Software AG > Case Studies > Make-or-Buy Decision For Maintenance Services

Make-or-Buy Decision For Maintenance Services

Customer Company Size

Large Corporate

Region

Europe

Country

Germany

Product

ARIS Business Designer

Tech Stack

SAP systems

Implementation Scale

Enterprise-wide Deployment

Impact Metrics

Cost Savings
Productivity Improvements

Technology Category

Analytics & Modeling - Process Analytics

Applicable Industries

Buildings

Applicable Functions

Facility Management
Maintenance

Use Cases

Predictive Maintenance

Services

Data Science Services

About The Customer

GEWOFAG – Gemeinnützige Wohnungsfürsorge AG München is a company that manages approximately 30,000 housing units in Munich. The company is an independent builder of new housing with total group assets of approximately EUR 1.1 billion and net sales of approximately EUR 175 million. The company employs around 600 people and has been serving housing needs for over 80 years. Its strategic mission is to create living accommodations for a broad range of the population.

The Challenge

GEWOFAG, a company that manages around 30,000 housing units in Munich, was faced with the decision of whether to maintain its buildings in-house or to outsource the work. The current trend in the real estate sector is to outsource maintenance services to external providers, who can perform the services more cheaply than internal staff on a case-by-case basis. GEWOFAG has its own technical workshops unit (mainly for corrective and preventative maintenance), which employs around 60 tradespeople, including garden workers to look after green spaces and parks. The company sought an objective expert opinion on the most cost-effective approach.

The Solution

IDS Scheer Consulting, a Software AG brand, was tasked with determining whether it makes better business sense for GEWOFAG to perform the services itself or to outsource them. Contribution margin analysis was used to establish the value of the services provided by GEWOFAG’s technical workshops. To make the results as reliable as possible, data was taken from an entire, complete accounting year. The hourly rates and costs typically found in the marketplace were applied to GEWOFAG’s technical workshop services to create imputed income for comparison with a fictitious external provider. The figures included the actual variable and fixed costs together with the overhead allocated to the technical workshops. Analysis focused on whether this produced a positive contribution margin, or even a cost advantage compared to an external provider.

Operational Impact

The project demonstrated that outsourcing the relevant GEWOFAG services would be extremely uneconomic and that significant cost benefits are achieved by performing services in-house compared to the competition – along with higher quality.
The findings produced by consultants of IDS Scheer Consulting using ARIS Business Designer enabled GEWOFAG to reduce process costs by some 25% while maintaining the same level of quality.
The project provided the required business data on which the organization was able to base its decision not to outsource heating, cleaning, electrical, carpentry, and gardening services.

Quantitative Benefit

Process costs reduced by around 25% while maintaining the same level of quality
IDS Scheer Consulting’s fees amounted to approx. 3% of the make-or-buy decision, or 11% of the potential savings