Robert Hamilton was hired 6 months ago as the controller of a small oil and gas exploration and development company, Gusher, Inc., headquartered in...

Robert Hamilton was hired 6 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 The joint interest billing and fixed asset accounting systems of Gusher are outdated, and many processing problems and errors have been occurring quite frequently.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 senior manager. Barton instructed Jeffries to make the new system that Hamilton wished to have a 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 4 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 of urgency 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 RFP (request for proposal) 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 close 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?