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ASSESSMENT Of THE INTEGRATION Of THE ACCOUNTING

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					                                                              ISSN 1392-1258.	EKONOMIKa 2009 88




ASSESSMENT Of THE INTEGRATION Of THE
ACCOUNTING INfORMATION SYSTEM IN SMALL
AND MEDIUM LITHUANIAN ENTERPRISES
Arūnas Butkevičius
Doctoral Student
Department of Economic Information
Vilnius University
Sauletekio al. 9, room 411 (II building)
Vilnius, Lithuania
Tel. (8 5) 249 70 44
E-mail: arunas.butkevicius@eh.vu.lt


Abstract. An accounting information system (AIS) plays a key role in providing the financial in-
formation for decision making within an organization. The degree of usability and value of the
information provided by an AIS largely depends on its timeliness and quality. Both can be improved
by the participation of the non-financial stakeholders in its preparation, and by its reuse across
multiple business processes.
The goal of the research was to investigate AIS integration models in Lithuanian small and medium
enterprises, and to determine the prerequisites and obstacles for their integration with the business
processes and external information systems. A number of Lithuanian business companies were
visited to investigate their information systems. Interviews with the accounting personnel were
conducted and the related documentation was inspected. The object of the research was a set of
problems concerned with the use of the information provided by the entity’s accounting informati-
on system in other functional areas for decision making purposes. Issues involving the preparation
and communication of the accounting information for the use of external stakeholders were con-
sidered as well.
The results of the research showed that the degree of integration of the accounting information sys-
tems of small and medium Lithuanian enterprises with their business partners and state institutions
remains low, although prerequisites for the integration in some cases are in place.. Obstacles that
preclude closer integration with external the systems are the relative inflexibility of the accounting
software, the lack of use of the contemporary information and communication technologies, and
high investments. To encourage closer integration within the systems, the Service Oriented Architec-
ture should be provided, and be open for Data Integration, easy customization, and extensibility.
     Keywords: accounting information system, business process integration, e-Government.


Introduction                                        mation	used	for	decision	making.	The	suc-
                                                    cess of a business largely depends on the
the dynamic and competitive environment
                                                    quality of decisions made, and the quality of
of the business world makes high demands
                                                    further decisions depends on the relevance
on the timeliness and reliability of the infor-
                                                    and	timeliness	of	the	information.

144
     Decisions	are	made	throughout	various	             cess of an entity and providing information
departments	of	an	organization	and	are	usu-             for the decision making, makes it the back-
ally based on the information prepared and              bone of the information system of an orga-
stored	by	those	departments	themselves.	It	             nization.	This	is	illustrated	by	the	fact	that	
may be presumed that the lack of integra-               implementing their Enterprise resource
tion between departments tends to result in             Planning (ErP) system nearly all compa-
the duplicate and inconsistent information,             nies	 adopt	 financial	 and	 accounting	 mod-
which	is	the	cause	of	inefficiency	and	inac-            ules	(Juozapavičius	et	al,	2009).	Integrated	
curacy	in	making	decisions.	Furthermore,	               management	 of	 organizational	 processes	
departments	may	tend	to	optimize	their	de-              is a prerequisite for the improvement of
cisions for achieving goals set for them and            competitiveness.	 An	 accounting	 informa-
thus neglect the overall goals of an organi-            tion system plays athe role of an integrator
zation.	These	reasons	clearly	demonstrate	              of	the	information	processes.
the need for a closer internal integration of               World class ErP systems such as SaP,
business	processes	between	departments.                 Oracle	 or	 MS	 Dynamics	 AX	 are	 costly	
     the primary goals of a business entity             and hardly affordable for the majority of
are maintaining its short term liquidity and            small and medium lithuanian enterprises
earning	 profits	 in	 the	 long	 run.	 The	 suc-        (SME).	Smaller	companies	choose	locally	
cess of a business in achieving these goals             developed accounting systems with a lim-
is	measured	by	financial	terms.	The	lower	              ited functionality that fail to integrate eas-
level goals of individual departments that              ily with the other information systems in
contribute to the achievement of these                  use.	This	situation	leads	to	the	duplication	
overall	 goals	 are	 usually	 measured	 in	 fi-         of	 information	 and	 to	 subsequent	 ineffi-
nancial	figures.	This	financial	information	            ciency.	The	problems	of	the	integration	of	
is produced by an accounting information                the	information	systems	were	analyzed	by	
system.	                                                lithuanian researchers and practitioners
     the accounting information system                  (Juozapavičius	et	al,	2009,	Kiauleikis	et	al,	
records events and transactions, and pro-               2006,	Bagušytė	et	al,	2007).	Juozapavičius	
duces information for the evaluation of                 et	al.	(2009)	analyzed	the	demand	for	the	
the overall success of a business entity,               automation of process management sys-
i.e.	 information	 on	 its	 financial	 position,	       tems in lithuanian SME, the current situ-
financial	 performance	 and	 cash	 flows.	 It	          ation of automation, described the weak-
also serves as a basis for facilitating future          nesses of the systems in use, and provided
decisions.	 Conversely,	 financial	 informa-            recommendations for overcoming those
tion	 is	 historical.	 It	 is	 a	 representation	 of	   weaknesses.	The	research	by	Juozapavičius	
past events and transactions that may be                et	al.	was	supported	by	the	EU	co-financed	
irrelevant	 for	 the	 future	 decision	 making.	        project	 “Integrated,	 Flexible	 and	 Open	
Still, it serves as a good basis for realistic          System	of	Automated	Organizational	Pro-
future	plans.                                           cess Management for Small and Medium
     the role, which the accounting infor-              Enterprises:	Applied	Research	and	the	De-
mation system plays in measuring the suc-               velopment	of	a	Software	Demo	Version”.	


                                                                                                  145
Their	 findings	 can	 be	 used	 in	 further	 sci-       gration of the accounting information
entific	research	and	in	the	development	of	             system	 in	 small	 and	 medium	 sized	
software packages for the business process              Lithuanian	enterprises	(SME).	This	in-
management	 systems.	The	 problems	 con-                cludes	determining	the	extent	to	which	
cerning the creation of an integrated ac-               the accounting information system
counting information system within the                  processes and stores information that
Lithuanian	context	and	its	subcomponents	               originates in other functional areas of
were	also	analyzed	by	Domeika	(2008).                   business entities, such as manufactur-
    Object of the research. the object of               ing, supply chain management, cus-
the	research	is	a	set	of	problems	utilizing	            tomer relationship management, hu-
information provided by an entity’s ac-                 man	 resources,	 investments,	 etc.	 How	
counting information system in other func-              this information contributes to the deci-
tional	areas	for	decision	making	purposes.	             sion making was a point of interest as
Issues regarding the preparation and com-               well.
munication of the accounting information            - to investigate the accounting infor-
for	the	use	of	external	users	are	considered	           mation	flows	to	the	external	users	and	
as	well.                                                evaluate the level of integration with
    Goals of the research. typically, all               the	external	information	systems.
companies have an accounting informa-               - to outline the best practices and pre-
tion system for processing transactions that            requisites for determining the possibili-
have	an	impact	on	their	financial	position,	            ties	for	the	further	internal	and	external	
financial	performance,	and	cash	flows.	The	             integration.	
aim	 of	 the	 research	 was	 to	 examine	 the	          Research methods. the method used
integration of an accounting system with            for the research was the analysis of the in-
other	business	processes,	i.e.	to	find	out	to	      formation gathered during visits to small
what	 extent	 other	 business	 processes	 rely	     and medium enterprises, observation of
on the accounting information in making             their operations, and researching of their
decisions	 (internal	 integration),	 how	 ex-       information	 systems.	 The	 main	 business	
ternal users base their decisions on the ac-        processes in lithuanian business entities
counting	information	(external	integration)	        were	identified	and	the	level	of	their	auto-
and, on the basis of the research results, to       mation and integration with their account-
provide recommendations for the develop-            ing	 information	 was	 analyzed.	 Special	
ment of integrated accounting information           attention was paid to the processes suscep-
systems.	The	intent	was	to	analyze	the	role	        tible to integration that can yield the larg-
of an accounting information system as an           est	savings	in	costs,	increase	in	efficiency	
information system integrator for a busi-           and	competitiveness.	
ness	entity.	                                           52 business entities from various in-
    to achieve this aim, the following ob-          dustries were selected for the research
jectives	have	been	dealt	with:                      purposes.	The	research	was	conducted	to-
- to investigate the current state of the           gether	with	the	financial	statement	audit	of	
    internal	 (within	 an	 organization)	 inte-     those	business	entities.	Among	other	pro-


146
cedures, an audit involves the assessment           its suitability for the integration with other
of the information system, including the            business	processes.
related business processes relevant to the
financial	reporting,	and	communication,	as	         Accounting information system
laid down by the International Standard on
                                                    One method to improve the productivity
Auditing	315.
                                                    of management and other employees is the
    In most cases, the information systems
                                                    automation	 of	 information	 systems.	 Con-
were reviewed in companies that are sub-
                                                    temporary information systems have more
ject	to	a	statutory	audit.	Such	companies	are	
                                                    or	 less	 automated	 processes.	 The	 major	
usually	larger,	with	a	more	complex	orga-
                                                    reasons for implementing automated infor-
nizational	structure	and	business	processes,	
                                                    mation systems are the savings in employ-
and possess more sophisticated information
                                                    ee	 time	 in	 executing	 business	 processes,	
systems	than	average	business	entities.	On	
                                                    cost savings, and increases in competitive-
average, the balance sheet total (total as-
                                                    ness	 (Juozapavičius	 et	 al,	 2009).	 Higher	
sets) of the companies reviewed was ltl
                                                    operating	 effectiveness	 and	 efficiency	
14.6	mln.,	with	an	average	income	of	LTL	
                                                    help to reduce employee time, which ob-
18.3	mln.	The	average	number	of	employ-
                                                    viously	 leads	 to	 the	 payroll	 cost	 savings.	
ees	was	69.5,	with	the	largest	company	hav-
                                                    On the other hand, automated information
ing	 as	 many	 as	 602.	 The	 companies	 were	
                                                    systems improve income growth pros-
large enough to justify the analysis of their
                                                    pects	 by	 extending	 markets	 and	 enabling	
accounting system integration with their
                                                    a	 better	 satisfaction	 of	 customer	 needs.	
other	business	processes.
                                                    Consequently,	 it	 can	 be	 generalized	 that	
    Interviews and inspection of a business
                                                    automated information systems contribute
entity’s documentation were targeted at the
                                                    to the achievement of the main business
determination of the communication and
                                                    goal	of	long-term	profitability	by	lowering	
data	flow	patterns	between	the	accounting	
                                                    costs	and	increasing	income.
personnel	and	other	areas	of	the	organiza-
                                                        another improvement method is the in-
tion.	 Interviews	 were	 held	 with	 employ-
                                                    tegration	of	information	systems,	i.e.	linking	
ees, and primarily with those in charge
                                                    them	together.	Just	as	in	the	case	of	automa-
of the preparation and presentation of the
                                                    tion, system integration assists in achiev-
accounting	 information.	 The	 analysis	 of	
                                                    ing	organizational	goals	by	the	increase	in	
information systems also involved a re-
                                                    the	transaction	processing	efficiency	and	in	
view of the accounting software used, and
                                                    the	quality	of	decisions	made.	The	success	
the procedures established for the initiat-
                                                    of information systems in achieving these
ing, processing and recording of business
                                                    goals largely depends on the initial analysis
transactions as well as the procedures con-
                                                    of	the	situation	and	the	identification	of	the	
cerned with the accounting of the entity’s
                                                    opportunities	for	improvement.	One	impor-
assets,	 liabilities	 and	 equity.	The	 analysis	
                                                    tant area of such analysis that contributes to
of software was based on the evaluation
                                                    the	efficiency	is	the	possible	integration	of	
of its functionality (operation) and design
                                                    the new systems with the other systems in
(database structure), with the emphasis on
                                                    use	(Simanauskas,	2008,	pp.	39–46).

                                                                                                147
           Figure 1. The sub-disciplines of accountingSource: Baker, 2007, p. 396

    the diversity of elements, subsystems,      and evaluate the operating effectiveness of
and their relationships determines a huge       the	AIS.	The	information	requirements	of	
range	 of	 information	 system	 variety.	 A	    tax	and	financial	accounting	are	usually	set	
common way to classify information sys-         by the outside authorities and are designed
tems	is	by	their	functionality,	e.g.	[23]:      just to meet the legal requirements in the
- transaction processing systems                first	place	(Baker,	2007,	p.	396-397).	
- Management information systems                    the objective of meeting the informa-
-	 Decision	support	systems                     tion needs of the internal users in the most
-	 Expert	systems                               efficient	way	by	providing	high	quality	and	
-	 Office	Automation                            timely information at low cost provides the
-	 Business	intelligence.                       incentive to integrate the aIS with the other
    Probably the most widely used are the       information	 systems	 within	 the	 organiza-
data processing systems for the processing      tion.	 Furthermore,	 integration	 with	 the	 in-
of	accounting	data.	Algorithms	for	the	pro-     ternal systems that are under the control of
cessing of accounting information are usu-      the	same	organization	is	much	easier	to	ac-
ally simple and made of basic arithmetic        complish, rather than with systems that have
and aggregation processes (Simanauskas,         been	 developed	 externally.	 Nonetheless,	
2008,	pp.	41).                                  there are attempts to integrate the aIS with
    the accounting information system           the	external	parties	as	well.	The	other	reason	
(AIS)	is	the	focus	of	accounting	discipline.	   that	prioritizes	internal	integration	over	ex-
It can be subdivided into several sub-disci-    ternal	is	that	the	information	flow	between	
plines,	including	financial,	managerial,	au-    the	 internal	 users	 is	 much	 more	 extensive	
diting,	tax,	and	the	accounting	information	    than	with	the	external	users.	The	internal	us-
system as shown in                              ers consume information to make their day-
    as depicted in Figure 1, the aIS has        to-day	decisions.	External	communication	is	
closer links with auditing and managerial       done in a less intense pattern, and usually in
accounting.	The	AIS	tends	to	be	based	on	       time	periods	set	by	the	legal	requirements.	
the	needs	of	its	internal	users.	Hence,	the	    It tends to be a one-way communication of
AIS	has	closer	links	with	those,	(i.e.	man-     either	gathering	external	data	or	submitting	
agers) who use the information for decision     information	to	the	external	users.
making and auditors who review the design

148
Table 1. Accounting software installations in researched companies
    Manufacturer         Software      No of           DMBS         Average     Average     No. of
                         package      instal-                        assets     income       emp-
                                      lations                                               loyees
UAB	“Rivilė”           Rivilė	             12 MS	SQL	Server        13.386.892 16.051.719        77
Firma	“PROTAS	IR	      agnum                      Firebird
lOGIKa”                                     6                      13.852.307 14.646.348        64
UAB	“Proringas”        Pragma               4 MS access             9.642.411 12.526.712       117
“EDRANA”               Profit-W	SQL         4 SQL	Anywhere         20.153.223   6.822.488       66
UAB	„STEKAS“           Stekas               3 Paradox              13.233.500 50.315.454        27
Microsoft              Dynamics	AX	         3 MS	SQL	Server        67.137.235 76.645.204       242
Epicor                 Scala                2 MS	SQL	Server         3.119.163   7.822.905        8
Natural person         Paulita              2 Pervasive             7.752.329   4.633.496       56
UAB	“Finansų	          Finvalda                   SQL	Anywhere
valdymo sistemos”                           2                       7.939.896 12.463.078        84
UAB	“DB	topas”         apskaita             2 advantage            17.353.086   4.105.941       18
UAB	“Būtenta”	         Būtent               2 Visual	FoxPro          222.377      11.625         5
SaP                    SaP                  1 SAP	MaxDB             4.659.600 17.723.545        70
UAB	“Prototechnika”    Euro Skaita          1 MS	SQL                3.218.749   9.031.387       18
Total:                                     52


    A	 key	 element	 of	 a	 computerized	 ac-       that	use	local	software	(see	Table	1).	The	
counting	 information	 system	 is	 software.	       main reasons for choosing local software
the use of accounting information for               are that it is cost effective and tailored to
the recording of transactions and decision          local	 settings.	 Conversely,	 ERP	 systems	
making in other business processes de-              offer	 more	 flexibility	 for	 processing	 and	
pends	to	a	large	extent	on	the	functionality	       using information that originates in other
of	the	accounting	software.	                        business	 processes.	 Therefore,	 they	 are	
    Software programs used in the com-              more readily accepted by non-accounting
panies researched ranged from primitive             personnel.	 This	 increases	 the	 chances	 of	
accounting packages with basic function-            successful integration of business process-
ality	to	the	sophisticated	ERP	systems.	As	         es	with	the	accounting	function.
table 1 indicates, lithuanian companies                the information in table 1 is not in-
prefer locally developed accounting soft-           tended	to	reflect	the	popularity	of	account-
ware.	 Only	 12	 per	 cent	 of	 the	 companies	     ing software in lithuanian companies be-
reviewed	 had	 extensive	 ERP	 systems	             cause of the small number of companies
(SAP,	MS	Dynamics	AX,	Scala)	installed.	            researched, but instead serves as a broad
Predominantly, larger companies opt for             indicator.
an imported system, whereas smaller com-
panies	choose	systems	of	local	origin.	On	
average, the assets, income and number of
employees are smaller in the companies

                                                                                               149
Accounting information system in-                  None of the companies reviewed employed
tegration with external information                methods	to	exchange	documentation	elec-
systems                                            tronically	in	a	predefined	format	with	their	
                                                   partners.	The	primary	obstacle	preventing	
Models of the External business
                                                   it	is	the	lack	of	standards.	The	requirement	
process integration                                of the electronic data interchange is that
External	 integration	 can	 be	 analyzed	 in	      messages should have a well-structured
the	 context	 of	 business	 models.	 There	 is	    standard	 format	 (Vlčková,	 2006,	 p.	 130).	
no	 formal	 classification	 of	 business	 mod-     this is an opportunity for an immense
els, but the following are used widely             improvement	 in	 efficiency	 and	 cost	 sav-
(Jovarauskienė	et	al,	2009,	p.	85):	               ings by the integration of the accounting
-	 Business-to-business	(B2B)	model:	busi-         information systems with customers and
    ness	processes	between	business	entities.      suppliers.	 Therefore,	 the	 creation	 of	 data	
-	 Business-to-government	(B2G)	model;	            exchange	 standards,	 e.g.	 based	 on	 XML,	
    business processes between businesses          should	be	a	priority.	Moreover,	Lithuanian	
    and	state	institutions.                        entities	 exchange	 documentation	 with	
-	 Business-to-consumer	 (B2C)	 model:	            their business partners in a form that is
    business processes between business            readily	 receptive	 to	 standardization,	 such	
    entities	and	final	consumers.                  as	invoices	and	goods	order	forms.	E.g.	the	
    Business-to-business.	 Probably,	 the	         Law	 on	 the	 Value	 Added	 Tax	 prescribes	
most obvious way for the integration of            information that must be contained on a
an accounting information system with              sales	 invoice.	 Obviously,	 there	 is	 a	 need	
external	 business	 partners	 is	 through	 the	    to	develop	a	standard	for	the	exchange	of	
replacement of paper documentation with            invoice data or goods order forms between
electronic	documents.	The	transfer	of	docu-        business	 partners	 electronically.	 The	 idea	
ments electronically enables the integration       of the standard can be similar to that of lI-
of	 distant	 business	 applications	 by	 utiliz-   taS-ESIS – a standard developed by the
ing	the	means	of	information	exchange	in	          Lithuanian	Bank	Association	for	exchang-
a	predefined	format	between	separate	enti-         ing	payment	details	between	banks.
ties.	This	enables	communication	between	               Another	 area	 for	 the	 external	 integra-
independent information systems without            tion	is	e-banking.	The	majority	of	business	
manual	intervention.	The	goal	is	to	replace	       transactions end up in a cash receipt or
paper	documentation	with	electronic	files.	        disbursement.	Banks	and	entities	basically	
The	exchange	of	paperless	documents	al-            hold the same information on the pay-
lows	faster,	more	reliable,	and	cheaper	ex-        ments.	The	synchronization	of	such	infor-
ecution	of	business	processes.	Encryption	         mation and the elimination of duplication
and digital signatures also means better           should	 lead	 to	 considerable	 cost	 savings.	
protection of information than tradition-          Furthermore,	 banks	 themselves	 exchange	
ally	signed	paper	documents.                       information on the payments in a pre-
    the research showed that this is an un-        defined	 standard	 format.	 The	Association	
explored	 area	 in	 Lithuanian	 companies.	        of	Lithuanian	Banks	has	an	approved	stan-


150
dard format (lItaS-ESIS) for the bank                 institutions	via	internet.	All	major	state	in-
statements	 and	 the	 import-export	 data	 of	        stitutions	have	a	predefined	format	of	data	
payment	documents.	The	same	format	can	               files	for	the	submission	of	information.	The	
be	 used	 for	 the	 import	 and	 export	 of	 the	     XML	standard	is	used	in	most	cases.	Even	
data	between	an	entity	and	a	bank	as	well.            though the information to the state institu-
     although nearly all accounting soft-             tions	 can	 be	 submitted	 in	 electronic	 files,	
ware reviewed was implemented to sup-                 the process of submission involved the
port	the	export	of	payments,	hardly	any	of	           manual	 intervention	 of	 employees:	 forms	
it was implemented to support the import              for submitting accounting information are
data	 function.	This	 is	 due	 to	 the	 fact	 that	   filled	out	manually	and	submitted	either	by	
disbursements are prepared on the basis of            e-mail	 or	 through	 a	 web	 portal.	This	 was	
the	 structured	 information	 existing	 in	 an	       the	 case	 in	 all	 the	 companies	 researched.	
accounting	system.	On	the	contrary,	import	           the vast majority of them communicated
data is less structured because it originates         information to the state institutions via in-
from	the	external	sources.                            ternet, but the preparation of the electronic
     Business-to-government.	Although	the	            files	was	manual.	
research showed that integration between                   the analysis of patterns and methods
lithuanian business partners is virtu-                for the submission of information to the
ally	non-existent,	business-to-government	            state institutions revealed that companies
models	 showed	 better	 practices.	 Legisla-          most often have to deal with the following
tion prescribes obligations for business en-          state	institutions:
tities to provide state institutions with the              State Social Insurance Fund Board of
information on various aspects of t busi-             the Republic of Lithuania.	Since	the	begin-
ness.	 This	 makes	 them	 primary	 external	          ning of 2008, the Social Security Insurance
users	of	accounting	information.	The	prep-            Fund has implemented the Electronic In-
aration and provision of the information              surer	Service	System	–	EDAS	(Elektroninė	
for governmental users is considered to be            draudėjų	aptarnavimo	sistema).	The	system	
one of the most important tasks of the ac-            enables insurers to submit reports and ap-
counting	information	system.	This	is	espe-            plication forms electronically and to query
cially noticeable in smaller entities, where          the	 social	 security	 database.	 Nowadays,	
the owner-manager has a good grasp on                 entities	have	computerized	accounting	and	
the	 business	 himself.	 In	 such	 companies,	        payroll	systems.	Data	processed	by	the	sys-
the accounting is done primarily to comply            tems is used for the preparation of reports to
with	the	legal	regulations.                           the	Social	Security	Insurance	Fund.	
     Despite	the	importance	of	the	provision	              The	 EDAS	 system	 is	 open	 for	 the	 in-
of	information	to	external	users,	the	analy-          tegration with the information systems of
sis of practices in business entities showed          insurers.	 The	 system	 of	 the	 State	 Social	
that there is no automated integration be-            Insurance	 Fund	 Board	 accepts	 electronic	
tween their information systems and the               files	 through	 the	 web	 portal	 and	 utilizes	
information	systems	of	external	users.	Re-            the more advanced technology of Web
ports are prepared manually and sent to the           Services.	 The	 exchange	 of	 information	


                                                                                                   151
can	 be	 executed	 by	 means	 of	 two	 public	      have	to	be	confirmed	by	logging	into	a	web	
web	services.	One	is	intended	to	automate	          portal.	This	makes	the	submission	of	files	
the submission of an electronically signed          through	web	services	less	convenient.
report	 to	 EDAS.	The	 other	 is	 used	 in	 the	        Register of Legal Entities. the regis-
verification	 of	 the	 template	 version	 and	      ter of legal Entities has implemented the
in downloading a template for the visual            System of Electronic Services of the Cen-
presentation	 of	 data.	 These	 web	 services	      tre	 of	 Registers	 –	 CEPS	 (Registrų	 centro	
enable the manufacturers of payroll data            elektroninių	 paslaugų	 sistema).	 Business	
processing systems to implement the func-           entities	 are	 legally	 obliged	 to	 present	 fi-
tionality of automated preparation and              nancial	 statements	 and	 other	 notifications	
submission of electronic reports directly           to	the	register.	The	process	is	usually	car-
from	the	accounting	software	to	the	Fund.	          ried out once a year after the approval of
E.g.	when	a	new	employee	is	recruited	and	          the	 financial	 statements.	Due	 to	its	 rarity,	
his data is entered into the payroll system,        its	automation	would	bring	few	benefits	to	
one mouse click is enough to generate and           the	business	entities.
submit	a	notification	of	employment	to	the	             Department of Statistics under the
social	security	authorities.                        Government of the Republic of Lithuania.
    State Tax inspectorate.	 The	 State	 Tax	       The	 information	 system	 of	 the	 Depart-
inspectorate has implemented an Electron-           ment of Statistics is called the System for
ic	Declaration	System	–	EDS	(Elektroninė	           Collecting Statistical reports – SaESS
deklaravimo	sistema).	The	system	accepts	           (Statistinių	 ataskaitų	 elektroninio	 surin-
and	processes	the	majority	of	tax	returns.	         kimo	sistema).	The	purpose	of	the	system	
Tax	returns	can	be	submitted	either	by	e-           is to collect statistical reports from compa-
mail, by an upload though a web portal, or          nies.	It	only	offers	the	basic	functionality	
by	filling	out	forms	interactively	in	a	web	        of	 uploading	 pre-filled	 statistical	 reports	
portal.	An	exchange	of	messages	through	            via	a	web-portal.
web	 services	 is	 also	 possible.	 The	 EDS	           Department of Customs under the Min-
system	provides	two	web	services:	one	for	          istry of Finance of the Republic of Lithua-
submitting	 files,	 the	 other	 for	 checking	 a	   nia.	IDAIS	is	an	internet	based	information	
file’s	status.	Unfortunately,	submitted	files	      system	of	the	Department	of	Customs	for	

Table 2. Options for submitting electronic files to the information systems of state institutions
                                                  Ways for submission of electronic files
      State institution     IS name    E-mail    Upload of pre- Interactive filling Web services
                            acronym             filled forms in a of forms in a Web
                                                   Web portal           portal
register of legal Entities CEPS          No            yes                yes              No
State	Tax	inspectorate      EDS         yes            yes                yes              yes
Social Insurance Fund       EDAS         No            yes                yes              yes
Department	of	Statistics	   SaESS        No            yes                No               No
Department	of	Customs	      IDAS         No            yes                yes              No


152
collecting and processing data on foreign         ment,	or	e-Government.	The	sophistication	
trade within the European union member            of the E-government service depends on
states.	The	system	accepts	Intrastat	reports	     the	stages	of	its	maturity.	The	extent	of	the	
on	the	dispatches	and	arrivals	of	goods.          possible system integration can also be as-
    a summary of the various options for          sessed by the maturity stage that has been
submitting information to the state institu-      reached	by	a	state	institution.	A	classifica-
tions	is	presented	in	Table	2.                    tion of maturity stages is presented below
    The Bank of Lithuania.	 The	 Bank	 of	        (Kašubienė	et	al,	2007,	p.	71):
lithuania provides several Web services           1.	 Providing	information	(enabling	access	
for transferring statistical information to           to	the	information	on	the	internet).
the	Web	service	clients.	The	IS	of	the	Bank	      2.	 Two-way	 communication	 (services	
can	be	queried	for	official	exchange	rates,	          through web forms, email and bulletin
interest	rates	of	the	Bank’s	lending	facili-          boards).
ties, the liquidity situation in the bank-        3.	 Transaction	 services	 (the	 handling	 of	
ing	 sector,	VILIBID	 and	VILIBOR	 rates,	            transactions	with	businesses).
functions	for	the	verification	of	payments,	      4.	 Transformation	processes	(governance,	
and	a	security	settlement	system.	The	most	           e.g.	online	voting).
important services for the accounting soft-           the information systems of the lithua-
ware	 are	 found	 in	 retrieving	 official	 ex-   nian state institutions have already reached
change rates and verifying the validity of        their 2nd or 3rd	stages.	This	has	also	been	
the	IBAN	accounts.                                confirmed	by	a	high-ranking	readiness	sur-
    It can also be concluded that only the        vey	in	the	United	Nations	e-Government.	
EDS	and	EDAS	systems	implement	the	ser-           In 2008, lithuania ranked 28th among 192
vice-oriented architecture (SOa) through          countries	of	the	world	[24].
the	use	of	web	services.	Web	services	sup-            Irrespective of the maturity stage that
port interoperable machine-to-machine in-         governmental information systems have
teractions over a network and enable the          reached and their service orientation, the
highest	level	of	system	integration.	Having	      current level of integration in small and
the metadata of a web service, system de-         medium-sized	 Lithuanian	 companies	 re-
velopers can implement the full integration       mains low, because the client systems fail
of	the	accounting	systems	with	the	exter-         to	 make	 use	 of	 the	 services	 offered.	 The	
nal	 information	 systems.	This	 means	 that	     most obvious reason for this must be the
for the time being, accounting information        fact that the automation of the submission
systems can achieve full integration only         processes to state institutions would only
with	 the	 EDS	 and	 EDAS.	 Unfortunately,	       save	a	limited	amount	of	manual	work.	In-
other state information systems fail to raise     vestments	 in	 extending	 software	 in	 order	
integration possibilities based on the web        to add to the functionality of an SOa client
services	or	other	SOA	technologies.	              would	not	pay	off	in	a	short	time.	
    the use of information and communica-             Business-to-consumer. End consum-
tion technologies in the provision of public      ers are usually private persons who do not
services is referred to as Electronic Govern-     have	 information	 systems	 implemented.	


                                                                                             153
there are neither the means nor the de-             integrated	 and	 used	 by	 organizations	 that	
mand for the integration of the accounting          use	different	systems.	
information systems with private consum-                 SOa enabling technology facilitates
ers.	However,	institutional	consumers	may	          Web	services.	Web	services	are	a	standard	
have information systems open for the               method	 to	 support	 SOA.	 Web	 services	
integration,	e.g.	public	procurement	infor-         are	 computer	 programs	 for	 the	 exchange	
mation	systems.                                     of	 data	 between	 computers	 using	 XML-
                                                    based	 standards	 –	 WSDL	 (Web	 Services	
Prerequisites for external integration              Description	Language)	to	define	services,	
                                                    SOaP (Simple Object access Protocol)
High investments and subsequent main-
                                                    to	 invoke	 services,	 and	 UDDI	 (Universal	
tenance costs preclude many businesses
                                                    Discovery,	Description	and	Integration)	to	
from	 pursuing	 integrated	 external	 solu-
                                                    locate	services	(Trembly,	2009,	p.	20).	The	
tions.	Therefore,	as	some	authors	point	out	
                                                    implementation of Web services is not a
(Vlčková,	2006,	p.	131),	smaller	business-
                                                    costly undertaking that requires technical
es implement the elements of integration
                                                    expertise;	SMEs	can	also	afford	Web	ser-
only	upon	being	urged	by	strong	partners.	
                                                    vices to integrate their information systems
In	 such	 cases,	 the	 benefits	 of	 integration	
                                                    with those of their partners and customers
may	not	outweigh	its	costs.	
                                                    (Vidgen	et	al,	2004,	p.	372).	
    It can also be concluded that integration
                                                         Web services may not only be a meth-
of the accounting systems depends on the
                                                    od to support operations, but can also be a
features	 of	 the	 external	 information	 sys-
                                                    source	of	the	competitive	advantage.	Vid-
tems.	External	information	systems	should	
                                                    gen	et	al.	(2004,	p.	376)	define	5	levels	of	
have	features	that	enable	integration.	The	
                                                    business transformations brought about by
implementation of service-oriented ar-
                                                    the	use	of	Web	services.	Where	each	level	
chitecture (SOa) increases the chances
                                                    provides	more	benefits	for	an	organization,	
of	 successful	 integration.	 SOA	 can	 also	
                                                    it	also	entails	higher	costs:
support	 enterprise-wide	 Business	 Process	
                                                         1.	 Web	 Service	 Enhancement	 –	 Web	
Management	(BPM),	which	assists	in	opti-
                                                             services	 are	 integrated	 into	 the	 ex-
mizing	the	business	processes	inside	an	or-
                                                             isting	 IS	 applications.	 E.g.	 the	 ac-
ganization	(Bajwa	et	al,	2008,	p.	16).	SOA	
                                                             counting software may use Web ser-
not	only	helps	to	develop	flexible	software	
                                                             vices to submit information to the
applications, but also enables integration
                                                             social security authorities instead of
with	other	systems.
                                                             printing and submitting paper docu-
    Service oriented architecture is a con-
                                                             ments.
cept used in the systems development and
                                                         2.	 Application	Sourcing	–	Web	service	
integration.	 It	 views	 the	 functionality	 of	
                                                             based	 IS	 applications	 are	 sourced.	
business	 processes	 as	 services.	A	 service	
                                                             At	 this	 level,	 an	 organization	 may	
is a self-contained function that performs
                                                             acquire complete applications for
a	 specific	 task.	 SOA	 packages	 this	 func-
                                                             the business process management,
tionality into software modules that can be
                                                             such	as	ERP	or	CRM.	


154
   3.	 Application	Brokerage	–	integrated	          among the information systems of an or-
       IS	 applications	 are	 sourced.	 Orga-       ganization.
       nizations	 acquire	 applications	 that	
       interact with each other and with            Models of integration with the
       legacy	 information	 systems.	 Or-           internal business processes
       ganizational	 structures	 change	 as	
                                                    the design and operation of business pro-
       business processes are redesigned
                                                    cesses	vary	greatly	among	business	entities.	
       to accommodate the installation of
                                                    Many factors such as the nature of opera-
       new	systems.
                                                    tions,	 organizational	 structure	 and	 corpo-
   4.	 Collaborative	 Commerce	 –	 Web	
                                                    rate culture dictate the actual implementa-
       services are used to build process
                                                    tion of business activities that make up a
       networks.	Web	services	are	used	to	
                                                    business	 process.	 Despite	 their	 diversity,	
       collaborate with the business part-
                                                    business processes are aimed at achieving
       ners,	e.g.	in	Supply	Chain	Manage-
                                                    common	organizational	goals.	To	achieve	
       ment.	Business	processes	are	shared	
                                                    goals, tasks constituting a business process
       across	organizations.
                                                    are	 performed.	 The	 performance	 of	 these	
   5.	 Business	reconfiguration	–	acceler-
                                                    tasks entails the use of resources (inputs)
       ating	growth.	The	whole	enterprise	
                                                    and	produces	outputs.	An	important	input	
       is transformed and the business
                                                    is the information that is used for decision
       mission	is	reassessed.
                                                    making.	An	output	can	also	be	information	
                                                    that	is	to	be	recorded	and	utilized	in	subse-
Integration of the accounting
                                                    quent	processes.
information system with the                             Companies seek to automate their most
internal business processes                         labor-intensive processes, where automa-
the purpose of an accounting informa-               tion	would	bring	the	largest	benefits	and	in-
tion system is to supply information to the         vestments can be reclaimed in the shortest
external	 and	 internal	 sources	 for	 decision	    period.	Further	benefits	can	be	obtained	by	
making.	 The	 extent	 to	 which	 other	 busi-       the integration of the automated process-
ness processes rely on the accounting in-           ing.	Research	carried	out	by	Juozapavičius	
formation depends on its availability and           et	al	(2009,	p.	107)	indicated	that	compa-
reliability.	Availability	 and	 reliability	 can	   nies prefer to automate and improve the
be increased through a better integration           following	business	processes:
of the accounting systems with the other            - Sales
information	systems	of	a	business	entity.           - Human resource management
    an accounting information system                -	 Quality	control
serves	as	a	firm	infrastructure	that	supports	      - Contract management
the	primary	value-adding	activities.	In	the	        -	 Documentation	management
performance of this role, it often acts as a        - Management of the provision of serv-
centralized	data	storage	area,	e.g.	when	an	            ices
ERP	system	is	installed.	Thus,	an	account-          - Procurement
ing	 system	 integrates	 information	 flows	        -	 Project	documentation	management.

                                                                                              155
    For research purposes, general busi-        ally have to record a large number of sales
ness	processes	that	are	exposed	to	a	large	     involving	small	amounts.	The	duplication	
number of transactions and are likely to        of	the	recording	would	be	very	inefficient;	
occur in every business company were            therefore, POS (point of sale) terminals
identified,	 namely:	 sales,	 procurements,	    were integrated with the accounting sys-
warehousing, operations (manufacturing),        tems,	i.e.	sales	information	was	transferred	
payroll,	and	fixed	assets.                      to	the	accounting	books	automatically.	In	
    Sales. the research showed that a sales     addition, most of the companies with in-
cycle is most likely to be integrated with      tegrated POS terminals also used barcode
the	accounting	function.	Even	if	primitive	     scanners for the automation of the sales
accounting software packages are used, it       process.	
is quite common to set up access to the ac-          Specifically,	 the	 accounting	 software	
counting	 system	 for	 salespeople.	 Printed	   applications	 examined	 with	 POS	 integra-
sales invoices are immediately booked in a      tion	 were	 Pragma,	 Agnum,	 Būtent,	 Fin-
general ledger and an accounts receivable       valda,	Edrana	and	Rivilė.	In	general,	POS	
ledger.	                                        integration was implemented in all major
    In 78 percent of all the information        locally	developed	accounting	systems.	The	
systems reviewed, invoices were prepared        high occurrence of integration can be at-
and printed from the accounting software,       tributed to the straightforward technology
thus enabling an immediate booking into         of operating POS terminals from the ac-
the general ledger, accounts receivable         counting software by means of the func-
ledger,	inventory	records,	and	other	books.	    tions	in	the	Dynamic	Link	Libraries	(DLL)	
In more than half of these cases, invoic-       provided	by	the	terminal	manufacturers.	
ing was performed by salespeople enter-              Procurement.	 Contrary	 to	 the	 sales	
ing the billing information directly into an    process, the accounting for purchasing in-
accounting	system.	The	other	half	of	these	     volves posting documents that were pro-
cases did not show any real integration of      duced	by	the	external	entities.	Purchasing	
the sales process, because the invoicing        documentation varies greatly in format and
was done by the accounting personnel and        content.	 The	 lack	 of	 standardization	 pre-
the process was based on the information        vents automatic processing and involves
received	informally	from	salespeople.	Fur-      manual	work.	
thermore, although billing in many compa-            the analysis of business companies
nies was done directly from an accounting       showed that the purchasing process is rare-
system, only in a few cases did the ac-         ly	 integrated	 with	 the	 accounting	 system.	
counting systems serve as a repository for      In most cases, the accounting personnel
the sales related information, such as cus-     were only responsible for posting purchase
tomer	orders,	prices	and	payment	terms.         invoices into the books after checking for
    Companies operating in the retail sector    the necessary approvals and in preparing
have demonstrated good practices regard-        payments.	 In	 larger	 entities	 that	 had	 ERP	
ing the integration between the accounting      systems implemented, more activities of
and	sales	processes.	Retail	companies	usu-      the purchase process, such as the genera-


156
tion of purchase orders, order approval,             operations.	In	4	cases,	it	was	an	in-house	
sending orders to suppliers, and posting             developed software because no suitable
dispatch notes and invoices were auto-               commercial off-the-shelf software was
mated.                                               available.	 None	 of	 the	 specialized	 infor-
    Warehousing.	 Warehouse	 attendants	             mation systems was really integrated with
have	 to	 keep	 records	 for	 their	 reference.	     the	 accounting	 information	 system.	 At	
an accounting department also needs in-              best,	 data	 was	 exchanged	 by	 utilizing	 an	
formation on the quantities of inventories           import	functionality.
for the accountability purposes and on their             large ErP system manufacturers offer
cost	 for	 the	 financial	 reporting	 purposes.	     industry solutions for the processing op-
However, keeping records of inventory                erations	 specific	 to	 an	 industry.	 E.g.	 SAP	
movement	 is	 a	 labor	 intensive	 task.	 The	       offers solutions to banking, automotive,
duplication of the inventory records would           public service, education, healthcare, insur-
be	very	costly,	inefficient	and	error	prone.	        ance and a wide range of other industries
When processing a transaction companies              [19].	 However,	 such	 solutions	 are	 afford-
that deal in a large number of inventory             able only for large and well-established
items (such as retail, wholesale and manu-           companies.	Another	drawback	of	the	stan-
facturing companies) have their inventory            dard solutions is that companies are forced
transactions	recorded	by	the	employees.	It	          to adapt their business processes to suit the
is very unusual for the accounting person-           model	of	an	ERP	system.	Although	an	ERP	
nel	to	maintain	inventory	records.                   system	may	reflect	the	best	practices	of	a	
    the accounting software of the com-              particular industry, its adoption may mean
panies researched implemented modules                losing a competitive advantage, because
for	 the	 inventory	 management.	 Only	 one	         the business processes are managed in the
company maintained its inventory records             same manner as those done by the com-
in another system that was not integrated            petitors	using	the	same	ERP	system.	
with	its	financial	accounting.                           Payroll.	 Payroll	 processing	 is	 highly	
    Operations/manufacturing. Compared               influenced	 by	 the	 local	 laws	 and	 regula-
to other business processes, the produc-             tions.	It	proves	to	be	more	efficient	to	pur-
tion	 process	 is	 usually	 very	 specific	 to	 a	   chase a locally developed payroll package
business.	A	 large	 variety	 of	 operations	 in	     rather	than	adapt	imported	software.	Many	
businesses is an obstacle to the standard-           personnel and payroll accounting systems
ized	 automation.	 To	 solve	 these	 prob-           developed locally offer the functional-
lems, businesses tend to either engage in            ities of storing permanent employee data,
the in-house development or to purchase              work time records and calculating payroll,
specialized	 software.	 Specialized	 systems	        but fail to address other human resource
to process operational processes are likely          management information needs, such as
to be disconnected from the accounting               employment planning, recruitment and se-
system.	 11	 out	 of	 52	 Lithuanian	 compa-         lection, evaluation, motivation and career
nies under investigation used some kind of           planning.
software other than an ErP system in their


                                                                                                 157
    there is no need for the tight integra-        the	 localization.	 Probably	 because	 of	 the	
tion between the payroll processing soft-          small market, foreign manufacturers do
ware and the general bookkeeping soft-             not bother to adapt their payroll module to
ware.	 Payroll	 is	 prepared	 on	 a	 monthly	      the	local	settings.	Moreover,	such	systems	
basis and only its totals are transferred to       are relatively costly to install and can only
the	 general	 ledger.	 The	 posting	 of	 a	 pay-   justify themselves in very large companies
roll fails to involve a lot of manual work         with	many	employees	(Juozapavičius	et	al,	
and it is acceptable if there is no automatic      2009,	p.	109).
posting.	Some	companies	choose	to	adapt	               Some	 authors	 (Juozapavičius	 et	 al,	
a payroll processing system that is not in-        2009,	 p.	 109)	 argue	 that	 the	 payroll	 and	
tegrated	with	the	accounting	software.	            work time processing systems currently
    the review of the information systems          used in lithuanian companies are not ad-
of lithuanian companies indicated that             equate for the true human resource man-
the major accounting software packages             agement	(HRM).	They	lack	applications	to	
included	 modules	 for	 payroll	 processing.	      process selection, recruitment, personnel
However,	 32.7	 percent	 of	 the	 companies	       planning, career planning, employee as-
reviewed did not process payroll with their        sessment,	and	similar	HRM	tasks.
accounting	 software.	Almost	 half	 of	 such	          Investments/fixed assets.	The	 acquisi-
companies had manual systems (based on             tion	and	disposal	of	the	fixed	assets	occur	
MS	 Excel	 spreadsheets).	 The	 other	 half	       irregularly.	 Compared	 to	 other	 areas	 of	
chose	specialized	payroll	processing	soft-         accounting,	 the	 processing	 of	 fixed	 asset	
ware.	 The	 most	 popular	 specialized	 soft-      transactions is not a labor intensive activity
ware	was	Vikarina	(2/3	of	all	cases).	The	         (Simanauskas,	2008,	p.	226).	A	low	rate	of	
findings	lead	one	to	presume	that	Lithua-          transactions does not call for its integration
nian managers believe that payroll integra-        with	other	processes	for	decision	making.	
tion with an accounting information system         In most of the cases reviewed, the account-
brings minimal savings in employee time,           ing	software	had	a	module	to	account	fixed	
because its totals have to be transferred to       assets.	Fixed	asset	transactions	in	all	cases	
the	general	accounting	only	intermittently.        were processed by the accounting person-
    Interestingly, a high rate of disconnect-      nel after the appropriate approval o fthe
ed information systems in regard to their          management.	 Ad	 hoc	 reporting	 fulfilled	
HrM and general accounting functions               the	need	of	the	internal	information	users.
was noticeable in the companies that had               It	can	be	summarized	that	the	interaction	
the sophisticated ErP systems of foreign           of business processes with the accounting
manufacturers	 installed.	 The	 reason	 for	       function	takes	place	in	two	perspectives:
choosing local payroll software was that           - reusability of master reference data
the standard HrM solutions of foreign                  among business processes in process-
manufacturers often fail to comply with lo-            ing	and	recording	transactions.
cal	legislation	concerning	payroll.	Specific	      -	 	 Decision	 making	 based	 on	 the	 infor-
payroll calculation rules and social secu-             mation collected and recorded in other
rity systems require additional effort for             business	processes.


158
    Special attention has to be given to the      Information	Integration.	It	is	a	process	of	
analysis of the integration of business pro-      integrating information to provide a single
cesses	 with	 the	 function	 of	 outsourcing.	    interface	for	users	accessing	the	data.
The	 accounting	 function	 requires	 specific	        In establishing the design of a database
technical	 knowledge	 and	 skills.	 Smaller	      structure, it is important to follow the prin-
companies tend to outsource the account-          ciples	 of	 good	 database	 design,	 e.g.	 data	
ing	function	to	the	external	service	provid-      should	not	be	duplicated;	it	should	be	re-
ers, because they fail to posses the required     corded once and reused whenever possible
knowledge.	 The	 main	 reasons	 for	 choos-       (Simanauskas,	2008,	p.	169).	Thus,	all	us-
ing	 an	 external	 service	 provider	 are	 cost,	 ers	within	an	organization	should	be	pro-
service quality, and the ability to focus on      vided	with	a	unified	view	of	the	data	that	is	
their	main	activities	(Daňko,	2006,	25	p.).	      achieved by integrating data from different
although smaller entities are usually own-        sources	into	a	single	view.	This	is	achieved	
er managed with few employees, which              by storing permanent reference data in a
means that their functions are not segre-         single	location.	Permanent	reference	data,	
gated and by their nature are integrated,         which is also called master data, includes
outsourcing creates an additional demand          data that is persistent and non-transactional
for	 the	 integration	 of	 external	 accounting	  in	nature.	In	a	business	context	it	describes	
with the information system of the com-           business	 objects,	 i.e.	 it	 is	 data	 of	 perma-
pany.	 Documentation	 to	 the	 service	 pro-      nent reference about customers, vendors,
viders is usually submitted after the end         inventory items, employees, departments,
of	 the	 month.	 Consequently,	 accounting	       locations,	general	ledger	accounts,	etc.	It	is	
information is prepared with a time lag           used to support the business processes that
which makes it less usable for operational        are	executed	by	several	functional	groups	
decision	 making.	 Some	 service	 providers	      within	 an	 organization.	 The	 multiple	 us-
try to close the time and logistical gap by       age of the same data in several functional
using	technologies	such	as	Remote	Desk-           groups may be the reason for storing the
top	Connection.	Still,	it	can	be	concluded	       data in different systems within an orga-
that the integration of business processes        nization.	 Such	 disconnected	 systems	 pro-
in smaller entities is very weak and virtu-       vide data with the risk of duplication and
ally	non-existent.                                subsequent	 inaccuracies.	 Fortunately,	 the	
                                                  risk can be avoided by referencing data
Prerequisites for internal integration centrally.
                                                      the need for the data integration of
Data integration. One of the most impor-
                                                  business processes can be illustrated by
tant prerequisites for the seamless business
                                                  the analysis of the master reference data
process	 integration	 is	 data	 integration.	 It	
                                                  of	 ERP	 systems.	 The	 extent	 of	 the	 reus-
involves combining data from different
                                                  ability of the permanent master data across
information systems into a single database
                                                  business processes can be estimated by the
and	providing	a	unified	view	of	this	data.	
                                                  number of ErP database tables that con-
From the management perspective, a syn-
                                                  tain foreign keys referencing primary keys
onym for the data integration is Enterprise

                                                                                               159
of	the	master	data	tables.	For	the	purposes	    data	is	as	high	as	1/3	of	all	the	tables	in	the	
of	the	analysis,	the	Rivilė	ERP	system	was	     database referencing the most often used
selected because it was the most popular        master	data	tables.
system among the lithuanian companies               yet another rather theoretical concept
under	 investigation	 .	 The	 database	 con-    of data integration is a federated database
tains 78 tables for storing master reference    system.	A	federated	database	management	
data and 95 tables for storing transactional    system integrates autonomous databases
data	(excluding	the	payroll	module).	Some	      into	a	single	view	without	merging	them.	
master data tables were selected and the        users view a collection of databases as a
number of tables referencing them was           single federated database, which is also
established.	Major	business	processes	that	     called	 a	 virtual	 database.	 The	 advantage	
make use of the master data were also           of a virtual database over the merging of
noted.	The	results	of	the	analyses	are	pre-     databases is that the constituent databases
sented in table 3they show that the master      remain	 autonomous	 and	 retain	 flexibility	
data is used in different business processes    and	high	performance.	
a	lot.	The	rate	of	the	referencing	of	master	

Table 3. Extent of referencing the selected master data tables of an ERP system


                                                                            General ledger
                                                           rencing tables




                                                                                                                             Warehousing
                                                             No of refe-




                                                                                                     Purchasing

                                                                                                                  Payments



                                                                                                                                           Payroll
                                                                                             Sales
   Master data table     table name       Primary key



accounting journals    I01_DKZR       I01_KODAS_ZS                    4         x
Chart of Gl accounts   N01_ACCT       N01_KODAS_SS                 38           x             x         x           x           x            x
Cost centers           N06_OBJ        N06_KODAS_OS                 48           x             x         x           x           x            x
Departments            N07_IMON       N07_KODAS_IS                 61           x             x         x           x           x            x
Vendors                N08_KLIJ       N08_KODAS_KS                 36                                   x           x           x
Customers              N08_KLIJ       N08_KODAS_KS                 36                         x                     x           x
location               N09_VIET       N09_KODAS_VS                 17                         x         x           x           x            x
Taxes                  N12_TAX        N12_KODAS_XS                    4                       x         x
Payment terms          N14_TERH       N14_KODAS_TS                    6                       x         x
Employees in charge    N15_MEN        N15_KODAS_MS                 34                         x         x           x           x            x
Inventory items        N17_PROD       N17_KODAS_PS                 49                         x         x           x           x
unit of measurement    N18_MAT        N18_KODAS_US                 50                         x         x           x           x
Services/expenses      N25_KOD        N25_KODAS_BS                    4                                                                      x
Banks                  N34_BANK       N34_KODAS_WS                    5                                             x                        x
Currencies             N45_VAL        N45_KODAS_VL                 22                         x         x           x
Employees              N60_ASM        N60_KODAS_SM                 25           x             x         x           x           x            x
Storage bins           N65_LOKA       N65_KODAS_LC                    5                                                         x


160
    Data	integration	also	can	be	implement-         middleware	 was	 identified	 in	 Lithuanian	
ed	by	data	import	and	export	functionality.	        companies.
Nowadays, most of the accounting soft-                   Extensibility and customization. In-
ware	 packages	 use	 SQL	 based	 database	          formation systems are usually individually
management	systems	(DBMS)	that	provide	             tailored	 to	 the	 needs	 of	 a	 business	 entity.	
tables for direct access (see table 1 for the       the implementation and maintenance of
DBMS	used	for	the	managing	database	of	             disparate information systems and their
accounting information in the companies             integration	is	a	lengthy	and	costly	process.	
researched).	 DBMS	 enables	 direct	 access	        Furthermore,	such	integration	is	inflexible	
to database tables by bypassing the graphi-         and	unstable.	Upon	the	change	in	the	sys-
cal	 user	 interface.	 This	 makes	 it	 easy	 to	   tem,	it	has	to	be	reintegrated.	Such	a	situ-
import	data	directly	into	a	database.	How-          ation is the result of the lack of the stan-
ever, software vendors rarely represent             dardized	product	that	would	be	affordable	
documentation	in	their	database	structure.	         to	smaller	entities.	
It	may	take	a	great	deal	of	time	to	find	out	            Currently, there are products on the
the	right	table	to	dump	data	into.	For	ex-          market that aim to automate all the business
ample, when a sales transaction is posted           processes	 of	 a	 company.	 However,	 they	
in the popular accounting package Fin-              are	still	considerably	inflexible	and	costly.	
valda,	information	is	posted	into	13	tables:	       to overcome this drawback, the system
invoice	header	and	detail	files,	warehouse	         should	be	open.	Openness	means	the	pos-
records, accounts receivable and the gen-           sibility	 to	 implement	 tailored	 extensions,	
eral	ledger,	just	to	mention	a	few.                 i.e.	the	users	should	have	a	chance	to	make	
    the majority of the accounting software         modifications	and	add	additional	function-
packages reviewed provide the functional-           ality	 to	 the	 purchased	 software.	 A	 very	
ity	of	data	export	into	the	popular	formats	        good	 example	 is	ABAP	 (Advanced	 Busi-
such	 as	 MS	 Excel	 for	 further	 processing.	     ness application Programming), which is
However, this import functionality was              a high level programming language creat-
implemented	only	in	a	few	cases.	The	im-            ed	by	the	German	software	company	SAP.	
port	of	data	is	a	much	more	complex	pro-            However, software vendors are reluctant
cess because the data has to be well struc-         to disclose their code for business and se-
tured and data validation has to be carried         curity	reasons.
out	 upon	 its	 import.	Accounting	 software	            Except	 for	 imported	 ERP	 systems,	
vendors usually only offer their services           none of the reviewed accounting software
for importing opening balances when their           allowed	 for	 its	 extensibility.	 Only	 a	 lim-
system	is	purchased.                                ited	customization	of	reports	was	possible.	
    another option for the system inte-             However, software vendors seem to be
gration	 may	 be	 the	 use	 of	 middleware.	        ready to develop additional features them-
Middleware is a piece of software for con-          selves, which is not a very attractive option
necting	applications.	It	allows	the	interac-        in	terms	of	cost,	time,	and	flexibility.	
tion	of	applications	across	a	network.	Dur-
ing the research, no usage of any kind of


                                                                                                  161
Conclusions                                                tems	of	more	specific	business	processes.	
                                                           Fortunately, the manufacturers of account-
the research indicated that at the present
                                                           ing	software	packages	are	ready	to	extend	
time, many business entities have auto-
                                                           the	 functionalities	 of	 their	 solutions.	 Tai-
mated their business processes to various
                                                           loring software to the needs of a business
extents.	Despite	a	high	level	of	automation	
                                                           means high development and maintenance
in the basic business areas such as account-
                                                           costs;	 this	 is	 not	 always	 affordable	 for	
ing,	sales,	and	payroll,	there	are	still	unex-
                                                           smaller	 companies.	 The	 ultimate	 integra-
plored	 areas	 of	 the	 external	 system	 inte-
                                                           tion of business processes is possible only
gration.	Integration	of	the	existing	systems	
                                                           in	flexible	systems	that	can	be	customized	
with	external	business	partners	would	lead	
                                                           to	suit	specific	needs.
to	 increases	 in	 the	 operational	 efficiency,	
                                                               On	 the	 basis	 of	 the	 findings	 of	 the	 re-
because business processes can be made
                                                           search, some recommendations can be made
faster,	more	reliable,	and	cheaper.	
                                                           for	system	development	and	integration:
     Contemporary information technology,
                                                           - Information systems should implement
based on the Service Oriented architecture
                                                               Service oriented architecture to en-
and	exploiting	the	advantages	of	Web	ser-
                                                               able seamless integration with business
vices, enables the integration of informa-
                                                               partners.
tion	 systems	 between	 business	 partners.	
                                                           -	 XML	 based	 standards	 to	 define	 ac-
Major state institutions in lithuania have
                                                               counting documentation should be de-
implemented	 these	 technologies.	 How-
                                                               veloped.	This	is	a	precondition	for	the	
ever, its use between business partners is
                                                               replacement of paper documents with
less common because few smaller entities
                                                               the	electronic	ones.
can afford investments into the technical
                                                           - accounting information systems should
expertise.	 Moreover,	 integration	 with	 the	
                                                               make use of the functionalities offered
information systems of business partners
                                                               by the information systems of state in-
is hampered by the lack of standards for
                                                               stitutions	through	Web	services.
exchanging	documentation.
                                                           - Information systems should be open to
     lithuanian proprietary accounting soft-
                                                               easy	customization	and	extension.
ware systems do not have features allowing
their integration with the information sys-


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