2 Chapter 10 Developing and Implementing Effective Accounting Information Systems IntroductionThe System Development Life Cycle: An IntroductionSystems PlanningSystems AnalysisDetailed Systems DesignImplementation, Follow-up, and Maintenance
3 An Introduction IT governance is the process of ensuring that it is effective,efficient, andstrategic.A comprehensive IT strategyrequires careful systems study andshould prioritize the acquisition or development of various information systems
4 An Introduction development, implementation, and The IT systems study includes planning and analysis throughdevelopment,implementation, anda feedback loop for each new IT application.
5 The Systems Development Life Cycle Organizations study and reengineer accounting systems becausetheir current system is inefficienttwo or more accounting systems need to be combinedthe power of the Internet encourages development of a web presenceA systems development workbegins with a formal investigation of an existing information system,is performed byin-house professionals in large organizationsa hired team of outside consultants in smaller organizations
6 The Four Stages in the Systems Development Life Cycle Planning and Investigation involvesa preliminary investigation of the current systemorganizing a systems study team, anddeveloping strategic plans.Analysis involvesanalyzing the company’s current system andidentifying its needs, strengths, and weaknesses.
7 The Four Stages in the Systems Development Life Cycle Designing involveseliminating the current system’s weak points, andpreserving its strengths.Implementation, follow-up, and maintenance includesacquiring 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 atapplications portfolio, which includesan enterprise system,other specialized information systems,many separate systems for functional areas
10 Systems Studies and Accounting Information Systems A systems study meansreplacing ormodifying existing information systemsaltering work flows,changing data gathering and recording tasks,revamping employee responsibilities, andrevising ways of rewarding personnel
11 Systems Planning and Investigation Systems Planning and Investigation involvesPlanning for Successapproach problems from a broad point of view,use an interdisciplinary study team to evaluate information systems, andmake the study team work closely with a steering committeeBroad Viewpoint in a Systems Studya systems approach aligned with mission, goals, and objectives.
12 Systems Planning and Investigation The Study Team and the Steering Committeetop management personnel critical to the success of a new system.Investigating Current Systems reportsthe problems or objectives the study team identified,solutions or alternatives it investigated, andfurther course(s) of action it recommends.
13 The Study Team The Study Team consists of interdisciplinary specialiststhe importance of a broad viewpointinterdisciplinary knowledgecommunicatesclosely with company’s managersmeaningfully to provide solutionswho 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, andrecommends 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 teamincludes top management personnel likethe controller,the vice president of finance,the top-level information systems managerone or more staff auditors, andthe CEO (for very important projects)may disband the study team and do nothing,perform further preliminary investigations, orproceed to the formal systems analysis stage
16 Systems Analysis The phases in systems analysis are: understanding the goals of the organizationusing system survey techniques to acquire sufficient information regarding problemsanalyzing data to suggest possible solutions to the systems problemsevaluating 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, andflexibility to accommodate to changing information needs.top management systems goals, andlong-range budget planning dataperiodic performance reportsshort-range operating performance of subsystems
18 Understanding The Goals operating management systems goalsare normally easier to determinerelate to well-defined and narrower organizational areas.are for the current business yearare generated internally
19 Understanding The Goals QuestionIn developing and implementing IT, the study team and steering committee must consider organizational goals. These include:a. General, technical, and top management goalsb. General, operating management, and technical goalsc. Top management, operating management, and economic goalsd. 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’scurrent system,its environment,strengths, andweaknessesThe study team has toretain the system’s strengths andeliminate 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 managementIt 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 teamwill meet employee resistance to changewill have to deal directly with this problemmust gain the full cooperation and support of the employeesThe best designed system ‘‘on paper’’is likely to cause behavioral problems when implementedshould 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 systemUsing questionnaires and surveysReview of internal control proceduresInterviews with individual system participants
24 Data Analysis The study team must analyze the results which, includes creating summary statistics,developing flowcharts and/or process mapshighlighting bottlenecks in information flows,reporting redundancy, andidentifying missing information links.
25 Data Analysis Systems analysis work takes longer than a preliminary investigation,provides interim reports to the steering committeedelivers the final systems analysis report.
27 Evaluating System Feasibility The design team must examine five feasibility areas:technical feasibilitytechnical resources - hardware and software componentsoperational feasibilityexamines its compatibility with the current operating environmentschedule feasibilityimportance of completion on timelegal feasibilitysystem should comply with all applicable federal and state statuteseconomic feasibilityanticipated benefits of the system exceed its projected costs
28 Evaluating System Feasibility QuestionThe feasibility evaluationa. is completed prior to detailed systems design.b. includes economic, schedule, technical, legal, and operational feasibility.c. both a and b are trued. neither a nor b is true
29 Detailed Systems Design Processes Descriptionsvarious processes in the revised system, what and by whomData elements and data structurerequired data elements and preliminary data structureInputs and outputssystem inputs and outputs - descriptionsDocumentationoperation of revised system and each subsystem
30 Detailed Systems Design Constraintsrestrictions like staffing limitations and regulatory requirements.Controlscontrols to reduce the risk of undetected errorsReorganization
31 Output, Process and Input Design Output Designmay be classified according to the area of useshould be able to a demand reportshould be able to trigger an exception reportProcesses Designearlier focus on what the system must providenow focus on how the system can provide it.Input Designdescribe each data element in the systems designspecify the way data items must be coded
32 Detailed Systems Design Prototypingis developing a simplified model of a systemis an iterative process of trial-use-and-modificationis not recommended where the inputs, processing, and outputs are already clearly defined.
33 Detailed Systems Design The system specifications reportproduces a report after inputs, outputs, and processing requirements are clearsubmits this report to the steering committee - review, comment, and approvalThe Make or Buy Decisionto use internal IT staff to develop the project in-house orto 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 SystemCosts and Benefits of Each Proposed SystemMaintainability of Each Proposed SystemCompatibility of Each Proposed System with Existing SystemsVendor SupportMaking 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 considera. 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 applicationto almost all the accounting functions of the organization.Knowledge Process Outsourcing (KPO) - three areasintellectual propertydata 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 purposesdisadvantage is inflexibility.loss of control isloss of competitive advantage
38 Implementation Implementation Activities Managing IT Implementation ProjectsPost-Implementation ReviewSystem Maintenance
39 Implementation Activities Implementation activities involvePreparation of the physical siteDetermination of functional changesSelection and assignment of personnelTraining personnelAcquiring and installing computer equipment
40 Implementation Activities Establishing internal controlsConverting data filesAcquiring computer softwareTesting computer softwareConverting to the new system
41 Implementation Activities QuestionWhich 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 toolto help managers identify critical pathsto recognise areas where slack time occurs.Gantt charts are usefulfor scheduling and tracking the activities of systems implementation projectsfor indicating progress directly on the Gantt chart in contrast to the planned progress.
43 Managing IT Implementation Projects QuestionWhich 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 byChecking with personnel about satisfaction with the new system.Talking with end users to ascertain their satisfaction.Evaluating the control procedures of the systemObserving employee work performance to determine efficiencyEvaluating effectiveness of computer processing functionsDetermining schedules for both internal and external reports are met with the new computer system.
45 System MaintenanceSystem maintenance continues the tasks created by the initial follow-up study,except that experts from the company’s IT subsystem now perform the modificationsexclusively.The IT subsystem is responsible to respond toerrors and anomalies in the systemestimate the cost of fixing them, andperform the necessary modifications.
46 System Maintenance The IT departments have forms for such requests, policies for prioritizing maintenance tasks, andformulas for allocating maintenance costs among the various departments.
47 System Maintenance Organizations spend Maintenance about 20 to 30 percent on developing and implementingthe remaining 70 to 80 percent on further modifications or software updates.Maintenanceis not the most glamorous part of a system cyclebut always the most expensive part.
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