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1 AIS Acquisition Cycle. Learning Objectives To describe and employ a structured approach to acquiring an AIS. To understand the nature and scope of accountants’

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Presentation on theme: "1 AIS Acquisition Cycle. Learning Objectives To describe and employ a structured approach to acquiring an AIS. To understand the nature and scope of accountants’"— Presentation transcript:

1 1 AIS Acquisition Cycle

2 Learning Objectives To describe and employ a structured approach to acquiring an AIS. To understand the nature and scope of accountants’ involvement when acquiring an AIS. To be able to select an AIS that is aligned with the organization’s objectives. To appreciate the importance of conducting proper and through AIS needs assessments. To use a needs analysis program, called The Accounting Library, to help narrow down the potential set of AIS solutions. To select a final AIS solution from among competing alternatives. To recognize that the best AIS can fail if the implementation is flawed. AIS Acquisition Cycle

3 3 Demand Pressures on the AIS Users are demanding added functionality and increased access to the AIS. Customers want better service, measured by flexibility, speed, quality, and availability (24/7). To facilitate interconnectivity of business processes and improve internal control often requires reengineering of the existing business and information processes. To reduce costs and provide better service, many organizations are using supply chain integration with trading partners. Internet, and wireless functionalities are must have features for some organizations when selecting an AIS. Metrics - measures of profitability of customers and products, the efficiency of production functions, and the performance of vendors all depend, partly, on data in the AIS.

4 4 Focus of this Chapter How to acquire an AIS solution from an external vendor in a methodical and controlled fashion. Discuss the issues and procedures involved in: –Conducting a preliminary survey. –Performing a needs analysis. –Evaluating alternative solutions. –Purchasing an AIS from an external vendor.

5 5 Introduction Organizations not wishing to or unable to develop software in-house may purchase, rent, or lease a commercially available software package. A turnkey system is a system in which a supplier has purchased computer hardware and has developed or acquired software to put together a computer system to be sold to end users. A service bureau is a firm providing information processing services, including software and hardware, for a fee. Systems integrators are consulting/systems development firms that develop and install systems under contract. Major consulting firms include: –Deloitte Consulting, Cap Gemini, BearingPoint, Accenture, and IBM Consulting.

6 6 Systems Integrators

7 7 Application Service Providers

8 8 Acquiring an AIS from External Parties Software developed in-house can cost up to 10 times more than purchased software. Annual maintenance of in-house software is typically 50 percent of the development cost –annual maintenance for purchased software normally costs only 25 percent of the purchase price. When a suitable standard package exists, buy it rather than try to reinvent it in-house.

9 9 Phases of the AIS Acquisition Process A structured AIS acquisition process, is comprised of four distinct phases: 1.Analysis. 2.Selection. 3.Implementation. 4.Operation. The Accounting Library, is a software program that accountants can use to help narrow down a potential subset of commercially available accounting systems

10 10 The AIS Acquisition Cycle

11 11 AIS Acquisition Phases

12 12 Accountants Involvement in AIS Acquisition

13 13 Reasons Organizations Fail to Achieve AIS Acquisition Objectives Lack of senior management support. Shifting user needs. Emerging technologies. Lack of standard project management and AIS acquisition methodologies. Failure to appreciate and act on strategic, organizational, and business process changes that may be required. Resistance to change. Lack of user participation. Inadequate testing and user training.

14 14 Project Management Items Associated with Failed Projects Underestimation of the time to complete the project. Inadequate attention by senior management. Underestimation of necessary resources. Underestimation of project size and scope. Inadequate project control mechanisms. Changing systems specifications. Inadequate planning.

15 15 Effective Project Management User participation in defining and authorizing the project. Assignment of appropriate staff to the project, along with specific definitions of their responsibilities and authorities. A clear written statement of the project nature and scope. A feasibility study that serves as the basis for senior management approval to proceed with the project. A project master plan, including realistic time and cost estimates, to facilitate project control.

16 16 Effective Project Management A risk management program to identify and handle risks associated with each project. Division of the project into manageable chunks, often called phases. Phases should be subdivided into steps, and steps into tasks. Documentation and approval of work accomplished in one phase before working on the next phase.

17 17 AIS Analysis – Two Steps 1.Conduct a preliminary survey. 2.Perform a needs analysis.

18 18 Conduct a Preliminary Survey Gather facts. Perform a feasibility study. Devise project plan. Obtain approvals.

19 19 Conduct a Preliminary Survey

20 20 Gather Facts Determine whether a problem exists. Refine the nature of the problem. Determine the scope of the problem. Obtain information to conduct a preliminary feasibility study. Devise a plan for conducting the analysis.

21 21 Perform Feasibility Study Technical feasibility. A problem has a technically feasible solution if it can be solved using available hardware and software technology. Operational feasibility. A problem has an operationally feasible solution if it can be solved given the organization’s available (already possessed or obtainable) personnel and procedures. –Consider behavioral reactions to the systems change. –Timing and scheduling may also be factors. –Organization may have available resources but cannot or will not commit them at this time because of union rules or resistance to change. –May wish to scale down a project, take an alternative course of action, or break the project into smaller projects to better fit their scheduling needs. Economic feasibility. A problem has an economically feasible solution if: –Net benefit estimates (benefits minus costs) for the AIS acquisition meet or exceed a minimum threshold set by the organization. –The project compares favorably to competing uses for the organization’s resources.

22 22 Devise a Project Plan The project plan includes a broad plan for the entire development, as well as a specific plan for needs analysis—the next acquisition step. The project plan typically includes: –Estimated project scope. –Recommended acquisition team structure, members, and leaders. –Required tasks. –Required personnel skills. –Sources of required information. –Estimated analysis costs. –Timetable and estimated costs for the entire acquisition and implementation.

23 23 Why Project Plans are Developed Provide a means to schedule the use of required resources. Indicate major project milestones to monitor the project’s progress and whether it is on schedule? Forecast the project budget, which is used to authorize project continuation. Furnish guidelines for making a go or no-go decision. –Are the costs and benefits as projected? –Is the utilization of these resources (monetary and personnel) in the best interest of the organization at this time? Offer a framework by which management can determine the reasonableness and completeness of the project’s steps. –Is there a complete list of tasks, and are these tasks properly matched with the required skills? –Are the proper information sources being investigated?

24 24 Obtain Approvals Preliminary survey approvals fall into two categories: 1.User/participant approvals: –Verify the accuracy of any interviews or observations and the accuracy, completeness, and reasonableness of the survey documentation and conclusions. 2.Management control point approvals: –Management approval of further development work (i.e., a go/no-go decision). –Upper management control points occur at the end of each step of each acquisition phase (e.g., AIS preliminary survey, AIS needs analysis, etc.). –Project management control points occur at the completion of tasks within each step (e.g., gather facts, perform feasibility study, etc.). –End-of-phase signoffs by upper management are necessary to ensure that the analyst (or analysis team) follows prescribed procedures and to verify the reasonableness of any assumptions made about such factors as constraints, objectives, and operational feasibility.

25 25 Approved Feasibility Document

26 26 Perform Needs Analysis Study current AIS. Define future AIS needs. Develop AIS configuration. Approve needs analysis.

27 27 Perform Needs Analysis

28 28 Study the Current AIS Evaluate physical requirements. –Workload volume, peak processing loads, response times, report layouts, input documents and screens, operating systems, computer hardware, and communication systems. –Please refer to Appendix S1 (page 30) and load The Accounting Library on your computer, using the CD provided with this supplement. Evaluate logical specifications. –Logical specifications describe the internal “reasoning” of the current system, such as how input, processing, and output data are linked; relationships among entities, data attributes, and data tables; and workflow automation processes. –Please refer to Wally’s Retail Bonanza works as shown on Figure S1.4 (page 20).

29 29 Evaluation of Logical Specifications

30 30 Define Future AIS Needs Logical specifications: –Survey and interview all affected parties to determine the future logical design. –Compare Figure S1.4 to Figure S1.7. Physical requirements: –Go to TAL and print out all of the Itemized Need Definition requirements for the Order Entry applications. –Checkboxes indicate which needs are applicable. –These needs are prioritized from 0 (very low priority) to 9 (very high priority) (see Figure S1.8 on page 24 for a sample report). –The completed itemized needs analysis will serve to document the future physical requirements.

31 31 Define Future AIS Needs

32 32 Define Future AIS Needs

33 33 AIS Selection Two steps: 1.Evaluating feasible solutions (Figure S1.1 bubble 3.0). 2.Determining the final solution (Figure S1.1 bubble 4.0). Both of these steps and their tasks are discussed next.

34 34 Evaluate Feasible Solutions

35 35 Match Specifications with Potential Solutions To match specifications, we will use The Accounting Library (TAL). –Follow the instructions on pages 24-26 of the text. –The TAL will produce reports ranking products matching the requirements that you input into the TAL software. –You should end up with one or more commercially available software solutions. –If none of the commercially available software solutions meet the needs of the organization, then either the requirements need to be adjusted or one of the commercially available software solutions will have to be modified to fit the business processes of the organization.

36 36 Determine Feasible Solutions In the last step, the available AIS solutions are narrowed down to a set of potential solutions, based on need requirements. There may also be some reasons why one or more solutions in the set cannot be included. Once the potential set has been reduced, you will end up with a feasible AIS solution set.

37 37 Determine Final Solution

38 38 Request Proposals from Vendors

39 39 Recommend Final Solution Select the winning candidate. You should also get references from companies who are using the vendor’s software. You should also search the Internet for reviews on and comments about the AIS solution.

40 40 Approve Final Solution At a minimum, one or more representatives from upper management, all user groups, and the project manager need to approve the recommended AIS solution. This process might involve an iterative series of questions and answers among all affected parties. Once everyone is satisfied, the organization should meet with its legal representative to develop and ratify a contract with the vendor. Logical specifications and physical requirements of the final solution are then forwarded to the implementation team.

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