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					       AIS
Acquisition
     Cycle

          1
              Learning Objectives
•   To describe and employ a
    structured approach to acquiring
    an AIS.
•   To understand the nature and
    scope of accountants’
    involvement when acquiring an
    AIS.
•   To be able to select an AIS that is
    aligned with the organization’s
    objectives.
•   To appreciate the importance of
    conducting proper and through
    AIS needs assessments.
                                             AIS
•   To use a needs analysis program,
    called The Accounting Library, to     Acquisition
    help narrow down the potential

•
    set of AIS solutions.
    To select a final AIS solution from
                                            Cycle
    among competing alternatives.
•   To recognize that the best AIS
    can fail if the implementation is
    flawed.
   Demand Pressures on the AIS
• Users are demanding added functionality and increased
  access to the AIS.
• Customers want better service, measured by flexibility, speed,
  quality, and availability (24/7).
• To facilitate interconnectivity of business processes and
  improve internal control often requires reengineering of the
  existing business and information processes.
• To reduce costs and provide better service, many
  organizations are using supply chain integration with trading
  partners.
• Internet, and wireless functionalities are must have features
  for some organizations when selecting an AIS.
• Metrics - measures of profitability of customers and products,
  the efficiency of production functions, and the performance of
  vendors all depend, partly, on data in the AIS.

                                                            3
        Focus of this Chapter

• How to acquire an AIS solution from an
  external vendor in a methodical and controlled
  fashion.
• Discuss the issues and procedures involved in:
  –   Conducting a preliminary survey.
  –   Performing a needs analysis.
  –   Evaluating alternative solutions.
  –   Purchasing an AIS from an external vendor.


                                                   4
                   Introduction
• Organizations not wishing to or unable to develop
  software in-house may purchase, rent, or lease a
  commercially available software package.
• A turnkey system is a system in which a supplier
  has purchased computer hardware and has
  developed or acquired software to put together a
  computer system to be sold to end users.
• A service bureau is a firm providing information
  processing services, including software and
  hardware, for a fee.
• Systems integrators are consulting/systems
  development firms that develop and install systems
  under contract. Major consulting firms include:
   – Deloitte Consulting, Cap Gemini, BearingPoint, Accenture,
     and IBM Consulting.

                                                                 5
Systems Integrators




                      6
Application Service Providers




                                7
  Acquiring an AIS from External
             Parties
• Software developed in-house can cost up to
  10 times more than purchased software.
• Annual maintenance of in-house software is
  typically 50 percent of the development cost
   – annual maintenance for purchased software
     normally costs only 25 percent of the purchase
     price.
• When a suitable standard package exists,
  buy it rather than try to reinvent it in-house.

                                                      8
    Phases of the AIS Acquisition
              Process
•    A structured AIS acquisition process, is
     comprised of four distinct phases:
    1.   Analysis.
    2.   Selection.
    3.   Implementation.
    4.   Operation.
•    The Accounting Library, is a software
     program that accountants can use to help
     narrow down a potential subset of
     commercially available accounting systems

                                                 9
The AIS
Acquisition
Cycle




              10
AIS Acquisition Phases




                         11
Accountants Involvement in AIS Acquisition




                                         12
      Reasons Organizations Fail to
    Achieve AIS Acquisition Objectives
•   Lack of senior management support.
•   Shifting user needs.
•   Emerging technologies.
•   Lack of standard project management and AIS
    acquisition methodologies.
•   Failure to appreciate and act on strategic,
    organizational, and business process changes that
    may be required.
•   Resistance to change.
•   Lack of user participation.
•   Inadequate testing and user training.

                                                        13
   Project Management Items
 Associated with Failed Projects
• Underestimation of the time to complete the
  project.
• Inadequate attention by senior management.
• Underestimation of necessary resources.
• Underestimation of project size and scope.
• Inadequate project control mechanisms.
• Changing systems specifications.
• Inadequate planning.
                                            14
 Effective Project Management
• User participation in defining and authorizing the
  project.
• Assignment of appropriate staff to the project,
  along with specific definitions of their
  responsibilities and authorities.
• A clear written statement of the project nature
  and scope.
• A feasibility study that serves as the basis for
  senior management approval to proceed with the
  project.
• A project master plan, including realistic time and
  cost estimates, to facilitate project control.

                                                  15
 Effective Project Management
• A risk management program to identify and
  handle risks associated with each project.
• Division of the project into manageable
  chunks, often called phases. Phases
  should be subdivided into steps, and steps
  into tasks.
• Documentation and approval of work
  accomplished in one phase before working
  on the next phase.
                                         16
   AIS Analysis – Two Steps
1. Conduct a preliminary survey.
2. Perform a needs analysis.




                                   17
Conduct a Preliminary Survey
•   Gather facts.
•   Perform a feasibility study.
•   Devise project plan.
•   Obtain approvals.




                                   18
Conduct a Preliminary Survey




                               19
           Gather Facts
• Determine whether a problem exists.
• Refine the nature of the problem.
• Determine the scope of the problem.
• Obtain information to conduct a
  preliminary feasibility study.
• Devise a plan for conducting the
  analysis.
                                        20
             Perform Feasibility Study
• Technical feasibility. A problem has a technically feasible solution if it
  can be solved using available hardware and software technology.
• Operational feasibility. A problem has an operationally feasible
  solution if it can be solved given the organization’s available (already
  possessed or obtainable) personnel and procedures.
    – Consider behavioral reactions to the systems change.
    – Timing and scheduling may also be factors.
    – Organization may have available resources but cannot or will not commit
      them at this time because of union rules or resistance to change.
    – May wish to scale down a project, take an alternative course of action, or
      break the project into smaller projects to better fit their scheduling needs.
• Economic feasibility. A problem has an economically feasible
  solution if:
    – Net benefit estimates (benefits minus costs) for the AIS acquisition meet or
      exceed a minimum threshold set by the organization.
    – The project compares favorably to competing uses for the organization’s
      resources.



                                                                               21
       Devise a Project Plan
• The project plan includes a broad plan for the
  entire development, as well as a specific plan
  for needs analysis—the next acquisition step.
  The project plan typically includes:
  – Estimated project scope.
  – Recommended acquisition team structure,
    members, and leaders.
  – Required tasks.
  – Required personnel skills.
  – Sources of required information.
  – Estimated analysis costs.
  – Timetable and estimated costs for the entire
    acquisition and implementation.

                                                   22
  Why Project Plans are Developed
• Provide a means to schedule the use of required
  resources.
• Indicate major project milestones to monitor the project’s
  progress and whether it is on schedule?
• Forecast the project budget, which is used to authorize
  project continuation.
• Furnish guidelines for making a go or no-go decision.
   – Are the costs and benefits as projected?
   – Is the utilization of these resources (monetary and personnel) in
     the best interest of the organization at this time?
• Offer a framework by which management can determine
  the reasonableness and completeness of the project’s
  steps.
   – Is there a complete list of tasks, and are these tasks properly
     matched with the required skills?
   – Are the proper information sources being investigated?
                                                                       23
              Obtain Approvals
Preliminary survey approvals fall into two categories:
   1.   User/participant approvals:
        –   Verify the accuracy of any interviews or observations and the
            accuracy, completeness, and reasonableness of the survey
            documentation and conclusions.
   2.   Management control point approvals:
        –   Management approval of further development work (i.e., a
            go/no-go decision).
        –   Upper management control points occur at the end of each
            step of each acquisition phase (e.g., AIS preliminary survey,
            AIS needs analysis, etc.).
        –   Project management control points occur at the completion of
            tasks within each step (e.g., gather facts, perform feasibility
            study, etc.).
        –   End-of-phase signoffs by upper management are necessary to
            ensure that the analyst (or analysis team) follows prescribed
            procedures and to verify the reasonableness of any
            assumptions made about such factors as constraints,
            objectives, and operational feasibility.


                                                                        24
Approved Feasibility Document




                                25
      Perform Needs Analysis
•   Study current AIS.
•   Define future AIS needs.
•   Develop AIS configuration.
•   Approve needs analysis.




                                 26
Perform Needs Analysis




                         27
          Study the Current AIS
• Evaluate physical requirements.
   – Workload volume, peak processing loads, response times,
     report layouts, input documents and screens, operating
     systems, computer hardware, and communication systems.
   – Please refer to Appendix S1 (page 30) and load The
     Accounting Library on your computer, using the CD provided
     with this supplement.
• Evaluate logical specifications.
   – Logical specifications describe the internal ―reasoning‖ of the
     current system, such as how input, processing, and output
     data are linked; relationships among entities, data attributes,
     and data tables; and workflow automation processes.
   – Please refer to Wally’s Retail Bonanza works as shown on
     Figure S1.4 (page 20).



                                                                  28
Evaluation of Logical Specifications




                                       29
     Define Future AIS Needs
• Logical specifications:
   – Survey and interview all affected parties to determine the
     future logical design.
   – Compare Figure S1.4 to Figure S1.7.
• Physical requirements:
   – Go to TAL and print out all of the Itemized Need Definition
     requirements for the Order Entry applications.
   – Checkboxes indicate which needs are applicable.
   – These needs are prioritized from 0 (very low priority) to 9
     (very high priority) (see Figure S1.8 on page 24 for a sample
     report).
   – The completed itemized needs analysis will serve to
     document the future physical requirements.


                                                                  30
Define Future AIS Needs




                          31
Define Future AIS Needs




                          32
                AIS Selection
•   Two steps:
    1. Evaluating feasible solutions (Figure S1.1
       bubble 3.0).
    2. Determining the final solution (Figure S1.1
       bubble 4.0).
•   Both of these steps and their tasks are
    discussed next.


                                                     33
Evaluate Feasible Solutions




                          34
     Match Specifications with
        Potential Solutions
• To match specifications, we will use The Accounting
  Library (TAL).
   – Follow the instructions on pages 24-26 of the text.
   – The TAL will produce reports ranking products matching the
     requirements that you input into the TAL software.
   – You should end up with one or more commercially available
     software solutions.
   – If none of the commercially available software solutions meet
     the needs of the organization, then either the requirements
     need to be adjusted or one of the commercially available
     software solutions will have to be modified to fit the business
     processes of the organization.


                                                                  35
 Determine Feasible Solutions
• In the last step, the available AIS solutions
  are narrowed down to a set of potential
  solutions, based on need requirements.
• There may also be some reasons why one or
  more solutions in the set cannot be included.
• Once the potential set has been reduced, you
  will end up with a feasible AIS solution set.



                                              36
Determine Final Solution




                           37
Request Proposals from Vendors




                             38
  Recommend Final Solution
• Select the winning candidate.
• You should also get references from
  companies who are using the vendor’s
  software.
• You should also search the Internet for
  reviews on and comments about the
  AIS solution.

                                            39
       Approve Final Solution
• At a minimum, one or more representatives from
  upper management, all user groups, and the project
  manager need to approve the recommended AIS
  solution.
• This process might involve an iterative series of
  questions and answers among all affected parties.
• Once everyone is satisfied, the organization should
  meet with its legal representative to develop and
  ratify a contract with the vendor.
• Logical specifications and physical requirements of
  the final solution are then forwarded to the
  implementation team.

                                                        40

				
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posted:8/13/2011
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