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I N F O 7 4 0 6 En erli

Instructions (30 Marks) Read the attached Enerline Restorations Inc. business case and respond to the questions below in the space provided. Remember to incorporate course material, concepts or other related material in your responses to the questions below. (1) Case Synopsis (10 marks) Opened in May, 1996 with 3 employees, Enerline was Canada’s leader in pipeline liner systems for progressive cavity pumping, rod pumping, and injection. Due to the company’s rapid growth, a much-needed Information System (IS) is required to be implemented. Mr. Ron Hozjan, chief financial officer of Enerline, is responsible for the overall management and control of the Operations as well as Financial areas of the business. This includes making decisions and implementing the solutions for the organizational improvements where he feels necessary. With the fact that Enerline had only a handful of computers which were running basic applications, namely, Simply Accounting, On-line banking, and Microsoft Office, Mr. Hozjan found that it was an urgent to upgrade Enerline’s IS infrastructure in order to support the business successful growth, specifically financial software solutions. After evaluating several alternative solutions, Mr. Hozjan decided that the ultimate solution would be the one that was either resident in-house, or hosted at the provider’s site. A hybrid solution would not be valid since this option would require the company to allocate more staff to maintain the IS as well as more monetary resources to pay the provider for their services. Criteria such as in-house staffing, training, management time, and constrained monetary issues were considered and finally, a financial software package which could be hosted in a flexible ASP-hosted environment was selected. FutureLink, the only ASP outsourcer based in Canada at the time, was chosen for this project. By being flexible and honest to each other when exploring solutions, the positive business relationship between the two organizations was growing rapidly. Financial software solutions: The Great Plains Accounting, The PeachTree, and QByte were evaluated in order to determine which was best suited for the Enerline operations. Ultimately,

QByte was selected as it presented an outstanding number of features and benefits that could meet and satisfy Enerline’s existing information requirements. A three-year contract between Enerline and FutureLink was signed in 2000, at $1,800 per month. In this contract, FutureLink owned all of the hardware and software and provided 24hour support to Enerline. About two months later, hardware and communications setup were completed and able to run. Though QByte remained the host for the application, Enerline would be able to access it via FutureLink’s dedicated line between their own server and the QByte location. All Enerline company files were stored at the FutureLink location. Seven months after signing the contract, in September, FutureLink had faltered financially, and was acquired by a California company. In the meantime, Enerline was growing rapidly and expanding services, and was increasingly dependent on information systems. With the changes in the IS industry, there were less expensive options available for Enerline. At this time, the CFO had to determine whether renegotiations to upgrade the IS services with FutureLink would be of benefit to Enerline, or if it was time for them to invest in building an internal information technology structure. Also, he had to consider the ease and cost savings of using online ASP's, and the accompanying short-term and long-term risks.

(2) What factors should Ron Hozjan consider in his current decision-making process and Why? (10 marks) Ron Hozjan should consider the following factors: 1. Cost: When making the decision, the company must consider the its budget, cost constraint or preference for the lower cost options. Since Enerline just signed the twoyear contract with FutureLink seven months ago, this was a tough factor as if Enerline exited the contract, they would have to pay $10,800 in penalty. 2. Time: With the rapid growth of Enerline, the Mr. Hozjan had to pick the option which could be implemented as quick as possible. Moreover, the elapsed time between the reference period for the estimates and the period for which the Information System was being made should be as short as possible so that the IS would appropriately reflect the need at the time that it was made. 3. Quality of the system: The system selected must be reliable to provide Enerline the ongoing and stable services for a sustained period of time. Moreover, an ASP Outsourcer like FutureLink was required to keep the data relatively stable over time. Data should not be subject to extreme volatility or to large, unexplainable variation. 4. Size of business: As Enerline had operated business in new locations and purchased companies in the United States, it was necessary that Mr. Hozjan considered the business size in his decision. Enerline was in need of an upgraded system that could process a large amount of daily production activity and business transactions. 5. Business objectives: The decision made must be in line with Enerline’s goals. That is, to allow the business to grow. A good IS would support the company in the continued success of Enerline.

(3) What is the best solution for Ron Hozjan going forward in managing the IS for Enerline Restorations Inc. and Why? (10 marks) The ultimate solution for Ron Hozjan is to looking for a new ASP to implement an Internetbased information system. The reasons for this solution are made considering the aforementioned factors: 1. Cost: Because there was no previous mention of FutureLink’s financial difficulties when Mr. Hozjan signed the business contract, or subsequently, he could use this to cancel the contract with FutureLink. This could prevent Enerline to pay 100% of the $10,800 in penalty. Moreover, the cost of setup an internet-based information as well as communications infrastructure had been decreased significantly making this solution more beneficial than building an in-house system in the long run. Moving to internetbased would help reduce the cost of managing and maintaining your IT systems as rather than purchasing expensive systems and equipment for Enerline, they could reduce your costs by using the resources of the provider. 2. Time: The dramatically increasing number of popular internet-based ERP and other software applications had given Mr. Hozjan the option to choose the one that could benefit the company the most. As companies such as SAP, Oracle, and Salesforce.com offer products on a large scale, Enerline could customize the system to its needs and requirements, and implement it in a short period of time. Moreover, there is no need to test the system on different operating systems. This makes development and testing much easier and cuts development costs and reduces development time. 3. Quality of the system: The sharing of data and collaborating on projects would be made much easier with internet-based systems. Data will be stored in one central location, so users can share data and work together on projects. Also, it is easier to integrate internet-based systems than isolated desktop applications. Moreover, users can access an internet-based system anywhere as long as they have an internet connection, a web browser, and the appropriate login details. This means that users can access the data they need when they are away from the office, or going between Canada and US offices. Finally, internet-based offers many advanced security features that guarantee that data is securely stored and handled. 4. Size of business: Because Enerline was growing and expanding to the US and in need of a system that could process a large amount of daily production activity and business transactions, internet-based IS is the choice. Internet-based solutions are ideal for businesses with growing or fluctuating bandwidth demands. Since Enerline’s demands expectedly increase in the future, they could easily increase their cloud capacity

without having to invest in or upgrade the physical infrastructure with less risks associated compared to in-house operational issues and maintenance. 5. Business objectives: Since the fact that businesses using internet-based systems gain a real advantage over competitors, Mr. Hozjan should choose to adopt one. Moreover, it is known that organizations which adopt internet-based find that many benefits that it offers positively impacts their business. Thus, by choosing to outsource IS to a company that has a good reputation, Mr. Hozjan and Enerline would be able to fully focus on developing and proving the best piping services for their customer....