WESTSYS information technology infrastructure upgrade proposal

Upgrading System

Proposed WESTSYS Systems Upgrade

John Moore

Senior IT Tech, WESTSYS Richmond

John Smith, CIO John Gibson Investment Services

Stephen Baker, VP, Purchasing, John Gibson Investment Services

Specific Issues with the System

Financial Aspects of the Problem

Feasibility of Implementation

Project Costs

The Average Life Cycle of Common Hardware (Garretson, 2010)

Technical Feasibility Assessment (Ambysoft, N.d.)

Estimated Project Costs

The report has identified a problem and investment opportunity that is salient to the financial services that the company offers. The problem is that our hardware and software is no longer sufficient to support our company's operations. In fact, the IT system in general is a problem that is costing the company significantly in terms of opportunity costs and lost revenue potential as well as with client satisfaction. The following report outlines these problems as well as offers a project outline to effectively and efficiently upgrade the IT capabilities in the WESTSYS South West operations of John Gibson Investment Services. The result of the proposed IT infrastructure improvements will significantly benefit the company in the short run as well as offer a favorable return on investment for the company. The window of opportunity to build this platform is small however given the seasonal nature of the business and it is recommended that the project move forward as soon as feasibly possible.

Introduction

The modern business world has steadily increased in its complexity and its level of competition. Firms that wish to maintain or build a competitive advantage must continually develop their operating models to reduce waste and streamline processes. Technology is primary driver of this trend and companies who wish to be competitive in their industries must maintain up-to-date platforms that allow their employees to maximize their productivity. This analysis identifies an opportunity for a company to upgrade a technology platform to allow its employees to be more efficient and effective in completing certain tasks which will also translate to an increase in productivity on an individual level as well as the level of the organization. The current system under analysis uses hardware and software that are out of date and are due to be upgraded. This system is not keeping pace with employees potential and another system would be better able to unlock better organizational outcomes.

Problem and Purpose

Purpose Overview

The purpose of this proposal is to help the organization meet several of its needs simultaneously. Our current computers, which were purchased in 2002 are a liability in our business. I have noticed in my work as an IT Tech that we lose a tremendous amount of productive time due to both hardware and software failures. We are running a version of Windows that is no longer supported by Microsoft, leading to some critical failures that are difficult to resolve. These issues not only plague our workforce but our customers as well.

I will present evidence of the negative effects of our current computers on the customers, which has become a problem to the point where we are starting to see customers defect because we are unable to deliver on our service promise to them. This document will provide a clear cost benefit analysis to highlight why the investment in new computers -- though costly -- will have a positive return for John Gibson Investments. This investment is vital to improving the core operations of the business as well as improving its competitive position in the financial services industry.

Financial Aspects of the Problem

The problem is costing us money. The statistics that I found are, quite frankly alarming. In the past six months, our computers have been down for a total of 8 hours and 13 minutes, 5 hours and 5 minutes of which was during market trading hours. As a consequence, our trading volume has decreased 7.5% at a time when the market is booming. Furthermore, I conducted an informal survey of our brokers and they are reporting that as many as 20 high-volume customers have left the company, specifically because we are unable to execute their orders.

Perhaps even more important, this trend is escalating, and we have lost 6 customers in the past week alone since the latest outage; a total of $5.4 million in assets just walked out the door because our computers keep crashing. We are at risk of losing investment advisors, as at least one informed me in confidence of the intent to leave WESTSYS if the technology situation does not improve. We are also exposing ourselves to significant security risk with the old operating system, because there are no new security patches being issued for it.

Finally, it must be stated that we cannot simply patch this problem up going forward. Our technology is only going to become more obsolete and ineffective, and these outages are only going to be become more frequent. Our competitors are all using more modern computers and software, and an informal investigation among my peers at other companies indicates that we are the only company with equipment this old. The average lifespan for a desktop is four years and for a laptop is three years and using these averages our company has been overdue to upgrades for quite some time now. Much of the industry is focusing on automated processes while our firm is struggling to make standard transactions in a timely manner.

Figure 1 - The Average Life Cycle of Common Hardware (Garretson, 2010)

Proposed Solution

While I have cautioned against a patchwork solution, I did investigate the possibility. This solution would be to upgrade to a more recent version of Windows, one that is supported, but still compatible with our trading software. The problem that we are facing is that our computers have slow processing speeds due to their age -- those chips are weak by today's standards, and the latest iterations of Windows will not run effectively on these computers.

If anything, lags will increase in duration and frequency, only further reducing the effectiveness of our team. Thus, we need to upgrade our software and our hardware in order to achieve the objectives of improving operational efficiency and meeting the needs of our customers. The total cost of new computers and licenses for operating system and software will be approximately $1,700 per machine, and we would need to purchase 110 machines according to my estimates, so the total cost is $187,000.

This may seem like a substantial upfront investment, but as is usually the case this will pay for itself very quickly. Indeed, the 20 customers known to have left because of our inferior technology were worth $289,000 in commissions last year. Upgrading our hardware, operating system and software is a business imperative that cannot be delayed any longer. Any further delay will further inhibit the employee's productivity as well as damage the brand image in general. It has led to an overall increase of 84 per cent in productivity per hour for office workers since the 1970s and this trend to expected to continue growing by two and a half percent until 2020 (Sanghani, 2013)

Feasibility of Implementation

While it is imperative, it is entirely necessary from a cost benefit standpoint. In order to implement this solution, however there will be some challenges that will need to be overcome. It is not easy to bring in an entirely new system quickly, so we will roll out the equipment gradually. This means that there will be people in each office with more experience who can help as new people receive their new equipment. Furthermore, if there are issues then there will still be functioning machines in each office to handle transactions.

The rollout and training process would therefore take a month. Each office is to have a hands-on training session prior to rollout, as Windows 8 Pro is substantially different than 2000, and has a fairly steep learning curve. Windows 7 may represent a more feasible platform giving the fact that the learning curve will be substantially shorter. There will also be a new version of El Rapido developed in order to meet the needs of our offices. I have spoken to the vendor and they have an off-the-shelf solution that can be adapted to our needs within 2 months.

I propose that we place an order for the new hardware/software package before the end of the month. I have gathered preliminary bids from Dell, Toshiba, Acer, and HP. El Rapido will not run on a Mac, so I did not contact Apple about this. This will allow us to take delivery at some point in mid-June. We will be able to do data transfers and roll out the software by mid-July to give everybody a chance to get used to the changes during the slow summer months before trading gets busy again in September.

The successful development and deployment of IT systems can face challenges the stem from three basic categories of limitations; environmental, technical, and human factors (Matthews, 2007). Each of these limitations can prevent integration alone however it is commonly a mix of factors that prevent companies from driving growth and the development of competitive advantages. The technical and environmental challenges can be effectively overcome by working closely with our partners to design a new efficient system. The employees can be trained quickly and a majority of the employees are already familiar with newer platforms because they frequently use them at home or elsewhere. Thus the project should be highly feasible on all accounts.

Technology Issues

Market Issues

Performance

Ease of learning

Ease of deployment

Ease of support

Operational characteristics (i.e. can it run 7 days a week, 24 hours a day?)

Interoperability with your other key technologies

Scalability

Vendor viability (i.e. is it likely that they will be in business in two years? In five?)

Alternate sources for the technology, if any

Third-party support for related products and services

Level of support provided by the vendor

Industry mindshare of the product (i.e. is the market gravitating toward or away from this technology?)

Figure 2 - Technical Feasibility Assessment (Ambysoft, N.d.)

Project Costs

The cost of the equipment, as I noted, is $187,000. There are other costs associated with this implementation as noted:

Figure 3 - Estimated Project Costs

These costs represent upfront investment, payable in cash, but a quick check of our balance sheet indicates that we have the cash available to make this purchase without seeking out additional financing. We would avoid losing customers. At the current rate of customer lost, we would lose between $400,000 and $500,000 in revenue in the next 12 months without new equipment. We would also see reduced trading profits from customers that we retained, since poor executions are going to affect the desire of customers to trade and the quality of fills that they receive when they do trade.

Conclusion

Based on what I have seen in my role as a senior IT tech, we are facing a serious business problem with the ancient computers, O/S and software that we are using. We are at a competitive disadvantage and this is starting to have an effect on the size of our assets under management, and on our trading revenues. WESTSYS has always been a leader in our industry, but now we are losing that leadership position. It is time to get back to being a technological leader in our industry.

We need to replace are ancient computers with modern equipment, and a refreshed trading system. The costs are manageable - $262,000 -- and the benefits are going to be substantial, as we will be able to win customers with our capabilities instead of losing them. We cannot persist with our current technology forever, so there is no benefit to delaying this decision any longer. From a technological standpoint, and from a business standpoint, the time has come to replace our computers with new ones, and regain leadership in our industry. Please take our plan into consideration. We look forward to receiving your reply.