Infrastructure Management - Assignment

Added on - 31 May 2021

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Running head:INFRASTRUCTURE MANAGEMENT PG1IT Infrastructure Management PGName:Institution Affiliation:
INFRASTRUCTURE MANAGEMENT PG2What mistakes did AstraZeneca make?AstraZeneca organization did not considerthat the business which they were doingcould change more rapidly than what thecontract could have accumulated(Borgman,2010). They were much dependent on theirinformation technology capabilities(Borgman, 2010). On the contract theorganization failed to cover all theinformation related to any eventuality whichled to the termination of the contract. Whatwere contained in the contract were merelythe hosting server services along with thestorage for the network, communication,commercial and the supply chain operations(Duggan, Ellison, Lampe, Lenhart &Madden, 2015). It is when the organizationdecided to terminate the 1.4 billion contractwhich was seven year global strategicoutsourcing agreement with the IBM. Therewas tough legal battle with the twoorganizations but the court sided withAstraZeneca(Larson & Chang, 2016).Among the major reason why the dealbetween the two organizations failed wasdue to the use of the outcome basedspecifications. What was contained in thecontract was merely to encourage innovationamong the vendors, nothing related to whatcould happen if there was a rapid businesschange in case they took place sincebusiness nowadays changes a lot(Larson &Chang, 2016). During the signing of thecontract it was seen as the ground breakingmodel, which was to encourage otherorganization to enter to such an agreement,but unfortunately it failed becauseAstraZeneca was changing faster than whatthe contract stipulated.What mistakes did IBM make?IBM at the time knew very well that verylarge and long term information technologyoutsourcing contracts are at time difficult tochange due to the aspect vendors usually
INFRASTRUCTURE MANAGEMENT PG3accrues profit from such deal(Duggan,Ellison, Lampe, Lenhart & Madden, 2015).When it comes to large outsourced deals, thevendors can make major investment in thefirst two years as the service is set up and atthe same time customized. When this isdone the vendors expect that they wouldmake profit margin in the last two to threeyears(Borgman, 2010). They should havecovered all these components in details forthe contract termination for example thecontinuing services to be offered and thepercentage of what their fees should be.Why are outsourcing contracts for five ormore years?The contract are usually 5 or more yearssuch as this one which was 7 years due tothe difficulty associated to changing on theway the vendors accrues on their profit(Larson & Chang, 2016). With regards tothe huge outsource deals, the vendors makemajor investment in the first two years sincetheir services are set up and they arecustomized(Larson & Chang, 2016). Theyexpect to make their margins of the profitsin the last two or three years. Additionally,the outsourced contracts are longer in orderto allow time for the organization to attainstrategic goals but with the flexibility toterminate on some or all the services eitherat any particular time on notice or at a givenbreak points in return to the payment of theearly termination compensation(Laudon,2015).Why do you think two majorcorporations could make such mistakes?In my view I think the two corporationscould have made such mistakes as a result ofthe poor assumptions. In my view theymight have overlooked on the importantinformation when it came to signing of thecontracts. There organizations did notrealize that there is some variation whichdepended on the type of the business
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