2. Chapter 10 Developing and Implementing Effective Accounting Information Systems
Introduction
The System Development Life Cycle: An Introduction
Systems Planning
Systems Analysis
Detailed Systems Design
Implementation, Follow-up, and Maintenance

3. An Introduction IT governance is the process of ensuring that it is
effective,
efficient, and
strategic.
A comprehensive IT strategy
requires careful systems study and
should prioritize the acquisition or development of various information systems

4. An Introduction development, implementation, and
The IT systems study includes planning and analysis through
development,
implementation, and
a feedback loop for each new IT application.

5. The Systems Development Life Cycle
Organizations study and reengineer accounting systems because
their current system is inefficient
two or more accounting systems need to be combined
the power of the Internet encourages development of a web presence
A systems development work
begins with a formal investigation of an existing information system,
is performed by
in-house professionals in large organizations
a hired team of outside consultants in smaller organizations

6. The Four Stages in the Systems Development Life Cycle
Planning and Investigation involves
a preliminary investigation of the current system
organizing a systems study team, and
developing strategic plans.
Analysis involves
analyzing the company’s current system and
identifying its needs, strengths, and weaknesses.

7. The Four Stages in the Systems Development Life Cycle
Designing involves
eliminating the current system’s weak points, and
preserving its strengths.
Implementation, follow-up, and maintenance includes
acquiring resources for the new system,
training new or existing employees,
identifying any new problems.

8. System Development Life Cycle of a Business Information System

9. Systems Studies and Accounting Information Systems
Systems studies are part of the greater task of reengineering one or more of the core systems of an organization.
A systems study looks at
applications portfolio, which includes
an enterprise system,
other specialized information systems,
many separate systems for functional areas

10. Systems Studies and Accounting Information Systems
A systems study means
replacing or
modifying existing information systems
altering work flows,
changing data gathering and recording tasks,
revamping employee responsibilities, and
revising ways of rewarding personnel

11. Systems Planning and Investigation
Systems Planning and Investigation involves
Planning for Success
approach problems from a broad point of view,
use an interdisciplinary study team to evaluate information systems, and
make the study team work closely with a steering committee
Broad Viewpoint in a Systems Study
a systems approach aligned with mission, goals, and objectives.

12. Systems Planning and Investigation
The Study Team and the Steering Committee
top management personnel critical to the success of a new system.
Investigating Current Systems reports
the problems or objectives the study team identified,
solutions or alternatives it investigated, and
further course(s) of action it recommends.

13. The Study Team The Study Team
consists of interdisciplinary specialists
the importance of a broad viewpoint
interdisciplinary knowledge
communicates
closely with company’s managers
meaningfully to provide solutions
who might be chosen as study team members?

14. The Preliminary Investigation
separates the symptoms from the causes,
considers alternatives to the current system,
attempts to estimate the costs and benefits, and
recommends desired alternatives.
The study team submits this report to the company steering committee.

15. The Steering Committee
interfaces between the company’s management and the study team
includes top management personnel like
the controller,
the vice president of finance,
the top-level information systems manager
one or more staff auditors, and
the CEO (for very important projects)
may disband the study team and do nothing,
perform further preliminary investigations, or
proceed to the formal systems analysis stage

16. Systems Analysis The phases in systems analysis are:
understanding the goals of the organization
using system survey techniques to acquire sufficient information regarding problems
analyzing data to suggest possible solutions to the systems problems
evaluating system feasibility

17. Understanding The Goals
Organization goals include:
general systems goals,
awareness that benefits should exceed the costs,
concern that the output should help in better decisions,
designing to allow optimal access to information, and
flexibility to accommodate to changing information needs.
top management systems goals, and
long-range budget planning data
periodic performance reports
short-range operating performance of subsystems

18. Understanding The Goals
operating management systems goals
are normally easier to determine
relate to well-defined and narrower organizational areas.
are for the current business year
are generated internally

19. Understanding The Goals
Question
In developing and implementing IT, the study team and steering committee must consider organizational goals. These include:
a. General, technical, and top management goals
b. General, operating management, and technical goals
c. Top management, operating management, and economic goals
d. Top management, operating management, and general systems goals

20. Systems Survey Work Objectives of a systems survey:
The study team has to understand the company’s
current system,
its environment,
strengths, and
weaknesses
The study team has to
retain the system’s strengths and
eliminate the system’s weaknesses.

21. Critical Success Factors
The strategic success of an information system might be determined by achieving a small number of critical success factors.
Two weaknesses of this approach are:
It is biased toward the perceptions of top management
It is difficult to analyze the responses to open-ended questions and managerial opinions about a system

22. Understanding the Human Element
The appearance of a study team on the work scene usually signals change.
The study team
will meet employee resistance to change
will have to deal directly with this problem
must gain the full cooperation and support of the employees
The best designed system ‘‘on paper’’
is likely to cause behavioral problems when implemented
should have wide user support for true success

23. Data Gathering There are several ways of gathering data, including:
Review of existing documentation.
Observation of the current system
Using questionnaires and surveys
Review of internal control procedures
Interviews with individual system participants

24. Data Analysis The study team must analyze the results which, includes
creating summary statistics,
developing flowcharts and/or process maps
highlighting bottlenecks in information flows,
reporting redundancy, and
identifying missing information links.

25. Data Analysis Systems analysis work
takes longer than a preliminary investigation,
provides interim reports to the steering committee
delivers the final systems analysis report.

26. Steps in the Systems Design Phase

27. Evaluating System Feasibility
The design team must examine five feasibility areas:
technical feasibility
technical resources - hardware and software components
operational feasibility
examines its compatibility with the current operating environment
schedule feasibility
importance of completion on time
legal feasibility
system should comply with all applicable federal and state statutes
economic feasibility
anticipated benefits of the system exceed its projected costs

28. Evaluating System Feasibility
Question
The feasibility evaluation
a. is completed prior to detailed systems design.
b. includes economic, schedule, technical, legal, and operational feasibility.
c. both a and b are true
d. neither a nor b is true

29. Detailed Systems Design
Processes Descriptions
various processes in the revised system, what and by whom
Data elements and data structure
required data elements and preliminary data structure
Inputs and outputs
system inputs and outputs - descriptions
Documentation
operation of revised system and each subsystem

30. Detailed Systems Design
Constraints
restrictions like staffing limitations and regulatory requirements.
Controls
controls to reduce the risk of undetected errors
Reorganization

31. Output, Process and Input Design
Output Design
may be classified according to the area of use
should be able to a demand report
should be able to trigger an exception report
Processes Design
earlier focus on what the system must provide
now focus on how the system can provide it.
Input Design
describe each data element in the systems design
specify the way data items must be coded

32. Detailed Systems Design
Prototyping
is developing a simplified model of a system
is an iterative process of trial-use-and-modification
is not recommended where the inputs, processing, and outputs are already clearly defined.

33. Detailed Systems Design
The system specifications report
produces a report after inputs, outputs, and processing requirements are clear
submits this report to the steering committee - review, comment, and approval
The Make or Buy Decision
to use internal IT staff to develop the project in-house or
to outsource the project’s development to a contractor.

34. Choosing an AIS In choosing an AIS The following must be the basis
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
Making a Final Decision.
Point-Scoring Analysis.
Selecting a Finalist

35. Choosing an AIS Question
In selecting a new accounting information system, the steering committee should consider
a. all expected costs and benefits of the new systems, including maintenance and operating costs.
b. support that a vendor can provide, including training, maintenance, and backup.
c. compatibility of a new system with existing systems.
d. All of the above are considerations in selecting a new system.
e. Only a and b are important considerations in selecting the new system.

36. Outsourcing Outsourcing – two kinds Business Process Outsourcing (BPO)
range from routine assistance with asingle application
to almost all the accounting functions of the organization.
Knowledge Process Outsourcing (KPO) - three areas
intellectual property
data mining of consumer data,
and research and development related to medical drugs and biotechnology

37. Outsourcing Advantages and Disadvantages of Outsourcing.
outsourcing also frees managerial time, financial assets, and related resources for other purposes
disadvantage is inflexibility.
loss of control is
loss of competitive advantage

38. Implementation Implementation Activities
Managing IT Implementation Projects
Post-Implementation Review
System Maintenance

39. Implementation Activities
Implementation activities involve
Preparation of the physical site
Determination of functional changes
Selection and assignment of personnel
Training personnel
Acquiring and installing computer equipment

40. Implementation Activities
Establishing internal controls
Converting data files
Acquiring computer software
Testing computer software
Converting to the new system

41. Implementation Activities
Question
Which of the following statements is not true:
a. A preliminary investigation of a current system is conducted by the steering committee.
b. Implementation, follow-up, and maintenance of IT includes acquiring resources for the new system.
c. In designing an AIS, the design team will begin with outputs.
d. The more work done during planning and analysis, the less likely the new system will fail.

42. Managing IT Implementation Projects
Two tools to help manage projects:
PERT (program evaluation and review technique)
useful project management tool
to help managers identify critical paths
to recognise areas where slack time occurs.
Gantt charts are useful
for scheduling and tracking the activities of systems implementation projects
for indicating progress directly on the Gantt chart in contrast to the planned progress.

43. Managing IT Implementation Projects
Question
Which of the following statements is not true with respect to managing IT projects:
a. Program evaluation and review technique (PERT) allows management to determine the shortest time it will take to implement a new system, and any slack time that might exist between implementation activities.
b. An advantage of PERT is that it allows managers to identify the critical path in implementation.
c. Both PERT and Gantt charts are manual techniques used in managing IT implementations.
d. Gantt charts are useful in scheduling and implementing IT because they allow you to indicate actual progress versus planned progress directly on the chart.

44. Post-Implementation Review
Reevaluation of the new system’s effectiveness by
Checking with personnel about satisfaction with the new system.
Talking with end users to ascertain their satisfaction.
Evaluating the control procedures of the system
Observing employee work performance to determine efficiency
Evaluating effectiveness of computer processing functions
Determining schedules for both internal and external reports are met with the new computer system.

45. System Maintenance
System maintenance continues the tasks created by the initial follow-up study,
except that experts from the company’s IT subsystem now perform the modifications
exclusively.
The IT subsystem is responsible to respond to
errors and anomalies in the system
estimate the cost of fixing them, and
perform the necessary modifications.

46. System Maintenance The IT departments have forms for such requests,
policies for prioritizing maintenance tasks, and
formulas for allocating maintenance costs among the various departments.

47. System Maintenance Organizations spend Maintenance
about 20 to 30 percent on developing and implementing
the remaining 70 to 80 percent on further modifications or software updates.
Maintenance
is not the most glamorous part of a system cycle
but always the most expensive part.

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49. Chapter 10