Complete
Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart
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CHAPTER 21
AIS DEVELOPMENT STRATEGIES
21.1 What is the accountant’s role in the
computer acquisition process? Should the accountant play an active role,
or should all the work be left to computer experts? In what aspects of
computer acquisition might an accountant provide a useful contribution?
21.2 In a Midwest city of 45,000, a computer was
purchased and in-house programmers began developing programs. Four years
later, only one incomplete and poorly functioning application had been
developed, none of software met users’ minimum requirements, and the hardware
and the software frequently failed. Why do you think the city was unable
to produce quality, workable software? Would the city have been better
off purchasing software? Could the city have found software that met its
needs? Why or why not?
21.3 You are a systems consultant for Ernst, Price, and Deloitte,
CPAs. At your country club’s annual golf tournament, Frank Fender, an
automobile dealer, describes a proposal from Turnkey Systems and asks for your
opinion. The system will handle inventories, receivables, payroll,
accounts payable, and general ledger accounting. Turnkey personnel would
install the $40,000 system and train Fender’s employees. Identify the
major themes you would touch on in responding to Fender. Identify the
advantages and disadvantages of using a turnkey system to
21.4 Sara Jones owns a rapidly growing retail store that faces stiff
competition due to poor customer service, late and error-prone billing, and
inefficient inventory control. To continue its growth, its AIS must be
upgraded but Sara is not sure what it wants the AIS to accomplish. Sara
has heard about prototyping, but does not know what it is or whether it would
help. How would you explain prototyping to Sara? Include an explanation
of its advantages and disadvantages as well as when its use is appropriate.
21.5 Clint Grace has been business over 30 years
and has definite ideas about how his ten retail stores should be run. He
is financially conservative and is reluctant to make expenditures that do not
have a clear financial payoff. Store profitability has declined sharply
and customer dissatisfaction is high. Store managers never know how much
inventory is on hand and when purchases are needed until a shelf is
empty. Clint asks you to determine why profitability has declined and to
recommend a solution. You determine that the current AIS is inefficient
and unreliable and that company processes and procedures are out of
date.</para> <para>You believe the solution is to redesign the
systems and business processes using BPM. What are some challenges you
might face in redesigning the system? How will you present your
recommendations Clint?</para></question></general-problem>
21.1 Don Otno has been researching software options but cannot decide
among three alternatives. Don started his search at Computers Made Easy (CME)
and almost wished he had looked no further. Steve Young, the manager of CME,
appeared knowledgeable and listened attentively to Don’s problems, needs, and
concerns. Steve had software and hardware that would, with a few exceptions,
meet Don’s needs. Don could start using the system almost immediately. The
system’s price was unexpectedly reasonable.
After three hours at Custom Designed Software (CDS), Don left convinced that
they could produce exactly what he needed. Cost and time estimates were not
established, but CDS assured him that the cost would be reasonable and that the
software would be complete in a few months.
At Modified Software Unlimited (MSU), the owner said that customized software
was very good but expensive and that canned software was inexpensive but rarely
met more than a few needs. The best of both worlds could be achieved by having
MSU modify the package that came closest to meeting Don’s needs.
Don returned to CME and asked Steve about customized and modified software.
Steve expressed enough concerns about both that Don came full circle—to
thinking canned software was best. That night, Don realized he could not make
an objective decision. He was swayed by whichever vendor he was talking with at
the time. The next morning he called you for help.
a. List the advantages and disadvantages of each vendor’s approach.
Advantages of canned (packaged software)
b. Recommend a course of
action for Don and support your
decision.</para></listitem></orderedlist></problem>
21.2 A federal agency signed a
15-month contract for $445,158 for a human resources/payroll system. After 28
months and no usable software, the agency canceled the contract and withheld
payment for poor performance. A negotiated settlement price of $970,000 was
agreed on. The project experienced the following problems:
§ The contractor did not
understand what software was desired. The RFP did not have fully developed user
requirements or system specifications, and user requirements were never
adequately defined and frozen. Changes delayed completion schedules and caused
disagreements about whether new requirements were included in the original
scope of work.
§ The contract did not
specify systems requirements or performance criteria, and the terminology was
vague. The contract was amended 13 times to add or delete requirements and to
reimburse the contractor for the extra costs resulting from agency caused
delays. The amendments increased the cost of the contract to
$1,037,448.
§ The contractor complained
of inexcusable agency delays, such as taking too much time to review items
submitted for approval. The agency blamed the delays on the poor quality of the
documentation under review.
§ The agency did not require
each separate development phase to be approved before work continued. When the
agency rejected the general system design, the contractor had to scrap work
already completed.
a.
What caused the problems?
How could the agency have better managed the systems development project?
What could the contractor have done differently?
b. Can we conclude from this case that organizations should not have
custom software written for them? Explain your answer.
21.3 Wong Engineering Corp (WEC) operates in 25 states and three
countries. WEC faced a crucial decision: choosing network software that would
maximize functionality, manageability, and end-user acceptance of the system.
WEC developed and followed a four-step approach:
Step 1. Develop evaluation criteria. WEC organized a
committee that interviewed users and developed the following evaluation
criteria:
§ Ease of use
§ Scope of vendor support
§ Ease of network management
and administration
§ Cost, speed, and
performance
§ Ability to access other
computing platforms
§ Security and control
§ Fault tolerance and
recovery abilities
§ Ability to connect
workstations to the network
§ Global naming services
§ Upgrade and enhancement
options
§ Vendor stability
WEC organized the criteria into the following four categories and
prioritized them. Criteria vital to short-term and long-term business goals
were given a 5. “Wish list” criteria were weighted a 3. Inapplicable criteria
were given a 1.
1. Business criteria:
overall business, economic, and competitive issues
2. Operational criteria:
tactical issues and operating characteristics
3. Organizational
criteria: networks’ impact on the information systems structure
4. Technical criteria:
hardware, software, and communications issues
Step 2. Define the operating environment. Several
data-gathering techniques were used to collect information from which an
information systems model was developed. The model revealed the need to share
accounting, sales, marketing, and engineering data at three organizational
levels: district, division, and home office. District offices needed access to
centralized financial information to handle payroll. WEC needed a distributed
network that allowed users throughout the organization to access company data.
Step 3. Identify operating alternatives. Using the criteria
from step 1, committee members evaluated each package and then compared notes
during a roundtable discussion.
Step 4. Test the software. The highest-scoring products were
tested, and the product that fit the organization’s needs the best was
selected.
a. Discuss the committee’s role in the selection process. How
should committee members be selected? What are the pros and cons of using
a committee to make the selection?
b. What data-gathering
techniques could WEC use to assess user needs? To select a vendor?
What data-gathering techniques could WEC use to select a vendor?
c. What is the
benefit of analyzing the operating environment before selecting the
software?
d. In selecting a system
using the point-scoring method, how should the committee resolve scoring
disputes? List at least two methods.
e. Should a purchase decision be made on the
point-scoring process alone? What other procedure(s) should the committee
employ in making the final selection?
21.4 Mark Mitton, the liaison to the IS
department, has eliminated all but the best three systems. Mark developed a
list of required features, carefully reviewed each system, talked to other
users, and interviewed appropriate systems representatives. Mark used a
point-scoring system to assign weights to each requirement. Mark developed
Table 21-4 to help him select the best system.
a. Use a spreadsheet to develop a
point-scoring matrix and determine which system Mark should select.
b. </inst>Susan Shelton did not agree with Mark’s weightings
and suggested the following changes:
</para><link linkend="informaltable0"
preference="1" role="generated"/></listitem>
|
<informaltable id="informaltable0"
frame="none" float="0"><tgroup cols="2"
colsep="0" rowsep="0"
align="left"><colspec colnum="1"
colname="c01" colwidth="500"/><colspec
colnum="2" colname="c02"
colwidth="500"/><tbody><row><entry
valign="top"><para>Flexibility</para></entry>
|
<entry
valign="top"><para>60</para></entry></row>
|
|
<row><entry
valign="top"><para>Reputation and
reliability</para></entry>
|
<entry valign="top"><para>50</para></entry></row>
|
|
<row><entry
valign="top"><para>Quality of support
utilities</para></entry>
|
<entry
valign="top"><para>10</para></entry></row>
|
|
<row><entry
valign="top"><para>Graphics
capability</para></entry>
|
<entry valign="top"><para>10</para></entry></row></tbody></tgroup></informaltable>
|
When the changes
are made, which vendor should Mark recommend?
c. Mark’s manager
suggested the following changes to Susan’s weightings:
</para><link linkend="informaltable1"
preference="1" role="generated"/>
|
<informaltable id="informaltable1"
frame="none" float="0"><tgroup cols="2"
colsep="0" rowsep="0"
align="left"><colspec colnum="1"
colname="c01" colwidth="500"/><colspec
colnum="2" colname="c02"
colwidth="500"/><tbody><row><entry
valign="top"><para>Reputation and
reliability</para></entry>
|
<entry
valign="top"><para>90</para></entry></row>
|
|
<row><entry
valign="top"><para>Installation
assistance</para></entry>
|
<entry
valign="top"><para>40</para></entry></row>
|
|
<row><entry valign="top"><para>Experience
with similar systems</para></entry>
|
<entry
valign="top"><para>40</para></entry></row>
|
|
<row><entry
valign="top"><para>Training
assistance</para></entry>
|
<entry
valign="top"><para>65</para></entry></row>
|
|
<row><entry valign="top"><para>Internal
memory size</para></entry>
|
<entry
valign="top"><para>10</para></entry></row></tbody></tgroup></informaltable>
|
<para>Will the manager’s changes affect the decision about
which system to buy?
</para></listitem>
d. What can you conclude
about point scoring from the changes made by Susan and Mark’s manager?
Develop your own weighting scale to evaluate the software packages. What
other selection criteria would you use? Be prepared to discuss your
results with the class.
e. What are the
weaknesses of the point-scoring method?
21.5 Nielsen Marketing Research (NMR), with operations in 29 countries,
produces and disseminates marketing information. Nielsen has been the primary
supplier of decision support information for more than 70 years. NMR’s most
recognizable product is the Nielsen television ratings. Nielsen is one of the
largest users of computer capacity in the UnitedStates. Its information system
consistently ranks above average in efficiency for its industry. NMR hired IBM
to evaluate outsourcing its information processing. NMR wanted to know whether
outsourcing would allow it to concentrate on giving its customers value-added
services and insights, increase its flexibility, promote rapid growth, and
provide it with more real-time information.
What are the benefits and risks of outsourcing for NMR?
Do the benefits
outweigh the risks? Explain your answer.
21.6 A large organization had 18 months to
replace its old customer information system with a new one that could
differentiate among customer levels and provide appropriate products and
services on demand. The new system, which cost $1 million and was installed by
the IS staff on time, did not work properly. Complex transactions were
error-prone, some transactions were canceled and others were put on hold, and
the system could not differentiate among customers. The system was finally shut
down, and transactions were processed manually. New IS management was hired to
build a new system and mend the strained relationship between operations and
IS.
So what went wrong? IS couldn’t—or wouldn’t—say no to all the requests for
systems enhancements. Eager to please top management, IS management ignored the
facts and assured them they could build a scalable system that was on time and
on budget. Another big mistake was a strict project schedule with little
flexibility to deal with problems and unforeseen challenges. Developers never
spoke up about any glitches they encountered along the way. More than a dozen
people (including the CIO) lost their jobs because of their roles in this
disaster.
a. What could IS management have done
differently to make this project successful?
1. b. What
in-house development issues are demonstrated in this case?
1. c. How
could the in-house issues have been addressed to prevent the system’s failure?
21.7 Meredith Corporation publishes books and
magazines, owns and operates television stations, and has a real estate
marketing and franchising service. Meredith has 11 different systems that do
not communicate with each other. Management wants an executive information
system that provides them with the correct and timely information they need to
make good business decisions. Meredith has decided to use prototyping to
develop the system.
a. Identify three questions you would
ask Meredith personnel to determine systems requirements. What
information are you attempting to elicit from each question?
b. Explain how
prototyping works. What would the system developer do during the
iterative process step? Why would you want the fewest iterations
possible?</para></listitem>
c. Would you want
the prototype to be operational or nonoperational? Why? If it were
an operational prototype, what would have to happen? If it were a
nonoperational prototype, how would the prototype be used?
d. Suppose the company
decides the prototype system is not practical, abandons it, and takes some
other approach to solving its information problem. Does that mean
prototyping is not a valid systems development approach? Explain your
answer.
21.8 Norcom, a division
of a large manufacturer, needed a new distribution and customer service system.
The project was estimated to take 18 months and cost $5 million. The project
team consisted of 20 business and IT staff members. After two years, the CIO
was fired, and the company hired a CIO with expertise in saving troubled
projects. The new CIO said three grave errors were committed.
1. 1. IT
picked the wrong software using a very naïve request for proposal process.
2. 2. IT
did not formulate a project plan.
3. 3. No
one “owned” the project. The IT staff assumed the users owned the project, the
users believed the IT staff owned it, and management believed the vendor owned
it.
The CIO developed a 2,000-line plan to rescue the project. Three
months later, the system failed, even with IT staff and consultants working on
it day and night. The failed system was to have been the company’s preeminent
system, but it could not even process customer orders correctly, resulting in
complaints about late shipments and receiving the wrong goods.
After three years and $4 million, the new CIO polled the staff
anonymously. Only two said the project could be saved, and they had staked
their careers on the project. The message that the project was not worth saving
was very hard for the CIO to give. It was likewise hard for the division
president to receive it; he could not accept the idea of killing a project that
cost so much money. He finally accepted the decision and all the ramifications
involved, including corporate IT taking control of all IT operations at his
division.
a. List the primary
components of an RFP.
1. a. Identify
possible components or deficiencies in Norcom’s RFP that could have led the new
CIO to claim that it was naïve or insufficient.
2. b. Identify
possible approaches Norcom could have used to evaluate RFP responses.
21.9 Quickfix is rapidly losing business, and management wants to
redesign its computer repair processes and procedures to decrease costs and
increase customer service. Currently, a customer needing help calls one of five
regional service centers. A customer service representative records the
relevant customer information, finds the closest qualified technician, and
calls the technician’s cell phone to see whether the repair fits into his or
her schedule. If not, the representative finds the next closest technician.
When a technician is located, customer repair information is provided over the
phone. The technician calls the customer and arranges to pick up the computer
and replace it with a loaner. Making these arrangements takes one to two days
and sometimes more if technicians are not available or do not promptly return
calls.
If a broken computer cannot be quickly repaired, it is sent to a repair depot.
These repairs take another four to seven days. If problems arise, it can take
up to two weeks for an item to be repaired. When a customer calls to see
whether the computer is ready, the service representative calls the technician
to find out the status and calls the customer back. The repair process usually
takes five phone calls between the customer, the service representative, and
the technician.
There are several problems with this process that have led to a significant
drop in business: (1) it is time-consuming; (2) it is inconvenient for a
customer to have a computer removed, a new one installed, and then the old one
reinstalled; and (3) service representatives do not have immediate access to
information about items being repaired. Quickfix decides to use BPM principles
to redesign its business processes.
a. Identify the repair
processes that occur and decide which should be redesigned.
b. Describe how the
repair process can be redesigned to solve the three problems identified.
c. What benefits can be achieved by
redesigning the repair process?
21.10 Conduct
a search (using written materials, the Internet, electronic databases, etc.)
for successful and failed implementations of information systems. Per
your professor’s instructions, prepare an oral or written summary of a
successful and a failed implementation. Include in your summary the
approach used to acquire or develop the system (purchase software, develop it,
modify it, outsource it).
21-1 Steve Cowan owns Professional Salon Concepts (PSC), a hair salon
products distribution company. After working for his father, a barber and
beauty salon products distributor, he started his own business selling Paul
Mitchell products. Business was poor until Steve conducted a free seminar
demonstrating how to successfully use his products. He left with a $1,000 order
and a decision to sell to salons that allowed him to demonstrate his
products.
Steve’s strategy paid off as PSC grew to 45 employees, 3,000 customers, and
sales of $7 million. PSC carries 1,000 products, compared with 10,000 for most
distributors. The smaller product line allows PSC to achieve a 24-hour order
turnaround, compared to over two days for the competition. Steve occasionally
has to work late packing orders and driving them to the UPS hub a few towns
away so he can meet the 2:00 A.M. deadline.
After buying a computer and installing a $3,000 accounting package, Steve
thought everything was going great until Terri Klimko, a consultant from a PSC
supplier, stopped by. Terri asked the following questions to find out how well
he knew his business:
§ Do you know exactly how
much you ship each month and to whom?
§ Do you know how much each
customer bought, by supplier?
§ Can you rank your customer
sales?
§ Can you break your sales
down by product?
§ Do you know how the profit
per client breaks down into product lines?
§ Do you know how revenues
per salesperson vary over the days of the week?
When Steve answered no to each question, Terri told him that people who cannot
answer the questions were losing money. Upset, Steve terminated the session by
politely dismissing Terri. Although unimpressed with Terri’s advice, Steve was
impressed with her and they were soon married. Shortly afterwards she joined
the company.
Steve asked Terri to help the salons become more profitable. She developed a
template to help salon owners determine how much each hairstylist brings in per
client, how many clients receive extra services, and which clients buy hair
products. The Cowans soon became more like partners to their customers than
trainers. If a salon had employee problems, the Cowans would help settle it. If
a salon needed help with a grand opening, they lent a hand. The more PSC
products the salons bought, the more time the Cowans gave.
PSC
sold turnkey systems and support services at cost to help salons answer Terri’s
questions. Unfortunately, PSC’s computer could not answer those same questions.
Steve asked consultant Mike Fenske for help. Mike entered all of PSC’s raw data
into a database and wrote a program to produce the desired information. The
system worked but had problems. It was so slow that accounts payable and
purchasing information was handled manually, it did not answer Terri’s growing
list of questions, and only a few months of detailed information were available
at a time. To alleviate these problems, Steve hired Mike as the company
controller.
After reading an industry report, Steve realized it was time to purchase a new
system. Steve and Mike decided to evaluate and select the software themselves
and rely on the vendor for installation help. They spent months researching
software and attending demonstrations before settling on a $20,000 system. The
vendor began installing the system and training PSC personnel.
Three days prior to conversion, Steve met a distributor who described how his
system met his detailed accounting and customer reporting needs as well as his
inventory management and order fulfillment needs. Steve was so impressed that
they stopped the conversion, went to North Dakota to check out the
distributor’s system, and flew to Minneapolis to visit DSM, the software
developer.
DSM did a great job of demonstrating the software and provided Steve and Mike
with great references. The only hitch was DSM’s inability to demonstrate two
features that were particularly important: adjusting orders automatically to
reflect outstanding customer credits and back orders, and determining the least
expensive way to pack and ship each order. DSM’s salespeople assured them that
those features would be up and running by the time the package was delivered to
PSC.
Their economic feasibility analysis showed $234,000 in yearly savings:
$144,000 Most PSC orders consist of several boxes,
95% of which are sent COD. The old PSC system had no way to prepare orders for
multiple-box shipments; a five-box order required five sales invoices and five
COD tickets. The new system allowed PSC to generate one sales order and ship
one box COD and the other four by regular delivery. Not having to ship every
box COD would save $144,000 a year.
$50,000 PSC paid a CPA firm $50,000
a year to prepare its financial statements. The new software would prepare the
statements automatically.
$40,000 Because the old system did
not have credit-managing capabilities, it was hard to detect past-due accounts.
Earlier detection of past-due accounts would result in faster collections,
fewer lost customers, and fewer write-offs.
Unknown The major reason for acquiring the system was to improve
customer service by making more detailed customer information available.
After estimated annual maintenance costs of $10,000, there was an annual return
on investment of $224,000. Because the system would pay for itself in less than
a year, Steve bought it and wrote off his $20,000 investment in the other
system.
When DSM installed the software, Steve found out that the promised features
were not available and that there was no immediate plan to add them. Although
Steve and Mike were upset, they had to shoulder some of the blame for not
insisting on the two features before signing the deal. They found a program
that automatically determined the cheapest way to pack and ship an order. DSM
agreed to pay half of the $10,000 cost to integrate it into the program. DSM
offered to create the module to reflect customer credits and back orders for
another $20,000, but Steve declined. These problems pushed the conversion date
back several months.
PSC spent three months preparing to implement the new system.
Training PSC employees to use the new system was particularly important. Adding
a customer to the database required only one screen with the old system, the
new software required six screens. Employees were taught to shout “Fire!” when
they had a problem they could not handle. Mike or a DSM programmer explained
the error and how to correct it. During implementation, the new system was
tested for glitches by processing real data. Looking back, Mike admits three
months were not nearly enough for the training and testing. They should have
used twice as much time to identify and eliminate glitches.
When PSC converted to the new system, telephone operators
were confronted with situations they had not been trained to handle. Soon
everyone was yelling “Fire!” at the same time. In less than one hour, so many
operators were waiting for help that the programmers stopped explaining the
correct procedures and simply ran from operator to operator correcting
problems. Mistakes were repeated numerous times, and the situation intensified.
Some employees, frustrated by their inability to work the new system, broke
down and cried openly.
In the warehouse, Steve was not having much fun either. On a
normal day, PSC has 200 to 300 boxes ready for 3:30 P.M. shipment. On
conversion day, a lone box sat ready to go. Facing the first default on his
24-hour turnaround promise, Steve, Terri, Mike, and a few others stayed past
midnight packing and loading boxes on trucks. They barely made it to the UPS
hub on time.
The next day, order entry and shipping proceeded more
smoothly, but Steve could not retrieve data to monitor sales. That did not make
him feel too kindly about his $200,000 system or DSM. It took Steve weeks to
figure out how to get data to monitor sales. When he did, he was horrified that
sales had dropped 15%. They had focused so hard on getting the system up and
running that they took their eyes off the customers. To make matters worse,
Steve could not get information on sales by customer, salesperson, or product,
nor could he figure out why or where sales were falling. Things
quickly improved after “Hell Week.” Orders were entered just as quickly, and
warehouse operations improved thanks to the integrated add-in program. The new
system provided pickers with the most efficient path to follow and told them
which items to pack in which boxes based on destination and weight. The system
selected a carrier and printed labels for the boxes. Order turnaround time was
shaved to 20 minutes from five hours.
Months after the system was installed, it still did not do
everything Steve needed, including some things the old system did. Nor did it
answer all of Terri’s questions. Steve is confident, however, that the system
will eventually provide PSC with a distinct competitive advantage. He is
negotiating with DSM to write the credit and back-order module.
Steve believes the step up to the new system was the right move
for his growing company. With the exceptions of taking the DSM salesperson’s
word and not taking enough time to practice with the system, Steve feels PSC
did as good a job as it could have in selecting, installing, and implementing a
new system.
<para>1. Do you
agree that PSC did a good job selecting, installing, and implementing the new
system? If so, why? Or do you feel PSC could have done a better
job? If so, what did it do wrong, and what should it have done
differently?
2.
How could PSC have avoided the missing features problem?
3.
How could PSC have avoided conversion and reporting problems?
4.
Evaluate Steve’s </inst>economic feasibility analysis. Do you agree
with his numbers and his conclusions?
5.
How could PSC's customers use the new multi-box shipping approach to defraud
PSC?
6.
How would you rate the service PSC received from DSM? What did it do well
and what did it do poorly?
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