Wecool Ltd manufactures industrial coolers. This company was established in 2005
ID: 2419878 • Letter: W
Question
Wecool Ltd manufactures industrial coolers. This company was established in 2005 and has experienced rapid sales growth. The company is organized by business divisions, with vice presidents for manufacturing, marketing, accounting and general administration. The company has a medium-sized computer network which supports a variety of batch processing applications for the business divisions. The manufacturing division and marketing division also use computer applications for inventory management and shipment. The manager of IT reports to the vice president of general administration. Wecool Ltd's rapid growth has strained its computer resources and there has been an increase in the number of complaints concerning inadequate support and service from IT in the past year. The CEO of Wecool Ltd is now thinking of forming a steering committee to help solve the IT problems. What is a steering committee? Discuss the role of a steering committee in planning for the acquisition and the u se of IT resources at Wecool Ltd. Identify several accounting related decisions that might be made by the CEO and the accounting manager of Wecool Ltd. How do the information needs of these two positions differ?Explanation / Answer
a. Steering committee :An advisory committee usually made up of high level stakeholders and/or experts who provide guidance on key issues such as company policy and objectives, budgetary control, marketing strategy, resource allocation, and decisions involving large expenditures.
A steering committee is a committee that provides guidance, direction and control to a project within an organization. The term is derived from the steering mechanism that changes the steering angle of a vehicle's wheels.
Project steering committees are frequently used for guiding and monitoring IT projects in large organizations, as part of project governance. The functions of the committee might include building a business case for the project, planning, providing assistance and guidance, monitoring the progress, controlling the project scope and resolving conflicts.
As with other committees, the specific duties and role of the steering committee vary among organizations.
b. Role of a steering committe in planning for the acquisition and the use of It resoures at Wecool Ltd.
IT steering committee exists as a standing committee or forms when a major IT investment is being considered. These committees vary significantly in their purpose and composition, including their leadership. Critical access and small hospitals may not have an IT steering committee, with IT only being addressed at budget time as part of a budget committee.
A major investment in health information technology (HIT), especially focusing on clinical information systems such as electronic health records (EHR) requires engaging representatives from all key stakeholder groups. An HIT steering committee is typically formed. As you embark upon planning for HIT, take time to consider how best to form and operate the group of people who should be involved in HIT planning.
Many IT committees plan the IT budget and prioritize projects. Projects may range from as simple as fixing a printer or replacing a broken monitor to writing an interface between a billing system and a laboratory information system. Many of these committees focus only on technology.
As more clinical information systems are considered, the HIT projects span several departments and play a supporting role to all of the organization’s strategic imperatives. In recognizing this, the organization needs to formalize a committee with more strategic functions and raise the level of authority of the committee to one that can make tactical decisions itself and refer formal strategic recommendations directly to executive leadership.
Establishing the IT steering committee
Important considerations in establishing an effective IT steering committee process are as follows:
Focus the IT Steering Committee on three main tasks: IT strategic planning; project prioritization and project approval.
Ensure the meeting agenda is related to the future IT needs of the business, versus last month’s service disruption reports.
Poll committee members for their ideas on what IT’s priorities should be for next year’s budget long in advance of the budget cycle. Use the committee meeting to encourage those people to speak to those priorities and encourage discussion.
Review new emerging technologies and brainstorm how they could be used for the business.
Implement a communications plan to pre-empt the need to react to requests coming from the executive table, seemingly out of left field. The IT steering committee becomes the process to examine requests that come via that route, reducing the number of requests that appear to be end runs to established policies.
c. (i) Decisions that might made by CEO :
There are varying approaches to IT decision-making, including:
the CIO gets all the requests and decides what to do;
the CIO makes all the decisions;
the decisions are made by a committee run by the CIO;
the CEO and the CIO make all the decisions, and
the officers of the company meet on a regular basis and decide what should be done.
Makeup and Functioning of the IT steering committee
IT should have a set of basic operating principles which should be universal among all IT departments. The makeup and the functioning of the IT steering committee should be one of them. In our view, the IT steering committee should be composed of the officers of the company and should be chaired by the CEO, or in certain circumstances, the COO.
Our rationale is as follows:
The officers of the company understand the strategic plan for the entire organization and have the insight and the power to add projects, exchange projects or delete projects based on resources, budget and plan. Lower level executives should not be put into that position.
The CIO should not be put into the position of deciding priorities. If the CIO does this, then the CIO’s position is compromised relative to all the officers. In this scenario, the CIO is required to determine that one officer’s priority is not as important as another. Decisions should be the consensus of the entire officer group based on the strategic plan.
The CIO, as a member of the steering committee, is allowed to express views just like any officer may comment on their or any other requested project. Each officer should be able to defend his or her project before the committee. The CIO should bring technical expertise to the conversation to either support or discourage discussed projects. The CIO must also defend any large technical infrastructure projects.
This approach avoids the “squeaky wheel” approach which allows powerful executives to dominate the IT agenda while less powerful departments are ignored even though their requirements may be more strategic.
This approach assures that IT is aligned to the business and ensures that IT is working on projects that the company wants and needs.
(ii) Decisions taken by accounting manager: Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts.
Management accountants look ahead - they focus on forecasting and decision-making. They use information to advise on how the business can move forward, for example, should a company buy another, should it invest in new equipment. Management accounting involves using the internal financial information available to managers, as well as that information which companies must publish by law. This contributes to forward planning, reviewing and analysing the performance of the business.
Management accounting is fundamental in strategic planning. When a business is looking to make a strategic decision, for example, whether to develop a new product line, acquire another business or expand into other countries, the CIMA trained management accountant can provide advice. They can use a number of tools to assist decision-making. These include ratio analysis, budgets and forecasts (such as cash flow and variances).
Hence, Human Resources (HR) be involved and kept abreast of the CEO’s agenda with regard to the proposed merger. The function should be proactively involved in all the stages of a typical M&A, namely, scoping, due diligence, integration and change institutionalization.
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