October 22, 2007

Operations Management Lesson 3 Exercise

Operations Management Lesson 3 Exercise

About the third blog, I’m going to talk about the contract management process in “IBM Software Group (SWG)”, valid for the whole IBM European locations.

After getting the agreement with customer about the kind of Software to be sold, a long process starts inside IBM.

1) First of all, we need the price configuration of SW products, indicating how many quantities of particular SW licenses have to be sold (in terms of number of processors, for example).

A price configuration is also generated for SW Maintenance, which could be sold apart (if we are selling renewal of existing SW licenses) or embedded with new licenses.

“Configuration task” is managed by the “Techline Division”, based in Dublin.

2) Once we have the prices, in order to achieve the final price agreed with customer after long negotiations, we have to submit a “Special Bid Request” to the approvers. There are al least 3 levels of approval and maximum 5 levels of approval, depending on the amount of the “Bid”, the kind of SW products and the discount requested.

“Special Bid Request task” is managed by Software Sales Representative of customer and the requests are introduced in a dedicated Tool.

Tasks 1) and 2) must be managed in SEQUENCE; tasks 3) and 4) could be managed in PARALLEL with themselves or with task 1) and 2).

3) In order to demonstrate customer solvency, we have to ask for a “credit check”, indicating the amount of money that customer will have to spend. This must be positive in order to continue the selling process.

“Credit Check task” is managed by a division based in Bratislava.

4) In parallel with the above activities, we have to ask authorization to proceed with the formalization of the contract, especially this is a requirement for customers who do not want to sign contract compliant with IBM standard conditions (for example, the majority of customers belonging to Public Sector).

This task is demanded to “Contract and Negotiations” division.

At the end of the 4 tasks, we can proceed with the offer to customer. At the sign of contract, we have to send the contract to the “Fulfillment division”, based in Madrid, which is responsible of:

-        verifying that order is compliant with the bid approved;

-        customer and internal documentation is complete;

-        order data entry.

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