Saber has a total of 12 full-time resources doing various roles. In addition, there are about 20

Subject Matter Experts (SMEs) who also have to be transitioned. This deliverable is included in

the 4.0 Artifacts work stream. The 12 full-time resources have been classified as follows:

Role Number Monthly

Salary

Comment

Senior

Management

2 $10,000 These are the face of the organization and need to be

kept as employees.

Sales 2 $6,000 These staff sell ads on the web site. Your company

has no experience with this type of sales and thus

you want to retain these resources.

Support 2 $5,000 Let go, assumed by Mammoth IT department

Technology 3 $6,500 These are the technical resources that maintain the

website and understand the architecture and must

be kept as long as you are using the website.

Finance 1 $7,000 Let go, assumed by Mammoth finance department

Legal 1 $9,000 Let go, assumed by Mammoth legal department

HR 1 $7,000 Let go, assumed by Mammoth HR department

The full-time resources are all located in one city in Europe, but your head office is in North

America. You also have a small office in Europe, but not in the same city as Saber. In talking to

your HR, they indicated that there are no vacancies in the departments for the redundant staff

at this time, especially since they are based on Europe. In your analysis, you do not have to

include any severance to be paid to the staff. The severance will be the same for a make or buy

option.

Make Option

The Mammoth HR department feels that if they defer four of their projects freeing up 2 people,

and take on the HR person from Saber for 6 months (there would be a 40% increase to their

monthly salary to cover Admin and overhead costs), they would have enough capacity to

handle the transition of these Saber resources. The HR Department has recently completed

another similar transition and have calculated it would take 1,500 hours at $75/hour to

complete. Plus, the HR Manager would need some legal advice to support the transition

because it is outside of North America. Based on past experience, the HR Manager estimates

this would require 100 hours of support at $200/hour. It is expected that with the Mammoth

HR Department handling the transition, it will take about 3 months and will result in an

additional month of pay before Saber resources are let go over the buy option.

Buy Option You have completed a RFI and you discovered that there are a number of companies that do

this type of work. In general, these companies can get the work done in a month and it looks

like their cost will be about $150,000.

The Mammoth HR department, based on their experience with hiring these firms, say that

typically they will have to have one of their resources supporting the organization full time for a

month and then they need another internal staff member full time for 2 months after they

leave to tidy up the mess for a total of 450 hours at $75/hour. In addition, their experience

has been these Companies low ball the employees which results with lawyers getting involved.

The net result is additional costs and having to pay more for the severance. You figure the

additional severance cost could be $100,000 and there is a 20% chance that one of the staff

members from Saber would go this route. In addition, there will be an internal cost to do the

procurement which you estimate will be 100 hours at $75/hour.

Assignment Requirements

Your submission should consist of:

1. The cost elements (calculations) for the Make Analysis

2. The cost elements (calculations) for the Buy Analysis

3. Your recommendation for one of the options and the rational why