Reference no: EM132597226

Wilson Petroleum is a local distributor of home heating oil. The firm also installs and services furnaces and heating systems in homes and small commercial buildings. The customer service department maintains sales and service records on current customers who number about 400. Detailed customer records are kept manually in file cabinets, and a small computer system holds all customer names and addresses for mailing and billing purposes. One full-time clerk maintains all the records and handles all billing and customer inquiries. Customers occasionally complain if delivery or service is late, but only one or two mild complaints are received each month. Delays are primarily a result of problems in the field rather than problems in assigning calls in the service department.

A consultant has proposed a new computer system that will completely automate the customer service function. It will provide on-line billing and immediate access to all customer records. The cost of the proposed system is $100,000 initially plus about $15,000 a year for maintenance and support. It will still take a person to run it. The consultant says the new system will provide faster service and superior insight into the needs of the customer base, which will result in better customer relations and more sales in the long run.

Question 1: Discuss the pros and cons of the consultant's proposal. What further justification should management demand before buying? Could the consultant have made the proposal for reasons that aren't in Wilson's best interest? Could the consultant be well meaning yet biased? Explain. Do you have any thoughts regarding how the ability of Wilson to service customers better with the new system will positively (or negatively) impact its cash inflows?