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information technology (IT)competitive advantages

Many information technology (IT) companies and IT departments have decided to outsource projects overseas to gain competitive advantages both domestically and globally. For this project, you will be choosing between two vendors bidding for an IT project for a U.S. company.

SCENARIO

You are the senior director of information technology at Endothon Inc. (Endothon), a U.S.-based company located in Atlanta, Georgia. Your company makes aircraft seats and accessories for private and small commercial aircraft. You have five manufacturing plants in the United States. Your company has recently expanded into western Europe due to long-term contracts with Airbus, Dassault, and Bombardier in France and the United Kingdom. This newly acquired business in western Europe required the company to purchase three manufacturing plants in western Europe. Also, you currently have long-term contracts with Boeing, Cessna, and Grumman in the United States.

The CEO and the board of directors at Endothon have indicated they want a new enterprise resource planning (ERP) system for their company, and they would like it to be compatible with their customers’ systems. All of Endothon’s customers have Systems, Applications, & Products in Data Processing (SAP) provide their ERP systems. They want the ERP to be configured and implemented in the next 10 months. Realizing this is an aggressive schedule, they have authorized you to outsource the development of the ERP system to either an inshore or offshore company to contract for the necessary resources to accomplish this project. Your team will be involved in this endeavor so that they will eventually learn the system. However, the initial configuration, implementation, maintenance, and support will have to be serviced by your selected vendor and transitioned to your team two years after initial implementation. As the senior director, you have already determined that the cost to implement this project with a domestic contractor or within the company is prohibitive. To achieve the aggressive timeline and the budget, you must find a lower-cost resource capability offshore. You have issued a request for proposal (RFP) and have gone through a selection process to the point that you now have the final two competing vendors. The budget for this project is $10,000,000.

The SAP ERP system you are going to be implementing will have a number of modules that represent core business processes and areas. You will focus on three major modules within the SAP ERP system:

1.  Financial Accounting and Controlling (FICO) Module: This includes procurement and payments for international contracts. It also includes the recording of financial transactions and the assurance of the correct payments for the correct performance. Transfer pricing (monetary exchange rates), tracking, and posting are continually managed by this system.

2.  Human Resources Management System (HRMS) Module: All personnel data, including personal information, work history, medical records, training history, salary information, and organizational placement are contained in this system.

3.  Sales and Distribution (SD) Module: The eight manufacturing plants are automated and tracked through this module. This includes the proprietary designs and components of the various products. Product design information is transmitted in encrypted form from the headquarters in Atlanta, Georgia, to the various plants on a continual basis. This includes customer data, shipping and receiving information, and inventory loads.