James A. Narus
James A. Narus is Professor of Business Marketing, Babcock Graduate School of Management, Wake Forest University in the U.S.A. D.V.R. Seshadri is Visiting Professor at Indian Institute of Management Bangalore, India. We gratefully acknowledge the significant contributions of Infosys executives and managers in providing case information.
CASE QUESTIONS TO ADDRESS 1. Looking beyond the immediate Ariba e-Procurement System project, what challenging issues related to global marketing does this case pose for Infosys? 2. What quantifiable cost savings not specified in project contracts has Infosys delivered to PFS during the past five years? 3. What “knowledge transfer time” cost savings can PFS expect from sole sourcing the Ariba e-Procurement System project? 4. How can Infosys’ PFS Account Team persuasively sell the firm’s ability to deliver a superior end-to-end solution for the Ariba e-Procurement System project?
Infosys® Technologies Ltd.: Growing Share of a Customer’s Business “In summary, we encourage Infosys to compete for the customization, installation, and maintenance of a JAVA-based Ariba® e-Procurement system here at Prairie Four Square (PFS) Insurance,” stated PFS Chief Information Officer (CIO) Robert Peters. “As part of this project, you would work not only with our information technology (IT) group on internal system tasks but also with our purchasing department to select and certify vendors, standardize all product codes and order processing procedures, and integrate certified vendors‟ billing processes with our accounts payable systems. Be aware that you will be competing head-to-head with two leading IT consulting firms; so, you will have to demonstrate that you can handle all aspects of the project in a superior manner. Furthermore, given our CEO‟s drive to cut costs significantly, I urge you to „sharpen your pencils‟ before you quote a price on the project. Let‟s schedule your project proposal presentation for three weeks from today.” And so concluded a one hour briefing that CIO Peters and his colleague, PFS Purchasing Vice President Kay Bryan had given to Infosys Engagement Manager, Rahul Dev, and Account Manager Jaspal Singh. During that briefing Peters and Bryan had outlined plans to move all company acquisitions of products and services online and provided operational details on how they would like to see the system function. As Rahul and Jaspal walked down the main corridor of PFS‟ Dallas headquarters building and toward the street, they nodded to each other in delight over the unexpected opportunity that had just presented itself. “Although Infosys has successfully increased the number of major IT projects it conducts for PFS to 65, we‟ve only managed to capture around United States (U.S.) $ 30 million (i.e., Rs. 1.38 billion Indian rupees) in annual business out of their annual IT total spend of $1 billion (Rs. 46 billion) even though we could ideally handle up to 45% of that total spend. Moreover, most of the projects that we have undertaken have been low value-added, price sensitive business. This project requires an end-to-end solution. If we win it and deliver a high quality solution, we will be in an advantageous position to gain a greater share of their more profitable, high value-added business. We must put together a convincing case for employing Infosys,” Rahul insisted.
Infosys Technologies, Ltd. With annual sales of over Rs. 35 billion ($750 million) and net profits exceeding Rs. 9 billion ($200 million), Infosys Technologies, Ltd. provides a full range of IT and consulting services including the development, customization, reengineering, and maintenance of personal and network computing, mainframe, and Internet-based information systems. Based in Bangalore, India, Infosys employs over 17 thousand people (Infoscions in company parlance)...