PROJ410 – Case Study 1
reduced operational control over outsourced activities! 3irect and indirect costs must #econsidered #y managers in ma(ing such decisions!
2.Three different alternatives and evaluation of these alternatives2.1.Local data center
-aving the data center close to customer is important factor in meeting customers" needsand therefore off+site/local data centers are located in the same country as the customer!By esta#lishing local data centers our company can e2pand and improve the offsitemodel! $hese local centers &ill allo& close interaction &ith the customer and uic( response to a service reuest #eing in the same geographic location and time )one as thecustomer! or(force may uic(ly move #ac( and forth #et&een the on+site team and thelocal team! $o compete more effectively &ith local service providers our company canrecruit locally hired managers mar(eters and possi#le technical associates in localcenters!
+ Service+level agreements are critical in the outsourcing #usiness! $he client company and the outsourcer must (no& &hat to e2pect from eachother! $he uality of the service+level agreements determines the uality of therelationship #et&een the client company and the outsourcer! ' lot can happen during thelife cycle of a data center services contract as people are reassigned to other pro%ectsleave the company or get promoted! Our company &ould need to (no& &hoseauthori)ation is reuired to fi2 escalations in data centre hosting5 ill there #e 64 #y 7services from the outsourcer.s employees5
Security of the data
+ Cloud computing in particular has lot of concerns a#out security!' remote service provider could #e transferring data over pu#lic data infrastructuresu#%ecting the company to data transfer ris(s! 8irtuali)ation poses ris(s &ith data fromdifferent customers hosted on the same server! 'lthough logical #arriers may #e in placeit.s easy enough to reach the conclusion that those #arriers are not as strong as physical
Renegotiation and TerminationMore often than not, it is more desirable to renegotiate a contract thanto terminate one. What do you think may be some of the eects of acontract termination from the buyer's perspective? What about fromthe seller's perspective? Termination of a !" contract #ill cause each of the parties to incuradditional costs. The $uestion to ask #ould be if the additional costout#eigh the risk or cost of not terminating and %o# much are thecosts and can they be mitigated. &les of such costs may includeadditional fees to the vendor for providing termination services, suchas maintaining parallel environments and training of customeremployees.
There are other things that both the parties need to consider. As part of renegotiation and termination discussions, both parties would need to review theintellectual property provisions in the BPO contract to determine their ownershipand use rights of certain key intellectual property e.g., software, methodologies,tools, documentation upon termination. Often at the center of renegotiation ortermination discussions is a project that was not successfully implemented, notimplemented on time, delayed, or canceled. The parties will need to review theBPO contract to determine each partys obligations with respect to the projectand the impact on the BPO contract if the project was not implemented asdesigned or on schedule or was delayed or canceled. !as the vendor provided alldeliverables in a timely manner" !as the vendor met all re#uired milestones" $sthere a termination right associated with the failure to provide deliverables ormeet milestones %in addition to the right to terminate for material breaches&"'oes the customer have the right to re#uest li#uidated damages" Are there anythird parties that did not perform that have impacted project implementation" $f so, which party bore the risk of third(party nonperformance")eferences* +ohn . !alvey and Barbara -. -elby. %//0&. Business Process Outsourcing.1econd 2dition. +ohn 3iley and 1ons, $nc.
"n both sides, contract termination generally costs time, money andcan result in ill(#ill by one or both parties.
$ would think both sides have a vested interest in making it work. They have bothdevoted much time and many resources in developing the contract and therelationship to this point. $t is better for both sides to salvage what they can andrenegotiate rather than scrap everything and start over.$n a situation where a material breach has not taken place, there may beopportunities when the purpose of the contract is no longer applicable. $n these