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Upgrading System

Proposed WESTSYS Systems Upgrade

John Moore

Senior IT Tech, WESTSYS Richmond

John Smith, CIO John Gibson Investment Services

Stephen Baker, VP, Purchasing, John Gibson Investment Services

Specific Issues with the System

Financial Aspects of the Problem

Feasibility of Implementation

Project Costs

The Average Life Cycle of Common Hardware (Garretson, 2010)

Technical Feasibility Assessment (Ambysoft, N.d.)

Estimated Project Costs

The report has identified a problem and investment opportunity that is salient to the financial services that the company offers. The problem is that our hardware and software is no longer sufficient to support our company's operations. In fact, the IT system in general is a problem that is costing the company significantly in terms of opportunity costs and lost revenue potential as well as with client satisfaction. The following report outlines these problems as well as offers a project outline to effectively and efficiently upgrade the IT capabilities in the WESTSYS South West operations of John Gibson Investment Services. The result of the proposed IT infrastructure improvements will significantly benefit the company in the short run as well as offer a favorable return on investment for the company. The window of opportunity to build this platform is small however given the seasonal nature of the business and it is recommended that the project move forward as soon as feasibly possible.

Introduction

The modern business world has steadily increased in its complexity and its level of competition. Firms that wish to maintain or build a competitive advantage must continually develop their operating models to reduce waste and streamline processes. Technology is primary driver of this trend and companies who wish to be competitive in their industries must maintain up-to-date platforms that allow their employees to maximize their productivity. This analysis identifies an opportunity for a company to upgrade a technology platform to allow its employees to be more efficient and effective in completing certain tasks which will also translate to an increase in productivity on an individual level as well as the level of the organization. The current system under analysis uses hardware and software that are out of date and are due to be upgraded. This system is not keeping pace with employees potential and another system would be better able to unlock better organizational outcomes.

Problem and Purpose

Purpose Overview

The purpose of this proposal is to help the organization meet several of its needs simultaneously. Our current computers, which were purchased in 2002 are a liability in our business. I have noticed in my work as an IT Tech that we lose a tremendous amount of productive time due to both hardware and software failures. We are running a version of Windows that is no longer supported by Microsoft, leading to some critical failures that are difficult to resolve. These issues not only plague our workforce but our customers as well.

I will present evidence of the negative effects of our current computers on the customers, which has become a problem to the point where we are starting to see customers defect because we are unable to deliver on our service promise to them. This document will provide a clear cost benefit analysis to highlight why the investment in new computers -- though costly -- will have a positive return for John Gibson Investments. This investment is vital to improving the core operations of the business as well as improving its competitive position in the financial services industry.

Specific Issues with the System

There are currently two types of computers that are used at WESTSYS throughout the Southwest. These are Dell DX-800 laptops and Dell 21CB-7 desktops. There are 103 machines in our inventory for the Southwest region. These machines were purchased in 2002, and to their credit they have been workhorses, with 103 of the original 120 machines still in use in the company. From a hardware perspective, the laptops no longer have functioning batteries, as Dell no longer manufacturers that model of battery.

There are some hardware problems reported, such as stability issues, problems with keys on laptops, and persistent heat issues whenever our flagship trading software is run, which is constantly during market hours. From an operating systems perspective, there are even more challenges. The operating system that is being used is Windows 2000 Professional edition. While this was a solid O/S at the time, support for Windows 2000 has been discontinued since 2010. This means that when there is a problem with the operating system, nobody at Microsoft will help us.

At first this was not a serious problem but recently it has resulted in one outage of four hours during the trading day, and on another occasion the computers were down for three hours on the morning of Monday, May 5th. It is because of that incident that I am writing you.

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In terms of software, the biggest problem with our current computers lies with our proprietary El Rapido trading system. The competitive advantage that WESTSYS sells to its customers is that we deliver superior service in all aspects of our business.

Our trading system, however, with these old computers and outdated O/S, is subject to considerable lag. This means that when our investment advisors are placing trades, they do not always see the accurate price, leading to bad fills. Moreover, the lag at times causes us to miss prices, and this is to the disadvantage of both our advisors and our clients. Our ability to bill ourselves as a competent stock broker is compromised by the lags in our software caused by using an obsolete O/S on old computers.

Financial Aspects of the Problem

The problem is costing us money. The statistics that I found are, quite frankly alarming. In the past six months, our computers have been down for a total of 8 hours and 13 minutes, 5 hours and 5 minutes of which was during market trading hours. As a consequence, our trading volume has decreased 7.5% at a time when the market is booming. Furthermore, I conducted an informal survey of our brokers and they are reporting that as many as 20 high-volume customers have left the company, specifically because we are unable to execute their orders.

Perhaps even more important, this trend is escalating, and we have lost 6 customers in the past week alone since the latest outage; a total of $5.4 million in assets just walked out the door because our computers keep crashing. We are at risk of losing investment advisors, as at least one informed me in confidence of the intent to leave WESTSYS if the technology situation does not improve. We are also exposing ourselves to significant security risk with the old operating system, because there are no new security patches being issued for it.

Finally, it must be stated that we cannot simply patch this problem up going forward. Our technology is only going to become more obsolete and ineffective, and these outages are only going to be become more frequent. Our competitors are all using more modern computers and software, and an informal investigation among my peers at other companies indicates that we are the only company with equipment this old. The average lifespan for a desktop is four years and for a laptop is three years and using these averages our company has been overdue to upgrades for quite some time now. Much of the industry is focusing on automated processes while our firm is struggling to make standard transactions in a timely manner.

Figure 1 - The Average Life Cycle of Common Hardware (Garretson, 2010)

Proposed Solution

While I have cautioned against a patchwork solution, I did investigate the possibility. This solution would be to upgrade to a more recent version of Windows, one that is supported, but still compatible with our trading software. The problem that we are facing is that our computers have slow processing speeds due to their age -- those chips are weak by today's standards, and the latest iterations of Windows will not run effectively on these computers.

If anything, lags will increase in duration and frequency, only further reducing the effectiveness of our team. Thus, we need to upgrade our software and our hardware in order to achieve the objectives of improving operational efficiency and meeting the needs of our customers. The total cost of new computers and licenses for operating system and software will be approximately $1,700 per machine, and we would need to purchase 110 machines according to my estimates, so the total cost is $187,000.

This may seem like a substantial upfront investment, but as is usually the case this will pay for itself very quickly. Indeed, the 20 customers known to have left because of our inferior technology were worth $289,000 in commissions last year. Upgrading our hardware, operating system and software is a business imperative that cannot be delayed any longer. Any further delay will further inhibit the employee's productivity as well as damage the brand image in general. It has led to an overall increase of….....

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