80 - 95

Hand - Offs Close Loop Holes 50 - 100

Eliminate Redundant Systems