Schaeffer Corporation must have improved information technology services in order for them to achieve their ambitious growth goals. Schaeffer’s IT is not one of their core competencies and they are able to save some money by outsourcing and expending into additional countries and acquiring these new companies will require extraordinary IT support efforts. Schaeffer Corporation has five challenges associated with their decision to outsource.
In order of priority, the first challenge is that what if there is a problem with the contract? If new situations arise that weren’t in the contract, Schaeffer is unable to renegotiate contract thereby losing lots of money in the process. This will require additional costs without additional benefits. Contract negotiations are an integral part of the purchase process because it is hard to renegotiate a contract with selected vendors (398).
The project manager involved in the contract writing and negotiation steps should re-read the company’s needs and the package’s capabilities before making a major decision. Successfully implementing a packaged application requires commitment from business managers and users so having a project manager satisfy the role to manage technical aspects of implementing a package (400). Challenge number two is that if Schaeffer outsources, the data center will be in Vilona and not all employees will want to work in Vilona so this causes employees to leave Schaeffer not because they want to but because they have to.
Project management can also use Schaeffer’s loyal and long time staff for certain parts of the project implementation and see what else they can do for their due to the change in outsourcing. Ten people have decided to leave for other jobs during the outsourcing decision process. IT people have been displaced by ABC employees. Outsourcing is already having an impact on the culture of the company and individuals with the best qualifications should be placed for work within the ABC Corporation as part of the outsourcing decision (418).
The third challenge is that ABC Corporation has a higher cost than they stated in their RFP. Schaeffer needs to have a project budget for the total project to outsource. Cost estimations can be very complicated by many types of unknowns not in the contract including lack of precedents, unpredictable technical problems and shifting business requirements (418). Schaeffer will need a budget that has some layaway in case of issues with cost arise. Challenge number four is that the Colbert Division does not want to outsource because it is very expensive and risky.
The outsourcing decision will have risks just like every other decision but Schaeffer should look into more firms and research so that this important decision does not interfere with their planning and that no one better fits their dynamic and growing Reitzel Division. Colbert Division does not want to outsource because it is too expensive and risky for their division. Schaeffer needs to let the Colbert Division know the advantages to outsourcing all the divisions.
Some advantages are the reduced need for internal IS resources because all of the resources will be based out of Vilona and that it takes less time to implement (402). The fifth problem is to outsource all of its IT operations for Reitzel but keep systems development in-house. The best plan has to be put in process in order to achieve the revenue targets. It does not seem right to only outsource some of IT’s operations while leaving some systems in-house.
The appropriate long term solution is to outsource in order to accomplish their goals and have the best IT support. ABC Corporation seems to be very outstanding in providing that support that Schaeffer has mentioned in their RFP. Even though ABC Corporation seems like the perfect choice, Schaeffer should investigate ABC Corporation more with references from other corporations/firms who have used ABC Corporation before signing onto a contract (396).
Schaeffer can ask all their vendors to provide a reference list as part of the RFP to make the best decision to implement for the outsource project. Schaeffer’s should not have to worry about making changing to this outsourcing decision five years from now so Schaeffer has plenty of time to research their vendors and see which one can provide the wants and needs of the corporation.