Enabling Tomorrow’s InnovationsTeam 6

by Joseph Helou, Karl Nickl & Ankush Balekundri

MobileMusic

2Team 6

Agenda

• Challenges• Overview• Recommendation• Implementation• Financial Analysis• Risks & Mitigation• Conclusion• Appendices

3Team 6

Challenges with MobileMusic’s current IT strategy

Legacy Costs

IT Operations & Controls

Scalability

Business Strategy

• What systems should we implement in order to increase reliability and decrease cost?

• How much staff do we need in regional offices?

• What IT controls should be put into place to create a secure environment?

• How do we increase our capacity without increasing total costs too much?

• How do we approach adding new Kiosks, Gaming, and Dating?

How can MobileMusic’s IT strategy help continue growth and ensure complete customer satisfaction?

4Team 6

Potential key improvements with MobileMusic’s new IT strategy

Enabling Future Business

Strategies

Integrated Systems

Scalable Technology

Improving IT Operations &

Controls

Short Term Long Term

Low

Prio

rity

H

igh

Prio

rity

Increased Revenue per Customer

Increased Customer Satisfaction

• Reduced Development Lead Timefor New Business Lines

• Increased Systems Uptime

Increased Employee Productivity

• Reduced Employee Turnover

5Team 6

Evaluation of opportunities and vision for the future of MobileMusic

We want to position MobileMusic with technology that will create a sustained competitive advantage, enable easy addition of new lines of business, and provide

customers with rich content solutions to their entertainment needs.

Our Vision

System Integration Restructuring IT Enabling The Future

• Consolidate dispersed IT services

• Move to standardized desktop environment

• Improve IT operations

• New systems from single vendor hosted on cloud infrastructure

• Migrate logistics system to cloud infrastructure

• Allows for the capability to support existing activities as well as future plans

• Better alignment with corporate strategy

• Gaming & Dating

6Team 6

Issues that can be addressed with an integrated system

System Integration Restructure IT Enable The Future

Subscription Management & Customer Management

• Critical: All customer services depend on it• Unreliable: Downtime causes irreparable damage to brand

Billing Management

• Inherited from parent company• Lack of scalability• Limited availability

Finance & Procurement

Logistics

• Developed in house, coded using COBOL• Expensive to manage and add functionality• Limited availability

• Poor compatibility with Finance & Procurement system• Increased development costs due to technological differences

• New systems from single vendor hosted on cloud infrastructure• SM/CM• BM• FP

• Migrate logistics system to cloud infrastructure

System Integration

Solved by:

7Team 6

The benefits of integrating systems outweigh the costs

System Integration Restructure IT Enable The Future

• Increased capability to deploy new features and services

• Decreased long-term costs• Increased scalability• More reliable accessibility/performance• Increased employee morale• Increased security

• Dependent on cloud provider for security and access

• Higher short-term costs• Learning curve of new systems

System Integration

Benefits

Costs

8Team 6

Issues that can be addressed by restructuring IT resources

System Integration Restructure IT Enable The Future

Unmanageable IT Environment

Scattered/Redundant IT Resources

Inefficient IT Operations

• Non-standardized desktop environment• Overload of PC-related issues

• ≈75% of IT staff is dispersed throughoutregional offices

• Low employee morale

• Lack of central planning• Lack of policy/process documentation• Minimal governance and execution strategy• Security failures

Solved by:

Restructuring IT

• Consolidate dispersed IT services• Outsource regional kiosk servicing to

outside firm• Outsource help desk services to India• All other IT services moved to

headquarters• Move to standardized desktop

environment• All computers, peripherals, software

pre-selected• Improve IT operations

• Increased standardization of processes

• Increased focus on security• More robust long-term planning

9Team 6

The benefits of restructuring IT outweigh the costs

System Integration Restructure IT Enable The Future

• Increased cohesiveness of organization• Better IT alignment with long-term strategic goals• Decreased TCO of IT environment• Improved service• Increased security

• Higher short-term costs• Resistance of employees to change

Restructuring IT

Costs

Benefits

10Team 6

Moving to integrated systems and restructuring IT will help enable future growth plans for Mobile Music

Restructure IT Enable The FutureSystem Integration

Future Plans

Value From Proposal

• Allows for the capability to support existing activities as well as future plans• Better alignment with corporate strategy• Increase long-term profitability• Ability to quickly adapt to changing business strategy

• Expand to shopping malls, grocery stores, and fast-food establishments• Gaming• Dating Services

11Team 6

Implementation Timeline

Y1 Q1 Y1 Q2 Y1 Q3 Y1 Q4 Y2 Q1 Y2 Q2 Y2 Q3 Y2 Q4

IT RestructuringSystem

Integration

Restructure Planning

Employee Restructuring

Planning

Analysis

Design

Organizational Restructuring

Facilities

Legal Issues / Issues Management

Evaluating & Adjusting

Implementation

Systems go live

12Team 6

Financial Analysis

Initiative Estimated Financial Benefit

Cloud Infrastructure Migration Benefit Cost Ratio = 6.81

Standardized Desktop Total Cost of Ownership Savings:$1,1982 x 400 employees = $479,200

Employee Rationalization Annual IT Labor Cost Savings: 1.563 x $83,9004 x 126 employees = $16,491,384

New System Purchase and Implementation

Estimated Cost of Implementation:$4,000 x 325 Concurrent Users x 2.5 = $3,250,0005

1. Alford, T., & Morton, G. (n.d.). The Economics of Cloud Computing: Addressing the Benefits of Infrastructure in the Cloud. Booz Allen Hamilton. Retrieved February 14, 2013, from www.boozallen.com/media/file/Economics-of-Cloud-Computing.pdf2. Troni, F., Margevicius, M. A., & Silver, M. A. (2010, November 16). Desktop Total Cost of Ownership: 2011 Update. Gartner.com. Retrieved February 15, 2013, from my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=14703423. The True Cost of an Employee. (n.d.). Legal Northwest. Retrieved February 14, 2013, from http://www.legalnw.com/index.php?option=com_content&view=article&id=81&Itemid=74#4. Career Builder Compensation Portal. (n.d.). Career Builder. Retrieved February 14, 2013, from bdm.careerbuilder.com/bdio.aspx?bdmlocrd=OJG2KIN6r5Gf0R%2b55db%2bRKJni7tQd2OU%2bbAl%2f6QMOUMsx2KuKsxMNg%3d%3d&TS=bMY3ftYQiHs=5. Kaupp, G. (2012, September 5). How much does a typical ERP implementation cost? | ERP Software Blog. ERP Software Blog. Retrieved February 15, 2013, from http://www.erpsoftwareblog.com/2012/09/how-much-does-a-typical-erp-implementation-cost/

13Team 6

Risks & Mitigations

Risk Assessment Mitigation

Employee resistance to changes Pursue employee buy in before implementation

Business may suffer in the short-term due to changes Strong emphasis on long term benefits

Projects may take longer than expected

Robust project management, cloud nature of system implementation allows for quick deployment

Excessive short-term costs Lower up front cost due to cloud implementation

Prob

abili

ty

Impact

X

Prob

abili

tyImpact

X

Prob

abili

ty

Impact

X

Prob

abili

ty

Impact

X

14Team 6

Conclusion

Integrate Systems

Implement Scalable

Technology

Enable Future

Business Strategies

By integrating systems, implementing scalable technology, and improving IT operations & controls, MobileMusic will have the capability to enable tomorrow's

innovations.

Improve IT Operations & Controls

Solution Recap

15Team 6

Appendices

• Why Not Refresh Logistics?• Why Cloud Infrastructure?• IT Security Strategy• Value of Cloud-Based Infrastructure (IAAS)• Desktop Total Cost of Ownership• IT Outsourcing Vendor Selection Criteria• Outsourcing Help Desk to India

16Team 6

Why Not Refresh Logistics?

• Current vendor also supplies kiosks• Proprietary• Technically solid other than system integration

issues– Possibility to be fixed by integration with new

systems– If unable to integrate, we will explore other

options

Back to Appendices

17Team 6

Why Cloud Infrastructure?

• Quick Deployment• Lower upfront costs• Virtualization provides scalability• Easier to manage• Easier backup and recovery• Automatic software integration• Easy access to systems and information

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18Team 6

IT Security Strategy

• Assess risks and determine needs• Establish central management focus• Form a central group to carry out IT security

strategy• Implement appropriate policies and related

controls• Promote awareness• Monitor and evaluate policy and control

effectivenessAction Steps for Improving IT Security. (n.d.). Cisco Systems. Retrieved February 15, 2013, from https://docs.google.com/viewer?a=v&q=cache:Utrgn0Ck93wJ:www.cisco.com/warp/public/cc/so/neso/sqso/roi5_wp.pdf+&hl=en&gl=us&pid=bl&srcid=ADGEESjR7Vh2qel80u8KETgfxcmPqH gLQbx7xRWpGToV1I3KjiTZRFaQmsp-gDvQsHRieq4W1xwqIOy6PT8SbnTXfFdD99gZh6cIuU6pr6G3U5K1qxLpxHG

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19Team 6

Value of Cloud-Based Infrastructure (IAAS)

Costs/Economic MetricsStatus Quo: 1,000 Server (Non-

Virtualized) EnvironmentScenario 1:

Public CloudScenario 2:

Hybrid CloudScenario 3:

Private CloudInvestment Phase Costs FY10-12 (BY09 M$) -$ 3.00$ 6.10$ 7.00$ Q&S Phase Costs FY10-22 (BY09 M$) 77.30$ 22.50$ 28.90$ 31.10$ Total LCCS (BY09 M$) 77.30$ 25.50$ 35.00$ 38.10$

Economic Metrics:NPV (BY09 M$) N/A 41.80$ 33.70$ 31.10$ BCR N/A 15.4 6.8 5.7DPP (Years) N/A 2.7 3.5 3.7

Alford, T., & Morton, G. (n.d.). The Economics of Cloud Computing: Addressing the Benefits of Infrastructure in the Cloud. Booz Allen Hamilton. Retrieved February 14, 2013, from www.boozallen.com/media/file/Economics-of-Cloud-Computing.pdf

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20Team 6

Desktop Total Cost of Ownership

UnmanagedSomewhat Managed

Moderately Managed

Locked and Well-Managed

Hardware 243.00$ 243.00$ 241.00$ 239.00$ Hardware Maintenance 35.00 36.00 37.00 38.00 Software and Software Maintenance 750.00 725.00 699.00 648.00 IT Software 70.00 75.00 79.00 88.00 Data Center Allocation - 1.00 1.00 1.00 Electricity/Heating/Cooling 67.00 55.00 48.00 24.00 Hardware, Software, and Facilities 1,165.00$ 1,135.00$ 1,106.00$ 1,038.00$

Tier 1 112.00$ 106.00$ 101.00$ 90.00$ Tier 2 219.00 186.00 153.00 87.00 Tier 3 95.00 96.00 89.00 75.00 Security 93.00 86.00 78.00 61.00 Desktop Management 145.00 202.00 191.00 170.00 IT Operations 663.00$ 677.00$ 612.00$ 483.00$

Administration 71.00$ 69.00$ 66.00$ 60.00$ Management 65.00 65.00 65.00 65.00 User Training 28.00 30.00 31.00 34.00 IT Training 14.00 15.00 15.00 15.00 Disposal 30.00 29.00 29.00 29.00 Administration 209.00$ 208.00$ 206.00$ 203.00$

Training 460.00$ 450.00$ 441.00$ 422.00$ Fixing 3,101.00 2,608.00 2,115.00 1,129.00 Downtime 197.00 157.00 116.00 35.00 End-User Costs 3,757.00$ 3,215.00$ 2,672.00$ 1,586.00$

Hardware and Software 1,165.00$ 1,135.00$ 1,106.00$ 1,038.00$ IT Operations Labor 663.00 677.00 612.00 483.00 Administration Labor 209.00 208.00 206.00 203.00 Direct Costs 2,038.00$ 1,925.00$ 1,925.00$ 1,724.00$ End-User Costs 3,757.00$ 2,672.00$ 2,672.00$ 1,586.00$ TCO 5,795.00$ 4,597.00$ 4,597.00$ 3,310.00$

Desktop TCO 2011

Lower Total Cost of Ownership (TCO)

Increased Desktop

Management Spending

Decreased Hardware, support,

security, and end user costs

Troni, F., Margevicius, M. A., & Silver, M. A. (2010, November 16). Desktop Total Cost of Ownership: 2011 Update. Gartner.com. Retrieved February 15, 2013, from my.gartner.com/portal/server.pt?open=512&objID=260&mode=2&PageID=3460702&resId=1470342

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21Team 6

IT Outsourcing Vendor Selection Criteria

Criteria Weight Vendor 1 Vendor 2 Vendor 3

Low Cost .3 (0-10) (0-10) (0-10)

Ability to work with Engineers

.25 (0-10) (0-10) (0-10)

Ability to work with Consumers and Employees

.35 (0-10) (0-10) (0-10)

Availability .1 (0-10) (0-10) (0-10)

Total Score 1

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22Team 6

Outsourcing Help Desk to India

• Long term price competitiveness• Focus on core business• Government support• Large pool of educated English speakers• 24/7 help desk coverage• Reliable communication facilities

• Cultural barriers• Potential lack of quality• Time lost managing project• Political instability

India Outsourcing

Benefits

Costs

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