An open source software implementation helped a health fund, IMAN, reduce operating costs to 60% less than competitors. IMAN replaced its mixed and unstable hardware infrastructure with newer machines using open source solutions, reducing daily downtime by 20 minutes per day and saving $148K/year. Business processes like credit card processing saw annual savings of $46K and form letter generation saw $457K in annual savings through open source projects. Hardware upgrades using open source software were cheap and easy, reducing response times and saving $750K/year. Reporting and business intelligence previously requiring 3 days/month was replaced with an open source solution, saving $120K/year in reporting plus $30K/year in audit fees.

1. How Open Source Software helps a Health Fund reduce their costs to 60% less than their competitors

2. Talk outline What is productivity? Why it matters.. How to spot potential gains Why Open Source Software matters A case study

3. Productivity Defined “ Productivity in economics refers to measures of output from production processes, per unit of input. “ Source: Wikipedia 4 October, 2008

4. Measures of Productivity Operating Costs Units Produced Sales Made Number of Employees Insurance: Operating Costs Premium expressed as a %

5. Industry Average 10% for Operating Costs / Premium IMAN's is 4% This means that for every 10 staff IMAN have, their competitors need around 25. What is so special about IMAN?

6. Where are the gains in Productivity? Improve: Business Process User Interface Reporting Performance Reliability Personnel Effectiveness

7. Spotting Potential gains Look for: Lots of movement, over-work. Paper everywhere. Users spending a long time on a task. Duplicate information. Many-step processes. Office Automation over-used.

8. Starting Point @ IMAN Mixed, complex and unstable hardware infrastructure 20-30 spreadsheets as mini databases Two different subsystems claims and policy

9. What do IMAN run now?

10. How does OSS help? Open Source Solutions are: Flexible Provide choice Are often standards-based Provide future-proofing Allow you to build on the shoulders of giants License fees...

11. Productivity – Uptime Average downtime was 20 minutes per day. Replace existing server infrastructure with newer machines. Less service dependencies. Less Windows. Saving 20 mins X 30 staff per day. $148K / year

12. Calculating Savings Payroll savings (most common) Annual Salary Multiply by 50% for on-costs Calculate % of annual effort Calculate how many staff get saving Forumula is: Salary x 1.5 x % effort x people involved 80K x 1.5 x 4.13% x 30 = $148,500

13. Business Process improvements I Credit Card Processing (one person) – before: Cost: $49,600/Year

14. Business Process improvements I Credit Card Processing – after: Cost: $3,200 Saving: $46,400/year

15. Business Process improvements II Form Letters – before: Cost: $16,000 x 30 staff = $480,000

16. Business Process improvements II Open Source projects used: JOD Reports http://jodreports.sourceforge.net/ Dojo toolkit http://dojotoolkit.org

17. Business Process improvements II Form Letters – after: Cost: $750x 30 staff = $22,500 Saving: $457,500 / year

18. Hardware Upgrades OSS made this easy and low cost! Reduced response times with no other effort from 6 secs to 1. Cheap and easy option for ROI. Saves approximately 1.67 hours per day per staff member. $750K / year

19. Reporting and Business Intel Data held in Excel and other sources. Took 3 days per month to report. Replaced with Pentaho. Overall saving: $120K/yr. Additional savings in audit fees: $30K/yr.

20. Summary Current economic climate = close scrutiny of all IT spend. Always talk in terms on ROI. As an OSS dev, you have a good story to tell. Drop me a line if you want to.. stuart at polonious.com.au