| dc.description.abstract | Commercial server products are known for high stability, high performance, and easy management. These are the main features that attract customers. Therefore, during sever product development, considerable amount of budget are allocated to research and development (R&D). Much of these R&D budget are allocated to functional testing and design validation test for products. In this study, we focus on a server product ODM/JDP (Joint Development Program) site. The “System Integration Test” (SIT) Department is responsible for all testing task in the entire server product line, during the R&D stages. The main task for SIT is to perform system integration test and stress test for all functionality of sever, in addition to design validation testing. These functional validation test must be completed before a sever product formally enters the mass production stage.
However, the SIT Department in Company A is faced with problems in high cost in testing resources, including manpower, equipment, etc. SIT is a “cost center” within R&D. This results in a phenomenon that testing requirements from related R&D teams are often unchecked and excessive, causing backlogs. As a result, the performance of SIT is difficult to measure and evaluate. Therefore, this study proposes a chargeback system, based on the transfer pricing literature. The proposed chargeback system is divided into three phases. In the first phase, invoice for testing costs are provided to related R&D teams, without actual chargeback. In the second phase, the invoices are charged against negotiated budgets. After the concept of R&D testing costs has been established and recognized, the final phase is to perform the real chargeback with the real budgets of each related R&D teams.
The goal of the chargeback scheme is to reduce the abuse for testing resources, and more accurate estimates of the desired manpower and material resources in the R&D phases. We hope that by implementing the scheme, the server testing costs of R&D projects can be effectively controlled and tracked. A feasibility analysis was also conducted, and the proposed chargeback system is found feasible.
Finally, “transaction cost” is another major issue in implementing the chargeback system. We further propose that an appropriate information system be developed to institutionalize the chargeback scheme. We also anticipate that transparent and open information of chargeback pricing will help to reduce the “information asymmetry” issues arising from implementing the chargeback system.
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