AstraZeneca and IBM: IT Outsourcing Contracts and Social Media Impact

This report provides a comprehensive analysis of the IT outsourcing contract between AstraZeneca and IBM, examining the mistakes made by both corporations that led to contract termination, including failures in addressing rapid business changes and inadequate contract provisions. It explores the reasons behind the contract's failure, the provisions in the 2012 SLAs, and the advantages of arbitration over lawsuits. Additionally, the report delves into the positive and negative impacts of social media in a globalized world, discussing its role in communication, business, and its influence on individuals, while also addressing concerns such as addiction, criminal acts, and the spread of misinformation. The report highlights how social media has transformed communication and business practices, while acknowledging the importance of addressing its negative consequences.

Running head: IT MANAGEMENT 1
IT Management
Name:
Institution:
Date:

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PART A What mistakes did AstraZeneca make?
As one of the world’s leading
pharmaceutical companies, AstraZeneca
signed a $ 1.4 Billion contract with IBM in
July 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.

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What 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 which
is useful for outsourcing companies but the
mistakes IBM did were as follows;
 There was termination of some
obligations which should have
been included in the contract
 It did not divide the outsource
vendors
 IBM 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 organization
to 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 major
corporations could make such mistakes?
Poor assumptions made the two
corporations, IBM and AstraZeneca to
make the huge mistakes. They overlooked
the important and necessary information
when it came to signing of the $1.4 billion

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contract. They did not realize the
impending variations which were
dependent on the outsourcing contract that
were being adopted(Spielvogel, Haworth
& Hickey, 2011). Fundamentally, it is
worthy to note that existing outsourcing
organizations usually are restructuring,
renegotiating and renewing the contracts at
the same time as before. The activity is
driven by the different changes in
organization strategy, changes in the scope
of sourced services, pricing related issues
or even work practices and the
introduction of new technology(Solli-
Sæther& Gottschalk, 2010). The two
organizations, IBM and AstraZeneca did
not have clear knowledge in regards to
preparation of basic contracts and
outsourcing. To ensure that the contract
was not terminated, the corporations
should have incorporated all the aspects
which were highlighted in the contract.
These was to ensure that all the required
components are considered before the
contract termination.
Do you think the 2007 SLA was doomed
to 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 first
fix 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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Numerous provisions in the SLA of 2012
have been put forward to protect the
organization as well as the outsourced
vendors. They are IT provisions which are
closely related to SLA s such as
cooperation policies and pricing. The
policy contains 13 principles(Kendrick,
2009). The contracts cover the standard IT
principles, including the fix first pay later.
AstraZeneca agreed a higher payment for
themselves and its vendors. In an event of
conflicting contract, the parties can both
go to appeal with an independent arbiter
being the one to oversee the policy
cooperation. Fast solutions required even
faster payment upon fixing of the IT
issues.
Why would parties prefer to use an
arbitrator instead of filing a lawsuit in
court?
There are very many advantages of using
an arbitrator instead of using the court of
laws. The first is that it is speedier and
takes less time to find a resolution than a
court of law(Kendrick, 2009). The limited
right to have an appeal after a decision has
been reached eliminates all the delay that
happens in court of law. The second
advantage is that an arbiter is more flexible
than a court of law. A court is largely
controlled and determined by procedural
and statutory rules. The parties establish
the rules by themselves by mutual
agreement. The third reason is that it is
less costly than court proceedings and
there are no expenses related to pre-trial
processes. The judge or the arbiter are
independent minded and will not be
skewed to any one particular party. The
arbiter also come with expertise in that
field that a judge does not have(Rau,
Sherman &Peppet, 2006). He or she is
specialized in that field. Appeal rights are
squashed and the final verdict is what is
taken as the correct position. Appeal rights
are limited.
PART B

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Abstract
This paper explores the negative and positive aspects of social media. By leveraging social
media or social networking, everyone can communicate online, such as chats, news, and
invitations. Even for those who find it hard to communicate in the real world are able to
communicate by using social media. communication in social media is more effective than
through a call or texting.
Well, it can not be denied that social media is needed in our daily lives, both in socialization
activities, education, business and so on. Apart from that, many people think that the
influence of social media is always synonymous with negative impacts even though social
media actually offers many advantages and benefits. This paper also analyses the
development of social media in the globalization.
Introduction
In this day and age, the development of information technology increasingly affects human
life. One of the most loved platforms of communication by people is social media. Social
media has facilitated easier communication in the world. But unfortunately, the reality is that
social media has got its negative effects (Hajli,2014). In fact, nowadays there are many
people who have more fun with gadgets or accounts in the virtual world than social
interaction in the real world.
The Development and growth of social media in the globalization era.
The growing advancement of technology today is certainly an important factor in supporting
globalization. Globalization tends to be often discussed because of its impact in the field of
politics and economics, whereas in the field of culture its impact is quite large because of the
rapid exchange of information. One that supports the emergence of globalization is certainly

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the rapid development of information technology, especially the Internet (Lange,et.al,2016).
The Internet began to grow in the 2000s and began to be a basic need for some people who
used the internet for various purposes in addition to accessing web pages as a source of
information (Mergel, 2017).. Along with the development of the internet came the so-called
internet-based social media platforms such as Facebook, Twitter, Instagram, Whatsapp
among others. Facebook is a social networking site that is popular today. Founded by Mark
Zuckerberg with his fellow Harvard University student Eduardo Saverin, it has
revolutionalised communication in the world today (Sunstein, 2018). .
The existence of social media becomes a need for young people to interact with others. In the
perspective of communication relationship structure, in general online social networking
provides two types of social connection system, namely bi-directional and unidirectional. Bi-
directional is a social connection system that requires confirmation between accounts that
will be interconnected as "friends" or "followers". Where the two interconnected accounts
can access profile information with each other and communicate with each other.
Negative and positive impact using social media
Speaking of social media today is not new to our ears. There are lots of impacts both positive
and negative that are derived by using social media.. The following is a positive and negative
impact of social media.
Positive impact:
An arena of multiplying friends With the use of social media, we can communicate with
anyone, even with people we do not know even from around the world. These advantages can
we use to add insight, exchange ideas, know each other's culture and the characteristics of
each region and others. It can also hone someone's language skills (Westerman, Spence &

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Van Der Heide,2014). For example, learn English using the call or video call facility
provided on social networking sites. Make it easier for us to promote a social action. For
example we can raise funds for disaster through Instagram or twitter and also Facebook.
Each account can be a source of news, every account can also be a source of slander or
successor slander. In social media there is no limitation of space and time, they can
communicate whenever and wherever they are (Allcott & Gentzkow,2017). It can not be
denied that social media has a great influence in one's life. Someone who is small can be big
with social media, and vice versa.If for traditional media such as television, radio or
newspaper required a large capital and a lot of labor, then it is different with social media.
Social media users can access using the Internet network without large fees and can be done
alone easily.
Another positive thing aspect of social media is to inform the public and people in any world
to participate in the action (Fardouly, Diedrichs, Vartanian,& Halliwell,2015).. As a means to
develop skills both technical and social skills are a must-fulfill requirement in order to
survive and be in the balance of competition in the modern era as it is today. It is easy to
access information that is up to date ,Social media also allows us to explore all kinds of
information that is up to date or information that has past (Hajli,2014).. Because not everyone
will see news portals and will certainly more often check their social media accounts. It is
also a vehicle for income. By utilizing social media, we can sell through online platforms
which of course the benefits are promising. In this way the business is able to tap into a broad
market, not only target national and even international market.
Negatives Impact
Addictions

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Social media sites like Facebook or others can also be dangerous because they triggers
people to isolate themselves. Increased self-isolation can change the way genes work,
confusing immune responses, hormone levels, arterial function and impair mental
performance.
Criminal Acts.
Often we hear of social media fraud. Some also use it for prostitution promotion online.
There are other evil intentions such as kidnapping that is due to Facebook, surveillance of a
person to which can also lead to sexual harassment. Other social vices such as proportion of
pornography is also a negative aspect of social media. It also causes a negative impact on
body health. If our eyes look to the smartphone screen too often, it will cause serious
problems. In addition, too long playing gadgets can cause stress on the brain. This of course
will affect the health of the body. If the brain stress then the body will be susceptible to
various diseases.

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