and Baven (1994) and Domberger (1998), this concept has been formally defined as “an activity where the supplier provides for the delivery of goods and/or services that would previously have been offered in-house by the buyer organization in a predetermined agreement” (Tho, 2005, “Agreeing the Definition of Outsourcing”). In keeping with this brief introduction, the current research will aim at evaluating the decision of Tegan, Inc. (Tegan) to outsource its accounts payable (A/P) project and recommending one or more feasible options from among those that had already been identified by the organization.
As has been mentioned in the introduction, the decision that had been taken by Tegan while outsourcing it’s crucial A/P project will be evaluated under this heading. Considerable efforts will be made to identify the reason behind outsourcing, the major outsourcing challenge, and the tradeoffs in requirement analysis (performed by Hrad Technika – a Czechoslovakian IT company). Subsequently, the choice of development methodology will be discussed and problems pertaining to scope and requirements will also be analyzed. Finally, light will also be shed on the IT-management failures of the organization.
It has been reported that despite sluggish sales, Tegan had managed to grown constantly all through its life. On being approached by the Chinese toy maker Fan Li in May 2007, Tegan could not apprehend that the inclusion of this accessory line would lead to a situation where the increase in orders will not match with that in sales growth. However, the contract was perceived to be a mismatch because of wide differences that existed between the two companies in terms of pricing – while Tegan’s products came at an average price of £50, Fan Li often priced its accessories below £5. It has been observed that the profit margin being in the range of 1 percent the major concern at Tegan was the error-free management of the A/P process. As the A/P process at