1.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 1 Systems Implementation, Operation, and Control Chapter 13 l There are three major steps in systems implementation. 1 Establish plans and controls. 2 Execute activities as planned. 3 Follow up and evaluate the new system.

2.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 2 Systems Implementation Systems Planning and Analysis Systems Planning and Analysis Systems Design Systems Design Execute Activities Execute Activities Systems Review and Control Systems Review and Control Establish Plans and Controls Establish Plans and Controls Follow Up and Evaluate New System Follow Up and Evaluate New System

3.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 3 Phase I: Establishing Plans and Controls for Implementation l These plans should incorporate three major components: 1 A breakdown of the project into various phases 2 Specific budgets applicable to each phase 3 Specific timetables applicable to each project phase

4.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 4 Phase I: Establishing Plans and Controls for Implementation l Several different scheduling techniques might be used to control implementation. l What are some of these techniques? – Gantt chart – network diagram – critical path

5.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 5 Gantt Chart Example Evaluate Software Select Software Select Computer Train Employees Test System Planned Time Actual Time 1/12/13/14/15/16/17/1

6.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 6 Simple Network Diagram Complete Start Contact Vendors Evaluate Software Select Software Train Employees Implement Computer Select Computer Contact Vendors Review Budget Allocate Funds

7.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 7 Phase II: Executing Implementation Activities l What are examples of activities during execution? – selecting and training personnel – installing new computer equipment – detailed systems design – writing and testing computer programs – system testing – standards development – documentation and file conversion

8.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 8 Recognize Some of the Major Human Factors Involved l In carrying out the implementation plan, certain measures should be taken to provide a smooth transition and ensure acceptance on the part of company employees. l What are some of these measures? l It is desirable for management and the systems team to make a formal announcement regarding the project.

9.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 9 Documentation l Good documentation can serve a wide range of useful purposes : – training new employees – providing programmers and analysts with useful information for future program evaluation and modification activities – providing auditors with useful information for evaluating internal controls – assisting in assuring that systems design specifications are met

10.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 10 Test Operations l Before the system is actually implemented, it must be tested as a whole. l There are three basic approaches to the final testing of the system. l What are these approaches? 1 Direct approach 2 Parallel operations 3 Modular conversion

11.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 11 Test Operations Module A Module B Module C Old System New System Old System New System Direct Approach Parallel Operations Modular Conversion

12.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 12 Phase III: Evaluating the New System l Follow-up is necessary to ensure that the new system operates as planned. l What approaches can assist in follow-up and evaluation? – observations – questionnaires – performance measures – benchmarks

13.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 13 The Information System Budget l The usual goal of financial control is to increase the benefits gained from information systems expenditures in the sense of return on costs. l Reducing overall costs is not a major goal.

14.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 14 The Information System Budget l Why? 1 The essential nature of information systems is a service activity within a firm. 2 In relation to other costs, information systems costs are not that large. 3 Costs are mostly fixed and remain unchanged across a wide spectrum. 4 Information is a valuable resource.

15.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 15 Acquisition and Insurance Controls l Long-term leasing is a financing alternative to outright purchase. l Frequently, long-term leases include a purchase option. l Financially, the relative advantages of leasing over purchasing are based on traditional capital budgeting considerations.

16.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 16 Acquisition and Insurance Controls l What other considerations are relevant to the lease or purchase decision? l Charges for regular equipment maintenance and other support services – charges for overtime usage in a lease – purchase and sale options – lease cancellation fees – technological obsolescence

17.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 17 Acquisition and Insurance Controls l Customary insurance coverage may not provide the protection necessary to cover loss exposure. l At a minimum, insurance coverage of equipment is desirable. l Insurance coverage for information systems equipment may not cover the related data storage media.

18.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 18 Financial Control Strategies l There are many similarities between information systems operations and other manufacturing or production operations. l What are some differences? l The product (information) is often quite difficult to measure and evaluate. l Costs tend to be fixed or semivariable with output.

19.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 19 Financial Control Strategies l What is a chargeback system? l It is a mechanism used to allocate costs to users in an organization within the overall framework of a responsibility accounting system.

20.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 20 Financial Control Strategies l Chargeback systems take one of two general forms: 1 Establishing predetermined rates or charges (prices) for unit services 2 Collecting usage statistics and allocating actual costs to users periodically based on these usage statistics

21.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 21 Financial Control Strategies l What are transfer pricing systems? l They are used to generate prices for internally produced goods and services that are exchanged between profit centers. l The ideal situation in transfer pricing theory occurs when all profit centers are highly independent and completely autonomous with respect to decision making.

22.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 22 Financial Control Strategies l The transfer pricing approach is fraught with difficulties and is rarely implemented in practice. l What are cost recovery systems? l In a cost recovery system, information systems operates as a cost center.

23.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 23 Financial Control Strategies l What are flexible rates? l Flexible rates factor all or selected charging units into priority classes. l Each class is assigned a priority/price factor to reflect its relative value to the user. l Flexible rates are set to affect the user’s demand for services rather than to strictly reflect the cost of services provided.

24.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 24 Control Over Nonfinancial Information System Resources l A number of nonfinancial factors relating to information systems are important to management from a control point of view. l What are these factors? – performance measures for hardware – performance measures for software – performance measures for personnel

25.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 25 Control Over Nonfinancial Information System Resources l Measuring hardware performance involves the following: – system utilization – system downtime – system responsiveness l What is downtime? l It is the percentage of time that all or part of the network is unavailable for use.

26.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 26 Control Over Nonfinancial Information System Resources l Evaluating software performance involves the following: l Survey systems users. l Constantly monitor the software. l Apply controls relating to personnel by issuing the following: – performance reports for data entry specialists

27.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 27 Control Over Nonfinancial Information System Resources – reports evaluating the efficiency of systems operators – reports relating to the efficiency of hardware repair persons

28.  2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood 13 - 28 Maintaining and Modifying the System l In all operational systems, it becomes necessary to make changes. l Why? l It is not possible to foresee all contingencies during the design phase. l Environmental conditions and information needs change. l The computer program may contain bugs.