CAPTIVA CASE STUDY ANALYSIS
I. Major Facts
• Captiva Conglomerate held a senior management meeting to discuss the issues related to the contract with S.O. Software (SOS) for the custom inventory and spare parts management system.
• Gerry (Captiva’s president) negotiated the contract with SOS, calling out “best efforts” and “whenever possible” thereby potentially limiting legal recourse Captiva may have. The specifications appear to have been drafted by SOS.
• Sam Sliderule, Inventory and Spares Manager, is thoroughly unsatisfied with the initial tests of the system – calling them a “disaster” - and the system is 4 months behind schedule. Additionally, the regional and centralized ...view middle of the document...
” This would be a difficult course since it would involve a high level of subjectivity and certainly wouldn’t arrive at resolution quickly. Additionally, the costs of legal proceedings are often great, therefore without some level of assurance that success would be likely; this would be a risky option.
B. Scrap the current SOS system and start from scratch. From the onset, Captiva should establish a cross functional team to develop the requirements suitable for the entire firm’s needs. Captiva could also re-evalute SOS entirely and try to find alternate sources of supply by opening the procurement up to a competition. However, there are definite down sides with this approach – Captiva would lose the $1M already invested plus incur re-procurement costs and costs associated with the termination and closeout of the SOS contract. Also, schedule would be significantly delayed to account for the re-procurement plus manufacture and delivery of the new system.
C. Try to salvage what has been invested in the SOS system by continuing the contract but significantly recalibrate the contract to revise the specification, Statement of Work and delivery schedule. This would allow Captiva to retain the $1M already spent on the project and continue to use the current system with potentially some additional training support from SOS. The possible downside to this option, aside from the amount of re-work to be done, is that Captiva continues to invest money with a supplier that may be inadequate for the job without the immediate opportunity for re-competition.
IV. Choice and Rationale
As CEO, I believe the most effective solution would be Option C. At this point, I have invested $1M in a system and while it isn’t completely useless, it is far from effective. My ability to seek legal recourse is significantly limited by the subjective language of the contract. Scrapping the system and starting over may ultimately result in an outstanding system from an outstanding supplier, however this would involves considerable time, effort and cost to achieve. However, I can work within the construct of the existing SOS contract but establish clearly upfront there will be updates to explicitly define Captiva’s needs. I would believe SOS would most likely be willing to work through this with me in order to avoid negative past performance ratings plus the stigma that comes with having a contract terminated. Through reviewing the outcome of the senior management meeting, I believe my team recognizes enough what should have been done in terms of defining requirements and with my specific guidance, I am confident they can get this contract back on track.
V. Implementation/The Action Plan
I would start by establishing a cross functional team to revise the SOS subcontract with a designated project manager at the helm. Most likely, I would nominate Sam Sliderule, since he is the Inventory and Spares Manager and the system has the most impact on his organization as the...