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|Precision Electronic Parts, Inc.
This case study will be used for a series of staged assignments. It should be thoroughly read and understood prior to working on any of the assignments.
Precision Electronic Parts (PEP), Inc., is a small private business that has retained you to assist in the development of a new billing and payment system and associated processes.
PEP is a small, private specialized electronics company in Kansas. For the past 20 years, it has manufactured a wide range of precision electronic components and replacement parts for medical equipment used in hospitals, doctor’s offices, and pharmacies. Last year, the company began building and delivering custom low voltage motors that reduced electricity costs and made older medical equipment more environmentally friendly. More recently, PEP has added a new line of more efficient low voltage motors that can be used in precision equipment outside the healthcare industry.
As a result, PEP is experiencing significant increases in orders for the motors. The manufacturing facility has been expanded, and the sales and marketing teams have been enlarged. All of this is straining the Ordering & Shipping Department and the Inventory Management Department, which have received no increase in personnel. They are meeting the challenge, but the Executive Leadership Team (the CEO, COO, CFO, and CIO) know that they are only treading water. The Finance Department, however, is getting further and further behind in their invoice, billing and payment processes. The Business Administration Department has stepped up to the task, but is at the breaking point.
The IT Steering Committee (ITSC) at PEP is comprised of the Executive Leadership Team, the Senior Vice President and Vice President.
- Carolyn West is the Chief Executive Officer (CEO). She has been at the company for 11 years. Carolyn has a background working for and managing electronics companies. Like most CEOs, Carolyn is focused on the strategic and long-term business health of PEP. She chairs the IT Steering Committee. Carolyn and the committee members jointly make decisions about IT systems and major organizational business process changes.
- Tim Uduak, Jr. is the Chief Operating Officer (COO) and the son of founding partner Tim Uduak, Sr. Tim has been around the company since its inception in one capacity or another, except for four years of college and a 3-year break to startup his own company. When his startup failed, Tim came back to PEP as the SVP, Engineering & Manufacturing Operations. Last year, he was promoted to COO. While Tim has a strategic focus and is not technology averse, he prefers to solve business challenges with processes rather than information technology.
- Karl Manley is the Chief Financial Officer (CFO). He has been with the company for 9 years. Karl has a background in accounting and finance, and is a certified public accountant (CPA). He tends to focus on the company’s financial health to the exclusion of all other business concerns. While Karl is technology fluent, he resists new IT purchases unless there is a clear and direct connection made between the technology investment and improving the company’s financial profile. The Director, Accounts Receivable (Mary Winston) and the Director, Accounts Payable (Amy Dole) report to the CFO, and together are responsible for the financial operations of the business.
- Mark Temple is the Chief Information Officer (CIO) and head of the IT Department. He provides all IT services to PEP. Prior to being hired as the CIO, Mark was an IT manager at a large multi-national corporation responsible for providing IT services to their offices from the headquarters in Lincoln, Nebraska. While in that position, Mark participated in very structured IT processes, and developed an appreciation for working with the operational and management divisions to ensure success of IT projects. When he arrived at PEP, he advised the CEO, COO and CFO that an IT Steering Committee could help ensure they pursued the most beneficial IT projects. He is your primary point of contact for dealing with PEP in analyzing their processes and systems.
- Susan Black is the Senior Vice President (SVP), Engineering & Manufacturing Operations and is Tim’s replacement. Susan has worked for the company for 13 years. She started as a Senior Engineer, andafter six years was promoted to Director, Engineering, where she spearheaded the successful research and development of the low voltage motors. Susan is a champion of information technology as long as it is clearly focused on the core business.
- Jason Udo is the Vice President (VP), Business Administration. He oversees all departments, except Engineering& Manufacturing, Finance, and IT. His responsibilities include key support functions such as Sales, Marketing, Ordering & Shipping, Inventory, and Human Resources.
The ITSC has adopted the IT governance processes recommended by the CIO. They review proposals for IT investments and determine where to invest their limited funds. Each of the members has particular areas of interest, but all of them are focused on reducing the overall cost of running the business, increasing sales, and managing the cost of IT for the company. The ITSC has established a series of checkpoints at which they make go/no-go decisions on IT projects. At these decision points the following documents are reviewed by the ITSC:
- Preliminary Investigation Report – describes the problem/opportunity, identifies benefits of a new system, and reports on various aspects of feasibility of the proposed project.
- Requirements Specification – documents the requirements to be fulfilled by the proposed system.
- Systems Design Specification – translates the requirements into a logical design for the proposed system.
- Final System Report – compiles previous documents and lays out the way ahead if the project is approved and funded.
As each report is approved, work on the following step begins. This controls the amount of time and effort put into a request for a system. For example, if the Preliminary Investigation Report is not accepted by the ITSC, no further work is performed on the system proposal.