Madeira Travel Services provides travel agents access to sophisticated travel information and analysis systems over the Web. The company combines these tools with access to benchmarking data, including e-mail and wireless communications, so that travel agents can instantly evaluate airline fares and hotel rates.
Madeira Travel Services; President Joey Madeira is happy with the company's growth. To better focus on client service, Madeira is considering outsourcing some functions. CFO Tom Lee suggests that the company's e-mail may be the place to start. Madeira asks Lee to identify the costs related to Madeira Travel Services' in-house Microsoft Exchange mail application, which has 2,300 mailboxes. This information is below
Variable Costs Per mailbox per month
E-mail license $7
Virus protection license $1
Other variable costs $4
Fixed Costs
Computer hardware costs $94,300 per month
$8,050 monthly salary for two information technology staff members who work only on e-mail $16,100 per month
Required:
• Compute the total cost per mailbox per month of Madeira Travel Services' current e-mail function.
• Suppose that a leader provider of Internet-messaging outsourcing services offers to host Madeira e-mail function for $9 per mailbox per month. If Madeira agrees, it still would need virus protection, computer hardware and one IT person. Should they accept the offer?
• Suppose for an additional $5 per mailbox per month, the outsourcer would provide virus protection, quarantine, and content-management services, which would eliminate Madeira's need for IT person and virus protection. Should they accept the additional services?