Tegan as One of the Largest Educational Toys Distributor Assignment - 3

Tegan as One of the Largest Educational Toys Distributor - Assignment Example In the case of Tegan, the outsourcing offered some benefits since the company’s outsourcing partner Hrad Technica had possessed significant experience in that field. The Tegan entered into a fixed cost contract with Hrad so that Tegan can avoid further costs related to project development. The outsourcing concept has assisted Tegan to escape from the trouble of reinvesting in the technology. Figure 11.20 indicates that outsourcing process would benefit the firms to reduce the costs by approximately 40% (Developing information systems). The Tegan could also take advantages of various costs such as operational and maintenance costs and project development costs. Moreover, Tegan has not adequate expertise to develop a new A/P system itself. Therefore, it is identified that outsourcing the A/P project was the best-fitted move for Tegan when comparing with other available alternatives. From a detailed study, the outsourcing challenge â€Å"scope of a definition† was the fact or that worsened the outsourcing process. Most of the companies fail to define a specific scope for the proposed program while outsourcing their IT projects. These contractual misunderstandings raise many problems and weaken the project development. Under such circumstances, the beneficiary organization tends to believe that the required services are within the scope of the contract whereas the service provider argues that it is outside the contract and therefore the organization must pay extra fees. Same is the case happened with Tegan and Hrad. During the progress of the project, Hrad Technica identified certain system features such as â€Å"computational forecasting algorithms for selecting and ordering payments† that had not been defined in the initial scope of the contract (Staats & Upton). This situation led to time delay and the need for extra funds for the completion of Tegan’s project. There are some tradeoffs involved in having the requirements analysis for a project performed by one of the firms that would ultimately bid on the project. While performing requirements analysis, the project development firm must try to accumulate information regarding the client firm wherever it is possible. Sometimes, the firms send their official representatives to scrutinize the client’s current systems and practices even though it involves some additional costs. This practice may assist the project development team to acquire the client’s trust. Generally, outsourcing firms also give an opportunity for the client to posts feedbacks at various phases of project development. Although the client’s frequent intervention may interrupt the project development flow, it is a better strategy to provide improved services to the client firms.