We have received the request to evaluate the current management system and practices of Game Shop Inc. We have taken actions to identify problems and the areas of improvement based on the information provided. Our team has concluded maintaining a good reputation in the industry is a critical success factor for Game Shop Inc. because this industry is an oligopoly and anything that affects your reputation would affect your reputation with all members of the video game industry.
We began by analyzing the current billing system. Past errors in the billing process have negatively affected your reputation and this could critically harm your future success in this industry. Then, we narrowed the potential causes of the problem down to the project managers lacking financial management skills, their compressed schedule, the deviation between the company policies regarding the purchase order system, and the current practice by the project managers, and the technical difficulties in the billing system.
To satisfy the desired objectives, we have come up with three possible solutions: offer ongoing education to project managers to be capable of performing financial management, have a specialized billing system customized for Game Shop Inc. , or integrate a new role under each PM to focus exclusively on the financial aspects of each project. Game Shop Inc. can expect to earn a good reputation by delivering high quality service to its customers. Therefore, this reports provides the in-depth recommendation on implementing changes to Game Shop Inc.
Billing Improvement Effort The billing improvements that you have implemented recently have had a positive effect in the accuracy of the billing however the timeliness still could benefit from further improvements. P-Cars, which focus on software errors and procedural breakdowns, have decreased the total billing errors from 15% to 0. 3%. However when looking at billing scorecards and detention meetings it has not had such a dramatic effect. The billing scorecards are informative to the PMs and others, however it does not seem o be improving billing timeliness as the grades have not increased significantly on average(insert endnote). The punitive nature of the scorecards (ie. Detention meetings) have the right goal in mind but may cause managers to harbor resentment which most likely would not lead to the desired effect. Since the P-Cars focus more on procedures rather than personnel, we will focus our alternatives mainly on procedural aspects as P-Cars were the most successful. Alternative 2: Another alternative is to have an IT system that is integrated into the billing system.
It can have several advantages and resolve key issues effecting billing accuracy and timeliness. An important flaw that an IT system will help address is efficiency in the billing process. Currently, billing work can only be submitted once a week and reports take too long to download onto a PM’s computer. With an integrated system, bill processing time is reduced through automation. Since changes in estimates are common, there can be a lot of paperwork submissions that have to go through the proper channels. Automated entry saves time, money, and can be more accurate.
Management is able to update POs quickly and easily. Some customers might not be happy with the current system of receiving POs because they quickly become obsolete. With an IT system, the customer has the benefit of tracking up to date changes in the order. The customer can review POs online and start review processes earlier; resulting in lower accrual rates and better alignment with our POs policy. The customers that do not accept a bill until the final stage of the project is complete might feel more comfortable with payment at certain stages if they feel estimates are more accurate and up to date.
Reporting time could be too long because the reports have too much information in them; with an IT system, reports can be more concise. When implementing the system it is important that IT and billing departments are offered support as we go through the change. If each department is given up to date information and has the opportunity to offer input, the transition can be better. There might be resistance because of job insecurity; offering job placement opportunities or bonuses can help alleviate that issue. A 3rd party consultant will help implement the best system for both departments.
Another flaw that an IT system will help address is accuracy. Since it is easier to submit billing work, estimates can be more accurate simply because they are less time consuming. PMs won’t spend as much time on menial tasks since the system is automated. The system will place limits/requirements that must be made as the order is processed and can eliminate double orders all together. Management is more focused on production than billing so an automated system can provide better submission accuracy, make it easier and less consuming to submit.
It is part of human nature for a person to become less motivated when they are required to work as late as 11PM and this can lead to problems. However, an important issue that won’t addressed by only implementing a new IT system is that management has no financial or technical background. They are more focused on the production side and don’t know how to use the billing tools that are available to them. Since GSI is so good at the production side, simply implementing an IT and offering limited training will not put billing at par with production. The PMs could be spread too thin and there is no room for error.
Merchant, Kenneth A., and Wim A. Van Der Stede. “Case Study Game Shop, Inc.”Management Control Systems: Performance Measurement, Evaluation and Incentives. 3rd ed. Harlow: Financial Times Prentice Hall, 2012. 229-38. Print.