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GoodStuff Incorporation: Technology Usage Risks Case Study

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Updated: May 17th, 2020

Introduction

GoodStuff Incorporation is a retail company that has existed since 1980. Over time, the company has expanded into several retail stores across the Seattle area. In the year 1998, the company formulated GoodStuff.com, an online website, whereby it conducts almost half of its business currently. The system reports credit sales data to a single master server via Direct Server Lines (DSL). The system, however, has a problem.

Problem

The problem is that the company uses an outdated POS system whilst still relying on the online store for almost half of its sales. The system is also used for all the credit card transactions that occur in the Seattle stores. It was bought in the 1990s and ran on A/S400 servers located in each store. Krawetz (6) states mismatching transaction codes are risky for a company, especially during account audits.

The related problem is that research shows that the ASP technology that the company uses has a loosely typed Java and Visual Basics code (Bose 21). Also, ASP is only able to update its files when the server is down. Thumati (1) claims that these ASP drawbacks impede its performance by making it more difficult for programmers to identify errors when they are writing code. For GoodStuff Incorporation, such errors will include the wrong transaction codes in the database (Simkin, Rose, and Norman 112).

Analysis

It is a common trend for companies to fail to update their POS systems (Kelso 1). However, according to value chain analysis, lack of technology development in a company creates a competitive disadvantage (Bose 25). Kelso, on the other hand, states that an outdated POS system makes a company lose business because it handles lesser orders at a higher cost when compared to companies with efficient and modern systems (Kelso 1).

Risks

Business

The use of outdated POS systems will inevitably result in GoodStuff being surpassed by its numerous competitors. As soon as the firm loses its competitive advantage due to the faults in its technological processes, the company will face the risk of a rapid decline and further untimely demise. Therefore, the slowdown of the cash flow and the drop in the organization’s liquidity rates can be deemed as the key risks related to the financial processes occurring in GoodStuff.

Financial

A drop in the quality of the technology tools used by the company will inevitably trigger financial risks. Particularly, the issue concerning a possible drop in the number of customers and, therefore, a considerable decrease in revenues is expected. Customers may become reluctant to use the company’s services due to the problems with technology. Moreover, the use of an outdated POS system will inevitably result in GoodStuff taking significant losses. Particularly, the fact that the organization will need to slow down some of its key processes needs to be brought up.

Reputation

The fact that the company uses an outdated POS system may become a major dent in its reputation if made aware to the stakeholders concerned. Therefore, it can be assumed that the choice made by the organization in terms of its technological progress, or, to be more specific, the lack thereof, is likely to affect its reputation in a very negative manner. Particularly, the risk of failing to attract new customers deserves to be mentioned as a significant outcome of the specified decision. Additionally, the company may risk failure in retaining its old customers. Indeed, as soon as the people, who are using the firm’s services currently, find out that the organization does not meet the existing criteria for technological safety, they are bound to consider the idea of using the services of other companies.

Technical

The technical risks concern the safety issue primarily. As it has been stressed above, the lack of technological advances in the organization reduces the competitiveness of the organization. Additionally, poor use of the existing technological resources may result in exposing the organization to the threat of data theft. The use of advanced technology alone does not facilitate complete safety; being open to cyber attacks, the organization may not only lose its entire data but also jeopardize the safety of its members and itself. Particularly, it is the exposure of the staff’s personal information that appears to be the key reason for concern. The fact that the company is not technologically advanced enough means that the staff is likely to make crucial mistakes when entering information into databases as well as transferring information to one another.

Alternatives

There are many alternatives to acquiring a good POS system. Firstly, there are those systems that are cost-effective and most beneficial to companies seeking further growth (Angeles 1). One example is the Cash Register POS,” which is compatible with Windows 7 Operating System.

Another alternative would be to get the most popular POS systems that enable a company to create a market impact by being up to date with the latest features and software in the market. Such features include the ability to accept online payments via smartphones and iPads. Apart from attracting more customers, this ability increases the user’s confidence and makes troubleshooting easy (Angeles 1).

Thirdly, there are POS systems that improve stakeholder relations by being able to set up loyalty programs and rewards for customers (Kelso 1). An example is SHOPKEEP and GROUPON. These systems are customizable and easy to use. Customer loyalty programs enable retailers to expand and retain their customers, thus, increasing a company’s returns in the long-term.

Fourthly, there are web-based POS systems that do not need a backup server. These systems reduce a company’s expenses by minimizing labor and marketing costs as well as encouraging more sales since all items descriptions and costs are available automatically in a database. These systems come with multiple OS compatibility, data protection features, and multi-device access. Examples are VERO, SHOPIFY, and QUICKBOOKS.

Recommendations

The best POS system would be one that is cost-effective, easy to use, and with features that enable it to do more than process transactions and accept payments. An example is a feature that enables a user to manage and strengthen customer relations (Angeles 1). Thus, Vend,” GROUPON, and SHOPKEEP seem to be worthy systems that will enable GoodStuff to acquire a larger customer base, which will lead to a greater competitive advantage and higher long-term returns for the company.

Conclusion

The former director of the Technology Department may have resigned because he feared the hefty fines and bad allegations that would have followed if a substantial problem had occurred on a credit card transaction made by the old POS system. Hence, since the company in study has already taken the right step by creating an online store and by allowing credit and debit card transactions, value chain analysis shows that all it needs for success is a new POS system with the best and latest capabilities for today’s trendy customers such as customer loyalty programs, data protection, and cost-effectiveness.

Works Cited

Angeles, Sara. “Best POS Systems 2015.” Business News Daily July, 2015: n. p. Web.

Bose, Chandra D. Modern Marketing: Principles and Practice. New Delhi: PHI Learning, 2010. Print.

Kelso, Alicia. 2014. Web.

Krawetz, Neal 2005. Web.

Simkin, Mark G, Jacob M. Rose, and Carolyn S. Norman. Core Concepts of Accounting Information Systems. New York: Oxford Publishers Ltd, 2015. Print.

Thumati, Varma Ravi. . 2009. Web.

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IvyPanda. (2020, May 17). GoodStuff Incorporation: Technology Usage Risks. Retrieved from https://ivypanda.com/essays/goodstuff-incorporation-technology-usage-risks/

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"GoodStuff Incorporation: Technology Usage Risks." IvyPanda, 17 May 2020, ivypanda.com/essays/goodstuff-incorporation-technology-usage-risks/.

1. IvyPanda. "GoodStuff Incorporation: Technology Usage Risks." May 17, 2020. https://ivypanda.com/essays/goodstuff-incorporation-technology-usage-risks/.


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IvyPanda. "GoodStuff Incorporation: Technology Usage Risks." May 17, 2020. https://ivypanda.com/essays/goodstuff-incorporation-technology-usage-risks/.

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IvyPanda. 2020. "GoodStuff Incorporation: Technology Usage Risks." May 17, 2020. https://ivypanda.com/essays/goodstuff-incorporation-technology-usage-risks/.

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IvyPanda. (2020) 'GoodStuff Incorporation: Technology Usage Risks'. 17 May.

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