Gelinas - AIS Acquisition Cycle

8/12/2019 Gelinas - AIS Acquisition Cycle

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Learning Objectives To describe and employ a

structured approach to acquiringan AIS.

To understand the nature andscope of accountantsinvolvement when acquir ing anAIS.

To be able to select an AIS that isaligned with the organizationsobjectives.

To appreciate the importance ofconducting proper and throughAIS needs assessments.

To use a needs analysis program,called The Accounting Library, tohelp narrow down the potential

set of AIS solutions. To select a final AIS solution from

among competing alternatives.

To recognize that the best AIScan fail i f the implementation isflawed.

AISAcquisition

Cycle


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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 andimprove internal control often requires reengineering of theexisting business and information processes.

To reduce costs and provide better service, manyorganizations are using supply chain integration with tradingpartners.

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 ofvendors all depend, partly, on data in the AIS.


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Focus of this Chapter

How to acquire an AIS solution from anexternal 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.


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Introduction Organizations not wishing to or unable to developsoftware in-house may purchase, rent, or lease acommercially available software package.

A turnkey system is a system in which a supplierhas purchased computer hardware and hasdeveloped or acquired software to put together a

computer system to be sold to end users. A service bureau is a firm providing informationprocessing services, including software andhardware, for a fee.

Systems integrators are consulting/systemsdevelopment firms that develop and install systemsunder contract. Major consulting firms include: Deloitte Consulting, Cap Gemini, BearingPoint, Accenture,

and IBM Consulting.


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Systems Integrators


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Application Service Providers


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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.


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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 helpnarrow down a potential subset ofcommercially available accounting systems


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The AIS

Acquisition

Cycle


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AIS Acquisition Phases


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Accountants Involvement in AIS Acquisition


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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 thatmay be required.

Resistance to change. Lack of user participation.

Inadequate testing and user training.


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Project Management Items

Associated with Failed Projects

Underestimation of the time to complete theproject.

Inadequate attention by senior management.

Underestimation of necessary resources.

Underestimation of project size and scope.

Inadequate project control mechanisms. Changing systems specifications.

Inadequate planning.


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Effective Project Management User participation in defining and authorizing the

project.

Assignment of appropriate staff to the project,along with specific definitions of theirresponsibilities 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.


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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 stepsinto tasks.

Documentation and approval of workaccomplished in one phase before working

on the next phase.


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AIS Analysis Two Steps

1. Conduct a preliminary survey.2. Perform a needs analysis.


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Conduct a Preliminary Survey

Gather facts. Perform a feasibility study.

Devise project plan. Obtain approvals.


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Conduct a Preliminary Survey


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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.


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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 feasiblesolution if it can be solved given the organizations 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 committhem at this time because of union rules or resistance to change.

May wish to scale down a project, take an alternative course of action, orbreak the project into smaller projects to better fit their scheduling needs.

Economic feasibility.A problem has an economically feasiblesolution 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 organizationsresources.


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Devise a Project Plan The project plan includes a broad plan for the

entire development, as well as a specific planfor needs analysisthe 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 entireacquisition and implementation.


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Why Project Plans are Developed

Provide a means to schedule the use of requiredresources.

Indicate major project milestones to monitor the projects

progress and whether it is on schedule? Forecast the project budget, which is used to authorizeproject 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 projectssteps. Is there a complete list of tasks, and are these tasks properly

matched with the required skills?

Are the proper information sources being investigated?


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Obtain ApprovalsPreliminary 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., ago/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 oftasks within each step (e.g., gather facts, perform feasibilitystudy, etc.).

End-of-phase signoffs by upper management are necessary toensure that the analyst (or analysis team) follows prescribedprocedures and to verify the reasonableness of anyassumptions made about such factors as constraints,objectives, and operational feasibility.


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Approved Feasibility Document


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Perform Needs Analysis

Study current AIS. Define future AIS needs.

Develop AIS configuration. Approve needs analysis.


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Perform Needs Analysis


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Study the Current AIS

Evaluate physical requirements. Workload volume, peak processing loads, response times,

report layouts, input documents and screens, operatingsystems, computer hardware, and communication systems.

Please refer to Appendix S1 (page 30) and load TheAccounting Library on your computer, using the CD providedwith this supplement.

Evaluate logical specifications. Logical specifications describe the internal reasoning of thecurrent system, such as how input, processing, and outputdata are linked; relationships among entities, data attributes,and data tables; and workflow automation processes.

Please refer to Wallys Retail Bonanza works as shown onFigure S1.4 (page 20).


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Evaluation of Logical Specifications


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Define Future AIS Needs Logical specifications:

Survey and interview all affected parties to determine thefuture 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 samplereport).

The completed itemized needs analysis will serve todocument the future physical requirements.


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Define Future AIS Needs


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Define Future AIS Needs


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AIS Selection Two steps:

1. Evaluating feasible solutions (Figure S1.1bubble 3.0).

2. Determining the final solution (Figure S1.1

bubble 4.0).

Both of these steps and their tasks are

discussed next.


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Evaluate Feasible Solutions


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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 therequirements that you input into the TAL software.

You should end up with one or more commercially availablesoftware solutions.

If none of the commercially available software solutions meetthe needs of the organization, then either the requirementsneed to be adjusted or one of the commercially availablesoftware solutions will have to be modified to fit the businessprocesses of the organization.


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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 ormore solutions in the set cannot be included.

Once the potential set has been reduced, you

will end up with a feasible AIS solution set.


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Determine Final Solution


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Request Proposals from Vendors


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Recommend Final Solution

Select the winning candidate. You should also get references from

companies who are using the vendors

software.

You should also search the Internet for

reviews on and comments about theAIS solution.


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Approve Final Solution At a minimum, one or more representatives from

upper management, all user groups, and the projectmanager need to approve the recommended AISsolution.

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 andratify a contract with the vendor.

Logical specifications and physical requirements ofthe final solution are then forwarded to theimplementation team.

Documents

Gelinas - AIS Acquisition Cycle