Question

Precyse Technologies provides supply-chain products and solutions that assist organizations in tracking their inventories using RFID technology. It was having difficulty improving the performance and battery life of a particular RFID device; there were not adequate internal resources to tackle the problem. So, Precyse asked InnoCentive, a crowd- sourcing provider, for assistance, believing that crowdsourcing would provide quick access to a worldwide talent pool and a higher return on investment (ROI). Ultimately, the company received more than 300 ideas from global experts for solving its problem. It narrowed the pool down to three finalists, from which a winner was chosen. The whole process took approximately 4 months, and Precyse estimated that it saved the company $250,000.

1. Name any 2 of the inherent issues that need to be included in the detail system development document?

2. How could crowdsourcing bring down the costs for Presyce? (1 Mark)

3. Describe 2 alternatives Precyse Technologies have other than crowdsourcing?

4. Why would Precyse Technologies require the company with the winning idea build them a prototype before paying them the remainder of the $600,000 promised for the job?

Answer 1

1. Although crowd sourcing has many benefits, few risks with crows sourcing that is applicable in this scenario as well are:

A. Time lag and no assurance of quality of work: There is noa ssurance of the time lag it will take to source ideas in crowdsourcing (as no obligation from participants) & and no guarantee of the output provided (again as no obligation from participants).

B. Intellectual Property Right Infringement : In crowdsourcing, outsiders will have access to company specific things like proprietary information, software source code, & other intellectual property, which is a huge risks for firms. Moreover, the entire information is avaliable to your competitors, making it even riskers.

2. Idea generation is not an easy job which can be guaranteed by paying high cost or by hiring costly resources. Precyse Technologies has tried using its internal resources to resolve the issue it faced but was not able to do so. They did not have a alternate and guaranteed solution for the issue other than seeking help from some rputed (many a times costly) consulting agencies. Consulting agencies may provide solutions but here the option avilable fo ideas may not be as much as what was received from crowd sourcing (although quality of ideas may not always be good). Thus from acost front & also from a variety of option front, crowd sourcing is a good optin for small firms like Precyse Technologies.

3. Alternatives other than crowd sourcing are:

A. Hire good consulting agencies

B. Recruit soluton experts from competitor firms who has a history of working in such scenarios

4. Idea generation is easy but ensuing it woks is essential. That too when the promised amount for the bid is high. Thus to ensure they are having a workable solution which can be used by them, Precyse Technologies require the company with the winning idea to build them a prototype before paying them the remainder of the $600,000 promised for the job