Introduction
The case of XYZ company’s CRM initiative illustrates how performance contracts with vendors have the potential to be renegotiated midstream. The case also illustrates how various decision makers can reach points of conflict during an initiative’s development and implementation stages. In this particular case, the project manager and head of marketing have reached an impasse in what the design of XYZ’s new CRM product should contain. A contractor that specializes in customer relationship management has already received a set of performance standards for the product and is near halfway complete with the project’s design.
Under conventional performance based contracting, the contractor cannot be told how to design XYZ’s CRM product, but must adhere to the standards of work (SOW) or performance work statement previously supplied by XYZ’s executive committee (University of Management and Technology, 2015). In this scenario, the product’s design should be measured against the initial performance standards to determine whether the design of the product will accomplish what XYZ’s executive committee originally had in mind (University of Management and Technology, 2015). While it is possible for XYZ and the contractor to renegotiate and make changes to the initial standards of work and the product’s performance standards, this change could result in the delay of the product’s launch, increased costs for XYZ, and compromises to other measurable components.
It would be best for both sides to determine how redesigning XYZ’s CRM product to incorporate additional customer profiling will have an effect on streamlining operations between order fulfillment and sales. In addition, the contractor needs to make XYZ aware of whether incorporating additional customer profiling is realistic. The contractor should assess the impact these changes will have on being able to deliver a quality product within the desired deadline.
“I am the Customer”
Roger Smith’s assertion that the contractor should adhere to his request because he is the customer has some merit. First, the contractor would not be able to obtain the work of designing XYZ’s CRM initiative if XYZ did not have a need that falls outside of its scope of expertise. It is more efficient for XYZ to hire a contractor that is an expert in customer relationship management tools and has a proven success rate in the design of these tools. The contractor must adhere to established measurable performance standards, the performance work statement or statement of work, and a performance measurement plan (University of Management and Technology, 2015). If the contractor produces a product that fails to meet these standards, XYZ company is within its rights to reject the product (University of Management and Technology, 2015).
Yet, customers cannot necessarily reject products that do adhere to the initial performance work statements, performance standards and measurement plans. If additional requests fall outside the scope of the initial agreed upon standards, the contractor and the customer must first agree to renegotiate these standards. The renegotiation can not only include changes to the performance work statement and standards, but changes to delivery timetables and contractor compensation. Although it is the customer’s responsibility to clearly define the scope of the project and the performance goals of that project (product), the contractor’s responsibility is to figure out how to best implement those goals (University of Management and Technology, 2015).
Unexpected Request
As Roger Smith is not the lead in charge of XYZ’s CRM initiative, Francis’s initial reaction to advise Steve McMahon and XYZ’s executive steering committee of Roger’s request is correct. Instead of approaching Francis, Roger Smith needed to ensure that his concerns were addressed by the executive steering committee during the formulation of the initiative’s statement of work. As Roger is raising concerns that the CRM initiative will not meet the marketing department’s strategic performance objectives, Steve and the executive steering committee will need to review these concerns.
Although Roger Smith is the executive level manager in charge of the department responsible for order fulfillment and marketing, it is possible that XYZ’s upper level management desired to have less biased managers in charge of developing the standards for the CRM initiative. This is likely the case, given the fact that the CRM initiative was developed in response to communication and coordination problems between sales/marketing and order fulfillment. It is possible that upper level management views Roger Smith’s perspective and decisions as the root of the problem and would like him removed from overseeing the potential solution. It would be best if Francis leaves the dispute to XYZ and advise Roger Smith that he is obligated to adhere to the performance work standards outlined by Steve and the executive committee.
Change Control Procedures
Francis and Steve can implement a series of change control procedures in order to effectively address Roger Smith’s request. First, Francis and Steve need to document the change request. The documentation process will require input from both Francis and Steve in regards to the nature of the request (i.e. incorporating customer profiling), whether the change is valuable to the project’s results and performance standards, and whether the change can be implemented (Rouse, 2011). In addition, Francis needs to assess how difficult it will be to implement the change. Second, Francis and Steve need to conduct a formal assessment of the risks and benefits associated with incorporating additional customer profiling. A full assessment will include the risks and benefits of not incorporating the change as well. Following the assessment, Francis and Steve must determine whether it is more feasible to accept or reject Roger’s request (Rouse, 2011). If Roger’s request is accepted, additional change control procedures include planning, designing and testing, implementation and review, and a final assessment (Rouse, 2011).
The first step of the documentation will assist Francis and Steve in ensuring that neither party fails to meet its contract performance obligations. Furthermore, the documentation procedure provides a formal review method that will help eliminate as much bias against or for the change as possible. Assessing risks and benefits helps clearly define whether the change is necessary and whether it makes sense for XYZ’s needs. If the changes outlined in Roger’s request are determined to be more beneficial than rejecting them, the planning, designing, testing, and review procedures help both sides ensure that the product meets performance standards and is not ultimately rejected by XYZ.
Consequences
If Francis were to go ahead and adhere to Roger’s request, it is possible that XYZ’s executive committee will reject the final project. Since Roger’s request falls outside the scope of the original performance standards and statement of work, it is highly probable that redesigning the CRM product will compromise the original measurable standards. In addition, since forty percent of the prototype is already complete, adhering to Roger’s request will result in lost time and additional costs. Without renegotiating the statement of work and performance standards, Francis stands to lose the time and money his team has already invested in the project.
References
Rouse, M. (2011, January 20). Change control. TechTarget. Retrieved from
http://searchdisasterrecovery.techtarget.com/definition/change-control
Technology.
