Case Analysis - Pagoda.Com Introduction Pagoda.com is an Internet Service Provider (ISP) that caters to individual consumers and small businesses who require a high level of service and are willing to pay a premium for it. Specifically, Pagoda.com offers state-of-the-art e-mail applications and web-building software, as well as plenty of storage space and fast access via its high-speed servers. The Marketing VP, Jerry Hunter, puts it this way: "There are a lot of companies out there distributing free CDs and promising the cheapest Internet access. But what do you get for your money? Slow- or no-access, a mailbox full of Spam, and an endless stream of system crashes. And I won't even mention the lack of support if you have a technical question! For a few dollars more a month, we give our customers the environment they need to be productive-without having to think about whether they can retrieve their e-mail, or whether their web site has crashed. It's no surprise, then, that we have the highest customer satisfaction and retention rates in the industry." The On-line Help Desk One of Pagoda's services is its on-line help desk. The on-line help desk works as follows: Customers who are experiencing technical problems, or who simply have questions about their account, enter a one-on-one "chat room", where they can "talk" directly with an expert. Problems are usually resolved within 10 minutes, and customers have listed it as one of the top three reasons why they stick with Pagoda.com. Presently, Pagoda has enough capacity to handle up to 900,000 requests per year, although management doesn't expect the number of requests to change much from the current level of 800,000 per year. A firm located in New Delhi, India has approached Pagoda about outsourcing the on-line help desk. Their offer is attractive. The New Delhi firms' own personnel would handle the help desk function. These personnel all speak English fluently, and have college degrees or appropriate technical backgrounds. And because they are in India, labor costs would be a fraction of what they are in the U.S. -a savings that would be passed on, in part, to Pagoda. And since the help desk "chat room" exists on the Internet, Pagoda's customers should be unaware of the switch. Pagoda management has put together the following figures, outlining the yearly costs associated with the current system and the Indian proposal: Current On-line Help Desk Personnel Costs: 40 full-time equivalent (FTE) technical experts @ $40,000 per year (salary and benefits) 3 supervisors @ $70,000 per year (salary and benefits) Equipment Costs: 4 servers @ $2,000 per year 20 PCs @ $1,000 per year Variable Costs: $1.50 per request (office supplies, fax paper, etc.) Pagelof 2 New Delhi Proposal Fixed Cost: $1,500,000 per contract year (to cover administrative and IT costs) Charge: $0.50 per request Questions 1. 2. 3. 4. Calculate the total cost of outsourcing the on-line help desk versus staying with the current solution. Which option is cheaper? What other factors, other than costs, should Pagoda consider? How would you weight these factors? Given the above, how might you use a weighted-point evaluation system to evaluate the two options? Should Pagoda.com outsource its on-line help desk? Why or why not? Be sure to justify your choice. For whatever the final decision of outsource or not, work typically specifies performance measurements that the buying firm can use to determine whether the service provider is meeting the terms of the contract or for not outsource decision the current operations might need improvement. What performance measurements would you recommend be put in place for either the case of outsource or not outsource? You are required to submit a written report of around 1250-1500 words (+/- 10%). 4-5 members target wordage is 1250 and 6 members target wordage is 1500. The report should be 3-5 pages of A4 size excluding cover page, 1.5 line spacing of pt. 12 Times New Roman font type is recommended. Date of Submission: 14th April 2021 Assignment cover page is required. Criteria of Assessment: 15% @ question in overall written skills, 20% in oral ppt. presentation and 20% in APA format totaling up to max 100%. An oral ppt presentation based on the information provided in Q1-Q4 from your group assignment report is also required (with no less than 20 ppt slides) 1. As per calculations, the outsourcing option is cheaper which is reducing overall costs upto 50.63% whixh is remarkable. Variable costs per request No. of requests (from case ) Total Variable cost per year Total Fixed cost per year Costs (5) In-house 1.5 800,000 1200000 1838000 Quality service (2) Customer feedback / complaints (2) Training / Communication skills (1) quality level service level Outsourced Costs saved savings 0.5 800000 400000 1100000 Total costs incurred 3038000 1500000 2. Pagoda should consider these factors (in order of preference on the scale of 10) Percentage 800000 66.67 738000 40.15 1538000 50.63 3. In the weighted-point method, the relevant attributes are chosen and each are assigned a weight depending on the importance to the overall performance. The firm reaches a consensus on weight assignments to prevent or minimize subjectivity. The weight for each performance category is then multiplied by the performance score that is assigned to it. Finally, these products are totaled to determine a final rating for each supplier. In addition, it combines qualitative and quantitative performance factors into a common system. Yes, the company can go ahead with the idea of outsourcing after taking a quick survey from its existing customers 4. Since, we have chosen to go for an outsource the performance metrics that could be put in to review the work of outsourcing firm can be as follows - on-time delivery presence of certification or other documentation flexibility to respond to unexpected demand changes communication skills/systems (phone, fax, e-mail, Internet) quick response time in case of emergency, problem, or special request willingness to change their products and services to meet your changing needs willingness to participate in your firm's new product development and value analysis Case Analysis - Pagoda.Com Introduction Pagoda.com is an Internet Service Provider (ISP) that caters to individual consumers and small businesses who require a high level of service and are willing to pay a premium for it. Specifically. Pagoda.com offers state-of-the-art e-mail applications and web-building software, as well as plenty of storage space and fast access via its high-speed servers. The Marketing VP, Jerry Hunter, puts it this way: "There are a lot of companies out there distributing free CDs and promising the cheapest Internet access. But what do you get for your money? Slow- or no-access, a mailbox full of Spam, and an endless stream of system crashes. And I won't even mention the lack of support if you have a technical question! For a few dollars more a month, we give our customers the environment they need to be productive - without having to think about whether they can retrieve their e-mail, or whether their web site has crashed. It's no surprise, then, that we have the highest customer satisfaction and retention rates in the industry." The On-line Help Desk One of Pagoda's services is its on-line help desk. The on-line help desk works as follows: Customers who are experiencing technical problems, or who simply have questions about their account, enter a one-on-one "chat room", where they can "talk" directly with an expert. Problems are usually resolved within 10 minutes, and customers have listed it as one of the top three reasons why they stick with Pagoda.com. Presently, Pagoda has enough capacity to handle up to 900,000 requests per year, although management doesn't expect the number of requests to change much from the current level of 800,000 per year. A firm located in New Delhi, India has approached Pagoda about outsourcing the on-line help desk. Their offer is attractive. The New Delhi firms' own personnel would handle the help desk function. These personnel all speak English fluently, and have college degrees or appropriate technical backgrounds. And because they are in India, labor costs would be a fraction of what they are in the U.S. - a savings that would be passed on, in part, to Pagoda. And since the help desk "chat room" exists on the Internet, Pagoda's customers should be unaware of the switch. Pagoda management has put together the following figures, outlining the yearly costs associated with the current system and the Indian proposal: Current On-line Help Desk Personnel Costs: 40 full-time equivalent (FTE) technical experts @ $40,000 per year (salary and benefits) 3 supervisors @ $70,000 per year (salary and benefits) Equipment Costs: 4 servers @ $2,000 per year 20 PCs @ $1,000 per year Variable Costs: $1.50 per request (office supplies, fax paper, etc.) Pagel of 2 New Delhi Proposal Fixed Cost: $1,500,000 per contract year (to cover administrative and IT costs) Charge: $0.50 per request Questions 1. 2. 3. 4. Calculate the total cost of outsourcing the on-line help desk versus staying with the current solution. Which option is cheaper? What other factors, other than costs, should Pagoda consider? How would you weight these factors? Given the above, how might you use a weighted-point evaluation system to evaluate the two options? Should Pagoda.com outsource its on-line help desk? Why or why not? Be sure to justify your choice. For whatever the final decision of outsource or not, work typically specifies performance measurements that the buying firm can use to determine whether the service provider is meeting the terms of the contract or for not outsource decision the current operations might need improvement. What performance measurements would you recommend be put in place for either the case of outsource or not outsource? You are required to submit a written report of around 1250-1500 words (+/- 10%). 4-5 members target wordage is 1250 and 6 members target wordage is 1500. The report should be 3-5 pages of A4 size excluding cover page, 1.5 line spacing of pt. 12 Times New Roman font type is recommended. Date of Submission: 14th April 2021 Assignment cover page is required. Criteria of Assessment: 15% @ question in overall written skills, 20% in oral ppt. presentation and 20% in APA format totaling up to max 100%. An oral ppt presentation based on the information provided in Q1-Q4 from your group assignment report is also required (with no less than 20 ppt slides)