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SE 20-1 Audio VisualCorporation

Audio Visual Corporation (AVC) manufactures and sells visualdisplay equipment. Headquartered in Boston, it has seven salesoffices with nearby warehouses that carry its inventory of newequipment and replacement parts. AVC has a departmentalizedmanufacturing plant with assembly, maintenance, engineering,scheduling, and cost accounting departments as well as severalcomponent parts departments.

When management decided to upgrade its AIS, they installed amainframe at headquarters and local area networks at each salesoffice. The IS manager and four systems analysts were hired shortlybefore they integrated the new computer and the existing AIS. Theother IS employees have been with the company for years.

During its early years, AVC had a centralized decision-makingorganization. Top management formulated all plans and directed alloperations. As the company expanded, decision making wasdecentralized, although data processing was highly centralized.Departments coordinated their plans with the corporate office buthad the freedom to develop their own sales programs. However,information problems developed, and the IS department was asked toimprove the company’s information processing system once the newequipment was installed.

Before acquiring the new computer, the systems analysts studied theexisting AIS, identified its weaknesses, and designed applicationsto solve them. In the 18 months since the new equipment wasacquired, the following applications were redesigned or developed:payroll, production scheduling, financial statement preparation,customer billing, raw materials usage, and finished goodsinventory. The departments affected by the changes were rarelyconsulted until the system was operational.

Recently the president stated, “The systems people are doing a goodjob, and I have complete confidence in their work. I talk to themfrequently, and they have encountered no difficulties in doingtheir work. We paid a lot of money for the new equipment, and thesystems people certainly cost enough, but the new equipment and newIS staff should solve all our problems.”

Two additional conversations regarding the new AIS tookplace.

BILLTAYLOR, IS MANAGER, AND JERRY ADAMS, PLANTMANAGER

JERRY:Bill, you’re trying to run my plant for me. I’m the manager, andyou keep interfering. I wish you would mind your ownbusiness.

BILL:You’ve got a job to do, and so do I. As we analyzed the informationneeded for production scheduling and by top management, we sawwhere we could improve the workflow. Now that the system isoperational, you can’t reroute work and change procedures, becausethat would destroy the value of the information we’re processing.And while I’m on that subject, we can’t trust the information we’regetting from production. The documents we receive from productioncontain a lot of errors.

JERRY:I’m responsible for the efficient operation of production. I’m thebest judge of production efficiency. The system you installedreduced my workforce and increased the workload of the remainingemployees, but it hasn’t improved anything. In fact, it mightexplain the high error rate in the documents.

BILL:This new computer cost a lot of money, and I’m trying to make surethe company gets its money’s worth.

JERRYADAMS, PLANT MANAGER AND TERRY WILLIAMS, HUMAN RESOURCESMANAGER

JERRY:My best production assistant, the one I’m grooming to be asupervisor, 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 whois unhappy. The supervisors and department heads no longer have avoice in establishing production schedules. This new computersystem took away the contribution we made to company planning anddirection. We’re going back to when top management made all thedecisions. I have more production problems now than I ever had. Itboils down to my management team’s lack of interest. I know theproblem is in my area, but I thought you could help me.

TERRY: I have no recommendations, but I’ve hadsimilar complaints from purchasing and shipping. We should exploreyour concerns during tomorrow’s plant management meeting.

ANSWER THEFOLLOWING QUESTIONS:

1.

Identify the problems the new computer system created, and discusswhat caused them.

2.

Howcould AVC have avoided the problems? How can they prevent them inthe future?