Studying Accounting Information Systems

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Studying Accounting Information Systems
What are we trying to do? (Are we accomplishing
that?)
Business Strategy
IT strategy IT infrastructure IT function Systems
development
IT Environment
Business Processes
AIS Applications
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Strategic Use of Information Resources

• 1994, Dell stops traditional retail sales
• Direct Business Model
• IT infrastructure
• Electronic contact / customization
• Integrated order/production system directly
  linked to suppliers
• Focus on production of high demand products but
  low inventory
• Internet Sales
• IS Strategy lt-gt Business Strategy
• Does using information resources provide
  (sustainable) competitive advantage?
• What tools are available to help shape their
  strategic use?

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Historical Use of IT

• 1960s-1990s IT driven by internal
  organizational needs
• (1st) Lowering existing transaction costs
• (2nd) Collect and distribute information to
  support management
• (3rd) Redesign business processes
• As competitors matched technology, IT based
  advantage faded and were back to original
  competitive structure.
• At the start of each era, external needs also
  impact IT use
• Currently, companies are trying to use the
  Internet for competitive advantage, including
  protection from competitors, particularly
  start-ups

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Historical Use of IT (Nolans Model)
Era I (1960s) Efficiency Automate existing paper
processes ROI Organization Application
Specific Mainframe Centralized Intelligence
Era II (1970s) Effectiveness Increase
individual group effectiveness Better
productivity decision quality Individual
mgr /group Data-driven Micro-computer Decentr
alized Intelligence
Era III (1980s) Strategic Industry/ Organization t
ransformation Competitive position Business proc
ess Business -driven Client-server Distribut
ed Intelligence
Era IV (2000) Value Creation Collaborative partner
ships Value Added Customer,
Supplier, Ecosystem Knowledge
-driven Internet Ubiquitous Intelligence
Primary Role of IT Justify Expenditures Targ
et of Systems Information Model Dominant
Technology
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The Value Chain of the Firm
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Link in the (Supply) Chain
American Marriott Budget
Suppliers
Channels
Buyers
Dell
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Ways to complete

• Cost leadership
• Become low cost provider
• Improve purchasing, cutting distribution costs,
  efficient assembly
• Differentiation
• Offer a unique product or service
• Superior designed products, better/unique service
• ATMs, e-trade, mass customization
• Focus
• Limit attention to a narrow market (cost or
  product focus)
• Reach an under served population, Amazon

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Multi-user systems

• Multiple people need access to data
• Different access privileges for different users
• Some linkage between user devices network
• LANs vs. WANs

Terminal Emulation
File Server
Shared Client Server
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The INTERconnected NETwork

• ARPANET ? NSFNET ? WWW
• Each node on the net has an address or URL
  (Uniform Resource Locator)
• DNS (domain name system) 66.181.85.201
• HyperText Markup Language
• HyperText Transport Protocol
• Research for a faster Internet
• Internet2 (I2)
• Next Generation Internet (NGI)
• ISP
• Commercial organization with a permanent
  connection to Internet that sells temporary
  connections to subscribers

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E-business

• E-business encompasses all electronic exchanges
  between customers and suppliers, within and
  outside the organization
• E-commerce focuses on buying and selling using
  the Web
• Client/Server technologies underlies both E
  approaches

(1) Form for requesting data
Users Web Browser (client)
Web Server
(2) Request for information
(3) Response
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Dynamic vs. Static web pages

• Static web pages are of little use in
  e-commerce/business
• Dynamic pages are typically implemented in a
  3-tiered approach

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Protecting Your Internet

• Firewall hardware or software placed between an
  organizations internal network and external
  network that prevents outsiders from invading
  private networks
• Extranets Private intranets extended to
  authorized users outside company

intranet
authentication
extranet
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Data Warehouse

• Collection of a wide variety of corporate data
  organized and made available to end users for
  decisionmaking purposes
• OLAP vs. OLTP
• Integrated data
• Nonvolatile data
• Summary and detail data
• Multi-dimensional data cube

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Data Warehouse
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Data Mining

• In OLAP (Data warehouse) the user drives data
  discovery
• In data mining , the user specifies what he or
  she wants to find out and on what he or she wants
  the answer to depend.
• Neural Nets, Decision Trees, Genetic Algorithms,
  Nearest Neighbor
• Advantages and disadvantages of data mining
• Computer does the work
• Not bounded by user biases
• Can take a long time
• Many irrelevant findings
• There may not be a course of action when a
  relationship is found

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Uses of Data Mining

• Where do they get the data?

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Decision Tree Rules

• How is a decision tree created?
• IF GPA gt 3.1 then
• IF GMAT gt 500 THEN SUCCESS PROBABLE
• ELSE SUCCESS NOT PROBABLE
• ELSE
• IF GMAT gt 570 THEN SUCCESS PROBABLE
• ELSE SUCCESS NOT PROBABLE
• Correlation and other statistical analysis
• Regression

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Creating a Decision Tree
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Neural Networks

• Hardware or software emulating processing
  patterns of biological brain
• Wire connections
• Weight connections
• Learn over time

• Answer explanation?

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Integrating Processes, Data and Applications

• Enterprise Resource Planning Systems (ERP)
• Integrate the value chain
• Integrating the supply chain with extended
  resource planning (XRP)
• E-commerce with EDI and XML
• Standards of communication and data storage that
  allow ubiquitous access
• Customer Relationship Management Systems
• Keeping all of a customers data in one place

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EDI

• Direct computer-to-computer exchange between two
  organizations of standard business transaction
  documents
• EDI reduces error and time involved in
  transactions by reducing, if not eliminating,
  human intervention.
• RJR Nabiscos cost of processing a paper PO was
  70, with EDI it was 0.93 in 1995

VAN Web-EDI
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eXtended Markup Language

• Parse, Parse, Parse

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Customer Relationship Management (CRM)

• Consolidates customer data from multiple sources
  and provides analytical tools for answering
  questions
• Manages all ways used by firms to deal with
  existing and potential new customers
• Uses information system to coordinate entire
  business processes of a firm

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Customer Analysis
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IT and Business Processes Risks and Controls

• Privacy of information may not be ensured
  (privacy)
• Data may be altered or corrupted during
  transmission (integrity)
• Senders/receivers may not be convinced of each
  others identities (authentication)
• Concerns may arise over legally proving that a
  document was sent or received (nonrepudiation)

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Data

• Privacy
• What is collected?
• How is information used?
• Use consistent with expected use?
• How can users control information collected?
• Collecting data
• Cookies
• Tiny files deposited on a hard drive to identify
  the visitor and track behavior
• Web bugs
• Tiny graphic files embedded in e-mail messages
  and Web pages
• Opt-in vs. Opt-out models of privacy

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Protecting the Digital Firm E-commerce Security

• Encryption Coding and scrambling of messages to
  prevent their access without authorization
• Authentication Ability of each party in a
  transaction to ascertain identity of other party
  (MS Passport)
• Digital signature Digital code attached to
  electronically transmitted message to uniquely
  identify contents and sender
• Digital certificate Attachment to electronic
  message to verify the sender and to provide
  receiver with means to encode reply
• Message integrity Ability to ascertain that
  transmitted message has not been copied or
  altered
• Secure Electronic Transaction (SET) Standard for
  securing credit card transactions over Internet
  and other networks alternative to SSL

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Public Key Encryption and Digital Certificates
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Accountants

• http//infotech.aicpa.org/Resources/Top10Techno
  logies/Top10TechnologiesArchive/2004/
• Help business use IT effectively
• Provide assurance services
• Analyze IT investments
• Risks and controls
• Design and Implement IT solutions
• Enhance value of current services
• Knowledge management
• Case based reasoning

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Capturing Organizational Knowledge

• Case-based Reasoning (CBR)
• Artificial intelligence technology that
  represents knowledge as database of cases and
  solutions
• Keep all cases and solutions, good and bad,
  successes and failures