The content on this page and other DCITA document archive pages is provided to assist research and may contain references to activities or policies that have no current application. See the full archive disclaimer.
Group GSA
Executive Summary
Group GSA is an architectural practice offering services in architectural planning, interior design and urban planning.
Jim Wright, IT manager, believed that e-commerce was necessary to further business opportunities for the company. At the same time, clients were demanding a more interactive service, which would allow them to monitor and be involved with project management.
E-security was vital in providing clients with the assurance that information transfer via the website was secure. It was also necessary to protect against disruption to system operations. The measures Group GSA adopted include password protection for customer login, anti-virus software, a firewall to protect the server and terminals and encryption technology for the transfer of data via the Virtual Private Network (VPN). These are supplemented with frequent data back-up and physical security measures.
The implementation of e-commerce succeeded in attracting additional revenue of $500,000 in 2001. Total cost savings of $114,000 were also achieved.
The main method of communication with customers and project parties is now via the website or by email. Staff productivity has improved, as less time is needed to address customer enquiries. Clients have been particularly responsive to the project management facility provided via the company website. The facility enables clients to monitor the progress of their project and proactively contribute to any developments.
The Business
Established in 1979, Group GSA is an architectural practice specialising in architectural planning, interior design and urban planning. Services are targeted at the construction industry and focus on commercial fit-outs and construction, large-scale residential developments and government contract work (principally in defence and education). The company has operations in Australia, the Pacific, Asia and the USA.
Group GSA is based in Sydney, NSW and employs 55 full time staff.
Getting Started
Jim Wright, IT manager, introduced e-commerce approximately four years ago with the use of email communication. He envisaged a paperless office that would minimise printing and courier costs. Later developments involved adoption of more advanced e-solutions such as an online project management tool. A brochure style website was initially created and gradually upgraded to include project management functions.
Jim is an architectural draftsman by trade who is also experienced in Information Technology (IT). Preliminary research involved investigating the online capabilities of competitors and contacting clients to determine the type of online services they required.
Web developers and consultants were commissioned to implement the technical features of the e-commerce strategy.
E-Security
Extensive e-security measures were adopted to protect online systems from data loss and damage. Customers were wary of transferring information online without the assurance that their information was protected from unauthorised access. To ensure confidentiality, access to project information via the company website is password protected. Clients access specific information related only to their projects.
The company employs firewall technology to protect against damage to hardware and software applications. The VPN is firewall protected, while zone alarms are also installed on all terminals. These measures control Internet connections in and out of the business. The VPN is also protected by 128 bit encryption technology which ensures that data is only read by the person intended to receive it.
Group GSA has also installed anti-virus software in all PCs to minimise data loss and destruction should a virus be contracted via emails or file transfer. Patches are downloaded fortnightly to update the anti-virus software.
These security measures are supplemented with nightly back-ups of data, which are stored on tape in an offsite location. Physical security is also employed to protect the server and terminals from unauthorised access. An external IT consultant oversees the security of the VPN and firewall on a monthly basis.
Current e-commerce strategy
The primary function of the e-commerce strategy is information dissemination. Clients can enter the company website and access project information such as drawings, specifications and other product literature. The company also delivers post sales service by making information available to clients for a set time after the completion of the projects so that they can refer to the drawings and specifications if required.
For prospective clients, the website acts as a marketing tool to provide information regarding capabilities and credentials. Marketing of the website is through search engines, brochures and company stationery. Website content is updated quarterly. Group GSA currently receives two to three web enquiries per week.
A Lotus Notes based intranet was developed in-house for sharing internal information such as training manuals, client information and leave forms. This intranet is accessible by remote access for senior staff working from interstate or home.
Other web-enabled transactions include online banking and payroll. Electronic transfers are also used for debtor and creditor transactions where possible. The company also lodges its tax forms electronically.
Internet access allows the company to conduct market research online. By reviewing the websites of competitors, the company can benchmark their own business developments and keep up to date with trends in the architectural industry.
Group GSA has installed Broadband Internet via Asymmetric Digital Subscriber Line (ADSL). The previous Integrated Services Digital Network (ISDN) connection was inadequate for the fast transmission of large files. ADSL was found to provide faster transmission, thereby improving staff productivity as less time was required for the upload and download of files as well as execution of web transactions.
Revenue and Costs
|
|
|
|
|
|
|
($) |
|
E-commerce establishment costs |
|
|
|
Web development - marketing (including via client sites) |
60,000 |
|
|
Preliminary research |
2,000 |
|
|
Staff training/education |
15,000 |
|
|
Database integration - development of Lotus Notes database |
25,000 |
|
|
Domain names |
1,200 |
|
|
Telecommunications - purchase of ISDN and ADSL |
1,500 |
|
|
Software - Lotus Notes |
12,000 |
|
|
Software - anti-virus application |
1,300 |
|
|
Hardware - servers |
27,000 |
|
|
Hardware - digital camera |
1,500 |
|
|
Hardware - routers |
3,000 |
|
|
Hardware - server for firewall |
2,700 |
|
|
Total e-commerce establishment costs |
|
152,200 |
|
|
|
|
|
Operating benefit from e-commerce |
|
2001 |
|
|
|
$ |
|
Additional revenue from e-commerce |
|
500,000 |
|
Less: Cost of goods sold |
(400,000) |
|
|
Gross profit from e-commerce |
|
100,000 |
|
Add: E-commerce cost savings |
|
|
|
Postage/freight - includes couriers |
8,000 |
|
|
Photocopying |
4,000 |
|
|
Printing |
2,000 |
|
|
Staff time - after sales service |
20,000 |
|
|
Bank charges |
1,000 |
|
|
Staff time - communication time |
50,000 |
|
|
Staff time - project administration |
15,000 |
|
|
Telecommunication |
4,000 |
|
|
Staff time - payroll |
10,000 |
|
|
Total e-commerce cost savings |
|
114,000 |
|
Gross benefit from e-commerce |
|
214,000 |
|
Less: Ongoing e-commerce costs |
|
|
|
Amortisation of capital expenditure* |
(38,050) |
|
|
Bank charges |
(300) |
|
|
ISP - include ADSL |
(9,600) |
|
|
Data storage - backup and storage |
(2,400) |
|
|
Website hosting |
(3,600) |
|
|
Systems - maintenance |
(3,300) |
|
|
License fees - Lotus Notes |
(1,200) |
|
|
License fees - Anti-virus software |
(1,300) |
|
|
Telephony - fixed (ISDN rental) |
(708) |
|
|
Training |
(2,000) |
|
|
Staff time |
(55,000) |
|
|
Consulting Fees - security of VPN, firewall |
(2,820) |
|
|
Total ongoing e-commerce costs |
|
(120,278) |
|
Operating benefit from e-commerce |
|
93,722 |
|
|
|
|
* Note: Capital Expenditure is amortised over a four-year period
Financial Analysis
Additional sales of $500,000 were derived from the e-commerce initiative. This was due to clients contacting the company after visiting the website. The contribution to gross profit is $100,000.
The use of e-commerce has also brought significant cost savings, which totalled $114,000 in 2001. The majority of these savings were associated with the reduction in staff time required for daily operations. Reduced communication time by using email has saved $50,000. After sales service is now provided online, thereby reducing staff time spent in managing queries and providing documents from completed projects ($20,000). Additionally, staff time required for project administration has been minimised ($15,000).
The uptake of electronic correspondence has reduced office supply costs including postage/courier ($8,000), photocopying ($4,000) and printing ($2,000). Telecommunication expenses have been reduced by $4,000 due to the increasing use of email. Online banking and payroll has reduced bank fees ($1,000) and time spent administering payroll ($10,000).
Since 1998, Group GSA has invested a total of $152,200 into the establishment of e-commerce. Costs associated with development of the website included website design and marketing ($60,000) and registration of domain names ($1,200). Infrastructure required to support the online system included Lotus Notes software ($12,000), servers ($27,000), routers ($3,000) and development of a Lotus Notes database ($25,000). A digital camera needed for taking images of architectural plans was purchased for $1,500. Investment in system security involved purchase of a dedicated server to support the firewall ($2,700) and initial installation of anti-virus software ($1,300).
Total ongoing costs were $120,278 in 2001. The majority of ongoing costs were required to support the Virtual Private Network and include system maintenance ($3,300), Lotus Note licence fees ($1,200), and staff time required to maintain the network ($55,000). Costs associated with e-security include data back-up and storage ($2,400), licence fees for anti-virus software ($1,300) and security consultant fees ($2,820). In addition, the company allocated $38,050 towards amortisation of capital expenditure over a four-year period.
Non-Financial Benefits
The company has reported improved customer and employee satisfaction. Customers have reported that they feel empowered as they have convenient access to project information, allowing them to monitor development and be pro-actively involved in the project. With a more responsive communication system, the risk of misunderstandings or mistakes is minimised.
Employee satisfaction is improved as increasing email use and intranet access allows staff to manage work volume more efficiently. Response time to client enquiries is also reduced as the online systems have expedited staff access to the required information. The after-sales facility provides clients access to completed projects. This minimises staff time required to manage queries and requests for documents relating to previous work. This also contributes to improved staff productivity as staff can now allocate more time towards current client work.
Challenges
One of the main challenges faced by the company is the need to convince external consultants (eg. structural engineers) as to the benefits of online project management. Continual education is required to break down this resistance to new technologies. While the lack of IT skilled staff was an initial problem, this was overcome by staff training.
Although Jim felt that set up costs of e-commerce were substantial, this issue was managed by the incremental development of online capabilities.
Future
Group GSA plans to implement an extranet system, which will allow staff and alliance partners to access the internal system. Entry will be via a login account on the company website.
Jim's recommendation to those first venturing into e-commerce is that development should be incremental. Careful analysis of business needs should be undertaken to ensure a cost effective result. In addition, installation of adequate security measures is important for fostering client and staff confidence in the online systems.