Question

Bina Memories

                Bina Memories is a small family photography business. The business has a good reputation for high-quality photos and enjoys long-standing arrangements with many schools for the provision of school photos. Bina Memories has traditionally used a small accounting package to manage its operations, with Make Your Business Profitable ‘MYBP’ being the package currently in use. Recently, however, a few of the staff in the administration team have complained that MYBP has become slow in processing transactions. The computer that runs the program is also fast approaching its capacity, having not been updated for several years and now also handling some of the business’s digital image requirements.

                As a result of the strained system, Bina Memories is considering the possibility of an upgrade. However, it is concerned that should it go ahead with an upgrade, it would have to employ a programmer to develop its new system, as well as a full-time IT specialist to keep the system running. It is also unsure of what needs to be done in managing the systems development process.

One of the things particularly troubling Mr. Cotton, the part-owner of Bina Memories, is the possibility of investing capital now and having to do it again in a couple of years’ time as technology changes. However, he does not mind spending a large sum now if the system is a long term answer, since as Cotton himself said, ‘Once the system is acquired then the business can get back to normal and do what it does best – take photos – without having to spend money on IT.’

In light of the details you have about Encosta Memories, prepare for a discussion in relation to the following questions:

(a) How correct is Cotton’s statement that: ‘Once the system is acquired then the business can get back to normal and do what it does best — take photos — without having to spend money on IT’? Explain your reasoning.

Answer 1

(a): I believe and think that the statement: ‘Once the system is acquired then the business can get back to normal and do what it does best — take photos — without having to spend money on IT’ is a statement that is based on a wrong or incorrect understanding of the IT systems and its applications in the field of business.

The accounting package being used by the company is a part of its AIS (accounting information system). AIS contain different elements that are important in accounting cycle. AIS include data that relates to revenue, expenses, customer information, employee information, and tax information. As the AIS is made of software and information system (i.e. hardware) it will need periodic upgradation as and when the size and scale of business changes and as and when technological changes occurs. When these happen then the current IT system in place may have to be updated as they are no longer relevant or have become obsolete.

As such the statement of Mr. Cotton is not at all correct.