AIS PowerPoint Presentations

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Chapter 10 Developing and Implementing Effective
Accounting Information Systems
Presentation Outline
The Systems Development Life Cycle Systems
Planning Systems Analysis - Procedures and
data gathering Systems Design - Procedures
- Design considerations - Design
methodologies - Factors affecting the selection
of a vendor Systems Implementation -
Performing preliminary actions - Executing
activities leading to an operational system -
Follow-up procedures
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THE SYSTEMS DEVELOPMENT LIFE CYCLE

• Developing a computer-based information system is
  a creative and demanding task that can and should
  produce economic benefits for an organization.
• However, systems development can be a disaster,
  with labor and financial resources being expended
  with no observable return and perhaps even a
  system that cannot be completed.
• Positive results are more frequently obtained if
  the process is formally structured, documented,
  and subject to management controls.
• By far the most common methodology for building
  new information systems is the systems
  development life cycle approach.
• Systems Planning - organizing the project team
  and developing strategic plans for performing the
  systems study
• Systems Analysis - analyzing the companys
  current system to determine information needs and
  identify the systems strong and weak points
• Systems Design - making changes to the company's
  current system so that weak points can be
  minimized or eliminated and strong points
  maintained
• Systems Implementation - acquiring resources for
  the new system and initial operation

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THE SYSTEMS DEVELOPMENT LIFE CYCLE
System operation on a daily basis
Follow-up studies to determine if the (newly
designed) system is operating efficiently
Planning and preliminary investigation
Analysis of the system to determine the cause(s)
of the problems
Implementation and initial operation of the
revised system
Design of system revisions to eliminate the
problems
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SYSTEMS PLANNING

• Planning for Success
• approach problems from a broad point of view
• use an interdisciplinary study team to evaluate
  information systems
• 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.
• 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
• Systems planning is a constant process that
  continues throughout all phases of the systems
  study.

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The System Development Life Cycle
System operation on a daily basis
Follow-up studies to determine if the newly
designed system is operating efficiently

• Broad viewpoint
• System study team
• Steering committee

Analysis of the system to determine the cause(s)
of the problems
Implementation and initial operation of the
revised system
Design of system revisions to eliminate the
problems
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SYSTEMS ANALYSIS

• The systems analysis phase begins following the
  recognition of problems in the companys current
  system.
• The purpose of systems analysis is to enable
  consultants to familiarize themselves with a
  clients current operating system so they can
  make recommendations for improvement.
• 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 solutionsto
  the systems problems
• evaluating system feasibility

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Understanding Organization Goals

• 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
• 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

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The Systems Development Life Cycle
System operation on a daily basis
Follow-up studies to determine if the newly
designed system is operating efficiently
Planning and preliminary investigation

• System Survey
• Data Gathering review document, observation,
  questionnaire, interviews
• Data Analysis work measurement, work
  distribution analysis
• System Analysis Report

Analysis of the system to determine the cause(s)
of the problems
Implementation and initial operation of the
revised system
Design of system revisions to eliminate the
problems
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System Analysis Procedures

• Define the problem - symptoms of problems must be
  distinguished from the real problems, and
  consultants must understand the goals of the
  system.
• Perform a systems survey - consultants look at
  the current systems strengths and weaknesses in
  order to obtain a complete understanding of the
  system.
• Prepare a systems analysis report - consultants
  suggest possible solutions to solve the problems
  of the present system.

The process of learning how the current system
functions, determining the needs of users, and
developing the logical requirements of a proposed
system is referred to as A. Systems
design. B. Systems feasibility study. C.
Systems maintenance. D. Systems
analysis. (CMA, adapted)
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Systems Survey Data Gathering and Analysis

• Data Gathering
• Review of documentation - i.e., system
  flowcharts, organization charts and company
  policy manuals
• Observation - involves watching employees
  performing their duties and examining computer
  operations
• Questionnaires and Surveys - standard lists of
  open-ended or closed-ended questions used to
  survey a large group of people when brief answers
  are desired
• Review of internal control procedures
• Interviews - used to gather information in more
  depth
• Data Analysis
• creating summary statistics,
• developing flowcharts and/or process maps
• highlighting bottlenecks in information flows,
• reporting redundancy, and
• identifying missing information links.

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SYSTEM DESIGN

• If the clients steering committee reacts
  positively to the systems analysis report, system
  design begins.
• System design is the creative phase of system
  development that involves specifying outputs,
  processing procedures, and inputs for the new
  system.
• Design work includes a feasibility evaluation, a
  detailed system design, a specification report, a
  submission of the report to vendors, and the
  selection of a vendor.

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The Systems Development Life Cycle
System operation on a daily basis
Follow-up studies to determine if the newly
designed system is operating efficiently
Planning and preliminary investigation
Analysis of the system to determine the cause(s)
of the problems
Implementation and initial operation of the
revised system

• Feasibility evaluation technical, operational,
  schedule, legal, economic
• Detailed system design output, process, input
• Specification report
• Selection of a vendor

Design of system revisions to eliminate the
problems
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Evaluating System Feasibility Narrowing
of Design Alternatives

• Operational feasibility - can and will the new
  system be used by the personnel for whom it is
  designed?
• Economical feasibility - are the expected
  benefits expected to exceed the costs of the new
  system?
• Time feasibility - can the new system be designed
  and implemented in the period scheduled?
• Technical feasibility - is proven technology
  available to implement the design?
• Legal feasibility - is there a conflict between
  the design and the firms ability to meet its
  legal obligations?

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
Ordinarily, the analysis tool for the systems
analyst and steering committee to use in
selecting the best system alternative is (CMA,
adapted) A. Pilot testing. B. User
selection. C. Decision tree analysis D.
Cost-benefit analysis
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Detailed Systems Design

• Consultants prepare a detailed system design for
  each feasible proposal.
• Outputs are designed first, followed by the
  processing steps and inputs.
• Tools that are available to consultants in
  preparing structured designs are Hierarchy Plus
  Input, Processing, and Output (HIPO) charts,
  Warnier-Orr diagrams, system flowcharts, and data
  flow diagrams.

• The three major activities of systems design are
• User interface design, data manipulation, and
  output analysis.
• Process design, output design, and output
  analysis.
• User interface design, data design, and process
  design.
• Data design, input validation, and
  processing. (CMA, adapted)

The process of developing specifications for
hardware, software, manpower, data resources, and
information products required to develop a system
is referred to as A. Systems analysis. B.
Systems feasibility study. C. Systems
maintenance. D. Systems design. (CMA, adapted)
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Systems Specifications Report

• System design specifications should be
  incorporated in a formal systems specifications
  report.
• Higher-level management should review this report
  and give final approval.
• The report should contain all information needed
  by management to make a sound decision concerning
  the proposed design.
• Historical background information about the
  companys operating activities.
• Detailed information about the problems in the
  companys current system.
• Detailed descriptions of the systems design
  proposals.
• Indication of what the vendors should include in
  their proposals to the company.
• Time schedule for implementing the new system.
• Consultants choose which vendors will receive the
  Request for Proposal (RFP) and answer specific
  questions that arise regarding aspects of the
  report.
• The major role of consultants during this
  decision-making process is to provide input
  regarding the pros and cons of each vendors
  proposal.
• Although the consultants may provide a
  recommendation concerning a vendors proposal,
  the steering committee must ultimately make the
  decision.

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Factors Affecting the Selection of a System

• Performance capability of each proposed system in
  relation to the systems cost (may be tested by
  using a benchmark problem)
• Modularity, or the ease with which a system can
  be altered at a later date
• Compatibility of each proposed system to the
  companys current system
• Reputation of vendors and the vendors ability to
  provide support in implementation and subsequent
  operation

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.
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Outsourcing

• Under outsourcing, a company needing data
  processing services hires an outside organization
  to handle all or part of these services.
• The degree to which a company outsources may
  range from routine assistance with a single
  application to running the entire info. system.
• Outsourcing contracts are usually signed for five
  to ten years.
• Advantages
• An attractive business solution
• Results in effective use of assets
• Causes cost savings that result from economies of
  scale
• Facilitates downsizing
• Disadvantages
• It could be difficult for a company to break its
  contract, resulting in inflexibility.
• The company may loose control of its information
  system and be exposed to possible abuse.
• Over the long run, a company may loose sight of
  its information needs and how the system can
  provide it with competitive advantage.

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Outsourcing

• Time-sharing organizations provide user companies
  with on-line capabilities.
• Monthly fees are based on a fixed cost for
  terminal facilities and variable costs for file
  storage and communications.
• Time-sharing is optimal for firms that require
  immediate feedback or have sporadic processing
  needs that require a lot of computing power.

• Service bureaus typically provide user companies
  with batch processing of accounting data.
• Fees are based on the time required to process
  the user companys data.
• An advantage of using service bureaus is that
  user firms obtain needed processing services
  without investing in its own computer system.
• Disadvantages include data security problems and
  possible delays in receiving output information.

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SYSTEMS IMPLEMENTATION

• Systems implementation encompasses the
  consultants planning and controlling of the
  various activities needed to convert the
  companys current system to the newly designed
  one.
• Three major steps in system implementation are 1)
  performing preliminary actions, 2) executing
  activities leading to an operational system and
  3) conducting follow-up activities and
  evaluations.

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The Systems Development Life Cycle
System operation on a daily basis
Follow-up studies to determine if the newly
designed system is operating efficiently
Planning and preliminary investigation

• Prepare physical site
• Determine functional changes
• Select and assign personnel
• Train personnel
• Acquire and install equipment
• Establish internal controls
• Convert data files
• Acquire and install software
• Test software
• Conversion

Analysis of the system to determine the cause(s)
of the problems
Implementation and initial operation of the
revised system
Design of system revisions to eliminate the
problems
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Performing Preliminary Actions

• Plans concerning implementation activities should
  include cost budgets, time schedules, work plans,
  and project controls.
• Two techniques often used for controlling systems
  projects are Gantt charts and network diagrams.
• Behavioral issues, organization of the project
  team, and contractual negotiations with suppliers
  should also be addressed.

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Gantt Charts

• A Gantt chart is a bar chart with a calendar
  scale that is useful
• for scheduling and tracking the activities of
  systems implementation projects
• for indicating progress directly on the Gantt
  chart incontrast to the planned progress.
• Gantt charts are straightforward, easy to
  understand, and best suited for projects that are
  not highly complex.
• A drawback of the Gantt chart is that it does not
  show relationships among activities in systems
  implementation.

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Network Diagrams

• A network diagram schedules the sequence of
  activities that must be performed in the
  implementation of a new system.
• Two major project planning and control techniques
  incorporate network diagrams PERT (Program
  Evaluation and Review Technique) and CPM
  (Critical Path Method)
• Two basic steps involved in constructing a
  network diagram are 1) estimating activity time
  and 2) linking activities together.

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.
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System Implementation Activities

• Personnel Selection - newly installed systems may
  require added personnel, job reengineering, or
  downsizing.
• Personnel training - computer vendor personnel
  and consultants help to train personnel using
  methods such as video presentations and case
  studies.
• Physical site preparation - sites of new systems
  may have to be constructed or modified.
• Detailed system design - conceptual design must
  be converted from logical specifications to
  detailed physical requirements of a workable
  system.
• Software development - firms may develop programs
  in-house or acquire commercial packages.
• Program testing- known as debugging because the
  objective is to eliminate errors (or bugs) in
  programs firms may use desk checking or string
  testing techniques.
• System testing - testing the hardware with the
  software, sample data, inputs, and outputs final
  testing consists of acceptance testing, which
  involves users of the system.

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System Implementation Activities

• Documentation - provides the basis for later
  system changes and aids new employees in
  performing their duties
• Standards development - major system changes may
  call for new standards for data elements, codes,
  etc.
• File conversion - steps to convert manual files
  to computer files or from one medium to another.
• System Conversion - involves converting from the
  current system to a new system.

• In which of the following phases of computer
  system development would training occur?
• Planning phase.
• Analysis phase.
• Design phase.
• Implementation phase. (CPA, adapted)

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System Conversion Approaches

• Direct conversion - the old system is immediately
  discontinued when the new system is implemented.
• Parallel conversion - both the new and old system
  operate simultaneously for a certain period of
  time.
• Modular conversion (or pilot) - consists of
  testing and converting the new system at one
  location initially.
• Phased conversion - consists of converting
  segments of the new system until the entire
  system is operational.

• Workwell Company operates in several regions,
  with each region performing its data processing
  in a regional data center. The corporate
  management information systems (MIS) staff has
  developed a database management system to handle
  customer service and billing. The director of MIS
  recommended that the new system be implemented in
  the Southwestern Region to ascertain if the
  system operates in a satisfactory manner. This
  type of conversion is called a
• Direct conversion. B. Prototype conversion.
• C. Parallel conversion. D. Pilot conversion.
  (CPA, adapted)

• The least risky strategy for converting from a
  manual to a computerized accounts receivable
  system would be a (CMA, adapted)
• Direct conversion. B. Parallel
  conversion C. Pilot conversion. D. Database
  conversion

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Systems Follow-up

• Fine-tuning consists of uncovering and solving
  hidden problems that may arise as the system
  becomes operational.
• A follow-up report summarizes the work the
  consultants performed in their follow-up study
  and recommendations for improving the client
  companys info. system.
• Operational activities consist mainly of
  maintenance of the system including software
  modifications and updates.

• The process of monitoring, evaluating, and
  modifying a system as needed is referred to as
• Systems analysis.
• Systems feasibility study.
• Systems maintenance.
• Systems implementation. (CMA, adapted)