Reference no: EM132368154

Question

Tilly's Pet Supplies is a small to medium sized business (SME). The business has a good reputation for high quality pet food and enjoys long-standing arrangements with many pet shops for the provision of food, toys and accessories. Tilly's Pet Supplies 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 the business's inventory management system. As a result of the strained system, Tilly's Pet Supplies 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 Sam Potter, the part owner of Tilly's Pet Supplies, is the possibility of investing capital now and having to do so again in a couple of years' time as technology changes. However, Sam does not mind spending a large sum now if the system is a long-term answer, since, as Sam said, 'Once the system is acquired then the business can get back to normal and do what it does best - make great pet products - without having to spend money on IT.'

Required

You work for a professional accounting firm as Sam's accountant, and Sam has asked for your advice on a new system. Sam would like your recommendation to be in writing so that it can be shared with their business partner and it should therefore be written using appropriate professional language and include answers to the following:

(a) Discuss the advantages and disadvantages of making or buying a new system

(b) Discuss the security risks associated with both making or buying a new system, and ways of mitigating those risks

(c) Provide a recommendation to Tilly's Pet Supplies as to whether making or buying a new system is most appropriate for their business, with a justification

(d) Evaluate Sam's claim that: 'Once the system is acquired then the business can get back to normal and do what it does best - make great pet products - without having to spend money on IT'? Explain your reasoning, using examples.