Chapter 13: Developing and Implementing Effective Accounting Information Systems Introduction System Development Life Cycle Systems Planning Systems Analysis Systems Design Implementation, Follow-Up, and Maintenance

Introduction Purpose of IT Governance Study of IT Systems Ensure IT is used effectively, efficiently, and strategically Study of IT Systems Planning and analysis through development Implementation Feedback loop for each new IT application

Systems Development Life Cycle Systems Study Systems Development Work Formal investigation of an existing information system Performance of Study In-house professionals (large organizations) Hire outside consultants (smaller companies)

Four Stages in the Systems Development Life Cycle Planning and Investigation Preliminary investigation of current system Organize a systems study team Develop strategic plans Analysis of Current System Identify information needs Strengths and weaknesses

Four Stages in the Systems Development Life Cycle Design Changes that eliminate weak points Preserve the strengths Implementation, Follow-up, and Maintenance Resource acquisition Training employees Identify new problems and correct

Systems Development Life Cycle

Study Break #1 Which one of the four stages in the Systems Development Life Cycle is likely to be most costly for a new system? Planning and Investigation Analysis Design Implementation, Follow-up, and Maintenance

Study Break #1 - Answer Which one of the four stages in the Systems Development Life Cycle is likely to be most costly for a new system? Planning and Investigation Analysis Design Implementation, Follow-up, and Maintenance

Systems Studies and AISs Applications Portfolio Enterprise system Specialized information systems for functional areas Impacts of Systems Studies Work flows Data gathering and recording tasks Employee responsibilities Rewards of managers

Systems Planning Planning for Success Approach specific organizational problems from a broad point of view Use an interdisciplinary study team for evaluation of systems Study team works closely with steering committee Broad Viewpoint in a Systems Study Align study with mission and strategic goals and objectives

Systems Planning The Study Team and the Steering Committee Interdisciplinary study team Communicate closely with management Appoint a steering committee Investigating Current Systems Preliminary investigation to identify issues Consider alternatives Make recommendations

Systems Analysis Purpose Study Team Activities Become familiar with current system Identify inputs and outputs Identify strengths and weaknesses Make recommendations Study Team Activities Identify and understand system goals Perform a systems survey Report findings

Systems Analysis Procedures

Understanding Organizational Goals General Systems Goals Benefits should exceed the costs Create output that helps make better decisions Allows for optimal access to information Accommodates changing information needs

Understanding Organizational Goals Top Management Systems Goals Long-range budget planning data Periodic performance reports Short-range operating performance Operating Management Systems Goals Well-defined narrow organization areas Current year decisions

Systems Survey Work Systems Survey Allows for a more complete understanding Strengths and weaknesses of current system Understanding the Human Element and Potential Behavioral Problems Employee resistance to change Gain full cooperation and support

Systems Survey Work Data Gathering Review existing documentation Observe the current system in operation Use questionnaires and surveys Review internal control procedures Interview systems participants

Systems Survey Questionnaire

Data Analysis Components Time Period Conclusions Create summary statistics Systems documentation Time Period Longer than preliminary investigation May provide interim reports Conclusions Final systems analysis report Submit to steering committee

Evaluating System Feasibility Technical Feasibility Required technical resources Technical skills of current employees Operational Feasibility Compatibility with current environment Capabilities of current employees

Evaluating System Feasibility Schedule Feasibility Estimate time needed for implementation Legal Feasibility Conflicts between system and legal obligations Economic Feasibility Cost-benefit analysis Difficulties estimating implementation costs

Study Break #2 The feasibility evaluation: Is completed prior to detailed systems design Includes economic, schedule, technical, legal, and operational feasibility Both a and b are true Neither a nor b is true

Study Break #2 - Answer The feasibility evaluation: Is completed prior to detailed systems design Includes economic, schedule, technical, legal, and operational feasibility Both a and b are true Neither a nor b is true

Study Break #3 In developing an implementing IT, the study team and steering committee must consider organizational goals. These include: General, technical, and top management goals General, operating management, and technical goals Top management, operating management, and economic goals Top management, operating management, and general systems goals

Study Break #3 - Answer In developing an implementing IT, the study team and steering committee must consider organizational goals. These include: General, technical, and top management goals General, operating management, and technical goals Top management, operating management, and economic goals Top management, operating management, and general systems goals

Steps in the Systems Design Phase

Systems Design Designing System Outputs, Processes and Inputs Prototyping The Systems Specifications Report Choosing an Accounting Information System Outsourcing

Detailed Systems Design

Designing System Outputs, Processes, and Inputs Determine necessary outputs and format Create better outputs Hard-copy versus Soft-copy Process Design Identify necessary processing procedures Utilize tools to model computer processes

Designing System Outputs, Processes, and Inputs Designing System Inputs Identify and describe data elements Specify how data items must be coded Determine source of each data element Streamline data entry tasks

Error Message of Data Input

Prototyping Concepts Usefulness and Challenges Develop a simplified model of proposed system Scaled-down, experimental version Usefulness and Challenges Helps address issues of challenging projects Can create distrust and perception concerns Not recommended for traditional AIS applications

Steps in Prototyping

The Systems Specifications Report Summary of findings Submitted to steering committee for review, comment, and approval The Make or Buy Decision Develop system within the organization Outsource development of system Canned software or Turnkey system

Choosing an AIS Selection Criteria The performance capability of each proposed system Costs and benefits of each proposed system Maintainability of each proposed system Compatibility of each proposed system with existing systems Vendor support

Choosing an AIS Point-Scoring Analysis Selecting a Finalist Used to evaluate possibly solutions Identifies point value for each criteria Selecting a Finalist Making a Final Decision

Point-Scoring Analysis

Outsourcing Advantages Disadvantages Company can focus on core competencies More efficient use of time and resources Cost savings Disadvantages Inflexibility of contractual relationships Loss of control Loss of competitive advantages

Implementation, Follow-Up, and Maintenance Implementation Activities Managing IT Implementation Projects Post-Implementation Review System Maintenance

Implementation Activities Prepare the physical site Determine functional changes Select and assign personnel Train personnel Acquire and install computer equipment

Implementation Activities Establish internal controls Convert data files Acquire computer software Test computer software Convert to the new system

Managing IT Implementation Projects Program Evaluation and Review Technique Also known as PERT Helps identify critical paths Recognize areas where slack time occurs Gantt Charts Useful for scheduling and tracking Easy to understand Best suited for projects lacking complexity

Managing IT Implementation Projects Project Management Software Operates on desktop or notebook computers Aids in the management of implementation projects Divides project into simpler activities Estimates time and cost of activities

PERT

Gantt Chart

Post-Implementation Review Reevaluate new system’s effectiveness Talk with personnel about satisfaction levels Talk with end users about satisfaction levels Evaluate control procedures and effectiveness Observe employee work performance Evaluate computer processing functions Determine output schedule timing and effectiveness

System Maintenance System Maintenance Responsibilities Performed by IT function Continues tasks created by initial follow-up study Responsibilities Identify errors and anomalies Estimate costs of fixing items Perform necessary modifications

System Maintenance Costs

Study Break #4 Prototyping, as an IT development approach, has both advantages and disadvantages. In general, prototyping is most appropriate when: The design team is not pressed for time in creating a new system Users have a thorough understanding of their information needs There are high risks associated with developing an implementing an ineffective system System requirements are easily defined

Study Break #4 - Answer Prototyping, as an IT development approach, has both advantages and disadvantages. In general, prototyping is most appropriate when: The design team is not pressed for time in creating a new system Users have a thorough understanding of their information needs There are high risks associated with developing and implementing an ineffective system System requirements are easily defined

Study Break #5 A point-scoring analysis: Is a useful tool in conducting a feasibility analysis Helps the systems study team to decide whether or not to outsource their AIS Provides a systems study team with an objective means for selecting a final AIS Is a tool used for managing IT projects

Study Break #5 - Answer A point-scoring analysis: Is a useful tool in conducting a feasibility analysis Helps the systems study team to decide whether or not to outsource their AIS Provides a systems study team with an objective means for selecting a final AIS Is a tool used for managing IT projects

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Chapter 13