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					IT Governance and Compliance
         Management
      Group Assignment (SaaS Case)




   University of Applied Sciences Northwestern Switzerland
              MSc Business Information Systems

        IT Governance and Compliance Management

                       Elaborated by:
                      - Odilia Müller
                      - Renato Melliger
                      - Roger Böhlen
                      - Marcel Dubach

                                th
                         June 13 , 2009
                           IT Governance and Compliance Management - Group Assignment (SaaS Case)




Table of Contents
            Table of Contents .................................................................................................................................. 2
            Preface .................................................................................................................................................. 4
            Executive Summary ............................................................................................................................... 5
1           Introduction ............................................................................................................................................ 6
2           Scenario ................................................................................................................................................ 7
2.1         ALPIQ Introduction ................................................................................................................................ 7
2.1.1       Strategic Alignment................................................................................................................................ 7
2.1.2       ALPIQ’s Current CRM Situation ............................................................................................................ 8
2.2         Reason for the new System ................................................................................................................... 8
2.3         Software Options Make or Buy Strategy ................................................................................................ 8
2.3.1       Make ...................................................................................................................................................... 8
2.3.2       Buy ........................................................................................................................................................ 8
2.3.3       SaaS a Specialty of Buying ................................................................................................................... 9
3           Business Case ......................................................................................................................................11
3.1         Stakeholders .........................................................................................................................................11
3.2         Quantitative Cost-Benefit Analysis........................................................................................................11
3.2.1       No CRM System ...................................................................................................................................11
3.2.2       Bought CRM System ............................................................................................................................12
3.2.3       SaaS CRM System (Enterprise Edition Variant) ...................................................................................12
3.3         Qualitative Analysis ..............................................................................................................................13
3.3.1       Option 1: No CRM System ...................................................................................................................13
3.3.2       Option 2: Traditional CRM System .......................................................................................................13
3.3.3       Option 3: SaaS CRM System ...............................................................................................................14
3.3.4       Summary of Qualitative Cost-Benefit Analysis .....................................................................................14
3.4         CRM Option Recommendation .............................................................................................................14
3.5         Risk Assessment of a SaaS Solution....................................................................................................15
3.6         Risk Mitigate Recommendations of a SaaS Option ..............................................................................16
4           Service Level Agreement and IT Balanced Score Card of the SaaS Option ........................................18
4.1         Service Level Agreement of SaaS Option ............................................................................................18
4.1.1       Introduction ...........................................................................................................................................18
4.1.2       Service Hours / Support Hours .............................................................................................................18
4.1.3       Performance Requirements ..................................................................................................................19
4.1.4       Issue Priority Definition / Performance..................................................................................................20
4.1.5       Release Update ....................................................................................................................................20
4.1.6       Test Environment..................................................................................................................................20
4.1.7       Penalties ...............................................................................................................................................20
4.2         CRM IT Balanced Score Card of a SaaS Solution ................................................................................21
4.2.1       CRM IT Balanced Score Card ..............................................................................................................21
4.2.2       CRM IT Balanced Score Card Map ......................................................................................................23
5           Conclusion ............................................................................................................................................24
            Directories / Glossary ...........................................................................................................................25
            Illustration Directory ..............................................................................................................................25
            Table Directory .....................................................................................................................................25
            Glossary ...............................................................................................................................................25
A)          Appendix...............................................................................................................................................26
A.A)        General Calculations over the whole Lifecycle .....................................................................................26
A.A.A)      Basic Calculations for Revenues and Sale Forecast: ...........................................................................26
A.A.B)      Revenues and Sale Forecast for the Option “No CRM”: .......................................................................26
A.A.C)      Revenues and Sale Forecast for the Option “Traditional CRM”: ...........................................................26
A.A.D)      Revenues and Sale Forecast for the Option “SaaS CRM”: ...................................................................26
A.B)        Implementation Costs ...........................................................................................................................27
A.B.A)      Infrastructure Investment Costs ............................................................................................................27
A.B.A.A)    Basic Calculations for the Infrastructure Investment Costs .................................................................. 27
A.B.A.B)    Revenues and Sale Forecast for the Option “No CRM”: ...................................................................... 27
A.B.A.C)    Revenues and Sale Forecast for the Option “Traditional CRM”: .......................................................... 27
A.B.A.D)    Revenues and Sale Forecast for the Option “SaaS CRM”: .................................................................. 27
A.B.B)      Project Effort Costs ...............................................................................................................................28
A.B.B.A)    Basic Calculation of the Project Costs ................................................................................................. 28
A.B.B.B)    Project Cost Estimation for the Option “No CRM”: ............................................................................... 29
A.B.B.C)    Project Cost Estimation for the Option “Traditional CRM”: ................................................................... 29
A.B.B.D)    Project Cost Estimation for the Option “SaaS CRM”:........................................................................... 29
A.C)        Operation and Maintenance Costs .......................................................................................................29
A.C.A)      Employee Cost: ....................................................................................................................................29
A.C.A.A)    Basic Calculations for Employee Costs: .............................................................................................. 29
A.C.A.B)    Employee Cost Estimation for the Option “No CRM”: .......................................................................... 30
A.C.A.C)    Employee Cost Estimation for the Option “Traditional CRM”: .............................................................. 30

Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                                                            26.11.2011 / Page 2 of 33
                          IT Governance and Compliance Management - Group Assignment (SaaS Case)



A.C.A.D)    Employee Cost Estimation for the Option “SaaS CRM”: ...................................................................... 31
A.C.B)      License Costs (based on Employee Costs): .........................................................................................31
A.C.B.A)    License Costs Estimation for the Option: “No CRM” ............................................................................ 32
A.C.B.B)    License Costs Estimation for the Option: “Traditional CRM” ................................................................ 32
A.C.B.C)    License Costs Estimation for the Option: “SaaS CRM” ........................................................................ 32
A.D)        Decommissioning .................................................................................................................................32
A.D.A)      Migration for the Option: “No CRM” ......................................................................................................32
A.D.B)      Migration for the Option: “Traditional CRM” ..........................................................................................33
A.D.C)      Migration for the Option: “SaaS CRM” ..................................................................................................33




Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                                                    26.11.2011 / Page 3 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)




Preface
The aim of this document is to get more know how and the usage of the IT governance and compliance
management. The document has been elaborated during the study of Master in Business Information Systems.
The assignment is the practical experience of the framework, methods and techniques which have been
discussed during the master lectures. The following assignment was elaborated in a group work of four students.




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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)




Executive Summary
This document describes the business case of a future CRM system for ALPIQ. ALPIQ maintains currently their
customers in different spreadsheets and different self made databases. The disadvantages of such a customer
data management are quite obvious.
Due to the future growth strategy in different regions within Europe a new company wide CRM system needs to
be introduced within ALPIQ. The management of ALPIQ has already decided to implement a new CRM system.
Previous project have already bee executed for a first overview about different solutions. Currently ALPIQ has
three scenarios (make or buy options) elaborated. Due to the fact that a self made CRM might be to expensive
and current standard CRM systems offer a lot of different interfaces as well as functions the make option is
already excluded.
This business case has regarded the following three options:
              No CRM solution process with the current customer treatment management
              Traditional CRM solution (Buying of a CRM solution and operation within ALPIQ)
              Software as a Service (SaaS) CRM solution (Renting of a CRM solution)

The SaaS concept works like a rent model. The system / licenses are not bought from a supplier instead they are
rented. In addition is the necessary infrastructure like servers, network components etc. outsourced and not in the
responsibility of customer. The maintenance and operation is provided by the supplier of the CRM system.
Therefore no additional costs for infrastructure and maintenance are necessary. Those costs are covered in a
monthly or yearly rental fee. This reduces the investments costs for infrastructure which normally occur at the
beginning of an IT project dramatically.

A supplier of such Software as a Service (SaaS) CRM solution has already be identified in a previous feasibility
study project. Salsesforce.com has been identified as the best potential SaaS supplier for ALPIQ’s needs. This
business case only dealt with the CRM solution supplier Salseforce.com and has not taken in consideration other
CRM SaaS provider anymore.

For the analysis of the best option for ALPIQ’s future CRM system all the necessary stakeholders have been
incorporated and taken in account. Based on the stakeholders, a quantitative analysis as well as a qualitative
analysis has been executed in this business case to identify the different benefits of the different options. Due to
the high benefits and the scalability of the strategic direction of ALPIQ management, the project team suggests
the management to consider the SaaS solution as a future ALPIQ CRM system. As evaluated, the SaaS solution
offers the most benefits and cost advantages compared to the other options.

In addition to the suggestion of which option should be taken, this business case uncovers the risks with might
occur with such a SaaS solution. All imaginable risks have been taken in account and appropriate mitigation
strategies have been mentioned in the business case. Most of the identified risks are avoidable with an
appropriate set up of a Service Level Agreement (SLA). For those risks which can not be covered by a SLA other
approaches to mitigate those risks have been provided. The proposal of the SLA between ALPIQ and
Salseforce.com is included in this business case.

To track the performance and the agreed performance indictors (PI) of a potential partnership between ALPIQ
and Salseforce.com an IT Balanced Score Card has been elaborated which points out the most important
fulfillment criteria of the SLA and provides therefore a measurement for the service.

The SLA as well as the Balanced Score Card provides a good basis for a potential partnership between
Slasesforce.com and ALPIQ. Due to the fact that the potential relationship is going to change during the contract
period changes / amendments might be necessary in the SLA as well as the Balanced Score Card.




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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)




1    Introduction
The intention of the assignment is to make up a business case for a SaaS (Software as a service) scenario.
A company (Company I) plans to implement software as a service. Before moving ahead, the company
establishes a comprehensive business case analysis to confirm that the intended approach is a profitable
investment. Company (Company II) is a supplier of software as a solution.

The content of this assignment covers the following scenario:

1.   Made up and describe a case study by concretizing a generic scenario
             Describe the company which is looking for a SaaS solution
             Describe the aim of the CRM solution
             Describe the SaaS supplier

2.   Analyze the business case and draft the business case for the use of the SaaS solution based on the
     scenario
               Identify viable alternatives which solve the business case
               Conduct a stakeholder analysis
               Conduct a quantitative and qualitative cost benefit analysis
               Define relevant risks and conduct a risk Assessment

3.   Elaborate an IT Balanced Score Card about a SaaS scenario and document assumptions (The IT Balanced
     Score Card only needs to cover objectives in reference to the SaaS environment

4.   Formulate a SLA (Service Level Agreement) between the SaaS provider and the SaaS consumer companies
     and document assumptions




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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)




2       Scenario
The following chapter is structured as the follow:
              Introduction of the ALPIQ company which intends to implement a new customer relationship
                 management (CRM) system
              The reasons why ALPIQ intends to implement a new system
              Make or Buy Options
              Introduction of SaaS and a possible supplier of a SaaS CRM

2.1      ALPIQ Introduction
ALPIQ is Switzerland’s leading energy service provider, active all over
Europe. From producing of retailing and trading, ALPIQ covers the
entire supply chain of energy business. ALPIQ’s headquarter is located
in Olten, Switzerland. With more than 10’000 employees serves ALPIQ
subsidiaries in 29 countries European countries.

In 2008, ALPIQ achieved a turnover of over 10 Billion Swiss francs and
earned a profit of 780 Million Swiss francs.
An ALPIQ division operates as the distribution department, which
serves around 80 employees. This division is responsible to acquire
different business customers. These are major Swiss company
customers like Migros, Coop, Von-Roll which have high energy
consumption and are interested in tailor-made energy services. For
ALPIQ on the other hand, it is an interesting business model which
becomes more and more important during the last few years, to treat
major customers individually.


                                                                                         Illustration 1 – ALPIQ Subsidiaries in Europe


2.1.1      Strategic Alignment
                                                th
During the strategy workshop on October 4 , 2008 ALPIQ defined their strategy for the next five years. ALPIQ’s
strategy is based on five main pillars these are the production, the net, the trading, the distribution and the supply.
The retail business is handled within the “Distribution” pillar. The main strategic focus within this pillar is to
“increase the market share in Europe”.




                                            Illustration 2 – ALPIQ’s Strategic Pillars

The above mentioned distribution pillar consists of different other activities and objectives in which will be drilled
in. The strategic alignment of ALPIQ’s management is to grow in all settled region in Europe with a focus on
energy distribution for business organizations like medium-sized costumers or high end customers like the steel
or aluminum producing branches. This is as well illustrated by the following figure of ALPIQ.




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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)




                                      Illustration 3 – ALPIQ’s Strategic Distribution Pillar

The target sales trend which is defined by the ALPIQ management is to increase the energy distribution from 40
TWh to 108 TWh within the next 5 years.
For the management of the distribution division it is clear that this goal is very ambitious. First the infrastructure
has to be in place to deliver such an amount of energy and secondly someone needs to have a demand for the
produced energy. Therefore more customers are needed or the current customers need to have higher energy
consumption.
A first step has already taken due to the commitment of the distribution division management to introduce a new
CRM system, as already previously mentioned.

2.1.2    ALPIQ’s Current CRM Situation
Currently ALPIQ maintains only a database with the most important customer data. This database is a self made
and grown system over the last 15 years. In addition the company maintains a lot of different spreadsheets with
customer data. Special agreements with customers are sometimes in written form in different word documents
and stored on a network drive. It is not amazing and worth to mention that such working methods ends in wrong
treatment of customers due to a lack of transparency.

2.2     Reason for the new System
With the new defined energy distribution targets from the ALPIQ’s management an appropriate treatment of the
current customers is indispensable as mentioned in the sub chapter ALPIQ’s Current CRM Situation 2.1.2. This
system and the current treatment would never support an individual treatment of business customers. A lot of
standard functions of the current CRM are not available on the current ALPIQ CRM solution.
Before such a CRM project can be kicked off, the decision about make or buy need to take place. This decision
about the make or buy depends again on the financial benefits compared to the financial costs of the one or the
other solution.
Due to the fact that the major customer business is going to increase, the management of ALPIQ predicts a high
demand of a new customer relationship management activities which helps to supervise the customers in a more
professional and reliable way. To handle all this activities a new CRM system needs to be introduced within the
company.

The ALPIQ management has launched a feasibility project about different options of new customer relationship
management software. The result of the feasibility study which takes different solutions into account like a buy or
make approach including a SaaS option should be the decision about the future CRM software solution.

To sum it up again, the most important points are listed again which are mentioned in the strategy and support the
implementation of a new CRM system:
              The strategy of ALPIQ is to growth in all European regions
              In future more individual services should attract even more customers
              The current customers are almost impossible to handle with the current customer database.
              Business customer is a very profitable business but complex
              All of the five mentioned pillar in chapter 2.1.1 Strategic Alignment are supported by an
                 appropriate IT application expect the distribution pillar
              Maintain customers in one single system

2.3     Software Options Make or Buy Strategy
Make or Buy strategy persuades to optimize the economical value added chain of software. Following three
different scenarios will be introduced. The scenario SaaS is a sub concept of buy. This concept will be introduced
in more details the other two because those should be known to most.

2.3.1    Make
Manufacturing / developing a product or software instead purchasing it is called make. Sometimes such software
solutions are called as well individual software even though individual software can be industry specific which has
been produced for a special industry and therefore as well bought be a company to use it.

2.3.2    Buy
A buy solution is normally the process of buying software from a vendor and the implementation of it within the
company. A supplier of such software normally charges a license fee. In addition the company which would to
implement the software needs to set up an infrastructure to run the software.




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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



2.3.3    SaaS a Specialty of Buying
A special buying solution is the SaaS solution. The company does not buy the software licenses but they rent the
software for usage as a service. Compared to other businesses it is more comparable with a rental fee to use the
software. In addition the infrastructure is maintained by the service suppliers and runs in their data centers.
Therefore the company does not need a data center environment to run the application.
Software as a Service (SaaS) is a new, fast growing and future oriented business model of computer software.
With the SaaS model software developer companies are able to provide the developed application on a rental
based model. Customers of such a solution are getting with such a solution a cost effective and convenient
solution via the internet and can avoid investment and license costs.
Based on current studies such SaaS solutions (renting the license instead of buying it) are growing very fast. The
advantages for the customer of a SaaS solution are the following:
                Higher competitor advantage
                Flexibility of supplying of new features and functions based on the demand
                Attractive price models and less previous investment costs
                Less time consuming and less cost intensive
                Accelerated market enlargement
                Faster extend of the business with current customers

To implement the SaaS CRM solution with an optimal value from IT-enabled business investments at an
affordable cost on a known and acceptable risk level ALPIQ’s management has decided to use the VAL IT
Framework as an implementation guide.

Trough the analysis of SaaS and corresponding CRM supplier with a SaaS solution different providers have been
already taken in account. The best impression of the different SaaS CRM solution provider made Saleforces.com.
If ALPIQ decide to go for a SaaS CRM solution the suggestion is to prefer Saleforces.com. In the next sub
chapter Salceforce.com will be introduced.

2.3.3.1 Salesforce.com (Provider of Customer Relationship Management Systems on Demand)
Salesforce.com is the worldwide leader in on-demand customer relationship management (CRM) services. More
than 55’400 companies trust Salesforce.com. Salesforce.com was founded in 1999 by former Oracle executive
Marc Benioff who pioneered the concept of delivering enterprise applications via a simple website.
Salesforce.com delivers integrated, completely customizable enterprise applications for companies of all sizes.

In fact, thousands of companies worldwide trust in Salesforce.com CRM to manage their sales, marketing,
customer service, and other critical business functions. Salesforce.com reported in 2007 revenues of 748.7
million, an increase of 51% compared to 2006. Fuelling this growth was the addition of more than 11’000 net new
customers.
Salesforce.com offers 4 different options for their SaaS CRM solution. This is a group edition, a professional
edition, an enterprise edition and an unlimited edition. The differences will be shown in the illustration below.




Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                 26.11.2011 / Page 9 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



                                               Source: http://www.salesforce.com/de/products/editions-pricing/feature-comparison/




                                     Illustration 4 - Saleforces.com CRM Solution Services




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                         IT Governance and Compliance Management - Group Assignment (SaaS Case)




3       Business Case
As already mentioned in chapter Software Options Make or Buy Strategy 2.3 each software can be either made or
bought. Due to the fact that a made solution for a CRM would not make sense in reference to development costs
it will not be treated as an option in the following business case. In addition are current CRM systems very flexible
and provide a lot of interface options to other system already as a standard.
The following chapter is structured as the follow:
                  Stakeholder analysis
                  Quantitative cost benefit analysis
                  Qualitative analysis
                  Recommendation of a solution
                  Risk analysis of the recommended solution
                  SLA based on the solution
                  IT Balanced Score Card

3.1       Stakeholders
In the following table the stakeholders which are part of the analysis will be described. The idea is to describe the
business of every single stakeholder group which is influenced by the system.

 Stakeholder                    Description
 Management                     The employee of ALPIQ which decide about the system, the employees who are
                                responsible that the business generates value (e.g. retail or distribution
                                management)
 Retail                         User of the system. This department is mostly impacted by the system itself. They
                                need the System daily in reference to satisfy the customers as much as possible.
 IT                             Employees of ALPIQ who are responsible for the implementation, integration,
                                support and maintenance of the system. If the system is not running properly this
                                stakeholders are responsible to solve the issues as fast as possible.
 CRM / SaaS provider            Provider of the system. The provider of the system is interested in selling as many
                                services as possible to ALPIQ.
 Customer                       Customers of ALPIQ who buy energy services. The customers will be administrated
                                in a CRM system in future.
                                               Table 1 – Stakeholder Analysis

All stakeholders are considered in the Quantitative and Qualitative assessments.

3.2       Quantitative Cost-Benefit Analysis
In the following quantitative cost-benefit analysis are the following options considered:
                Option 1: Proceed with the current CRM system / CRM approach
                Option 2: Buy a CRM system and maintain it internally of ALPIQ
                Option 3: Rent a CRM system with the model SaaS
The approach and the detailed figures how the costs and benefits have been analyzed are described in Appendix
A). The tables below only show a summary of the different identified costs and benefits.

3.2.1      No CRM System
This cost benefit scenario covers the costs and benefits which occur without any new system or processes
around the system. Therefore the current work flow will be retained.

Option 1:             Reason       Year 0         Year 1         Year 2         Year 3     Year 4        Year 5
No CRM                              (CHF)         (CHF)           (CHF)         (CHF)      (CHF)          (CHF)
system
Benefits:
Revenue         Energy sales       28500000      36045000       42585000        48120000   52650000      56700000
Total benefits:                    28500000      36045000       42585000        48120000   52650000      56700000
Costs:
Non-            ---
recurring
Recurring       Retail             12000000      16852500       21105000        26730000   31185000      37260000
                employee
Total costs                        12000000      16852500       21105000        26730000   31185000      37260000
Net sum (Benefit - Costs)          16500000  19192500   21480000   21390000   21465000                  19440000
Yearly NPV calculation             16500000 18454326.9 19859467.5 19776257.4 19845599.1                17973372.8
Total NPV         112409024

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                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



                                Table 2 – Cost Benefit Analysis: Use current CRM for future Purposes


3.2.2    Bought CRM System
This cost benefit scenario covers the costs and benefits which occur with nowadays a standard solution. Software
will be bought from a CRM software supplier and will be implemented in the company. The company pays the
supplier a fee for the license to use the software.

Option 2:          Reason            Year 0          Year 1           Year 2          Year 3           Year 4        Year 5
Traditional                          (CHF)            (CHF)           (CHF)            (CHF)           (CHF)          (CHF)
CRM
system
Benefits:
Revenue        Energy sales         28500000         36045000        50100000        60150000          70200000      81000000
Total benefits:                     28500000         36045000        50100000        60150000          70200000      81000000
Costs:
Non-           IT Project             8250000         8250000                   0               0               0              0
recurring
Recurring      Retail               13200000         18537750        18994500        22963500          28066500      32076000
               employee
               IT employee            1500000         1500000         1500000          1500000          1500000        1500000
               Licenses              162737.8        221829.9         226886.4        270825.6         327318.9       371706.5
               Infrastructure       1571712.7        150000.0         150000.0        150000.0         150000.0      1571712.7
               Migration               300000           300000          300000          300000           300000         300000
Total costs                       24984450.5 28959579.9 21171386.4 25184325.6 30343818.9                            35819419.1
Net sum (Benefit - Costs)           3515549.5 7085420.08 28928613.6 34965674.4 39856181.1                           45180580.9
Yearly NPV calculation              3515549.5 6812903.93 26746129.4 32327731.5 36849279.9                           41771986.7
Total NPV         148023581
                                 Table 3 – Cost Benefit Analysis: Buy CRM and Maintain it Internally


3.2.3    SaaS CRM System (Enterprise Edition Variant)
This cost benefit scenario covers the costs and benefits which occur with a SAAS CRM solution. The application
is installed by the partner company (Saleforces.com) and ALPIQ only rents the rights to use the application.

Option 3:          Reason            Year 0          Year 1           Year 2          Year 3           Year 4        Year 5
SaaS CRM                             (CHF)            (CHF)           (CHF)            (CHF)           (CHF)          (CHF)
system
Benefits:
Revenue        Energy sales         28500000         40050000        50100000        60150000          70200000       81000000
Total benefits:                     28500000         40050000        50100000        60150000          70200000       81000000
Costs:
Non-           IT Project             8250000                  0                0               0               0              0
recurring
Recurring      Retail               13800000 15967743.8 19996987.5                   25259850          29469825       35117550
               emloyee
               IT employee             450000    450000                450000    450000     450000                     450000
               Licenses             157756.05 181754.274            226360.42 284623.465 331230.415                 393754.119
               Infrastructure               0          0                    0          0          0                          0
               Migration               150000    150000                150000    150000     150000                     150000
Total costs                       22807756.1 16749498.0 20823347.9 26144473.5 30401055.4                            36111304.1
Net sum (Benefit - Costs)           5692243.9 23300502.0 29276652.1 34005526.5 39798944.6                           44888695.9
Yearly NPV calculation              5692243.9 22404328.8 27067910.6 31440020.8 36796361.5                           41502122.7
Total NPV         164902988
                                     Table 4 – Cost Benefit Analysis: CRM Operation as a SaaS

The three options in comparison with each other shows that the SaaS solution is the most profitable one for
ALPIQ.



Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                               26.11.2011 / Page 12 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



If option 1 is compared with option 3, it could be concluded that option 1 does not take in account potential future
profits, due to missing of a CRM system. The additional work which is needed to coordinate all the clients
increases exponentially, through that a lot of revenues are lost.
Evidentially better looks option 2 compared to option 3. Only the first year shows a difference between option 2
and 3 because it is assumed that a traditional CRM system has much higher project costs than a SaaS solution.
On SaaS solution avoids a lot of initial costs like infrastructure, licenses, maintenance etc. After the first year the
revenues are quite similar, but the SaaS option has still higher revenues than the traditional CRM option.
The quantitative cost-benefit analysis brings the evidence that the SaaS option might be the best choice for
ALPIQ.

Ranking after cost benefit analysis
   1. SaaS solution (Option 3)
   2. Tradional CRM (Option 2)
   3. No CRM solution (Option 1)

To compare the three options also on another level, than the financial one, in the next section a qualitative
analysis will be done.

3.3     Qualitative Analysis
The qualitative analysis compares intangible elements, which are other than numbers, not comparable. In order to
make an accurate comparison, the determinations were weighted and ranked in a quantitative form. At the end of
the analysis and overall score of all alternatives will be presented.

Ranking: L (Low), M (Middle), H (High)

3.3.1    Option 1: No CRM System
 Qualitative Summary           Description                                                 Stakeholder            Ranking
                                                                                           Impacted
 Benefits
 No changes on                 There are no changes on processes and                               All                L
 processes                     systems needed, cost avoidance on every
                               level
 No project costs              No implementation project is needed                                 IT                 M
 No additional training        No additional training for Retail and IT users                 Retail and IT           L
                               needed
 IT independence               No IT system must be supported and                                  IT                 L
                               maintenances
 Costs:
 Organizational overhead       Trough fast increase of clients and additional                    Retail               H
                               sales a bureaucratic overhead is the result
                               when no CRM is needed
                                      Table 5 – Qualitative Analysis for Option “No CRM”


3.3.2    Option 2: Traditional CRM System
 Qualitative Summary           Description                                                 Stakeholder            Ranking
                                                                                           Impacted
 Benefits
 Client                        More client satisfaction trough better                            Clients              M
 satisfaction                  treatment. The results are more clients and
                               higher revenues
 Employee satisfaction         The employees are happier and more                                Retail               M
                               motivated through easier processes and
                               additional functions (e.g. analysis functions).
 Single information base       A lot of old databases and Excel sheets can                    Retail and IT           M
                               be destroyed. The clients are added and
                               administrated on one single platform.
                               For ALPIQ’s IT is it easier to administrate one
                               platform than a lot of Excels and Access
                               databases
 More customization            With a traditional CRM solution, the system                       Retail               L
 possibilities                 can be exactly customized to the needs of the
                               Retail employees.
 Costs:
 Interdependence to            With a decision for an IT system, the customer                 CRM provider            M
 provider of SaaS solution     is interdependent with the software
                               developer/provider

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 High IT project costs         With this solution, the IT project costs are                      IT and Retail               H
                               huge, because the system must be
                               implemented in the actual IT landscape
 Additional IT resources       With this solution a lot of additional resources                         IT                   M
 needed                        are needed for support, maintenance and
                               infrastructure
                                   Table 6 – Qualitative Analysis for Option “Traditional CRM”


3.3.3    Option 3: SaaS CRM System
 Qualitative Summary            Description                                               Stakeholder                  Ranking
                                                                                          Impacted
 Benefits
 Client                         More client satisfaction trough better                              Clients                  M
 satisfaction                   treatment. The results are more customer and
                                higher revenues
 Employee satisfaction          The employees are happier and more                                  Retail                   M
                                motivated through easier processes and
                                additional functions (e.g. analysis functions).
 Single information base        A lot of old databases and Excel sheets can                      Retail and IT               M
                                be destroyed. The clients are added and
                                administrated on one single platform.
                                For ALPIQ’s IT is it easier to administrate one
                                platform than a lot of Excel sheets and Access
                                databases
 Overall costs                  The costs for an SAAS solution is much                           Management                  H
                                deeper than for a traditional CRM solution
 Costs:
 High Interdependence           With an SAAS solution, the interdependence
                                to provider of SaaS solution is much higher                      SAAS provider               H
                                than with a traditional CRM solution. With the
                                outsourcing of support, maintenance and
                                development of the CRM system, the cost
                                grows.
 Coordination costs             Because a lot of processes are outsourced, a                  IT / Retail /                  M
                                lot of coordination between ALPIQ and                     Management / SAAS
                                Salesfoce.com is needed. The costs are                          provider
                                coordination costs.
                                     Table 7 – Qualitative Analysis for Option “SaaS CRM”


3.3.4    Summary of Qualitative Cost-Benefit Analysis
In the next table a short summary about the above mentioned qualitative cost benefit analysis follow:

 Summary of qualitative cost-benefit analysis                            Option 1                Option 2            Option 3

 Summary of Total Benefits                                                    L                    L-M                   H

 Summary of Total Costs                                                       H                     M                  M-H

 Overall qualitative value of each alternative                                L                    M -H                  H
                                    Table 8 – Summary of Qualitative Cost Benefit Analysis

Out of the qualitative cost benefit analysis it could be mentioned that option 1 has on one hand a lot of benefits,
but compared to the other two options, option 1 has no chance. Option 1 also has a clear disadvantage, when the
costs are compared with the benefits. So it could concluded, that Option 1 is the worst option out of this three in
the qualitative cost analysis.

With the other two options, the benefits on Option 3 are much higher than on Option 2. On the other hand, the
total costs are also higher on Option 3 compared to Option 2. All in all it is really hard to decide, at the end we
decided on Option 3 because the Benefits are all in all much higher than in option 2 and the costs are not that
much higher in option 3.

3.4     CRM Option Recommendation
As shown in the previous sub chapter option 3 has the best rating in the quantitative as well as the qualitative
analysis. The suggestion for ALIPQ is to proceed with option 3 to implement a CRM as SaaS. Due to the already
executed feasibility study of the SaaS CRM from Salesforce.com the suggestion of the project team is to use this
system as for a future CRM system of ALPIQ.

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The following chapters of the business case will be focused on option 3. The other options will no longer be taken
in account.

3.5     Risk Assessment of a SaaS Solution
In SaaS solutions different risks are involved, which do not occur in other solutions like traditional make or buy. In
make or buy solutions are similar risks involved as in an outsourcing project. Due to that fact the following risk
assessment has been elaborated to uncover such risks. The risk analysis does not take into account ALPIQ
internal organization problems. This risk analysis focuses only on the relationship between Salseforce.com and
ALPIQ.

 Risk                                                                                     Probability    Severity
 Third Party Risks (External)
 T1          The third party company Saleforces.com has access to all customer
                                                                                          Frequent      Critical
              data of ALPIQ
 T2
             Saleforces.com does not keep ALPIQ’s data confidentially                    Unlikely      Critical

 T3          ALPIQ has no idea what kind of employees from Salceforce.com
              has access to the CRM data of ALPIQ and what they do on the                 Moderate      Negligible
              database
 T4          Bankruptcy of the Salesfore.com company (what will happen with
                                                                                          Unlikely      Catastrophic
              ALPIQ’s data and the CRM application)
 T5          ALPIQ is online one of dozens of customer and not the most
              important one. If things are not running well it will takes a lot of time   Unlikely      Critical
              to solve it
 T6          Main issues are not reported to ALPIQ like successful hacker
                                                                                          Moderate      Marginal
              attacks or data loss
 T7          Salseforce.com conceals important information instead of provide it
                                                                                          Frequent      Critical
              to ALPIQ
 T8          Saleforces.com does not have a disaster scenario for all imaginable
                                                                                          Remote        Catastrophic
              catastrophes
 T9          Salseforce.com will be overtaken by another company which is no
                                                                                          Unlikely      Negligible
              longer to provide the CRM as SaaS
 T10         Salesforce.com highly raises their prices                                   Unlikely      Critical
 T11         ALPIQ is dependent on Salesforce.com after the service is
                                                                                          Moderate      Negligible
              reinsourcing to ALPIQ
 System / Connection Risks (External / Internal)
 S1          The CRM solution might contain security issues or vulnerabilities
                                                                                          Occasional     Critical
              which can be used by hackers to get access to the system data
 S2          Interruption of the data connection between Salseforce.com and the
                                                                                          Frequent       Marginal
              different locations of ALPIQ
 S3          The system does not deliver the expected services                           Occasional     Critical
 S4          There are not as many configuration possibilities as ALPIQ wishes           Frequent       Negligible
 S5          The system does not deliver the expected performance                        Occasional     Critical
 S6          The system is frequently not available for longer periods                   Frequent       Marginal
 S7          The system cannot connect new interfaces to other systems in
                                                                                          Unlikely       Critical
              future
 Law Related Risks
 L1          Laws are going to change and current procedures or processes are
                                                                                          Remote         Marginal
              no longer possible (cross border)
 L2          Salesforce.com is an American company, ALPIQ is Swiss, the law is
                                                                                          Frequent       Critical
              maybe different
 L3          Mover/Joiner/Leaver process cannot be complied (e.g. former
                                                                                          Moderate       Critical
              employees have still access to customer data)
 Employee Risks (Internal)
 E1          Employees within the ALPIQ are against the new CRM system and
                                                                                          Occasional     Marginal
              work against the project and the future operation of it
 Fulfillment Risks
 F1          The Saleforces.com company is not going to fulfill the contract or the      Remote         Critical

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                      SLA
 Collaborative Issues
 C1                  Communication between Saleforces.com and ALPIQ does not work                       Occasional        Marginal
 C2                  Interest conflict between Salseforce.com and ALPIQ pops up                         Remote            Critical
                                                    Table 9 – Saleforces.com SaaS Risks

The next illustration identifies risks from the above mentioned table (Table 9 – Saleforces.com SaaS Risks) which
are presented in a risk profile matrix according to their rating in reference to probability and severity. The risks in
the red present the risks which should get most attention by ALPIQ first. The risks in the yellow area are critical
risks with a probability of occurrence which is moderate but need management attention and mitigation strategies
/ mitigation activities as well. The green area shows the risks which are unlikely to happen but need to be tracked
and should be covered by contracts as well. The risks in the green area are unlikely to happen but might have a
huge impact. Let’s assume that Saleforces.com gets bankrupted. The probability is currently unlikely but the
impact on such an event could be critical of even a catastrophe. If the green area is not taken in account in the
SLA or other contract documents between Saleforces.com and ALPIQ such risk can have a huge impact once
they occur. Therefore this risks need to be taken in account as well. Such a risk analysis needs to be updated
frequently and the risks have to be reassessed. If no risks pop up which have not covered or if the risk probability
and severity is going to change new contracts need to be agreed on.


                                          S4                      S2,S6                   T1,T7,L2
                      Frequent

                                        T3,T11                       T6                       L3
                      Moderate

                                                                  E1,C1                   S1,S3,S5
                      Occasional
        Probability




                                                                    L1                      F1,C2                     T8
                       Remote

                                          T9                                            T2,T5,T10,S7                  T4
                       Unlikely

                        Almost
                      Impossible
                                       Negligible                Marginal                   Critical           Catastrophic
                                                                     Severity
                                         Illustration 5 - Risk Profile Matrix of the SaaS CRM Solution

As already mentioned, it is very important to reassess the risk situation after frequent time slots or major events.
Therefore, after first actions have taken place, it is necessary to reassess the current risk situation again and to
mitigate the high probability and high severity risks again. Such mitigation actions might have an impact on the
current contractual agreements.

3.6    Risk Mitigate Recommendations of a SaaS Option
A lot risks which are mentioned in the sub chapter 3.5 Risk Assessment of a SaaS Solution can be avoided by an
appropriate SLA between the service provider (Salesforce.com) and customer (ALPIQ).
The Service Level Agreement (SLA) has evolved to become a useful tool which governs both service
expectations and the consequences of failure to meet these agreed upon metrics. The next chapter deals with
this issue of SLA and how to measure the agreed performance indicators (PI’s). A SLA is normally only based on
system or service performances and do not control or provide suggestions about other issues which could occur
during a partnership like bankruptcy of the provider ( risk T4) or interest conflicts (risk C2). Those risks need to be
taken in account and if necessary mitigated and treated appropriate by other instruments.

The following risks from the risk analysis from the risk table Table 9 – Saleforces.com SaaS Risks can be covered
by the appropriate elaborated SLA which will be presented in chapter 4.1 Service Level Agreement of SaaS
Option.

                         T5, T9, T10, S1, S2, S3, S4, S5, S6, S7, L2, L3, F1

Risks which can not be mitigated by a SLA should be handled with the following strategy / tactic. Even though the
green area risks are almost impossible or do not have high impacts, the company should take them although in
account.

 Risk Number                Risk Mitigation / Risk Elimination           What Needs to be Done to Avoid or Mitigate the
                                                                         Risk
 T6/ T7 / T8/               Partnership Service Contract                 These risks can be avoided by an appropriate contract

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 T11 / L1/ C1/                                                   between ALPIQ and Saleforces.com. The contract
 C2                                                              should contain as well instructions about a potential
                                                                 reinsourcing after the contract ends.
 T1 / T2/ T3        BSI Grundschutz                              Salsesforce.com employees need to sign and agree on
                    ALPIQ Directives                             the same data protection and directives as ALPIQ’s
                                                                 employees.
 T4                 Escrow Agreement                             To avoid a service unavailability in the case that
                                                                 Salsesforce.com runs into a bankruptcy, the application
                                                                 code will be deposited by an escrow agent. In case of a
                                                                 bankruptcy has ALPIQ the possibility to access the
                                                                 current application code of the CRM system.
 E1                 Change Management                            ALPIQ needs to set up an internal change
                                                                 management which deals with the changes of the
                                                                 company. If agitations are present in the company a
                                                                 change management need to take up those concerns
                                                                 and need to mitigate them.
                          Table 10 – Risk Mitigation / Risk Elimination which are not covered in the SLA




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4       Service Level Agreement and IT Balanced Score Card of the SaaS Option
This chapter describes the Service Level Agreement SLA between ALPIQ and Saleforces.com. Based on the SLA
an IT Balanced Score Card for the CRM service has been elaborated to track the performance of the SLA based
on performance indicators (PI) and other important management figures which are impacted by the CRM system.

4.1      Service Level Agreement of SaaS Option
The following SLA between ALPIQ and Salesforce.com defines the emergence of the Software as a Service
(SaaS) model which is necessary for relationships between the service provider (Saleforces.com) and the
consumer (ALPIQ) with respect to service availability, service performance and response times.

4.1.1      Introduction
            Parties of the SLA
            This is document describes an SLA between ALPIQ an energy provider company and
            Salsesforce.com a SaaS supplier of a CRM system.


            Service Description
            SLA of Salesforce.com CRM SaaS
                                                                th
            ALPIQ a Swiss energy provider decided on March 24 , 2009 to sign the contract with Salsesforce.com
            a CRM provider with the SaaS model for the next 5 years. With the signed contract ALPIQ made a
            strategic step towards a SaaS CRM with is supplied by Salsesforce.com.
            Salsesforce.com offers a CRM system based on the SaaS model for ALPIQ which reduces operation
            and maintenance costs. ALPIQ is able to decide weather they want to use function which are
            implemented for other customers to use as well. Therefore the CRM system provides the opportunity
            to use common developed functionalities.


            Scope of the Agreement and Service
            This SLA document covers only the CRM SaaS service which is provided by Salesforce.com and used
            by ALPIQ. All other services are excluded from this SLA.
            This SLA has four main scope areas:
                  Salesforce.com environment up to the internet note
                  Salesforce.com internet provider
                  ALPIQ’s internet provider
                  ALPIQ’s environment


            Responsibilities of each Participant
            Salesforce.com is responsible for the operation of the infrastructure, including hardware and software.
            Salesforce.com is in charge of keeping the infrastructure including all Salesforce.com network
            components up to date. Salsesforce.com responsibility of the service ends at the internet service
            provider note.

            ALPIQ takes over the responsibility of the service at the company internet connection entry point and
            is responsible for all infrastructures after the entry note of the internet provider.

            The service in between the end note of Salesforce.com and the entry note of ALPIQ lays in the
            responsibilities of the server providers of Salesforce.com and ALPIQ. Each party is responsible to
            agree on SLA with their own service providers. The SLAs with the internet service provider need
            provide an equal of even better availability than the SLA between Salesforce.com and ALPIQ to
            guarantee the agreed server availability and breakdown definitions.

            In addition is Salesforce.com responsible to back up ALPIQ’s CRM data according the agreed backup
            scenario defined in this SLA. Salesforce.com does not take over the responsibility of ALPIQ’s data
            quality based on the information which has been entered by ALPIQ’s employees. Salesforce.com is
            responsible for a secure and appropriate data management and is not permitted at any time to provide
            ALPIQ data to a third party.
            Both parties are obliged to bring up potential SLA improvement which will be clarified in a SLA update
            after the agreement of both parties.

4.1.2      Service Hours / Support Hours
            Working Hours and Non-Working Hours
            The CRM service which is provided by Salsesforce.com is 365 day and 24 hours available. This does
            not include the downtime which is defined under availability and the in advance agreed maintenance
            windows. All other time of nonuse which is not agreed on between both parties falls under denial of

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           service.


           Support Hours and Non-Support Hours
           Help desk from Salesforces.com needs to             On the following bank holidays is no help desk
           be provided for the following weekdays and          provided:
           time slots:                                               January 1
                  Monday - Friday, 7:00 AM-5:00 PM                  January 2
                  Saturday, No Service                              January 3
                  Sunday, No Service                                Ester Friday, Monday
                                                                     Ascension day
                                                                     August 1
                                                                     December 24
                                                                     December 25
                                                                     December 25
                                                                     December 31

4.1.3    Performance Requirements
           Availability
           The provided CRM service availability is 99.5%. This 99.5% availability excludes maintain windows
           which have been advised in advance and both parties have agreed on. In addition are the windows for
           defined release updates as well not part of the availability. If the service is not available without a
           previous notification of ALPIQ and their acceptance of the downtime, the time will be added to the
           unavailability of the service.
           The maximal unavailability of the service in a row is 2.5 hours. After three hours the service needs to
           be available in its full functional scope at least for a week until the next unexpected breakdown occurs.

           Maintenance Windows:
                Accepted maintenance windows are excluded by this rule
                Maintenance windows must be placed outside of the defined work hours.
                There is no limitations of the amount of maintenance windows per year

           Release Update:
                Announced and agreed release updates belong not to the unavailability time of service
                Release updates need to be installed outside of the defined working hours
                Interruptions which are caused by release updates and occur after such an update fall under
                 the availability regulations.

           BSI Grundschutz / ALPIQ Directives:
                Salsesforce.com is obliged to keep up to date according to the BSI Grundschutz
                 recommendations as well as ALPIQ internal directives which have an impact on IT. ALPIQ is in
                 charge to provide the new directives on a monthly basis which have an impact on the
                 relationship with Salesforce.com to the Salesforce.com Account Manager. The Salesforce.com
                 Account Manager is responsible for the enforcement of those directives within Salesforce.com.

           Escrow Agreement:
                Salesforce.com is obliged to send the source code of the CRM system ever other month to the
                 Escrow Agent.

           Backup:
                The CRM data which are stored on Salesforce.com database are stored twice a day. The
                 backup starts everyday at 01:00am. At the same day a second backup will be recorded at
                 12:30pm. Which backup method Salesforce.com pursues is Salesforce.com owns decision.
                 The requirement is to restore all executed transactions of the last two years.
                Restore works of backup falls under service availability measurements as long as nothing else
                 has been agreed on in advance of the restoring activity
                The backup process does not impact the performance as well as the availability of the service.

           Disaster Recovery Scenario:
                 Disaster recovery scenarios don’t have an impact of the availability
                 If an interruption is announced in advanced and agreed from both parties, the downtime will
                  not be part of the availability calculation.


           Denial of Service / Downtime
           In a case of denial of service a ticket needs to be opened from the user who diagnoses the issue. This
           ticket is afterwards treated according the defined priorities. If more than 10 users report the same
           issue, the ticket changes it status to high priority and a case manager from Salsesforce.com and from

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           ALPIQ to identify where the current problem has it sources.

           Downtimes which occur based on the responsibility of Slasesforce.com need to be reported in a detail
           report to ALIPQ with the reason why the system was unavailable and future mitigation activities to
           avoid similar future issues.

4.1.4    Issue Priority Definition / Performance
         The following response and fix times are provided. The priorities of the tickets are defined according the
         service function importance. This is an additional list which will be updated and adjusted according the
         needs of ALPIQ. Those priorities are currently not definable due to the lack of information. As soon as
         someone calls the CRM support a ticket will be opened and a priority is added to the ticket.

           Priority    Description                                           Response time
           Critical    Critical infrastructure components or customer        Immediate resolver group member
                       service down or degraded; significantly               needs to investigate the problem and
                       operational impact. If more than 15 ALPIQ             takes action. 24 hour trouble shooting
                       employees are impacted a ticket need to be            necessary. Tickets need to be solved
                       treated as critical.                                  after 2 days
           Urgent      Non-Critical Network components or function           Problem needs to be looked at after
                       which does not work as specified but a work           three hour during normal business hours.
                       around is available, Non-critical restricted          Trouble shooting during normal business
                       function and some operational impact.                 hours within 3 days.
           Low         Network components or less used functions             As soon as a resolver group member
                       but work-around possible with no operational          has time to investigate the issue. First
                       impact, non-critical, deferred maintenance            status update to ticker opener after 24
                       acceptable.                                           hours. Low priority tickets need to be
                                                                             solved after five business days.


           Performance
           The performance of Salesforce.com CRM service is measured according the balanced score card
           which is presented after this SLA. The performances are reported as well to the key account executive
           of Salseforce.com.

           Transaction performances, scalability etc. of the service, need to fulfill the requirements according the
           non functional requirements list (not part of this SLA).

4.1.5    Release Update
           Release On Productive System
           New release updates are installed in the productive environment after an announcement period of at
           least 4 weeks and APLIQ confirmed the implementation date and time as well as the provided time
           frame of unavailability. Release updates never take place during the defined working hours. ALPIQ is
           responsible to provide a defined amount of dedicated resources for a first functional test as soon as
           the new release has been rolled out.

4.1.6    Test Environment
         The CRM test environment is covered by another SLA which is customized for test purposes and
         therefore none of the paragraphs which are mentioned in this SLA apply for the test environment.

4.1.7    Penalties
           Monthly Measurement of Violations and their Penalties
           Number of Violations Penalties
                1>5                   30% reduction of the SaaS fee
                5>10                  30% reduction of the SaaS fee and in addition a penalty of USD
                                        3’000.-. In addition is Salsesforce.com obliged to provide a corrective
                                        action plan which takes place after 3 weeks
                10>                   No SaaS fee for the service with a penalty of USD 10’000.-. In
                                        addition is a corrective action plan necessary which takes place
                                        within 3 weeks on a weekly reporting to ALPIQ.

         If Salsesforce.com provides a quarter year without violation ALPIQ is going to pay an extra premium of
         USD 2’000.-.




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4.2     CRM IT Balanced Score Card of a SaaS Solution
An IT balanced score card consists of four views. The views are learning and growth, internal business process,
customer and financial. Between the different views of the IT balanced score relations exist. Each view consists of
objectives, measurements, targets and initiatives to achieve the targets. Those objectives are based on the CRM
system with the service model SaaS of the ALPIQ Company.




                               Illustration 6 - Overview Balanced Score Card of SaaS CRM Solution


4.2.1    CRM IT Balanced Score Card
Following the IT Balanced Score Card objectives, measurements, targets und initiatives in reference to the
Salesforce.com CRM system of Salesforce.com are presented.
 Objective                   Measurement           Targets                              Initiatives
 Financial
 F1       Total costs         Additional costs      No additional costs apart of       Tracking of issues
           of service           apart the              the normal agreed service          Issues which not covered by the
                                normal service         fee                                 agreed contract / SLA need to be
                                fee                                                        avoided in future
                                                                                          Amendments on basis of the
                                                                                           contract
 F2       Stabilization       Costs of the          The target is to keep the          Increasing of process efficiency
           of service           service fee            costs over the next 5 years         between Salesforce.com and
           costs                                       lower than USD 3000.- per           ALPIQ
                                                       month.                             Reduction of Salseforce.com
                                                      If changes in the scope of          support by additional training of
                                                       the service occur this target       the CRM application
                                                       need to be amended                 Creating of a knowledge group
                                                                                           within ALPIQ for CRM questions
                                                                                          Maturity of service
 F3       Standardizati       Reduce amount         Reduce the amount of               Workshop about a reduction of the
           on of                of reports             reports by 30%                      current reports
           reporting                                                                      Introduction of slightly amended
                                                                                           reports to cover different reports
                                                                                           by one report
 Customer
 C1       Increase of         Appropriate           Lower than 2 seconds               Performance measuring and
           response time        response time                                              appropriate improvements
                                of the system                                             Code optimization to accelerate
                                                                                           transactions
 C2       Complaint           Faster solution       Time needed to resolve             Accurate ticket handling process
           reduction            in cases of            tickets                            Improvements on ticket handling
                                complaints            Inform system user in               process
                                                       advance about possible             Communication management

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                                                       issues                           about current issues and possible
                                                                                        walk around
 C3       Customer             Survey               Customer satisfaction higher    Service quality improvements
           satisfaction          feedbacks             than 80%                        Complain tracking and future
                                Amount of            Less than 2.0% complains         activities to prevent the same
                                 complains             about ticket handling            complains
                                                       process                         User CRM training
 C4       Issue                Amount of            The amount of escalations       Appropriate issue tracking
           escalation            escalations per       muss be less than 0.2 per       Close cooperation between
                                 month                 month                            Salseforce.com and ALPIQ.
 Internal Business Process
 I1       Availability of      Availability of      Availability of 99.5%           Frequently risk analysis
           the CRM               the system                                            Frequent system hardening
           system                                                                       exercises
                                                                                       Monitoring system of the CRM
                                                                                       Increase awareness of CRM
                                                                                        system by business- and IT
                                                                                        management
 I2       Communicati          Effectiveness of     Gap analysis of what            Improvement of communication
           on                    communication         employees know and what          media
           management            management            employees should know           Communication mix -> What will be
                                                      Request of employees             communicate how
                                                       know-how about the last         Narrow, more precise
                                                       communications                   communication
                                                      Less than 10% hits              Training of employees who write
                                                                                        communications
 I3       Issue pattern        Identification of    Gap analysis what kind of       Allergization of support people
           recognition           issue patterns        issues pop up and which         Analysis of all issues and
                                                       could have been recognized       appropriate potential follow-up
                                                       in advance                       issues
                                                      Less than 10% hits
 I4       User manual          Changes of the       Less than 2% changes on         Replay of the issues and
           amendments            manual which          the manual to avoid issues       identification of further user
           / changes             could have                                             improvements to avoid certain
                                 avoided of the                                         issues
                                 issue
 I5       Customer             Availability of      Account Manager need to         Every other week a meeting with
           oriented              Salesforce.com        be available on the second       the Salesforce.com Account
           processes             Account               day of request                   Manager to discuss current topics
                                 Manager
 I6       Enforce IT           Number of            A maximum of two                Restrict the number of persons
           security              successful            successful attacks per year      with access to a particular system
                                 hacker attacks       Reduce the number of             to the minimum
                                 per year              access-rights per employee      Establish a well-defined
                                Overall number        by 20% until the end of 2010     joiner/mover/leaver process
                                 of system                                             Maintain all system rights in a
                                 accesses per                                           centralized user access
                                 employee                                               system/database
  Learning and Growth
 L1       Issue                  Occurrence of        Less than 5% issues           Analysis of occurred issues and
           prevention              same issue            which could have been          identification of avoidance by
                                                         avoided by an                  previous taken arrangements
                                                         appropriate prevention        Issues meetings to clarify the
                                                         strategy                       source of the issues
                                                                                       Implementation of a Knowledge
                                                                                        database
 L2       Friendliness of        Survey               90% satisfaction feedback     Increase of Salesforce.com internal
           support                  feedbacks            about Salesforce.com           communication
           employees              Amount of             support employees             Training of support employees
                                   complains                                           Issue tracking process
                                                                                        improvements within the
                                                                                        organization of Salesforce.com
 L3       Competency of          Survey               70% of positive feedback      Education of support / resolver
           support                  feedbacks            based on the surveys           group employees
           employees              Amount of            Detailed research on          Optimization of support employee
                                   complains             complaints                     hiring process
 L4       Improvement of         Increased speed      Time needed from the          Improvement of processes
           issue                   to solve issues       ticket issuance to the        Education of support / resolver
           clarification                                 resolution                     group employees
 L5       Familiarization        Time to get up       Time which is needed until    Efficient on job training for new
           of new support          to speed              a new support employee is      employees


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           employees                                               able to work autonomous                   Documentation of top issues for fast
                                                                                                              resolution
                                                                                                             Three month parallel work on the
                                                                                                              job with a senior support employee
                                        Table 11 – IT Balanced Score Card for Salesforce.com CRM


4.2.2    CRM IT Balanced Score Card Map
In the next illustration are the different objectives on the different perspectives linked to each other. Therefore
each objective supports another objective either in the same perspective or in another perspective. The financial
perspectives are the main perspectives. Therefore all objectives are connected over other objectives or directly
with at least one financial objective.

                                                 Share Value

 Financial                                                                               Profits
                      Shareholder                                                                                         IT System
 Perspective
                      Satisfaction                                                                                    Maintenance Costs




                                             Complaints                            Customer
                                                                                  Satisfaction                    Customer Retention
 Customer
 Perspective           Business Customers
                                                           Customer Data                    Customer Relation
                                                              Quality


                                                                                                                Environment
                    Customer Profitability                                                                       Protection                 CRM System
                                                                 Warranty Calls
 Internal
 Perspective
                                                                                  Customer Oriented
                                      After Sales Phase                                                                       IT Security
                                                                                     Processes


                                                                                                       CRM System
                                                           Customer                                     Knowledge
 Learning &                                               Management
 Growth             Customer Knowledge
 Perspective                                                                  Customer Satisfaction




                       Illustration 7 - Strategic IT Balanced Score Card Map of Salesforce.com CRM Solution




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5    Conclusion
The elaborated document about a new implementation of an ALIPQ CRM system shows the benefits of such a
new company wide application / service. The recommendation of the business case team is to implement a
common standard CRM system within ALPIQ. This need is in addition supported by the persuaded strategy of
ALPIQ’s management which foresees a growth strategy in all European regions.
As the quantitative analysis and the qualitative analysis brought up, the CRM option with a SaaS solution
emphasized as the best and most profitable choice for ALPIQ.
Salsesforce.com should be taken in account as the preferred partner in reference to a SaaS CRM system. If the
ALPIQ management decides to pursue a SaaS solution several activities are necessary before such a contract
can be signed. To use a CRM as a SaaS solution different legal questions and contractual exercises need to be
executed in advance. As soon as all legal questions are clarified and both agree on the compiled legal
paragraphs the established SLA in the business case must be verified and extended / amended if necessary.
Such extensions / amendments on the SLA might have impacts as well on the IT Balanced Score Card which
need to be aligned with the SLA afterwards.

This business case uncovers the benefits and cost saving expenses which might be possible to cut down with
Salsesforce.com CRM solution and which increases the efficiency of ALPIQ.
The following approach is suggested if ALPIQ’s management decides to implement the SaaS option from
Salsesforce.com
    1. Get together with Salsesforce.com for legal clarifications of such a solution
    2. Present the requirement list (not part of this business case) / non functional requirement list (not part of
         this business case) and the proposal of the SLA
    3. Asking for a quote based on the requirement list / non function requirements and the proposed SLA for
         the Enterprise Model version
    4. Speak about exclusions / extensions and changes of the SLA and agreed on a final version
    5. Negotiate with Salsesforce.com about the methods how the performance is measured -> BSC
    6. Agree on the performance measurements
Sign the contract




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Directories / Glossary
In the following chapter the illustration and table directory will be summarized. In addition a glossary about
mentioned words in this document are listed.

Illustration Directory
Illustration 1 – ALPIQ Subsidiaires in Europe ................................................................................................................................................................. 7
Illustration 2 – ALPIQ’s Strategic Pillars ......................................................................................................................................................................... 7
Illustration 3 – ALPIQ’s Strategic Distribution Pillar ........................................................................................................................................................ 8
Illustration 4 - Saleforces.com CRM Solution Services ................................................................................................................................................ 10
Illustration 5 - Risk Profile Matrix of the SaaS CRM Solution ....................................................................................................................................... 16
Illustration 6 - Overview Balanced Score Card of Saas CRM Solution ........................................................................................................................ 21
Illustration 7 - Strategic IT Balanced Score Card Map of Salesforce.com CRM Solution ............................................................................................ 23


Table Directory
Table 1 – Stakeholder Analysis .................................................................................................................................................................................... 11
Table 2 – Cost Benefit Analysis: Use current CRM for future Purposes ...................................................................................................................... 12
Table 3 – Cost Benefit Analysis: Buy CRM and Maintain it Internally .......................................................................................................................... 12
Table 4 – Cost Benefit Analysis: CRM Operation as a SaaS ....................................................................................................................................... 12
Table 5 – Qualitative Analysis for Option “No CRM” .................................................................................................................................................... 13
Table 6 – Qualitative Analysis for Option “Traditional CRM” ........................................................................................................................................ 14
Table 7 – Qualitative Analysis for Option “SaaS CRM” ................................................................................................................................................ 14
Table 8 – Summary of Qualitative Cost Benefit Analysis ............................................................................................................................................. 14
Table 9 – Saleforces.com SaaS Risks ......................................................................................................................................................................... 16
Table 10 – Risk Mitigation / Risk Elimination which are not covered in the SLA ......................................................................................................... 17
Table 11 – IT Balanced Score Card for Salesforce.com CRM ..................................................................................................................................... 23
Table 12 – Glossary ...................................................................................................................................................................................................... 25
Table 13 – Basic Revenues and Sale Forecast Calculations....................................................................................................................................... 26
Table 14 – Revenues and Sales Forecast for the Option “No CRM” ........................................................................................................................... 26
Table 15 – Revenues and Sales Forecast for the Option “Traditional CRM” ............................................................................................................... 26
Table 16 – Revenues and Sales Forecast for the Option “SaaS CRM” ....................................................................................................................... 27
Table 17 – Basic Calculations for the Infrastructure Investment Costs........................................................................................................................ 27
Table 18 – Infrastructure Investment Costs for the Option “No CRM” ......................................................................................................................... 27
Table 19 – Infrastructure Investment Costs for the Option “Traditional CRM” ............................................................................................................. 27
Table 20 – Infrastructure Investment Costs for the Option “SaaS CRM” ..................................................................................................................... 28
Table 21 – Resource Estimation for Project ................................................................................................................................................................. 28
Table 22 – Basic Calculation for the Project Effort ....................................................................................................................................................... 28
Table 23 – Factor Cost Estimation for a SaaS Project ................................................................................................................................................. 29
Table 24 – Project Costs Estimation for the Option “No CRM” .................................................................................................................................... 29
Table 25 – Project Costs Estimation for the Option “Traditional CRM” ........................................................................................................................ 29
Table 26 – Project Costs Estimation for the Option “SaaS CRM” ................................................................................................................................ 29
Table 27 – Basic Calculation for the Employee Costs ................................................................................................................................................. 30
Table 28 – Employee Cost Estimation for the Option “No CRM” ................................................................................................................................. 30
Table 29 – Employee Cost Estimation for the Option “Traditional CRM” ..................................................................................................................... 31
Table 30 – Employee Cost Estimation for the Option “SaaS CRM” ............................................................................................................................. 31
Table 31 – Yearly License Costs for the Option “No CRM” .......................................................................................................................................... 32
Table 32 – Yearly License Costs for the Option “Traditional CRM” ............................................................................................................................. 32
Table 33 – Yearly License Costs for the Option “SaaS CRM” ..................................................................................................................................... 32
Table 34 – Migration Costs for the Option “No CRM” .................................................................................................................................................. 32
Table 35 – Migration Costs for the Option “Traditional CRM” ...................................................................................................................................... 33
Table 36 – Migration Costs for the Option “SaaS CRM” .............................................................................................................................................. 33


Glossary
  ALPIQ                                          Energy and Energy service company
  BSC                                            Balance Score Card
  CRM                                            Customer Relationship Management
  Escrow Agreement                               Source code deposit in case of a dispute between contract partners or bankruptcy of
                                                 the software developer company
  NPV                                            Net present value
  PI                                             Performance Indicator
  ROI                                            Return on Invest
  SaaS                                           Software as a Service
  Salesforce.com                                 Provider of a SaaS CRM system
  SLA                                            Service Level Agreement
                                                                                              Table 12 – Glossary




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A) Appendix
This appendix describes how the costs for the quantitative analysis in chapter Quantitative Cost-Benefit Analysis
3.2 have been gathered and what kind of different costs are involved.

A.A) General Calculations over the whole Lifecycle
In this part it is mentioned how much ALPIQ revenues can be, when they achieve their target. In 2009 the retail
group achieved revenues of 30 Mio CHF by an energy distribution of 40 TWh. This results in revenues of 0.75
CHF per MWh. It is extinguished that this revenue factor can be hold during the next years. Therefore the
calculation for the next upcoming years will be calculated with the factor of 0.75 CHF / MWh.
The following table shows how much ALPIQ can earn at their maximum. The tables which follow afterwards, the
revenues for the three options are calculated. The options are, “No CRM”, “Traditional CRM” and a “SaaS CRM”.

A.A.A) Basic Calculations for Revenues and Sale Forecast:
Basic calculations:

                                          YEAR 0          YEAR 1        YEAR 2         YEAR 3          YEAR 4       YEAR 5
Energy Sales (in TWh)                    40000000        53400000      66800000       80200000        93600000     108000000
Revenues (in Mio CHF.)                   30000000        40050000      50100000       60150000        70200000     81000000
Revenue per CHF / MWh                       0.75            0.75           0.75          0.75            0.75          0.75
                                   Table 13 – Basic Revenues and Sale Forecast Calculations

A.A.B) Revenues and Sale Forecast for the Option “No CRM”:
There exists no company wide CRM solution at ALPIQ today. A lot of small Excel and Access Tools are available
to support the customer needs. With the aspired aim to sell 108 TWh within the next five years, it is no longer
possible for the Retail department to reach this goal without a proper CRM solution. If no CRM solution will be
implemented, it is no longer possible for ALPIQ to keep the revenues of 0.75 CHF / MWH. It is estimated that the
coordination costs will increase per year of 5%. This is because it is planned that every year more employees are
working for ALPIQ and in addition the coordination costs will increase massively.

Yearly cost estimation:                   No CRM

                                          YEAR 0         YEAR 1         YEAR 2         YEAR 3          YEAR 4        YEAR 5
Coordination costs (no CRM)               1500000        4005000        7515000       12030000        17550000      24300000
Coordination costs (no CRM) (%)             0.05             0.1           0.15           0.2            0.25          0.3
Total Revenues:                          28500000        36045000      42585000       48120000        52650000      56700000
                                Table 14 – Revenues and Sales Forecast for the Option “No CRM”

A.A.C) Revenues and Sale Forecast for the Option “Traditional CRM”:
With this option the same problems are addressed which are already mentioned on the previous option. The main
differences are that the estimation indicates that after 2 years a CRM system is successfully implemented and
trough that the coordination costs sink back to a normal level.

Yearly cost estimation:                 Traditional CRM

                                          YEAR 0         YEAR 1          YEAR 2        YEAR 3          YEAR 4        YEAR 5
Coordination costs (no CRM)               1500000        4005000           0             0               0             0
Coordination costs (no CRM) (%)             0.05           0.1             0             0               0             0
Total Revenues:                          28500000        36045000      50100000       60150000        70200000      81000000
                            Table 15 – Revenues and Sales Forecast for the Option “Traditional CRM”

A.A.D) Revenues and Sale Forecast for the Option “SaaS CRM”:
In this scenario the same problem occur which is already described under the option “No CRM”. The main
difference is that the SaaS CRM system implementation is massively shorter than with a “traditional CRM”
system. So, it is calculated, that after 1 year the project is implemented and trough that the coordination costs sink
back to a normal level.

Yearly cost estimation:                 SaaS

                                          YEAR 0          YEAR 1         YEAR 2        YEAR 3          YEAR 4        YEAR 5
Coordination costs (no CRM)               1500000           0              0             0               0             0
Coordination costs (no CRM) (%)             0.05            0              0             0               0             0


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Total Revenues:                           28500000        40050000       50100000       60150000         70200000      81000000
                               Table 16 – Revenues and Sales Forecast for the Option “SaaS CRM”


                  CRM implemented

A.B) Implementation Costs
This chapter illustrated the costs. The Project costs contain two positions, which are discussed in the next few sub
chapters. The first position shows the infrastructure investment costs and the second point shows the costs of the
project itself.

A.B.A) Infrastructure Investment Costs
The calculation is based on the assumption, that a traditional CRM project will be implemented. Afterwards all
three options are calculated on a detailed basis.
ALPIQ’s server farm contains exclusively Sun Servers. ALPIQ has calculated to buy two servers for a traditional
CRM implementation, because of a clustered environment. The other entire infrastructure is already available.
ALPIQ’s estimation calculates with two servers of the type: SEJASY11Z which have to be bought. The price for
one server is about 471’800 Euro. It is estimated, that an additional Infrastructure employee is needed to make all
the settings and configurations which are needed for the server. Additionally it is assumed that after 5 years two
new servers have to be ordered.
To calculate with this estimation the following calculation sheets have been elaborated:

A.B.A.A) Basic Calculations for the Infrastructure Investment Costs
Basic calculations:

                                           Amount          Cost per unit          Total Cost in Euro       Total Costs in CHF.
Server costs:                                2               471800                    943600                 1421712.684
Additional employees                           1              150000                      0                       150000
Total costs:                                   3                                                                 1571712.7
                              Table 17 – Basic Calculations for the Infrastructure Investment Costs

A.B.A.B) Revenues and Sale Forecast for the Option “No CRM”:
For the option with “no CRM” no server and no additional employees have to be taken in account. So the costs for
the infrastructure are 0 over all years.

Yearly cost estimation:                 No CRM

                                           YEAR 0          YEAR 1         YEAR 2         YEAR 3           YEAR 4        YEAR 5
Server Infrastructure (in CHF)               0               0              0              0                0             0
Additional employees                         0               0              0              0                0             0
Total costs:                                   0               0              0               0              0             0
                               Table 18 – Infrastructure Investment Costs for the Option “No CRM”



A.B.A.C) Revenues and Sale Forecast for the Option “Traditional CRM”:
This option shows all the costs which are calculated on the basic calculations. So the servers as well as the
additional employee are needed.

Yearly cost estimation:                 Traditional CRM

                                           YEAR 0          YEAR 1         YEAR 2         YEAR 3           YEAR 4        YEAR 5
Server Infrastructure in CHF:               1571713                0            0                  0             0      1571713
Additional employees                         150000           150000       150000             150000        150000       150000
Total costs:                                1721713           150000       150000             150000        150000      1721713
                           Table 19 – Infrastructure Investment Costs for the Option “Traditional CRM”

A.B.A.D) Revenues and Sale Forecast for the Option “SaaS CRM”:
In this case, ALPIQ runs a CRM system, but the costs are 0, due to the fact that the needed infrastructure and the
service technicians are part of the service and therefore provided by Salesforce.com.
Yearly cost estimation:                 SaaS

                                           YEAR 0          YEAR 1         YEAR 2         YEAR 3           YEAR 4        YEAR 5
Server Infrastructure in CHF:                0               0              0              0                0             0


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Additional employees                           0                0              0              0            0             0
Total costs:                                   0                0              0              0            0             0
                              Table 20 – Infrastructure Investment Costs for the Option “SaaS CRM”

ALPIQ has already a datacenter and all the necessary connections are established. So, it is assumed that all
other costs concerning Infrastructure could be neglected. The following link lead to the Sun website, where the
costs for the server was evaluated: http://de.sun.com/products/highend/m9000.jsp

A.B.B) Project Effort Costs
In this chapter the costs for a traditional CRM project are calculated. On the basis of that, the costs for the next 5
years will be presented for all 3 options.

A.B.B.A) Basic Calculation of the Project Costs
Resource estimation for a traditional CRM project:
 Phase                                                     Needed persons                                            Duration
 Requirement                                     40 Retail / 15 Project Team                                          8 month
 Implementation                                  40 Retail / 15 Project Team                                         12 month
 UAT                                             40 Retail / 15 Project Team                                          4 month
                                           Table 21 – Resource Estimation for Project

Cost forecast for a traditional CRM project. The average yearly costs for a project member are defined with
150’000 CHF.
 Basic Calculations:
Phase:                         Type of employee:           No. of employee:        Duration (Yearly):   Cost:
Requirement Phase              Retail                                           40          0.666666667       4000000
                               IT                                               15                0.666666667         1500000
                                                                                     Total cost per phase             5500000

Implementation Phase           Retail                                           40                          1         6000000
                               IT                                               15                          1         2250000
                                                                                     Total cost per phase             8250000

UAT                            Retail                                           40            0.333333333            2000000
                               IT                                               15            0.333333333         750000.0002
                                                                                     Total cost per phase         2750000.001

                                                                                     Total cost of project:          16500000

                                                                                     Duration in month:                      24
                                        Table 22 – Basic Calculation for the Project Effort

After the costs are calculated for a traditional CRM system the cost calculation changes now to the calculation for
a SaaS system. The cost calculation is according the costs of Salesforce.com which are provided on their
website. For the cost calculation three different options are prepared (best, most likely, worst). The most likely
option was chosen afterwards for the cost calculation. The different options will be presented in the next sections.

Best case:
“When the Glovia team’s application development skills and domain expertise were combined with
Salesforce.com’s high productivity, rapid development cycles resulted. “ This project moved very quickly,” says
                                                                                                   th
Ehler. “It was an order of magnitude faster than previous dev efforts. And the cost was about 1/10 of what it
would have been if we had used .NET or J2EE.” The following link lead to a experience report about
Salesforce.com, where it is described how much faster, the implementation project was realized:
http://www.salesforce.com/platform/innovators/glovia.jsp

With an implementation of a SaaS system a cost saving of 90% might be achievable, because a lot of functions
are already available. Instead of spending 16’500’000 CHF for a traditional CRM system the SaaS option costs
only1’650’000 CHF.

Most likely case:
It is assumed, that often this statements are extreme, so a more possible case with which will be calculated is
      th.
5/10



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Worst case:
There exist a lot of problems, with interfaces, communication and in reference with the Third Party Company, etc.
Therefore it is assumed that the project for the SaaS option needs as much resources as a traditional CRM
project. In the worst case the traditional costs are equal to the SaaS option.

Benefit calculation:
 Case                Project costs with CRM Solution               SaaS Factor                       Project Costs
 Best                                      16’500’000                                         1/10                  1’650’000
 Most likely                               16’500’000                                         5/10                  8’250’000
 Worst                                     16’500’000                                        10/10                 16’500’000
                                      Table 23 – Factor Cost Estimation for a SaaS Project

A.B.B.B) Project Cost Estimation for the Option “No CRM”:
In case the ALPIQ management decides not to implement a CRM system, the costs for the implementation could
be saved. The cost estimation for all 5 years is therefore 0.
 Yearly cost estimation:             No. CRM

                                        YEAR 0          YEAR 1          YEAR 2          YEAR 3          YEAR 4        YEAR 5
Total costs per year                      0               0               0               0               0             0
Total costs:                                0               0               0                 0            0             0
                                  Table 24 – Project Costs Estimation for the Option “No CRM”

A.B.B.C) Project Cost Estimation for the Option “Traditional CRM”:
If ALPIQ decides for a traditional CRM system the costs would be extremely high, due to the fact that the entire
system must be configured for the need of ALPIQ, bugs must be fixed and tested, interfaces have to be
established, etc. It is assumed that the implementation is as twice the costs as for the SaaS solution. The initial
costs are in the costs analysis split by two years. The estimated costs for such an approach are at CHF 16.5 Mio.-
 Yearly cost estimation:             Traditional CRM

                                        YEAR 0          YEAR 1          YEAR 2          YEAR 3          YEAR 4        YEAR 5
Total costs per year                   8250000         8250000              0                 0            0             0
Total costs:                           8250000         8250000              0                 0            0             0
                              Table 25 – Project Costs Estimation for the Option “Traditional CRM”

A.B.B.D) Project Cost Estimation for the Option “SaaS CRM”:
With a SaaS CRM solution, the costs are between the options “no CRM” and “traditional CRM”. The costs for a
SaaS solution are empirically deeper than in case of a traditional CRM, because the system is already available
and the knowledge about the standard interfaces is available. Therefore the assumption is that the project effort is
only one year. The costs for the project are half of the traditional CRM project and are about CHF 8.25 Mio.
 Yearly cost estimation:               SaaS

                                       YEAR 0           YEAR 1          YEAR 2          YEAR 3          YEAR 4        YEAR 5
Total costs per year                   8250000            0               0               0               0             0
Total costs:                           8250000              0               0                 0            0             0
                                 Table 26 – Project Costs Estimation for the Option “SaaS CRM”

A.C) Operation and Maintenance Costs
In this chapter, all the operation and maintenance costs will be listed. These are mainly the costs for the
employees as well as the licenses which are needed.

A.C.A) Employee Cost:
ALPIQ’s management calculates to increase the sales within the next 5 years of 68 TWh to 108 TWh. For this
strategy, ALPIQ needs additional employees to handle the workload. In case ALPIQ implements a CRM system
additional IT and support resources are needed as well.

A.C.A.A) Basic Calculations for Employee Costs:
Under constant circumstances the conclusion is that ALPIQ needs in total 216 employees within the next five
years. In this assumption the theoretical need of employees are calculated, without usage of synergies or
additional costs. The reason is because there work already 80 employees in the retail environment. Therefore are
136 new employees needed. The following table shows the costs for the additional employees.
 Basic calculations:

                                        YEAR 0          YEAR 1         YEAR 2          YEAR 3           YEAR 4       YEAR 5


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Estimated no. of employees                 80             107            134                162      189           216
Employee costs                        12000000        16050000       20100000        24300000     28350000     32400000
                                      Table 27 – Basic Calculation for the Employee Costs

A.C.A.B) Employee Cost Estimation for the Option “No CRM”:
For this option are only some minor changes necessary in the basic calculation. There are no savings instead
additional costs pops up due to the fact that new employees cause coordination costs which have a massive
impact. The additional costs are covered under the point additional facts.
It is assumed that with 100 employees no coordination effort is needed and therefore no additional costs occur.
Between 100 and 150 employees an additional 5% of the basic wages is needed for the coordination of them.
Between 150 and 200 employees an additional 10% of the basic wages is needed for coordination. For more than
200 employees an additional 15% of the basic wages is needed for the coordination.
With this assumption, the following yearly cost calculation can be presented:

Yearly cost estimation:              No. CRM

                                       YEAR 0          YEAR 1          YEAR 2          YEAR 3      YEAR 4        YEAR 5
Synergies processes (%)                  0               0               0               0           0             0
Synergies tools (%)                      0               0               0               0           0             0
Coordination costs (system
supplier) (%)                              0               0               0                 0        0             0
Total costs Retail excl. CC
employee                              12000000        16050000        20100000        24300000    28350000      32400000
No. of needed employee                   80             107              134             162         189           216
Coordination costs (employee)             0            802500          1005000         2430000     2835000       4860000
Total costs Retail incl. CC
employee                              12000000        16852500        21105000        26730000    31185000      37260000
IT Employees                               0               0               0                 0        0             0
Total costs employees                 12000000        16852500        21105000        26730000    31185000      37260000
                                 Table 28 – Employee Cost Estimation for the Option “No CRM”

A.C.A.C) Employee Cost Estimation for the Option “Traditional CRM”:
For this option different synergies and additional costs need to be considered. These are mainly cost savings
which can be reduced by process improvements as well as using of synergies by better analysis and dashboard
functions. On the other hand additional costs pop up as well with this option. These are the coordination costs for
employees (already mentioned under A.C.A.B) and the coordination costs for the system supplier as well as costs
for additional IT employees. It is assumed that approximately 10% of the employee costs could be saved yearly
with better and easier processes. Of course, this benefit comes initially into account after the project
implementation, which might be the case after the second year.

Additional facts:
               Synergies processes: It is assumed that around 10% of the employee costs could be saved
                  yearly through better and easier processes. Of course, this benefit comes initially into account
                                                                                    nd
                  after the project implementation, what is in this case after the 2 year.
               Coordination costs (system supplier): When a system is bought by a software supplier, the
                  software supplier is in charge for bug fixing and new releases. So ALPIQ has to be in a steady
                  connection with the system supplier. This coordination cost a lot of time and effort. So, in this
                  case it is assumed that ALPIQ’s employee costs will rise by 10% in this option.
               Coordination costs (employees): It is assumed that under 100 employees no coordination cost is
                  needed. Between 100 and 150 employees an additional 5% of the basic wage is needed for the
                  coordination. Between 150 and 200 employees an additional 10% of the basic wage is needed
                  for coordination. Over 200 employees an additional 15% of the basic wage is needed for the
                  coordination.
               Additional IT employees: In this case, the CRM system is in the responsibility of ALPIQ.
                  Therefore ALPIQ needs additional IT employees for the support and maintenance of the system.
                  It is assumed, that 10 additional IT employees are needed. This causes yearly costs of
                  1’500’000 CHF.

With this calculation, the following yearly cost calculation can be presented:
Yearly cost estimation:              Traditional CRM

                                       YEAR 0          YEAR 1          YEAR 2         YEAR 3      YEAR 4         YEAR 5
Synergies processes (%)                  0               0               0.1            0.1         0.1            0.1


Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                        26.11.2011 / Page 30 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



Synergies tools (%)                        0              0              0.1             0.1            0.1            0.1
Coordination costs (system
supplier) (%)                             0.1            0.1             0.1             0.1            0.1            0.1
Total costs Retail excl. CC
employee                              13200000        17655000        18090000        21870000       25515000        29160000
No. of needed employee                   88             117.7           120.6           145.8          170.1           194.4
Coordination costs (employee)
(%)                                        0           882750          904500         1093500         2551500        2916000
Total costs Retail incl. CC
employee                              13200000        18537750        18994500        22963500       28066500        32076000
IT Employees                           1500000         1500000        1500000         1500000         1500000        1500000
Total costs employees                 14700000        20037750        20494500        24463500       29566500        33576000
                             Table 29 – Employee Cost Estimation for the Option “Traditional CRM”

A.C.A.D) Employee Cost Estimation for the Option “SaaS CRM”:
For this option different synergies and additional costs come into account. These are mainly cost savings trough
process improvements as well as synergies trough better analysis and dashboard functions. Also additional costs
rise in this option. These are the coordination costs for employees (already mentioned under the point A.C.A.B)
and the coordination costs for the system supplier as well as costs for additional IT employees. The single points
are mentioned more detailed under Additional facts.

Additional facts:
               Synergies processes: It is assumed that around 10% of the employee costs could be saved
                  yearly through better and easier processes. Of course, this benefit comes initially into account
                                                                                    st
                  after the project implementation, what is in this case after the 1 year.
               Synergies tools: It is assumed that around 10% of the employee costs could be saved yearly
                  through better analysis and dashboard functions. Of course, this benefit comes initially into
                                                                                            st
                  account after the project implementation, what is in this case after the 1 year.
               Coordination costs (system supplier): A SaaS solution needs a lot of coordination, because the
                  system is no longer in ALPIQ’s responsibility. So, the coordination costs are higher than with a
                  traditional CRM system. It is estimated, that the employee costs are around 15% higher in this
                  case.
               Coordination costs (employees): It is assumed that under 100 employees no coordination cost is
                  needed. Between 100 and 150 employees an additional 5% of the basic wages is needed for the
                  coordination. Between 150 and 200 employees an additional 10% of the basic wages is needed
                  for coordination. Over 200 employees an additional 15% of the basic wages is needed for the
                  coordination.
               Additional IT employees: In this case, the CRM system is installed at the suppliers
                  Salesforce.com. So ALPIQ need not as many additional IT employees for support and
                  maintenance as with a traditional CRM. It is calculated, that 3 additional IT employees are
                  needed. What are yearly costs of CHF 450’000.-
With this calculation, the following yearly cost calculation can be presented:
Yearly cost estimation:              SaaS

                                     YEAR 0           YEAR 1          YEAR 2          YEAR 3         YEAR 4          YEAR 5
Synergies processes (%)                          0              0.1             0.1            0.1             0.1            0.1
Synergies tools (%)                              0              0.1             0.1            0.1             0.1            0.1
Coordination costs (system
supplier) (%)                                  0.15            0.15            0.15         0.15              0.15        0.15
Total costs Retail excl. CC
employee                               13800000        15207375        19044750       22963500        26790750       30537000
No. of needed employee                       92           101.4             127          153.1           178.6          203.58
Coordination costs (employee)
(%)                                              0      760368.8       952237.5        2296350         2679075        4580550
Total costs Retail incl. CC
employee                               13800000        15967744 19996987.5            25259850        29469825       35117550
IT Employees                             450000          450000    450000               450000          450000         450000
Total costs employees                  14250000 16417743.8 20446987.5                 25709850        29919825       35567550
                                Table 30 – Employee Cost Estimation for the Option “SaaS CRM”

For further calculations within the work the “new employee costs” will be relevant.

A.C.B) License Costs (based on Employee Costs):




Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                           26.11.2011 / Page 31 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



In this chapter the license costs are determined. These costs depend on the employee costs, which were
calculated before. The costs are estimated for every option and the basis was the “Total costs employees” of
every option from the “employee cost” point.

A.C.B.A) License Costs Estimation for the Option: “No CRM”
Under the point “No CRM”, no system will be implemented and so, no license costs occur. Therefore the cost for
the option “No CRM” are 0.
 Yearly cost estimation:          No. CRM

                                         YEAR 0          YEAR 1          YEAR 2          YEAR 3         YEAR 4        YEAR 5
Retail licenses                             0              0               0               0               0             0
IT and support licenses                     0              0               0               0               0             0
Total licenses needed                       0              0               0               0               0             0
Cost per license ($ / license)            1500            1500            1500            1500           1500          1500
Total cost (in $)                           0              0               0               0               0             0
Total cost (in CHF)                          0               0               0               0             0              0
Total cost (in CHF)                          0               0               0               0             0              0
                                    Table 31 – Yearly License Costs for the Option “No CRM”

A.C.B.B) License Costs Estimation for the Option: “Traditional CRM”
This option shows the license costs for the Traditional CRM solution. It is estimated, that the license costs are
1500 $ per license.
 Yearly cost estimation:         Traditional CRM

                                         YEAR 0          YEAR 1          YEAR 2          YEAR 3         YEAR 4        YEAR 5
Retail licenses                            88              124             127             153           187           214
IT and support licenses                    10               10              10              10            10            10
Total licenses needed                      98              134             137             163           197           224
Cost per license ($ / license)            1500            1500            1500            1500           1500          1500
Total cost (in $)                        147000         200377.5         204945          244635         295665        335760
Total cost (in CHF)                     162737.8        221829.9        226886.4        270825.6       327318.9      371706.5
                                 Table 32 – Yearly License Costs for the Option “Traditional CRM”

A.C.B.C) License Costs Estimation for the Option: “SaaS CRM”
This option shows the license costs for the SaaS CRM solution. The assumption is that the license costs are 1500
$ per license.
 Yearly cost estimation:              SaaS

                                         YEAR 0          YEAR 1           YEAR 2            YEAR 3       YEAR 4       YEAR 5
Retail licenses                            92             106               133               168          196         234
IT and support licenses                     3              3                 3                 3            3           3
Total licenses needed                      95             109               136               171          199         237
Cost per license ($ / license)            1500            1500             1500              1500         1500         1500
Total cost (in $)                        142500       164177.4375 204469.875             257098.5      299198.25      355675.5
Total cost (in CHF)                     157756.1         181754.3         226360.4       284623.5       331230.4      393754.1
                                   Table 33 – Yearly License Costs for the Option “SaaS CRM”

A.D) Decommissioning
This chapter shows the costs and benefits which occur when the system is decommissioned. The point which is
mentioned here are the costs for the migration of the data, which ALPIQ needs to do when they migrate to a new
system.

A.D.A) Migration for the Option: “No CRM”
Yearly cost estimation:        No CRM


                                         YEAR 0           YEAR 1           YEAR 2           YEAR 3       YEAR 4       YEAR 5
Migration costs                            0                0                0                0            0            0
Total cost (in CHF)                         0.0              0.0                 0.0             0.0       0.0           0.0
                                       Table 34 – Migration Costs for the Option “No CRM”



Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                             26.11.2011 / Page 32 of 33
                       IT Governance and Compliance Management - Group Assignment (SaaS Case)



A.D.B) Migration for the Option: “Traditional CRM”
Because the old data has to be migrated to the new system, this has needs to be taken in account. For this
reason every year 300’000 CHF will be saved. It is assumed, that the system has a life cycle of ten years. After 10
years 3’000’000 CHF will be needed for the migration of the new system.
 Yearly cost estimation:         Traditional CRM


                                       YEAR 0           YEAR 1            YEAR 2            YEAR 3     YEAR 4       YEAR 5
Migration costs                         300000           300000           300000            300000     300000       300000
Total cost (in CHF)                    300000.0         300000.0         300000.0        300000.0     300000.0     300000.0
                                  Table 35 – Migration Costs for the Option “Traditional CRM”

A.D.C) Migration for the Option: “SaaS CRM”
Because the old data has to be migrated to a new system, this has to be calculated. It is assumed that a SaaS
system is already well prepared for the data migration, because Salesforce.com needs to offer a customer after
the sign off of the contract to start within a few time periods with the migration. The data needs to be prepared for
the migration. So, it is assumed, that the migration costs are as half as high as with a traditional CRM.
For this reason every year 150’000 CHF will be saved. It is assumed, that the system has a life cycle of ten years.
After 10 years the 1’500’000 CHF will be available for the migration of the new system.
 Yearly cost estimation:              SaaS


                                       YEAR 0           YEAR 1            YEAR 2            YEAR 3     YEAR 4       YEAR 5
Migration costs                        150000           150000            150000            150000     150000       150000
Total cost (in CHF)                    150000.0         150000.0         150000.0        150000.0     150000.0     150000.0
                                     Table 36 – Migration Costs for the Option “SaaS CRM”




Elaborated by: Odilia Müller, Renato Melliger, Roger Böhlen, Marcel Dubach                           26.11.2011 / Page 33 of 33

				
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