REDUCING AGENCY COSTS
Your company has 3,000 employees and is looking for ways to reduce some of its operating costs. You have prepared the following list of operating expenses.
You are hoping you can reduce some of these costs by using Internet technology to build an intranet for the firm. The intranet would do the following:
Provide e-mail communication among employees worldwide.
Provide employee handbooks that could be published and revised electronically and accessed from each employee’s desktop computer.
Enable employees to select and revise their medical and life insurance plans on-line through their computers.
You believe that employees could use e-mail to accomplish 40 percent of the communication that is taking place over the telephone.
All employees are required to review their health benefits and re-enroll in their benefits plans once per year.
New employee handbooks are distributed to each employee once a year.
The intranet would cost $600,000 to develop and $100,000 annually to maintain. No new hardware or networking infrastructure would be required since all employees already use networked desktop PCs.
- Telephone costs $750,000 per year
- Employee policy handbooks $8.75 per handbook for printing and distribution
- Employee benefits counseling $80 per hour meeting
You are hoping you can reduce some of these costs by using Internet technology to build an intranet for the firm. The intranet would do the following:
Provide e-mail communication among employees worldwide.
Provide employee handbooks that could be published and revised electronically and accessed from each employee’s desktop computer.
Enable employees to select and revise their medical and life insurance plans on-line through their computers.
You believe that employees could use e-mail to accomplish 40 percent of the communication that is taking place over the telephone.
All employees are required to review their health benefits and re-enroll in their benefits plans once per year.
New employee handbooks are distributed to each employee once a year.
The intranet would cost $600,000 to develop and $100,000 annually to maintain. No new hardware or networking infrastructure would be required since all employees already use networked desktop PCs.
- How would the intranet make the management process more efficient?
- How much would the intranet reduce agency costs? Is the intranet worthwhile to build?
- Are there any other benefits that could be produced by the intranet? Are there any disadvantages to using the intranet?
