Tegan CCC and Hrad Technika - Case Study Example

Tegan c.c.c. and Hrad Technika Case Study The case study of Tegan c.c.c. and Hrad Technika provide an overview of the major program, project, contractual, dictatorial, and intellectual issues faced by multinational companies in administrating essential projects including virtual teams, subcontract and transformational outsourcing. Hrad Technika illustrates a problem from the perspective of an IT services provider; on the other hand, Tegan c.c.c. analyzes the same issue from the customer's standpoint. Both perspectives provide the opportunity to understand the essentials of managing IT outsourcing projects. The case study analysis and research would help one to identify the requirements for a Program Management Office in monitoring and controlling overseas operations with regard to outsourcing a project to a third party company. 1. The company desired to replicate the scalable system using newer technologies that could manage the explosion in volume. In fact, outsourcing the A/P project was the right move for Tegan even while considering the other possible alternatives. Though the sales in its core business was declining at a point, their association with Fan Li – a Chinese toy manufacturer, in 2007 had dramatically increased the number of transactions as order sized plummeted. The Addition of Fan Li’s accessory line meant an outburst in orders providing a boost to sales that could augment the profitability. At this stage, the accounts payable process at Tegan had a significant role in providing bottom line results for the company, because the firm received standard discounts (typically 1% to 2%) on most of its payables for early payments. The firm also had to make sure that the payments were not too early. Therefore, it was a challenging task for the firm to manage the A/P as any mistakes in handling the razor-thin profit margin floating around 1% would dramatically reduce the profitability. The Tegan’s accounts payable system was thus a complex machine, and it became much worse because of the stress from the new Fan Li business association. The system faced frequent re-boots, blocking of records, and bizarre runtime related errors which created a lot of annoyance for the daily routine of the A/P staff, creating a frightening issue for Tegan’s leadership team. So, the foremost consideration was to fix the A/P system fast, as even the finance and IT departments were worried that the system would not make it through Christmas 2008, conventionally, the peak time for Tegan. Finally, Tegan had three options to choose from to address the A/P problem. The first was to install an enterprise resource planning system (ERP), such as SAP. And the already running SAP did not include financial accounting modules, and it would cost £5 million to install SAP with all the accounting modules. Then, the second option was to rewrite the system using internal resources, which did not seem practicable at the first site itself due to lack of sufficient internal staff and the ongoing ineffective SAP rollout. So the third choice was to outsource the development of the system to a third party. Moreover, Hrad Technika already had established reputation for solving the problems of a number of industrial giants. And the estimated final output seemed working and the cost was marginally less than Tegan doing the work entirely in-house. Therefore, outsourcing the A/P project was the right move for Tegan even while considering the other possible alternatives. 2. The idea of Hrad Technika was to move to an updated version of Dunnock in which all the custom work can be replicated. As the system “definer,” Hrad has to capture the functionality of the ongoing system which could be replicated accurately on a scalable system utilizing the modern technologies that could easily manage the explosion of volumes. Hrad’s primary task was to create a requirement analysis document so that Tegan could put the system out for bid. The idea behind the requirement document was not to get the hundred percent precision of the ongoing functions of the system but rather to enhance the bidders with some information about the system in order to accurately estimate the effort and risk involved in the project. Tegan wanted the contract for the project at a fixed price, and when Hrad offered a bid of £900,000 Tegan agreed to the statement of work thereon launching the project. Hrad on taking the project had to make partnership deals with Dunnock and work with the experts in the Dunnock system. One of the difficult tasks for the Hrad was to work with the experts from Tegan who could explain the various customizations and business-statutes built into the system. Adding to the problem, though many of the staff had been working with the A/P system, there was only one person Julia Jones who clearly understood the working of the entire system. Hrad sent each week low level design documents (LLDs) to Tegan for review, but unfortunately the whole documents had to be signed-off by the same person, Julia Jones. Due to this slow signing-off the DLLs, the project had been facing great delay and Hrad could not go further ahead with the project. Finally, there were only two choices; whether to push out the timeline of the project or to considerably cut down incorporated functionality. Moreover, to meet the deadline, Hrad must spend an additional £400,000 into the project, which the Tegan refused to accept as it was a fixed price project. 3. Various project managers and firms make use of the Work Breakdown Structure (WBS) as a significant aspect of their project management methodology. Hrad undertook the project using the formal work breakdown methodology with Sokol and Zelenka jointly working on the bid. Comparing with the outline structure, the WBS of the project task has hierarchical chart view of the deliverables in a project. Each phase downwards provides progressively more comprehensive information of the project deliverables, having its own code set for each phase. The specified project plan required Hrad to send weekly Low Level Design documents (LLDs) to Tegan for review. On the other hand, Tegan had the contractual responsibility to review and return the LLDs within four days so that Tegan could write the specified code for the phase. 4. Hrad Technika entered into a contract with Tegan for a fixed project price of £900,000, and agreeing to the statement of work, it launched the project in December 2007. Hrad also partnered with Dunnock for having access to experts in the Dunnock system. The most important requirement of the project was to work with the experts from Tegan who could define and explain all of the various customizations and business statutes of the A/P system. The project plan required Hrad to send low level design documents (LLDs) to Tegan for review each week. Tegan on the other hand, had the contractual responsibility to return the LLDs after reviewing and signing-off within four days in order that Hrad could then create the specified code for the reviewed LLDs. However, after commencing the project, going into the detail within 2-3 weeks, it was clear that the project was facing great scope and requirement problems. There had been problems with project sign-off. The team alarmingly found out that even there were many people working closely to the A/P system; and it was only the most vocal person at the meeting who could understand the system, Julia Jones (Upton and Staats , “Hard Technika”). It was found that definition projects were carried out iteratively, because all the documents that defined the requirements of the project had to go through a single person at Tegan. The same person was forced to review all the documents and sign-off the LLDs, which sounded too much. When Tegan had completed reviewing and signing-off and returned one LLD, there were ten more with Hrad ready to go. It was evident that the requirement problem was extensive that the project could not be completed in time as the project was woefully behind the schedule. 5. In fact, as Smith found out, “Leadership” and “Commitment”, the paucity of which was blamed for untold IT failures were not the problems at Tegan. Several years earlier to the project, Tegan had merged all IT personnel within the company into the IT group. When this merger took place, some parts of the business “hid” IT personnel into their ranks by providing them with titles of manager, even though they were actually able to make strong contributions ( Upton and Staats, “Tegan c.c.c”). This practice created some chaos when Maredudd left Tegan for another company and previously hidden IT personnel was transferred from the finance group. The main issue behind outsourcing the project was lack of experienced personnel with respect to the A/P system. The same issue of inadequacy in the effective staff also affected carrying out the project. In fact, Jones was the only person who had sufficient system expertise to evaluate the LLDs for functionality and therefore a backlog quickly grew around her. In the same way, when they had to rewrite some of the LLDs that laced some necessary functionality, the Hrad’s team said that they were not sure whether this issue was within the scope of the project. Thus, the project lacked a clear and precise identification of necessities for the project. This lack of project identification also added to the management problems. 6. Among the four suggested options, it would be advisable for Tegan to move forward with the first option of sticking with Hrad. They should identify and adopt a suitable strategy for dealing with Hrad. While choosing to stick with Hard, the firm can push them on the deadline or on the size of the change fee. Choosing another option would not be helpful for the firm as it is too hard for the firm to recover the amount that is already spent on the project. The firm cannot simply cut their losses and walk away, and so the best option will be to continue with Hrad once suitable strategies are developed. Works cited  Upton, David M & Staats, Bradley R. “Tegan c. c.c.” Harvard Business School. (31 October 2008): 1-5.    Upton, David M & Staats, Bradley R. “Hrad technika” Harvard Business School. (21 October 2008): 1-5. Read More