Performance Improvement: IT Effectiveness: Case Study

IT outsourcing study

Issue

The client is a large Cargo Airline that provides freight forwarders with unrivalled door-to-door freight transportation services for various categories of products and clients.

PricewaterhouseCoopers was asked to write a business case assessing the opportunity to spin off all/part of the client’s IT department. The study had to focus extensively on financial opportunities that would justify a spin-off, and, therefore, required the implementation of an Activity Based Costing (ABC) model.

Our Approach

The project was managed through the following activities:

• Assess current structure: products and services, customer segmentation, strategy in place
• Identify possible growth opportunities through a detailed market assessment
• Perform financial cost analysis: analyse actual cost structure, set up high level ABC, define cost and revenue drivers and allocation keys
• Forecast cost and revenue projections, calculate expected economic value, model financial statements (profit & loss, balance sheet, cash flows)
• Propose new business structure
• Identify and mitigate risks

Key Client Benefits

As a result, the client was able to obtain a thorough and detailed view on its activities and each cost associated. The ABC model allowed the client to quantify several possible IT outsourcing scenarios.