Carefully read the attached case article and answer all questions based on your learning. You will find tables 7.6 and 7.7 in the W14 reading material.

PAGODA.COM Pagoda management has put together the following fig- [ntroduction ures, outlining the yearly costs associated with the current sys- pagoda.com is an Internet service provider (ISP) that caters to tem and the Indian proposal: individual consumers and small businesses who require a high Current Online Help Desk level of service and are willing to pay a premium for it. SpecifiPersonnel costs: cally, Pagoda.com offers state-of-the-art e-mail applications and 40 full-time-equivalent (FTE) technical experts @$40,000 web-building software, as well as plenty of storage space and fast per year (salary and benefits); 3 supervisors $70,000 access via its high-speed servers. The marketing vice president. each per year (salary and benefits) Jerry Hunter, puts it this way: "There are a lot of companies out. there promising the cheapest internet access. But what do you get Equipment costs: for your money? Slow-or no-access, a mailbox full of spam, and 4 servers $2,000 per year an endless stream of system crashes. And I won't even mention 20 PCs @ \$1,000 per year the lack of support if you have a technical question! For a few dol Variable costs: lars more a month, we give our customers the environment they need to be productive - without having to think about whether or not they can retrieve their e-mail, or whether their Web site New Delhi Proposal has crashed. It's no surprise, then, that we have the highest cusFixed cost: pomer satisfaction and retention rates in the industry." $1,500,000 per contract year (to cover administrative and The Online Help Desk IT costs) One of Pagoda's services is its online help desk. The online help Charget $0.50 per request desk works as follows: Customers who are experiencing technical problems, or who simply have questions about their acQuestions count, enter a one-on-one chat room, where they can interact 1. Calculate the total cost of outsourcing the online help directly with an expert. Problems are usually resolved within desk versus staying with the current solution. Which op10 minutes, and customers have listed it as one of the top three tion is cheaper? reasons they stick with Pagoda.com. Presently, Pagoda has 2. What other factors, other than costs, should Pagoda conenough capacity to handle up to 900,000 requests per year, alsider? How would you weight these factors? Given the though management doesn't expect the number of requests to above, how might you use a weighted-point evaluation change much from the current level of 800,000 per year. system to evaluate the two options? A firm located in New Delhi, India, has approached Pagoda 3. Should Pagoda.com outsource its online help desk? Why about outsourcing the online help desk. The offer is attractive. or why not? Be sure to consider Table 7.6 and 7.7 when The New Delhi firm' \& m personnel would handle the help desk framing your answer. function. These penwarnd all speak English fluently and have col- 4. A statement of work typically specifies performance mealege degrees or approyriate technical backgrounds. And because surements that the buying firm can use to determine they are located in Indic. labor costs would be a fraction of what whether the service provider is meeting the terms of the they are in the United states. The savings would be passed on, in contract. What performance measurements would you part, to Pagoda. And siace the help desk chat room exists on the recommend be put in place? What should happen if the Internet, Pagoda's customers should be unaware of the switch. service provider fails to meet these requirements