Switching telecoms provider and software reseller has saved the Christchurch City Council $600,000 in one financial year. And the gains were achieved and calculated without using a complicated return-on-investment model.
The council changed from Telecom to Telstra-Clear for its voice and data services and from Software Spectrum to Computerland for desktop management.
Council MIS manager John Edmonds says a formal ROI calculation wasn’t part of the process when the council tendered for voice and data services late in 2001.
“We looked at how [each tender] would best meet our requirements and attached weightings to various categories.”
Cost was only one of those. The others included scalability and future-proofing.
For the voice and data contract, how it met business functionality requirements was the most important criterion. That test resulted in a new telecommunications contract signed last year with TelstraClear, which has saved $413,000, Edmonds says.
Switching from Software Spectrum to Computerland as its Microsoft reseller cut $180,000 from the council’s licensing expenses, which are down to $370,000 from $550,000.
A formal ROI calculation is “a good thing to do”, Edmonds says, but they can take up a lot of time.
“For us, cost was only one factor and we looked at the one-time capital cost and the annual operating cost, whereas ROIs go into hidden and indirect costs.”
The council IS department has used elementary forms of ROI calculation for some projects, “but it’s time-consuming to get a consultant to dig into the hidden and indirect costs”.
Edmonds says nine months into the 2002-03 financial year, the TelstraClear voice and data contract is “definitely” delivering benefits.
“We went through a comprehensive RFP process and spent a lot of time specifying business requirements so that before we got the proposals in, there was a comprehensive methodology for evaluating them.”
Cost, scalability and future-proofing were among the criteria used to evaluate the tenders. The council’s corporate services manager, its IS department and an external consultant picked TelstraClear. A key factor in choosing the telco was to take advantage of its recent fibre rollout in Christchurch, Edmonds says.
“We now have high-speed fibre at 10Mbit/s to our 12 primary sites — that is, suburban service centres and libraries — and 2Mbit/s to secondary sites, with lower speed connections to other sites and a few frame relay connections, run over Telecom tails. We have a high-capacity, highly scalable MAN, which can scale up to 1Gbit/s. That’s all the capacity we’ll need for some time. Anything we run in the central office can run to remote sites and that’s allowing us to increase the capability of some corporate applications.”
Applications such as document management and GIS mapping can be “run at will”.
The network is all IP over fibre, except for the frame relay connections. That is also providing savings on voice, he says.
“Now we have seamless voice coverage to all sites.”
The change of reseller came about as a result of a competitive bid. “Again, we went to the market with an RFP for a reseller and resellers put in their own margins. Computerland said it’d be able to offer the same desktop arrangement at a lower price.”
A competitive tender for provision of Windows software also resulted in substantial licensing savings.
The council hopes to achieve a further reduction in Microsoft licensing costs after a new version of Select, the Microsoft-government agreement, is introduced later this year, he says.