INF80042 Technology Essentials for Managers

In this assignment you will create a Cost Benefit Analysis (CBA) report for an Financial Technology (FinTech) start-up organisation looking to expand into a second location within the same city and  considering changing from a current 1-staff-per-office to an open plan hot-desking model with a Bring  Your Own Device (BYOD) infrastructure model. Your CBA will analyse a set of criteria and put forward a  recommended preferred solution.

What is a Cost Benefit Analysis (CBA)?

A Cost Benefit Analysis is a process businesses use to analyse decisions. A CBA normally takes into consideration the Net Present Value (NPV) and a discount value* of costs and benefits. An analyst sums the benefits of a situation or action and then subtracts the costs associated with taking that action. The CBA technique assumes that a monetary value can be placed on all the costs and benefits of a programme, including tangible and intangible returns to other people and organisations in addition to those immediately impacted.

* For the purpose of this CBA, a simple payback calculation will be used instead, which removes the complex NPV discount, while at the same time is reflective of the most basic question that management and finance expect – i.e. Will it pay back in less than X years?

Key Points

• Cost-benefit analysis is a relatively straightforward tool for deciding whether to pursue a project.
• To use the tool, first list all the anticipated costs associated with the project, and then estimate the benefits that you'll receive from it.
• Where benefits are received over time, work out the time it will take for the benefits to repay the costs.
• You can carry out an analysis using only financial costs and benefits. However, you may decide to include intangible items within the analysis. As you must estimate a value for these items, this inevitably brings more subjectivity into the process.

Background and context

SwinX is a Financial Technology (FinTech) start-up company based in Hawthorn, Australia. The organisation currently has 30 employees. The company has developed a revolutionary new electronic mobile payment gateway system called ‘Swindle’ and uptake from consumers in Australia and around the world has surprised the organisation. Expansion is required quickly with an additional 15 staff to be expected to be recruited ASAP. This recruitment will include:

• 1 x Project Manager with (5-10 years-experience);
• 9 x Business Analyst (Entry-level);
• 3 x Business Analytics /Reporting Analyst (Entry-level); and
• 2 x Admin (Entry-level)

SwinX management do not want to leave their current office at Hawthorn which is conveniently located inside the Swinburne University of Technology Innovation Precinct but the physical constraints of the office space inside the innovation precinct have led management to begin a search for a second office. Management have identified Burnley (an adjacent suburb to Hawthorn) as the ideal second location. Currently, the 30 SwinX Hawthorn-based staff are assigned 1 staff member per private office (6 x 6 metres, each with a 27-inch LCD monitor, laptop docking station and Internet and Cisco phone). Staff areeach supplied 1 x HP Spectre laptop with Office 360 and 1 x iPhone XRs for their work on-the-go. All work is backed up in a basic Amazon Web Service (AWS) Cloud platform model.Management are open to considering changes from PC to Mac laptops and iOS to Android for their smartphones.

Currently all staff have their ID photo taken and are provided a swipe card with lanyard to enable access into the Hawthorn offices. The swipe cards are also used for printing and for purchases from the kitchen kiosk (at no extra cost). The average printing cost per employee is $125 per year and the cost of providing the kitchen Kiosk is $250 per employee per year.

Your Task

Conduct a Cost Benefit Analysis for SwinX which explores the following three (3) options:

1. Keeping the current architecture, infrastructure (software, vendor relationships) and building office setup model for Hawthorn and Implementing a hot-desking and BYOD policy for staff deployed at the new Burnley Office (OPT1);

2. Keeping the current architecture, infrastructure (software, vendor relationships) and building office setup model for BOTH locations (Innovation Precinct and Burnley) (OPT2);
3. Implementing a hot-desking and BYOD policy for BOTH locations (Innovation Precinct and Burnley) (OPT3);

Steps for conducting your CBA:
Step One: Brainstorm Costs and Benefits.
Step Two: Assign a Monetary Value to the Costs.
Step Three: Assign a Monetary Value to the Benefits.
Step Four: Compare Costs and Benefits
Overall considerations for you to complete the CBA:

• What Are the Goals and Objectives of the Project? The first step is perhaps the most important because before you can decide if a project is worth the effort, you need a clear and definite idea of what it is set to accomplish.
• What Are the Alternatives? Before you can know if the project is right, you need to compare it to other projects and see which is the best path forward.
• Who Are the Stakeholders? List all stakeholders in the project.
• What Measurements Are You Using? You need to decide on the metrics you’ll use to measure all costs and benefits.
• What Is the Outcome of Costs and Benefits? Look over what the costs and benefits of the project are, and map them over a relevant time period (ProjectManager 2019)