Schaffer Corporation is a manufacturer, which began by making small farm machines, but now has spread to make diverse machines. Originally founded by Frederick W. Schaffer during 1877, it was his three son-in-laws who led the corporation to new product lines and divisions within the company. These divisions were called the Colbert division, the Kinzer division, and the Reitzel division; each of which has its own manufacturing plant with the exception of the Reitzel division, which serves as a financial service provider.
While the first two divisions mentioned above have shown a steady growth, the Reitzel division is the one with most potential with growth due to its dynamic and well-spread services that touch on ten European countries. This, as well as the fact that Reitzel contributes to 80% of total profits for Schaffer Corporation, is more than enough reason to examine the option of improving the system further (Brown). Very ambiguous goals were set in place once the decision was made to focus on the Reitzel division for the growth of the corporation.
These goals included a ten percent growth in revenue and a fifteen percent growth in profit for Schaffer Corporation in the next five years. Outsourcing the information technology was the idea suggested by the Vice President of Human Resources, Pedro A. Moreno, which sat well with some but did not with others. It is an important decision that Schaffer Corporation had to face with time on their side for proper planning and research. Schaffer Corporation is presented with options as to which vendor they want to use for their outsourcing, and must now decide which fits better for their dynamic and growing division.
Target:Recognizing one’s own weakness is an important quality that every company should posses if it intends to stay around and be consistent in its performance. Schaffer recognizes that information technology is not one of their core competencies and decides to outsource these kinds of activities. Other than improving the quality of service, this outsource should save the corporation money even when they are expanding into new areas. These strategies would potentially lead Reitzel to achieve their targets, which include the expansion into new counties, along with an improvement and depth of their product line.
Outsourcers have the capability of expanding the corporation’s reach with a work force that is very capable and well trained to address such issues. The Reitzel division has a far more complex application infrastructure than the one found in the Colbert and Kinzer divisions. It is a more dynamic system that needs more attention, both due to its complex infrastructure and its fast growing success: “Reitzel also had triple the network capacity, triple the number of servers, and more help desk problems than the other two divisions combined” (Brown).
Maintaining a division like this one could be very costly for the corporation, and replacing it may be a better option since saving money is always a goal to keep in mind. This is why Schaffer Corporation prepared a summary of exactly what they need and what they already have in the Request For Proposal document (RFP), which was handed to each of the vendors who had two months to come with an answer and offer. ABC and DEF Corporations were the selected vendors for an invitation to the corporation for a friendly tour and meeting.
Proposal: Change is always something that is difficult to accept. In companies, the case is no different. The financial aspect of an upgrade is no longer the only concern of the company. Employees must be in sync so it is important to keep them happy and worry-free. Schaffer faced this problem when their employees heard of the change. Several of them decided to quit, and more were expected to be lost. These lost jobs must be replaced and further increase the total costs on the way: “Small companies find success by treating employees as valued, respected individuals” (Nelson).
Employees form a very important part of companies today, and managers are beginning to understand this more everyday. Companies must keep an eye on what the competition is doing, and find ways to do these things better than they do. For companies that are on the top of their industry, it is often hard to find ways to improve themselves, being that they are already “better” than the competition. Innovation and fresh minds must be brought forward when this is the case. Out with the old, and in with the new.
Keeping things fresh is also a way to keep your customers, and even your employees interested. When there is interest by part of the customer for something that is continuously changing, they will not get bored and start looking elsewhere for new things. Employees are introduced to a far more active day, where no day at work will be the same. Due diligence is often under-rated by most companies, but it shows to be one of the main causes for projects to fail (IT Lever). Projects involve great amounts of research and time put into looking at the possible options.
Schaefer should take some more time to consider the different possible options. Outsourcing is very popular among companies now a day but many do not know all the work needed and the complications that could come up when migrating a system. Schaefer is in a position where they have time to consider other options. In most important decisions, there is an opposition. Many employees in the Schaefer Corporation absolutely believe that the company should not outsource its services when it does it so well itself. Outsourcing does have its disadvantages too.
These disadvantages include losing communication between organization and clients, and sometimes one may even lose control over all areas of the company (Chron. com). This situation could bring the company and its shareholders some complications if the issues are not resolved. Besides from having employees quitting their jobs after hearing the corporation’s plans to outsource, the remaining employees should all be in the same boat if they want to work in synergy. Taking on the costs that this new project could entail is a risk that must be taken.
The ends justify the means is a common saying that can be applied in this case, because sometimes the ones who make the decisions are not looking at the big picture. Reitzel is a division that is growing at an outstanding rate, being very diverse and with a huge potential to grow. If Schaffer Corporation plays its cards right, it could be sitting on a gold mine by improving this fast growing division and show a continuous stream of success: “Excellence in project management is often regarded as a continuous stream of successfully managed projects” (Kerzner).
Costs are something that must be considered and regulated, but when the prize may be so much larger than the investment, then sometimes the risk just might be worth it. The process of setting goals for a company may be just as important as the actual goal itself, since it could sink a company down if this goal is so out of reach. The Reitzel division showed a very promising future, but this does not mean that the division must be exploited or have set-goals that are out of this world.
The goals set by Schaefer for this particular division may have been out of its reach to start with, or maybe it was not the right time. Keeping things in perspective is the main way to avoid these over-shot goals. Goals and objectives are one of the first things that are set when starting a project. These objectives will govern what is done and the way they are done during the project. It is important to have an obtainable goal that doesn’t seem so out of reach; not to the customer nor the employees who could get unmotivated with such an out-of-reach goal.
Great ideas and promising projects succeed at a given time, but may have failed with the same game plan but at a different time. This is why timing is so important. Schaffer Corporation is at a sweet-spot where its three divisions are doing well and stable, with one of them doing exceptionally well. The new plans and projects must not be written in stone, and should be just another idea to consider and analyze before implementing: “As many firms discovered during the outsourcing ‘mania’ of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all” (NY Times).
Maybe it is not the right time for this change to occur in Schaffer, but maybe it is a “now or never” situation too. Juggling three balls in the air is not such a hard task as long as an eye is kept on all three balls. It seems like Schaefer Corporation is putting too much attention in this particular division, while not paying much attention to the other two. It is a valid point that Reitzel is the fastest growing and most diverse division, but surely the other two divisions also have many things that could be improved.
With simple and economical improvements to the remaining two divisions, more money could be allocated to address the Reitzler division as the company intended to. These are just some options that Schaffer should examine before committing with any vendor or any consultant. In the past, they have been doing just fine by hiring consultants when they needed them, but only their future success and growth will tell if this is enough to keep up with the demand.