Print Approach.qxd

Document Sample
Print Approach.qxd Powered By Docstoc
					Advancing with
       Print Approach

                                                                                                          Advanced e-Business
 The Business
 Print Approach is a family owned and operated printing company servicing
 the corporate and government sectors. Based in Brisbane, Queensland,
 Print Approach employees 38 full time staff.

 The idea
 In early 2001, Managing Director Tom Eckersley decided that e-commerce
 was vital in Print Approach's drive towards a position of market leadership.
 The inherent marketing opportunities of the Internet and client demand for
 e-commerce convinced Tom that online business processes were the way
 of the future.                                                                      Tom Eckersley

 Supply Chain Integration
 Supply Chain Integration focuses on the strategic sharing of information in order to promote
 synchronised planning and workflow coordination amongst business partners.
 Print Approach built a system to facilitate the development of individual client solutions as they
 were required by clients. Through collaboration with Business Print Australia, a print broker
 specialising in print product marketing and management, the company has implemented a system
 to provide customers with a transparent printing service with online functionalities such as proofing,
 order tracking, and inventory management. Clients are able to log onto the website and view the
 final document design, make changes and view the relevant order and dispatch details.

 The Investment
 The total initial outlay invested in the system was $135,540. In preparation, Print Approach
 allocated $10,000 for preliminary research and a further $10,000 for staff training. Professional
 web development fees totalled $15,000 and the installation of telecommunications infrastructure
 to support the network cost $5,000.
 Information Technology (IT) consultants cost $10,000 for system design, with custom software
 and database integration costing a further $30,000 and $10,000 respectively. Additional hardware
 required consisted of ten computers valued at $35,000. In the interests of security, the company
 invested $10,000 on a disaster recovery plan including a backup server and tape system.

 Tom found that there were often too many options in choosing between technologies. This
 created a recurring problem, as every time a client specific solution was required time was spent
 identifying and determining the best solution, resulting in delayed solution deployment. This issue
 has been resolved by transferring more decision making responsibility to the IT consultant.
 Significant establishment costs presented another issue but this was partially overcome by
 receipt of a $35,000 dollar for dollar government grant.

 Print Approach generated additional revenue of $500,000 in 2001, which contributed $100,000
 to gross profit. This was the result of new work gained due to improved workflow co-ordination
 among supply chain partners.
 Total cost savings for Print Approach amounted to $160,200 in 2001. Decreased postage and
 freight requirements saved the company $20,000, and expenditure on printing and
 photocopying was reduced by $10,000. An increase in after sales service efficiencies was
 valued at $80,000, and there were reductions in administration errors ($10,000) and
 communication time ($10,000). Electronic banking reduced administrative cost by $5,000 and
 the electronic supply chain resulted in reduced inventory levels, saving a further $5,000.
     The total ongoing cost for e-commerce in 2001 was $76,635, including $33,885 allocated to
     the amortisation of capital expenditure over a four-year period. System maintenance cost
     $20,000, while Internet related expenditure consisted of $6,000 in Application Service Provider
     (ASP) hosting services and $6,000 for Internet Service Provider (ISP) fees per annum.
     The e-commerce initiative has resulted in significantly increased staff productivity. The
     company has also been able to reallocate staff from reactive tasks (answering phones and
     emails) to proactive and revenue generating tasks (after sales service, sourcing new clients).
     The online interface and electronic communication methods have provided customers more
     control over orders, enabling more accurate results. The process from order to pre-
     production, proofing, production, warehousing and delivery is now more transparent, allowing
     clients and suppliers better visibility of demand and supply conditions.

     Due to the dynamic nature of client requirements, the e-commerce solution is continually
     being updated and adapted. Print Approach plans to enhance system responsiveness and
     expand the company's client base to include internal government departments. An interface
     would be introduced whereby government staff could electronically access Print Approach
     services directly through an online service on their desktop computer.

     Revenue and Costs
     E-commerce Establishment Costs
     Web development                                                                                                                     15,000
     Preliminary research                                                                                                                10,000
     Staff training                                                                                                                      10,000
     Database integration                                                                                                                10,000
     System design                                                                                                                       10,000
     URL (three domain names)                                                                                                               540
     Telecommunications                                                                                                                   5,000
     Disaster recovery plan                                                                                                              10,000
     Hardware - 10 computers                                                                                                             35,000
     Software - custom, including consultant fees                                                                                        30,000
     Total Establishment Costs                                                                                                                                                      135,540

     Operating Benefit from E-commerce
     Revenue from E-commerce                                                                                                                                                        500,000
     Less: Direct Costs                                                                                                              (400,000)
     Gross Profit from E-commerce                                                                                                                                                   100,000
     Add: E-commerce Cost Savings
     Postage and freight                                                                                                                 20,000
     Photocopying                                                                                                                         5,000
     Printing                                                                                                                             5,000
     Stationery                                                                                                                             200
     Staff time: Reduction in administration errors                                                                                      10,000
     Staff time: Banking                                                                                                                  5,000
     Staff time: Communication time saved via email                                                                                      10,000
     Inventory                                                                                                                            5,000
     Staff time: After sales service                                                                                                     80,000
     Telecommunications                                                                                                                  20,000
     Total E-commerce Cost Savings                                                                                                                                                  160,200
     Gross Benefit from E-commerce                                                                                                                                                  260,200
     Less: Ongoing E-commerce Costs
     Amortisation of capital expenditure over four years                                                                               (33,885)
     ASP hosting                                                                                                                        (6,000)
     System maintenance                                                                                                                (20,000)
     Printing                                                                                                                          (10,000)
     Internet Service Provider                                                                                                          (6,000)
     Bank charges                                                                                                                         (200)
     Electronic payment systems                                                                                                           (350)
     Telephony                                                                                                                            (200)
     Total Ongoing E-commerce Costs                                                                                                                                                (76,635)
     Operating Benefit from E-commerce                                                                                                                                             183,565

     * Note: Capital Expenditure was amortised over a four-year period

                        For further information on this case study please go to

This Case Study is based on the research, opinions and information provided by the management of this business. Neither Ernst & Young or NOIE have audited nor sought to verify the information contained
within this Case Study. Neither Ernst & Young or NOIE undertake any responsibility or liability in relation to this Case Study. Professional advice should be sought prior to actions being taken on any of the
information contained within this Case Study. Liability is limited by the Accountant's Scheme under the Professional Standards Act 1994 (NSW). (Ernst & Young Marketing Melbourne 027328)

Shared By:
Description: Print Approach.qxd