20.8 Recent years have brought an explosive growth in electronic
communication. Laptops, netbooks, e-readers, personal digital
assistants, sophisticated cell phones, fax machines, e-mail,
teleconferencing, office productivity software, and sophisticated
management information systems have changed the way information
is received, processed, and transmitted. With the decreasing costs of
computer equipment and the increasing power of automation, the full
impact of computerization has yet to be felt. Although the
development of computer applications is directed at being user
friendly or user oriented, the integration of computers into the
organization has had both positive and negative effect on
employees.
Adapted from the CMA Examination
a.Describe the benefits companies and employees receive from electronic communications.
a. Discuss the organizational impact of introducing new electronic communication
systems.
b. Explain
1. Why an employee might resist the introduction of electronic communication systems
2. The steps an organization can take to alleviate this resistance.
20.9 PWR manufactures precision nozzles for %re hoses. Ronald Paige, an
engineer, started the corporation and it has experienced steady
growth. Reporting to Ronald are six vice presidents representing
marketing, production, research and development, information
services, finance, and human resources. The information services
department was established last year when PWR began developing a
new information system consisting of a server connected to each
employee’s personal computer. The PCs can download and upload
data to the server. PWR is still designing and developing applications
for its new system. Ronald received a letter from the external auditor
and called a meeting with his vice presidents to review the
recommendation that PWR form an information systems steering
committee.
Adapted from the CMA Examination
a. Explain why the auditors would recommend an information systems steering committee
and discuss its specific responsibilities. What advantages can the committee offer
PWR? What advantages can such a steering committee offer PWR?
1. Because information systems span functional and divisional boundaries, organizations establish an
executive level steering committee so that the company, from an overall organizational perspective,
2. Specific steering committee responsibilities include:
Developing a master plan to strategically develop and maintain the company’s
information system, incorporating short-term and long-term goals.
3.The advantages of an information systems steering committee include:
b. Identify the PWR managers most likely to serve on the committee.
The six vice-presidents or their representatives.
20.10 Businesses often modify or replace their financial information
system to keep pace with their growth and take advantage of
improved IT. This requires a substantial time and resource
commitment. When an organization changes its AIS, a systems
analysis takes place. Adapted from the CMA exam
a. Explain the purpose and reasons for surveying an organization’s existing system.
b. Explain the activities commonly performed during systems analysis.
Initial Investigation
Systems Survey
Feasibility Study
Information Needs and System Requirements
Systems Analysis Report
c. Systems analysis is often performed by a project team composed of a systems analyst, a
management accountant, and other knowledgeable and helpful people. What is the
management accountant’s role in systems analysis?
20.11 Don Richardson, JEM Corporation’s vice president of marketing, is
part of a management team that for several months has been
discussing plans to develop a new line of business. Rumors about the
major organizational changes that may be required to implement the
strategic plan have been circulating for months.
Several employees who are anxious about the expected changes
confronted Don. The sales manager said, “It is imperative that we
speak to you right away. The employees are very apprehensive about
the proposed changes, and their job performance has slacked o#.”
The accounting manager added, “That’s right. My sta# are asking me
all sorts of questions about this new line of business, and I don’t have
any answers for them. They’re not buying the ‘We will make an official
announcement soon’ line any longer. I suspect that some of them are
already looking for jobs in case the department changes phase out
their positions.”
Implementing organizational change is one of the most demanding
assignments an executive faces. It has been suggested that every
change requires three steps: unfreezing the current situation,
implementing the change, and refreezing the e#ected change. This
view, however, lacks the specific details needed by an operating
manager who must initiate the change. Adapted from the CMA Examination
a. Explain why employees resist organizational change.
b. Discuss ways JEM Corporation can alleviate employee resistance to change.
20.12 Remnants, Inc., with headquarters in St. Louis, manufactures designer
clothing. The company markets and services its products by region, with
each functioning as a profit center. Each region has a manager, an
accounting department, a human resources department, and several area
offices to market and service the products. Each area office has sales,
service, and administrative departments whose managers report to an area
manager.
The New York area office departed from the standard organizational
structure by establishing a branch office to market and service the %rm’s
products in Boston. A branch manager who reports directly to the New York
area manager heads the local office.
The Boston branch manager is encouraging the New York area manager to
consider a new information system to handle the local branch’s growing
information needs. The NewYork area manager and the eastern region
manager want to establish a project team with employees from the region,
area, and branch office. The team will assess the information needs at the
Boston branch office and develop system recommendations. The following
employees have been appointed to the project team, with Keith Nash as
chairperson:
Eastern Region Office
Kurt Johnson, Budget Supervisor
Sally Brown, Training Director
New York Area Office
Keith Nash, Administrative Director
Boston Branch
Heidi Meyer, Branch and Sales Manager
Bobby Roos, Assistant Branch and Service Manager
Joe Gonzalez, Salesperson
Juana Martinez, Serviceperson
a. Project team members contribute their skills to help accomplish a given objective.
Characteristics of group members can influence the functioning and effectiveness of a
project team. Identify some of these characteristics.
b. Due to the team’s composition, what sources of conflict can you see arising among its
members? Do you think the group will succeed in its objective to develop an
information system for the Boston branch office? Why or why not?
c. What contribution would a person who holds a position as budget supervisor make in a
20.13 Managers at some companies face an ongoing systems development
crisis: IS departments develop systems that businesses cannot or
will not use. At the heart of the problem is a “great divide” that
separates the world of business and the world of IS. Few
departments seem able or ready to cross this gap.
One reason for the crisis is that many companies are looking for
ways to improve existing, out-of-date systems or to build new ones.
Another is the widespread use of PC-based systems that have
spawned high user expectations that IS departments are not
meeting. Users seek more powerful applications than are available
on many older systems.
The costs of the great divide can be devastating. An East Coast
chemical company spent over $1 million on a budgeting and control
system that was never used. The systems department’s expertise
was technical excellence, not budgets. As a result, the new system
completely missed the mark when it came to meeting business
needs. A Midwestern bank used an expensive computer-aided
software engineering (CASE) tool to develop a system that users
ignored because there had been no design planning. A senior
analyst for the bank said, “They built the system right; but
unfortunately they didn’t build the right system.”
a. What is the great divide in the systems development process? What causes the gap?
b. What would you suggest to solve this great divide information crisis?
c. Discuss the role a systems designer, business manager, and end user can take to narrow
the great divide.
d. Who plays the most vital role in the effective development of the system?
20.14 Joanne Grey, a senior consultant, and David Young, a junior
consultant, are conducting a systems analysis for a client to
determine the feasibility of integrating and automating clerical
functions. Joanne had previously worked for the client, but David
was a recent hire.
The first morning on the job, Joanne directed David to interview a
departmental supervisor and learn as much as possible about
department operations. David introduced himself and said, “Your
company has hired us to study how your department works so we
can make recommendations on how to improve its efficiency and
lower its cost. I would like to interview you to determine what goes
on in your department.”
David questioned the supervisor for 30 minutes but found him to be
uncooperative. David gave Joanne an oral report on how the
interview went and what he learned about the department.
Describe several flaws in David’s approach to obtaining information. How should this task
have been performed?
SUGGESTED ANSWERS TO THE CASES
20-1 Audio Visual Corporation (AVC) manufactures and sells visual display equipment.
Headquartered in Boston, it has seven sales offices with nearby warehouses that carry its
inventory of new equipment and replacement parts. AVC has a departmentalized
manufacturing plant with assembly, maintenance, engineering, scheduling, and cost
accounting departments as well as several component parts departments.
When management decided to upgrade its AIS, they installed a mainframe at headquarters
and local area networks at each sales office. The IS manager and four systems analysts were
hired shortly before they integrated the new computer and the existing AIS. The other IS
employees have been with the company for years.
During its early years, AVC had a centralized decision-making organization. Top management
formulated all plans and directed all operations. As the company expanded, decision making
was decentralized, although data processing was highly centralized. Departments coordinated
their plans with the corporate office but had the freedom to develop their own sales programs.
However, information problems developed, and the IS department was asked to improve the
company’s information processing system once the new equipment was installed.
Before acquiring the new computer, the systems analysts studied the existing AIS, identified
its weaknesses, and designed applications to solve them. In the 18 months since the new
equipment was acquired, the following applications were redesigned or developed: payroll,
production scheduling, financial statement preparation, customer billing, raw materials
usage, and finished goods inventory. The departments affected by the changes were rarely
consulted until the system was operational.
Recently the president stated, “The systems people are doing a good job, and I have complete
confidence in their work. I talk to them frequently, and they have encountered no difficulties
in doing their work. We paid a lot of money for the new equipment, and the systems people
certainly cost enough, but the new equipment and new IS staff should solve all our problems.”
Two additional conversations regarding the new AIS took place.
BILL TAYLOR, IS MANAGER AND JERRY ADAMS, PLANT MANAGER
JERRY: Bill, you’re trying to run my plant for me. I’m the manager, and you keep
interfering. I wish you would mind your own business.
BILL: You’ve got a job to do, and so do I. As we analyzed theinformation needed for
production scheduling and by top management, we saw where we could improve the
workflow. Now that the system is operational, you can’t reroute work and change procedures,
because that would destroy the value of the information we’re processing. And while I’m on
that subject, we can’t trust the information we’re getting from production. The documents we
receive from production contain a lot of errors.
JERRY: I’m responsible for the efficient operation of production. I’m the best judge of
production efficiency. The system you installed reduced my workforce and increased the
workload of the remaining employees, but it hasn’t improved anything. In fact, it might
explain the high error rate in the documents.
BILL: This new computer cost a lot of money, and I’m trying to make sure the company gets
its money’s worth.
JERRY ADAMS, PLANT MANAGER AND TERRY WILLIAMS, HUMAN RESOURCES
MANAGER
JERRY: My best production assistant, the one I’m grooming to be a supervisor, told me he
was thinking of quitting. When I asked why, he said he didn’t enjoy the work anymore. He’s
not the only one who is unhappy. The supervisors and department heads no longer have a
voice in establishing production schedules. This new computer system took away the
contribution we made to company planning and direction. We’re going back to when top
management made all the decisions. I have more production problems now than I ever had. It
boils down to my management team’s lack of interest. I know the problem is in my area, but I
thought you could help me.
TERRY: I have no recommendations, but I’ve had similar complaints from purchasing and
shipping. We should explore your concerns during tomorrow’s plant management meeting.
Adapted from the CMA Examination
Evaluate the preceding information, and answer the following questions:
1. Identify the problems the new computer system created and discuss what caused them.
2. How could AVC have avoided the problems? How can they prevent them in the future?