Pyramid Printing Company's information-technology department administers the company's material-requirements-planning and general-ledger systems, provides support to the computer-based shop floor reporting and payroll systems, and provides personnel computing services for each department's administration.
Recently, Pyramid's controller, Pete Roberts, has been considering outsourcing IT operations to cloud-computing providers as a way to minimize support-department expenses. He has been reviewing potential contracts with cloud suppliers and interviewed the managers of departments that receive support from the current IT department. Pete determines that the cost savings are approximately $10,000 for the company. Its revenues are presently $60 million.
For this discussion:
What are the qualitative considerations for the elimination of support departments when strategically minimizing costs?