BOSS (Business Outsourcing System Solutions) commissioned an independent assessment of the earned and projected financial savings realised by Westwood Corporation after outsourcing its IT infrastructure and back-end accounting to BOSS. At the time of the assessment Westwood had been on the service for eighteen months.
Westwood designs and markets textile products to department and speciality retailers. Founded in 1980, it carries revenue of over $15 million, serves more than 100 customers across North America, and distributes from three warehouses on the East and West coasts.
Like many mid-sized apparel manufacturers, Westwood had made limited IT investment — a financial application on an AS400 and EDI bolted on to meet customer requirements. The application did not cover the full supply chain, had no inventory management module, and offered no real-time reporting.
Financial reports were typically unavailable until after an accounting period had closed. By then the data was too old to avert a problem. Real-time data became a hard requirement for any solution considered.
Facing an expired AS400 lease, Westwood weighed the cost, benefit and risk of upgrading its own infrastructure against outsourcing. Significant upgrades to backup, security and redundancy would have been required, plus the custom configuration needed to migrate legacy data to a new financial application.
Westwood elected to outsource back-office accounting and IT management to BOSS at a fixed monthly fee, upgrading the financial system at the same time and retaining decision and analytical control.
Westwood incurs $12,500 per month for IT infrastructure outsourcing ($150,000 annually) and $8,333 per month for business process outsourcing — $250,000 per year in total.
To stay conservative, the analysis excluded the software and hardware upgrade costs Westwood would have incurred had it not used BOSS.
| Profit impacts | 2003 | 2004 | 2005 | Total |
|---|---|---|---|---|
| IT Personnel | $80,000 | $80,000 | $80,000 | $240,000 |
| AS400 Lease / Support / Maintenance | $15,000 | $15,000 | $15,000 | $45,000 |
| MIS Outsourcing | $15,000 | $15,000 | $15,000 | $45,000 |
| EDI Consulting | $20,000 | $20,000 | $20,000 | $60,000 |
| Back-office Employees | $160,000 | $160,000 | $160,000 | $480,000 |
| Treasurer — close cycle | $50,000 | $50,000 | $50,000 | $150,000 |
| Inventory Carrying Costs | $80,000 | $80,000 | $80,000 | $240,000 |
| Inventory Manager | $25,000 | $25,000 | $25,000 | $75,000 |
| Net inflows | $445,000 | $445,000 | $445,000 | $1,335,000 |
| BOSS — outsourcing fees | ($250,000) | ($250,000) | ($250,000) | ($750,000) |
| Net cash flow | $195,000 | $195,000 | $195,000 | $585,000 |
| Cumulative cash flow | $195,000 | $390,000 | $585,000 | $585,000 |
Westwood had earned $292,500 over the first eighteen months and was projected to earn a further $292,500 over the following eighteen.
We were the independent assessor. We did not deliver the outsourcing service and we do not claim the savings — BOSS earned those. What we produced was the evidence: a line-item baseline, a cost side that was not omitted, a deliberately conservative assumption set, and a matched actual at eighteen months.
That is the difference between a vendor claim and a CFO-certifiable number. BOSS could put this document in front of a finance committee. A brochure does not survive that room.