Ron Smith Manufacturing (RSM) is a company specializing in the manufacture of furniture components for the caravan trade and has an annual turnover of £1.6 million. The company was bought out of receivership 10 months ago, complete with workshops, tools and other equipment. Profitability for the current year is unknown at this stage. Included in the sale was an IBM System/36 (S/36) mini-computer serving 15 terminals. Although the equipment is wholly owned, the company appears to have no license to run the installed software packages (although this is a matter of some dispute between RSM and the software company, Consoft Ltd). The company is at a critical stage in its recovery and is seeking to increase sales by a substantial amount.

The software packages installed are as follows:

• Sales Order Processing
• Purchase Order Processing
• Warehousing and Stock Control
• Job Costing and Bill of Materials
• Financial Ledgers
• Payroll.

The company also has three PCs. One of these is used by the chief accountant to prepare the annual accounts as well as ad hoc management reports. There is no network link between the S/36 and the PCs so all data has to be re-keyed into Excel (spreadsheet). The other PCs are used for word Processing.

The present S/36-based applications deliver around 60% of the required functionality, and it is recognized that the poor availability of accurate up-to-date information is beginning to hamper business operations. The payroll system is also in a critical situation because a new tax year has just begun but the dispute with Consoft means that the tax tables cannot be updated. The company has no significant IT expertise beyond that enjoyed by the chief accountant and he admits that his knowledge is strictly limited. The other staff are proficient in using the existing S/36-based software packages but would be incapable of developing their own systems. Consoft have suggested that RSM upgrade their S/36 to an IBM AS/400 running the latest version of the various packages. This will cost around £20,000 for the hardware and £40,000 for the software. The managing director, chief Accountant and operations manager now have to decide what to do.

I have a few questions;

1)Is outsourcing appropriate for this company? If it is, which IS functions can be outsourced and why?

2)Draw a context diagram for the information system.