©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.OutsourcingCaseStudyRonStratton,WorldwideDirectorContractFinance&AccountingServices(CFA)©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.Objectives◆Outsourcingand...●FinanceFunctionoftheFuture●Reengineering●Sharedservices©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.CyprusAmaxMineralsCompany◆Revenue-$3.5billion◆Publiclytraded◆Mining-copper,coal,Moylbdenum,lithium,gold◆Globaloperations-US,Peru,Chile,Australiaandexplorationsites◆NopriorAndersenrelationship-PriceWaterhouse,EDS©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.Timeline◆Firstmeeting-February,1995◆MarchthruJuly-Feasibilityanddiagnosticstudy◆AugustthruOctober●Transitionplanning($500,000)●Processimprovementstrategies($740,000)◆November15,1996-Outsourcingcontractsigned©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.KeyProvisions◆Scope-design,createandoperateandsharedservicescenter...35to40peopleinitially,goingto90in3to4yearsasenablingprojectsarecompleted◆Pricingmodel-“openbook”,costplus,withamanagementfee,incentivesandexpensepassthrough-approx.$3.5millionperyear,7years◆Enablingprojects-processreengineeringandsystemsimprovements;separatelyarranged©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.Keyprovisions-PersonnelProjectionsStartupYear2Year3Cyprus16912761AA407197Total209198158Reduction(9)(11)(40)©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.Non-CoreEssential,Non-CoreOutsourceCoreWHATTOOUTSOURCE?IdentifyCoreCompetencies,OutsourcetheRestInvest&ManageDivestorShutDown©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.DecisionSupportReportingTransactionProcessingAccountingProcesses©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.DecisionSupportReportingTransactionProcessingRetainOutsourceAccountingProcesses©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.DecisionSupportReportingTransactionProcessingRetainOutsourceHOWMUCHCANWEOUTSOURCE?e.g.,Finance&AccountingProcessesFunctionalOutsourcingComprehensiveOutsourcing©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.ThreeCriticalComponentsProcessToolsPeople©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.AlternativesActionsChallengesuSimplificationuEliminatenon-valueaddedactivityuProcessimprovementuBestpracticesuCostbenchmarksuStandardizationuCentralizationuFlattenorganizationuAutomationuPurchaseservice(versuspersonnel)uEconomicsofscaleuSpecializedskillsuRisksharinguServiceandfinancialcommitmentsuFlexibilityuContinuousimprovementProcessReengineeringProcessReengineeringSharedServicesSharedServicesOutsourcingOutsourcinguImplementationuBenefitsachievementuManagementeffortuElapsedtimeuSavingsachievementuClientcontroluOrganizationreactionuServicedesign©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.ReengineerorOutsource?Coretocompany?YesNoOutsourceREENGINEER©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.ReengineerorOutsource?Coretocompany?YesNoCoretofunction?YesNoOutsourceREENGINEER©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.ReengineerorOutsource?Coretocompany?YesNoCoretofunction?YesNoQuality?HighLowOutsourceREENGINEER©1996ArthurAndersen,AndersenWorldwide,SC.Allrightsreserved.ReengineerorOutsource?Coretocompany?YesNoCoretofunction?YesN...