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2 Abstract This project is a case study about SolarWinds, an information technology (IT) company. The grading rubric provided by Roger Mayer serves as the basis for the questions that will be answered. There are a total of five sections that need to have their questions answered, and each section includes its own set of sub-bullet questions. The research will be carried out utilizing Wiley Plus Financial as a primary source and the library search engine at Purdue Global to obtain secondary sources to answer the issues presented. This is an investigation into accounting questions, the answers to which will reveal SolarWinds' current financial position. Instead of focusing on other parts of the business, the issues that need to be addressed are centered on accounting. Notably, the article addresses the CVP, CSR, and BSC of SolarWinds IT Company.

3 Analysis of Solar Winds, Inc. Introduction SolarWinds is a software company that has been around for 20 years and is one of the best at managing IT infrastructure. The company's head office is in Austin, Texas (SolarWinds.com, n.d.). The company has 2500 employees worldwide and 300,000 clients (SolarWinds.com, n.d.). The company's primary goal is to make IT management software easier. CARE, which stands for Collaborative, Accountable, Ready, and Empathetic, is the value guiding the company. So, the organization takes social responsibility and accountability seriously by trying to help the community, the environment, and society. Brief History of the Organization Donald Yonce and his brother David Yonce started SolarWinds in 1999 in Tulsa, Oklahoma. SolarWinds has been sold to the public on and off since 2009. According to Flynn (2018), the company went private in 2016, intending to go public again, which happened in 2018. The brand is known for being the best in its class in Network Management and the fourth best in Systems Management (SolarWinds.com n.d.). The organization's goal is to improve the lives of the people it works with, including its employees, customers, communities, shareholders, and partners. Its goal is to help customers speed up business transformation through powerful, secure, and easy-to-use solutions for hybrid IT and multi-cloud environments. Products Manufactured SolarWinds sells IT management software at a low price. One can divide their products into seven groups: network, database, systems, IT service, IT security and application management, as well as managed service providers (SolarWinds.com, n.d.). Each category has a

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4 group of products that fall under it. One example would be a product in the IT service management category called "service desk." Customer Niche and Base Niche marketing is when a company focuses all its marketing efforts on a small, well- defined group of people. A company can create a niche by using innovative marketing techniques and determining what the customer wants. Professionals in the IT world are among SolarWinds' customers (SolarWinds.com, n.d.). This group includes people who work in IT operations, DevOps, managed service providers (MSPs), and big companies like Microsoft, Intel, and Cisco. The company has only 300,000 customers in 190 countries around the world. Significant Costs Identified Major Costs SolarWinds is subject to several significant expenses. Most of their debt comprises long- term obligations, which total more than $1.8 billion (SolarWinds, n.d.). In the first quarter of 2020, other significant costs include marketing, sales, general and administrative expenses, research and development, and remuneration of acquired intangibles; these costs are $152,274. (Investors, 2020). Environmental Concerns SolarWinds has not discussed environmental issues on its website or in any other media. Even if this is not a concern for the growing company, it would be good for them to put in place ways to reduce their carbon footprint as they grow. They can cut their carbon footprint in 4 ways. The first way is to move toward zero waste by stopping the making, moving, using, and throwing away materials (Wood, 2019). The second way would be to use solar panels or wind turbines to get energy from natural sources. Third, reduce business travel emissions by incentivizing

5 employees to use green ways to get to work, like biking (Wood, 2019). The fourth is to teach and involve workers. Prevention and Appraisal Costs Monitoring and measuring activities related to quality are linked to appraisal costs. Costs come from how suppliers and customers rate the products bought. According to "Cost of Quality" (n.d.), there are three main types of appraisal costs. The groups are checking the products that come in, doing quality audits to ensure the system is working right and rating the supplier based on how the customers feel about the product. Prevention costs are the costs that are incurred to stop quality problems from happening. These costs can be divided into four groups: quality planning, product requirements, training, and quality assurance (Cost of Quality, n.d.). SolarWinds should emphasize training so their employees can teach customers how to use the products they sell. Internal and External Failure Costs There are internal failure costs to fix broken products that have already been sent to customers. This cost is because of how poor a product was before being sold to a customer. Some examples of these costs are work that does not need to be done, a broken product that cannot be fixed, fixing a broken product, and not finding a broken product before putting it on the market (Cost of Quality, n.d.). On the other hand, external failure costs happen when a customer notices a product's flaws (Cost of Quality, n.d.). This cost comes from the fact that the product was poorly made and sold to the customer. Repairs, warranty claims, customer complaints, and returns are all examples of these kinds of costs. Since SolarWinds is a smaller company, it is hard to find reports of the company's poor products. SolarWind's biggest worry would be that their IT infrastructure management code will

6 add hours of unnecessary work. If SolarWinds gives a company a help desk tool with a coding mistake, the company will need hours to find and fix the mistake. Also, since the customer already has the product, all other projects are less critical and will not be finished until the customer's problem is fixed. Cost Volume Profit Analysis Basic Calculations The break-even analysis shows how many sales a business needs to make to cover its costs. (Kimmel et al. 2019). For a break-even analysis, one takes Total Sales minus Variable Costs multiplied by the number of units and minus Fixed Costs to get Net Income. For Q1 2020, SolarWinds will make a total of $246,950. The costs that changed were $219,267. There were $24,853 in fixed costs. This results in a net income of $415 (Investors, 2020). CVP Analysis Benefits for Company The cost-volume-profit analysis shows how a company's profits change when its costs or sales go up or down (Kimmel et al., 2019). CVP analysis is a more detailed and objective way for a business manager to evaluate and predict how the business will go for the organization and its employees. It is one of the tools a manager can use to make decisions. One of the benefits of CVP analysis is that it helps managers answer particular practical questions necessary in business analysis (Lewis, 2019). Questions about the organization’s break-even point assist the management in predicting how future production and spending will influence the organization's accomplishment or failure. For instance, if the management knows the break-even point, they can change spending and work harder to make more money. Besides, since CVP analysis is centered on statistical models, decisions and choices can be subdivided into likelihoods that help make decisions.

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7 Budgeting Considerations Budget Processes The SolarWinds company does not say if it is a top-down or a bottom-up company. Their press release says it is a top-down budget corporation. According to Kimmel et al. (2019), the budget is composed of the upper management and forwarded to lower-level employees. Participative budgeting, a "bottom-to-top" budget, lets lower-level employees develop detailed budgets. A budget is suitable for a company because it helps them plan, gives them an early warning system if they make bad financial decisions, and motivates their employees to reach their goals. Budget Variances Once a top-down budget has been set, it is essential for management to continually examine variances between actual results and the results expected according to the budget (Kimmel et al., 2019). Establishing a budget will be rendered moot if any deviations from it are not investigated and discussed. Regularly, tracking and addressing any variances should be a priority. Management and Budgeting Since SolarWinds is still a relatively young company in terms of its time spent trading publicly, it is prudent to do a monthly assessment of the budget. Because of this, the organization can maintain a consistent relationship between its intended budget goals and its actual budget. Lower-level managers should be included in a review of the budget to ensure that it is being adhered to and that there is no unnecessary spending. Balanced Score Card

8 A balanced scorecard is a planned management performance metric that assists businesses in recognizing and improving the regions of their operations that are most directly responsible for influencing their customers' experiences. It is a strategic planning and management framework that firms use to convey what they are attempting to do, align daily work, prioritize projects and outputs, and measure or monitor progress toward a strategic aim (Balaji et al., 2018). It does this by analyzing historical performance data and offering recommendations to organizations on how to advance their future decision-making. The measures that need to be taken to achieve future success at SolarWinds are outlined in a scorecard format and can be found below. Financial Perspective  Increase inventory turnover  Refine Operational effectiveness  Appearance to stakeholders Business Process Perspective  Customer demands  Product life cycle improvement  Research and development Customer Perspective  Brand quality  Brand Reliability  Customer service  Appearance to consumers Vision and Strategy Learning and Growth Perspective  Retention of workers  Employee growth  Agile  Cross training in tech field

9 Financial Perspective From this perspective, the balanced scorecard examines net income and return on investment, which are used by all for-profit organizations. Measures of financial performance give a common means for comparing and analyzing companies. When deciding whether or not to loan or invest money in a company, financial institutions and shareholders depend heavily on financial performance indicators (Agarwal, 2015). When created correctly, financial indicators can give an overall picture of a company's success. By themselves, financial indicators do not motivate people to do well. Financial measures show what happened in the past but not what will happen in the future. They are essential, but they will not show how to create value. Customer Perspective From this perspective, managers decide which customer and market sections the business unit will contest and how its performance will be measured in these targeted sections. The customer perspective usually includes a few cores or generic indicators of the success of a well- designed and implemented strategy (Eaton & Kilby, 2015). The most critical measures of results are customer retention and satisfaction, gaining new customers, customer profitability, and market share in targeted sections. However, the consumer perspective should also comprise particular indicators of the value propositions the organization will offer consumers in targeted market segments. The customer perspective looks at it from the customer's point of view and then compares it to similar products from other companies (Kimmel et al., 2019). The company said it had 95,000 customers in 2011 (Lind, 2011) and could have up to 275,000 customers by 2020. The company's customer base is growing by slightly more than 16% yearly. Internal Process Perspective

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10 The internal process perspective looks at all operating processes and how well they work to ensure the company is running well (Kimmel et al., 2019). In the internal-business-process view, managers determine which internal processes are most important for the organization to do well. Some values, like product development, production, delivery, and service after the sale, are examined (Kimmel et al., 2019). An organization must be able to keep its outputs high if it wants to control its inputs. SolarWinds needs to know what its customers want and get high-quality goods and services from its key suppliers to do a good job. Learning and Growth Perspective This perspective examines how well the company keeps its employees and helps them grow (Kimmel et al., 2019). The learning and growth perspective looks at people's skills as a way to motivate them. Managers would be in charge of improving the skills of their workers. Employee satisfaction, employee retention, and employee productivity would be good ways to judge a manager's job (Agarwal, 2015). It helps figure out if the company is flexible with its workers. A company is not successful if its workers do not have the chance to learn and grow in their jobs. Corporate Sustainability and Responsibility Corporate Sustainability Investors who want to make money and do good for society are becoming more concerned about the sustainability of businesses. Sustainable investing is based on the environment, being socially responsible, and good governance. Companies can be better stewards of the environment if they cut down on their carbon footprints and other wasteful actions (Beattle, 2021). The social responsibility pillar involves activities that help the company's employees, its consumers, and the community. The economic pillar, also called

11 "governance," is about ensuring that accounting practices are honest and open and that rules are followed. It's an alternative to the usual model of growth and profit (Wilson, 2003). Corporate sustainability includes the traditional values of profit and growth, but it also considers how the organization impacts the environment, society, and economic growth (Wilson, 2003). Corporate Responsibility Corporate social responsibility (CSR) is a model that guides an organization to be socially responsible to itself, its investors, and the public. By embracing CSR, organizations can be aware of its effects on the economy, society, and the surrounding (Fernando, 2022). CSR means that a corporation does business in ways that help society and the surroundings instead of hurting them. Corporate responsibility implies that companies have an ethical duty to think about what society needs and not just what the shareholders want (Wilson, 2003). Wilson says that corporate social responsibility is up for debate because it's not clear how much a company should care about the needs of society (2003). SolarWinds, Inc. Corporate Sustainability and Responsibility SolarWinds Corporation wants to be carbon neutral, reduce environmental impacts, encourage employees to volunteer, and give money to charity. The whole supply chain is committed to the highest standards of social responsibility. SolarWinds Corporation ensures that all its suppliers follow environmental rules, keep their workers safe, treat them with dignity and respect, and use manufacturing methods that are good for the environment. To reach these CSR goals, SolarWinds Corporation is doing many things in business, law, ethics, and charity. SolarWinds Corporation takes care of its economic responsibility by concentrating on business practices that help the company grow in the long run while meeting the set standards for

12 charity, the environment, and ethics. A company weighs the effects of its business decisions on society as a whole. It sells goods, provides services people need, and makes money from them to stay in business. Economic anticipation is a fundamental social responsibility since society expects SolarWinds Corporation to make money to encourage investors to put money into the company for business continuity (Fernando, 2022). Society has always thought of SolarWinds Corporation as an organization that makes and sells goods and services to make money in a way that is good for everyone. Businesses have a legal responsibility to follow the rules and laws that are in place. As a part of society, SolarWinds Corporation is expected to follow the rules. These basic rules show how society thinks about coded ethics and tell SolarWinds Corporation how to run its business honestly and fairly. Local, regional, and national lawmakers make these rules and laws. They make sure that businesses make money without putting the greater good of society at risk. SolarWinds Corporation has put a compliance officer in a high-level role in the executive chart to guarantee the business meets all primary legal responsibilities. This is to avoid lawsuits that could come from not following the rules. The mission of the SolarWinds Corporation, referred to as its philanthropic responsibility, is to make the world a n improved place to live. In addition to meeting society's expectations regarding law and ethics, SolarWinds Corporation meets its charitable responsibility by actively participating in volunteer activities. This demonstrates the company's commitment to the community. The organization gives up a certain amount of its profits to charitable causes. Benefits of Sustainability and Responsibility

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13 CSR is essential for the community, but it is also crucial for a business. CSR activities can help employees feel more linked to their companies and the world. They can also boost morale and assist workers and employers feel more connected to the world. Epstein-Reeves says that sustainability and responsibility should be good for the company in six ways (2012). They can be put into five different groups. These are innovation, saving money, making a brand stand out, thinking about the long term, and getting people involved (Epstein-Reeves, 2012). Products become better for the environment because of new ideas. Every business wants to save money. Use green ways to save money, like installing energy monitors, and tell people about how the company saved money on energy (Epstein- Reeves, 2012). By making their brands stand out, the company will be able to keep growing. Growth will be driven by thinking about the long term. Lastly, investing in sustainability is a good idea because customers and employees are involved. Strategic CSR could also help businesses make more money and save money by making their operations more efficient. It could also boost employee morale, make people happier at work, and reduce staff turnover, among other things. By making the business more sustainable, the company can make more money and improve its bottom line. Heuristic and Bias Heuristics A heuristic is a mental short-cut that helps managers make decisions and solve problems quickly and satisfactorily. These rules of thumb help people make decisions faster and do their jobs without having to stop and think about what to do next (Atansiu & Ruotsalainen, 2019). There are many different heuristics, such as availability, representativeness, and affect heuristics. The availability heuristic considers how easy it is to think of something (Cherry, 2020). When

14 trying to make a choice, a person might quickly think of some relevant examples. Since these are easier to remember, they will probably think these outcomes are more common or happen more often. On the other hand, the representativeness heuristic is based on comparing a situation from the past to a situation in the present (Cherry, 2020). When trying to figure out if someone can be trusted, you might compare parts of that person to others you know. The affect heuristics happens when people make decisions based on how they feel about things (Cherry, 2020). For example, research has shown that when people are in a good mood, they are more likely to see decisions as having benefits and less risk. Bias of Heuristics Heuristics can help us solve problems and make decisions more quickly, but they can also lead to mistakes. As in the above examples, heuristics can lead to wrong conclusions about how often something happens and how representative it may be. Cherry says that heuristics make it harder to make good decisions (2020). Even though there are benefits to making decisions quickly, a manager should be aware of the potential bias in their decisions. Just do not make all future decisions based on what you did in the past. Also, just because something worked in the past does not mean it will work again, and using a heuristic can make it hard to see other solutions or come up with new ideas. Heuristics can also lead to prejudice and the formation of stereotypes. Because people use mental short-cuts to classify and group people, they often miss critical information and put people into categories based on stereotypes that do not match reality. Conclusion

15 SolarWinds is an IT company that has been around for a while. They are set up for success if they find and deal with their Significant Costs, CVP, budgeting concerns, Balanced Score Card, Corporate Sustainability/Responsibility, and heuristics. As SolarWinds continues to grow, it should pay attention to keeping customers, keeping employees, and sticking to its budgets. Through the cost-volume-profit analysis, the company can see how different levels of volume and costs affect operating profit. CVP analysis is a more detailed and objective way for a business manager to evaluate and predict how the business will go for the company and its employees. It is one of the tools a manager can use to make decisions. This is very good for the SolarWinds organization as a whole. Also, businesses need to know how important corporate social responsibility is for their long-term survival. SolarWinds Corporation thinks that CSR is a must-do that cannot be ignored any longer. By putting money into economic, legal, ethical, and charitable corporate social responsibility (CSR) activities, SolarWinds Corporation has improved the way stakeholders think about its brand. By doing things for the environment, social good, and the benefit of a broader range of stakeholders, SolarWinds Corporation has gotten good press, which has helped it stand out in a crowded market. So, for the company to stay relevant to the people it serves, it needs to keep focusing on corporate social responsibility and sustainability.

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16 References Agarwal, R. (2015, May 13). Perspectives in the balanced scorecard (4 perspectives). Your Article Library. https://www.yourarticlelibrary.com/accounting/performance- measurement/perspectives-in-balanced-scorecard-4-perspectives/53100 Atanasiu, R., & Ruotsalainen, R. (2019, July). The role of managerial heuristics in organizational decision-making and beyond. Academy of Management Proceedings (Vol. 2019, No. 1, p. 11516). Briarcliff Manor, NY 10510: Academy of Management. Balaji, M., Dinesh. S. N., & Parthiban. V. V. (2018). Applying balanced scorecards to supply chain performance: More enterprises in developing countries should adopt Kaplan and Norton innovation. ISE: Industrial & Systems Engineering at Work, 50(11), 42. Beattle, A. (2021). The three pillars of corporate sustainability. Investopedia. https://www.investopedia.com/articles/investing/100515/three-pillars-corporate- sustainability.asp Cherry, K. (2020). Heuristics and cognitive biases. Cognitive Psychology. Retrieved from https://www.verywellmind.com/what-is-a-heuristic-2795235 Cost of Quality (2020, May 26). ASQ. https://asq.org/quality-resources/cost-of-quality Eaton, D., & Kilby, G. (2015). Does your organizational culture support your business strategy? Journal for Quality & Participation, 37(4), 4. Epstein-Reeves, J. (2012). Six reasons companies should embrace CSR. Forbes. Retrieved from https://www.forbes.com/sites/csr/2012/02/21/six-reasons-companies-should- embracecsr/#7b89010d3495 Fernando, J. (2022). Corporate social responsibility (CSR) definition. Investopedia. https://www.investopedia.com/terms/c/corp-social-responsibility.asp

17 Flynn, M. (2018). SolarWinds goes public again, with silver lake and Thoma Bravo retaining control. Retrieved from https://www.themiddlemarket.com/news/solarwinds-goes- publicagain-with-silver-lake-and-thoma-bravo-retaining-control Kimmel, P., Weygandt, J., & Kieso, D. (2019). Accounts: Tools for business decision making (7th ed.). John Wiley & Sons. Lewis, J. (2019). Advantages & disadvantages of cost-volume-Profit analysis. Small Business - Chron.com. https://smallbusiness.chron.com/advantages-disadvantages-costvolumeprofit- analysis-35135.html Lind, T. (2011). SolarWinds blow into post-fall. Retrieved from https://www.spokanejournal.com/local-news/solarwinds-blows-into-post-falls/ Investors (2020). SolarWinds Announces First Quarter 2020 Results. SolarWinds. https://investors.solarwinds.com/news/news-details/2020/SolarWinds-Announces- FirstQuarter-2020-Results/default.aspx SolarWinds.com (n.d.). SolarWinds Company. https://www.solarwinds.com/company/home Štreimikienė, D., & Ahmed, R. R. (2021). Corporate social responsibility and brand management: evidence from Carroll's pyramid and triple bottom line approach. Technological and Economic Development of Economy, 27(4), 852-875. Wilson, M. (2003). Corporate sustainability: What is it, and where does it come from? Ivey Business Journal. Retrieved from https://iveybusinessjournal.com/publication/corporatesustainability-what-is-it-and-where- does-it-come-from/ Wood, M. (2019). 4 ways to reduce your business's carbon footprint. Business. Retrieved from https://www.business.com/articles/reduce-business-carbon-footprint/

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