Pleasance House Consulting - Managed
Services
Introduction to Managed Services
Pleasance House Consulting launched Managed Services in the depth of the “credit-crunch” early in 2009 to make the benefits of the management information system available to smaller retailers without a large capital expenditure initially. The longer term plan is to extend the business model to include central merchandising functionality and then a simple stock and materials management system designed for all businesses, not just retailers.
The design of the pricing structure is the same for all managed services on offer. PHC will perform the initial implementation - not for the usual quoted fixed price up front, but for a commitment to a two-year contract. Costs are based on either a fixed weekly or monthly charge (for larger, established customers) or on a transactional basis for smaller clients. This removes the need to find a large sum of money initially and makes budgeting much more accurate and simple going forward. In particular, smaller businesses will see costs reflecting their changing turnover levels rather than becoming onerous during hard times. One particular saving for all clients is that they will not have to license the expensive central system software necessary to generate the data files for analysis, only the analysis tools themselves. If a client is happy to specify a fixed list of reports then no additional third party software will be required at all as the reports can be provided as text, html or spreadsheets.
Once the managed service is operational, major system enhancements will be undertaken on a quoted, fixed price basis. There will be an option to pay in full on completion of the work or to have the standard managed service cost revised accordingly. Minor system enhancements will, wherever possible, have a standard charge associated with them – payable on completion of the work with no adjustment to the standard charge.
After each completed year, all standard managed service costs will be discounted by 10% until they level out at 50% of the initial cost after five years. This is to encourage continued use of the system, reflecting expected improvements on the technical side and acknowledging the value of an established business relationship.
Management Information System
Click here for a full description of the PHC MIS. PHC will perform two days of analysis and design to arrive at a system specification, guideline timescales and a proposed pricing structure. If all is satisfactory then work will commence after getting a commitment to two years use of the system and the payment of the first standard charge. This date will be used for the application of the annual 10% discounts.
The system specification will describe the following features:
· The logical data model to be used
· The analysis dimensions to be created
· The transaction types to be loaded
· The measures to be made available for analysis
· The standard data inputs to be processed
· The type and frequency of output to be supplied
· The basis of charging and the actual base cost of the managed service
· The cost of any additional third party software required
· Minor upgrades, the inputs required and their standard costs
· History to be pre-loaded, the inputs required and the one-off processing cost
Inputs could be provided in a variety of formats and mechanisms – XML, csv, spreadsheets or an Access database delivered by ftp or direct input for regular intakes or as e-mail attachments for one-off or infrequent minor enhancements.
Outputs are most likely to be either a standard set of reports or analysis cubes to allow both standard and ad hoc reporting by the customers themselves. In both cases the actual delivery can either be by transmission of files (ftp, e-mail attachments etc.) or by remote access to the PHC server over a secure connection using the internet. Most reports are likely to be in html or spreadsheet format but small, mission-critical reports can also be distributed by SMS text messages to mobile telephones.
PHC will install all additional software on customers’ computers (if required) organising the purchase and licensing from third parties.
PHC will maintain the customers’ data on a Windows server, taking full responsibility for its integrity and security.
If the initial build takes longer than the guideline timescale given then standard charging will cease until the system is fully functional. Missed payments need not be made up later and the base start date will remain unchanged.
During the life of the system it is anticipated that PHC will want to initiate some improvements. These could result from third party software upgrades or a desire to increase operational efficiency. In all but the most extreme (forced) circumstances these will only be applied with the full consent of the customer.
An example of the managed services pricing structure for a retailer with about 20 outlets and £25m pa turnover might be:
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|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
|
|
|
|
|
|
|
|
|
Standard
Monthly Charge |
£600 |
£540 |
£480 |
£420 |
£360 |
£300.0 |
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|
|
|
|
|
|
|
|
Annual
Cost |
£7,200 |
£6,480 |
£5,760 |
£5,040 |
£4,320 |
£3,600 |
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|
|
|
|
|
|
|
|
Cumulative
Cost |
£7,200 |
£13,680 |
£19,440 |
£24,480 |
£28,800 |
|
By year 6 the retailer is paying £75 per week for a state-of-the-art management information system. Over the first five years the total amount paid is £28,800. This compares with approximately £25k up-front payment if the system were purchased conventionally.
At the other end of the scale, a smaller start-up turning over only £250k pa might see a managed services pricing structure like:
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|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
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|
|
|
|
|
|
|
|
Average
Monthly Charge |
£200 |
£180 |
£160 |
£140 |
£120 |
£100.0 |
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|
|
|
|
|
|
|
|
Annual
Cost |
£2,400 |
£2,160 |
£1,920 |
£1,680 |
£1,440 |
£1,200 |
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|
|
|
|
|
|
|
|
Cumulative
Cost |
£2,400 |
£4,560 |
£6,480 |
£8,160 |
£9,600 |
|
Monthly charges are stated as average because they are transaction-based. By year 6 the cost of having the system is £25 per week. The 5-year total cost of £9,600 compares to an absolute minimum one-off payment of £10k to commission the system in the conventional manner.
Central Merchandising System
This is not yet available as a PHC managed service, but if you have a particular requirement, please make Contact. Priorities can be altered.
Simple Stock and Materials Management
This system is no more than an idea at the moment. There is a requirement for many different types of smaller businesses to be able to track their stock and also their returnable ‘containers’ like pallets, cages, boxes, bins etc. Truck drivers could be equipped with hand-held terminals with GPRS technology to track movements on-line. There is not a lot of software available to do this at the moment and the managed services pricing structure is absolutely ideal for this application.
