Robert Hamilton was hired six months ago as thecontroller of a small oil and gas exploration anddevelopment company, Gusher, Inc., headquarteredin Beaumont, Texas. Before working at Gusher,Hamilton was the controller of a larger petroleumcompany, Eureka Oil Company, based in Dallas. The joint interest billing and fixed asset accountingsystems of Gusher are outdated, and many processingproblems and errors have been occurring quitefrequently. Hamilton immediately recognized theseproblems and informed the president, Mr. Barton,that it was crucial to install a new system. Bartonconcurred and met with Hamilton and Sally Jeffries,the information systems (IS) senior manager. Bartoninstructed Jeffries to make the new system thatHamilton wished to have on top priority in herdepartment. Basically, he told Jeffries to deliver thesystem to meet Hamilton’s needs as soon as possible.Jeffries left the meeting feeling overwhelmed,since the IS department is currently working ontwo other very big projects, one for the productiondepartment and the other for the geological department.The next day, Hamilton sent a memo to Jeffriesindicating the name of a system that he had 100percent confidence in—Amarillo Software—and healso indicated that he would very much like this systemto be purchased as soon as possible. He statedthat the system had been used with much successduring the past four years in his previous job.When commercial software is purchased, Jeffriestypically sends out requests for proposals to at leastsix different vendors after conducting a careful analysisof the needed requirements. However, due to theair demonstrated in the meeting with the presidentand the overworked systems staff, she decided to goalong with Hamilton’s wishes and sent only onerequest for proposal (RFP) out, which went toAmarillo Software. Amarillo promptly returned thecompleted questionnaire. The purchase price($75,000) was within the budgeted amount. Jeffriescontacted the four references provided and was satisfiedwith their comments. Further, she felt comfortablesince the system was for Hamilton, and he hadused the system for four years.The plan was to install the system during themonth of July and try it for the August transactioncycle. Problems were encountered, however, duringthe installation phase. The system processedextremely slowly on the hardware platform ownedby Gusher. When Jeffries asked Hamilton how theproblem had been dealt with at Eureka, he repliedthat he did not remember having had such a problem.He called the systems manager from Eurekaand discovered that Eureka had a much more powerfulmainframe than Gusher. Further investigationrevealed that Gusher has more applications runningon its mainframe than Eureka did, since Eureka useda two-mainframe distributed processing platform.Further, the data transfer did not go smoothly.A few data elements being stored in the systemwere not available as an option in the Amarillo system.Jeffries found that the staff at Amarillo wasvery friendly when she called, but they could notalways identify the problem over the phone. Theyreally needed to come out to the site and investigate.Hamilton was surprised at the delays betweenrequesting an Amarillo consultant to come out andthe time in which he or she actually arrived. Amarilloexplained that it had to fly a staff member fromDallas to Beaumont for each trip. The system finallybegan to work somewhat smoothly in January,after a grueling fiscal year–end closing in October.Hamilton’s staff viewed the project as an unnecessaryinconvenience. At one point, two staff accountantsthreatened to quit. The extra consulting feesamounted to $35,000. Further, the systems departmentat Gusher spent 500 more hours during theimplementation process than it had expected. Theseadditional hours caused other projects to fall behindschedule.RequiredDiscuss what could have been done differently duringthe design phase. Why were most of the problemsencountered? How might a detailed feasibility studyhave helped?

Robert Hamilton was hired six months ago as thecontroller of a small oil and gas exploration anddevelopment company, Gusher, Inc., headquarteredin Beaumont, Texas. Before working at Gusher,Hamilton was the controller of a larger petroleumcompany, Eureka Oil Company, based in Dallas. The joint interest billing and fixed asset accountingsystems of Gusher are outdated, and many processingproblems and errors have been occurring quitefrequently. Hamilton immediately recognized theseproblems and informed the president, Mr. Barton,that it was crucial to install a new system. Bartonconcurred and met with Hamilton and Sally Jeffries,the information systems (IS) senior manager. Bartoninstructed Jeffries to make the new system thatHamilton wished to have on top priority in herdepartment. Basically, he told Jeffries to deliver thesystem to meet Hamilton’s needs as soon as possible.Jeffries left the meeting feeling overwhelmed,since the IS department is currently working ontwo other very big projects, one for the productiondepartment and the other for the geological department.The next day, Hamilton sent a memo to Jeffriesindicating the name of a system that he had 100percent confidence in—Amarillo Software—and healso indicated that he would very much like this systemto be purchased as soon as possible. He statedthat the system had been used with much successduring the past four years in his previous job.When commercial software is purchased, Jeffriestypically sends out requests for proposals to at leastsix different vendors after conducting a careful analysisof the needed requirements. However, due to theair demonstrated in the meeting with the presidentand the overworked systems staff, she decided to goalong with Hamilton’s wishes and sent only onerequest for proposal (RFP) out, which went toAmarillo Software. Amarillo promptly returned thecompleted questionnaire. The purchase price($75,000) was within the budgeted amount. Jeffriescontacted the four references provided and was satisfiedwith their comments. Further, she felt comfortablesince the system was for Hamilton, and he hadused the system for four years.The plan was to install the system during themonth of July and try it for the August transactioncycle. Problems were encountered, however, duringthe installation phase. The system processedextremely slowly on the hardware platform ownedby Gusher. When Jeffries asked Hamilton how theproblem had been dealt with at Eureka, he repliedthat he did not remember having had such a problem.He called the systems manager from Eurekaand discovered that Eureka had a much more powerfulmainframe than Gusher. Further investigationrevealed that Gusher has more applications runningon its mainframe than Eureka did, since Eureka useda two-mainframe distributed processing platform.Further, the data transfer did not go smoothly.A few data elements being stored in the systemwere not available as an option in the Amarillo system.Jeffries found that the staff at Amarillo wasvery friendly when she called, but they could notalways identify the problem over the phone. Theyreally needed to come out to the site and investigate.Hamilton was surprised at the delays betweenrequesting an Amarillo consultant to come out andthe time in which he or she actually arrived. Amarilloexplained that it had to fly a staff member fromDallas to Beaumont for each trip. The system finallybegan to work somewhat smoothly in January,after a grueling fiscal year–end closing in October.Hamilton’s staff viewed the project as an unnecessaryinconvenience. At one point, two staff accountantsthreatened to quit. The extra consulting feesamounted to $35,000. Further, the systems departmentat Gusher spent 500 more hours during theimplementation process than it had expected. Theseadditional hours caused other projects to fall behindschedule.RequiredDiscuss what could have been done differently duringthe design phase. Why were most of the problemsencountered? How might a detailed feasibility studyhave helped?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Robert Hamilton was hired six months ago as the
controller of a small oil and gas exploration and
development company, Gusher, Inc., headquartered
in Beaumont, Texas. Before working at Gusher,
Hamilton was the controller of a larger petroleum
company, Eureka Oil Company, based in Dallas. The joint interest billing and fixed asset accounting
systems of Gusher are outdated, and many processing
problems and errors have been occurring quite
frequently. Hamilton immediately recognized these
problems and informed the president, Mr. Barton,
that it was crucial to install a new system. Barton
concurred and met with Hamilton and Sally Jeffries,
the information systems (IS) senior manager. Barton
instructed Jeffries to make the new system that
Hamilton wished to have on top priority in her
department. Basically, he told Jeffries to deliver the
system to meet Hamilton’s needs as soon as possible.
Jeffries left the meeting feeling overwhelmed,
since the IS department is currently working on
two other very big projects, one for the production
department and the other for the geological department.
The next day, Hamilton sent a memo to Jeffries
indicating the name of a system that he had 100
percent confidence in—Amarillo Software—and he
also indicated that he would very much like this system
to be purchased as soon as possible. He stated
that the system had been used with much success
during the past four years in his previous job.
When commercial software is purchased, Jeffries
typically sends out requests for proposals to at least
six different vendors after conducting a careful analysis
of the needed requirements. However, due to the
air demonstrated in the meeting with the president
and the overworked systems staff, she decided to go
along with Hamilton’s wishes and sent only one
request for proposal (RFP) out, which went to
Amarillo Software. Amarillo promptly returned the
completed questionnaire. The purchase price
($75,000) was within the budgeted amount. Jeffries
contacted the four references provided and was satisfied
with their comments. Further, she felt comfortable
since the system was for Hamilton, and he had
used the system for four years.
The plan was to install the system during the
month of July and try it for the August transaction
cycle. Problems were encountered, however, during
the installation phase. The system processed
extremely slowly on the hardware platform owned
by Gusher. When Jeffries asked Hamilton how the
problem had been dealt with at Eureka, he replied
that he did not remember having had such a problem.
He called the systems manager from Eureka
and discovered that Eureka had a much more powerful
mainframe than Gusher. Further investigation
revealed that Gusher has more applications running
on its mainframe than Eureka did, since Eureka used
a two-mainframe distributed processing platform.
Further, the data transfer did not go smoothly.
A few data elements being stored in the system
were not available as an option in the Amarillo system.
Jeffries found that the staff at Amarillo was
very friendly when she called, but they could not
always identify the problem over the phone. They
really needed to come out to the site and investigate.
Hamilton was surprised at the delays between
requesting an Amarillo consultant to come out and
the time in which he or she actually arrived. Amarillo
explained that it had to fly a staff member from
Dallas to Beaumont for each trip. The system finally
began to work somewhat smoothly in January,
after a grueling fiscal year–end closing in October.
Hamilton’s staff viewed the project as an unnecessary
inconvenience. At one point, two staff accountants
threatened to quit. The extra consulting fees
amounted to $35,000. Further, the systems department
at Gusher spent 500 more hours during the
implementation process than it had expected. These
additional hours caused other projects to fall behind
schedule.
Required
Discuss what could have been done differently during
the design phase. Why were most of the problems
encountered? How might a detailed feasibility study
have helped?

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