Assignment on IT Management
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Added on 2021-06-17
Assignment on IT Management
Added on 2021-06-17
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Running head: IT MANAGEMENT1IT ManagementName:Institution:Date:
IT MANAGEMENT2PART AWhat mistakes did AstraZeneca make?As one of the world’s leading pharmaceutical companies, AstraZeneca signed a $ 1.4 Billion contract with IBM inJuly 2007. The contract was a seven year strategic sourcing and was signed to include 60 countries, 32 schedules and 90 clauses. The mistakes the company did was to forget that the business it was involved in changes rapidly, its IT capabilities are dependent on Research & Development, it terminated the SLAs and included similar infrastructures for all its global ventures. On the contract, AstraZeneca failed to cover relevant information related to any eventuality that led to contract termination(De Mari, 2009). When the contract was terminated, there was a fierce legal battle between the two companies where the court sided with AstraZeneca. In the specification based results that is continuous services between the vendors but did not take into consideration rapid change in business strategies and structure.
IT MANAGEMENT3What mistakes did IBM make?IBM made a $1.4 Billion contract with AstraZeneca because it is one of the leading pharmaceutical companies and uses information technology in its businesses. An agreement was made whichis useful for outsourcing companies but themistakes IBM did were as follows;There was termination of some obligations which should have been included in the contractIt did not divide the outsource vendorsIBM failed to cover the necessary information in the contract that led to termination of the contract(Keshari& Kumar, 2012). IBM should have had prior information of the contract in place to make sure that it is not terminating its contract on outsourcing of vendors. Why are outsourcing contracts for five or more years?The difficulty associated in changing the way the outsourced vendors accrue profits makes it worthy for contracts to be set in the long term that is 5 or more years. In this case, the contract was set at 7 years(Schiesser, 2010). Since the services are set up and customized, vendors make their major investments in the first 2 years.The margins or profits are expected to be reaped in the last three years. Consequently, in order for the organizationto have attained their strategic goals, the contracts must be made longer. However, there is need to put a flexibility clause for termination of the contract at a particular time or on notice(Spielvogel, Haworth & Hickey, 2011). Why do you think two majorcorporations could make such mistakes?Poor assumptions made the twocorporations, IBM and AstraZeneca tomake the huge mistakes. They overlookedthe important and necessary informationwhen it came to signing of the $1.4 billion
IT MANAGEMENT4contract. They did not realize theimpending variations which weredependent on the outsourcing contract thatwere being adopted(Spielvogel, Haworth& Hickey, 2011). Fundamentally, it isworthy to note that existing outsourcingorganizations usually are restructuring,renegotiating and renewing the contracts atthe same time as before. The activity isdriven by the different changes inorganization strategy, changes in the scopeof sourced services, pricing related issuesor even work practices and theintroduction of new technology(Solli-Sæther& Gottschalk, 2010). The twoorganizations, IBM and AstraZeneca didnot have clear knowledge in regards topreparation of basic contracts andoutsourcing. To ensure that the contractwas not terminated, the corporationsshould have incorporated all the aspectswhich were highlighted in the contract.These was to ensure that all the requiredcomponents are considered before thecontract termination. Do you think the 2007 SLA was doomedto fail? Explain your answer.Looking at how the contract was set up, I think the 2007 SLA was doomed to fail. The issue was fix first, pay later. In this regard, if an urgent case takes place in relation to IT, AstraZeneca and the outsourced vendors should first corporate to fix the issues. It is in the contract to firstfix the IT issue first before asking any question in relation to the cost incurred. In previous cases, the vendors may have checked the contract to confirm their responsibilities so that to protect their profit margins which consequently led to delay in fixing the problem. To have a fast solution, the company involved wanted a clause introduced with the option for fast payment of the vendors. Therefore, the 2007 SLA was doomed to fail at first due to the emerging issues at hand. Regardless of the previous contracts the contract would still end. What provisions in the 2012 SLAs protect AstraZeneca and the vendors?
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