Accounting Information Systems: Changing the AIS - Assignment Example

Accounting Information Systems – Changing the AIS of the of the Answer Accounting information systems are used toidentify, report, record and analyze the business events and transactions for the successful management of any business enterprise. The examples of accounting information systems include accounts receivable, payroll, general ledger systems, accounts payable, inventory control, order processing etc. The accounting information systems are used in a business with the aim of making the accounting and finance processes more efficient and streamlined with the ancillary functions and departments of the organization. However, many of the accounting information systems face a number of barriers to their successful implementation and continuation in an organization. Figure 1: The accounting information system (Source: Heeks, 2002, p.55) A real life example of the accounting system failure is the case of the Nigerian Railway Corporation. There were some major problems identified in the implementation process of the accounting information system within the corporation due to which the project was a failure within a short term of its commencement. The three main reasons identified for the failure of the accounting information system are: The inadequate allocation and use of resources for the accounting information system. The complexity of the accounting information systems and The inadequate amount of focus given towards stakeholder engagement in the process. The appropriate allocation and commitment of the available resources within an organization is a main pillar that supports the successful implementation of an accounting information system. Different kinds of resources like human resources, information technology resources, financial and operational resources are necessary for the success of an accounting information system. The information technology resources and human resources are the most significant resources that should be committed for an accounting information system development and usage. However, in the case of the Nigerian Railway Corporation, the access to information technology resources and capabilities were limited. The company focused on the development of a concrete accounting information system but the technological requirements that were necessary to support the working of the system were not in place. The right resources, skills and budget for the project were not mapped and correlated appropriately which led to an unmanageable degree of confusion and shortage of resources within the project. Secondly, the accounting information system developed for the Nigerian Railway Corporation was a much complex one when compared against the human resource skills present within the organization. The corporation did not consider the factor of Commercial off the Shelf (COTS) dimension of a systematic workflow and functionality. As a result of this, the streamlining of the business processes with the functioning of the accounting information system was not done suitably. Stakeholder commitment and involvement is necessary for the success of new system, especially in the case of the accounting information system which is expected to bring about a major transformation in the way the business activities are managed (Gordon, Loeb and Lucyshyn, 2003, p.102). However, in the case of the Nigerian Railway Corporation stakeholder engagement as a basis for the financial management system was largely lacking. Answer 2 The responsibility of the senior managers of a company towards the success or failure of a big project like the introduction of an accounting information system is higher than the general employee groups of the company. In the case of the Nigerian Railway Corporation, the senior management should have focused on understanding the existing situation of the company and assessing the readiness of the company before launching the new information system. Apart from this, the development of a suitable level of commitment towards culture should start with the senior managers. Therefore, the senior management team of the Nigerian Railway Corporation should have focused on developing commitment that would remain sustainable and effective over time. One of the biggest drawbacks associated with the failure in the implementation phase of the information system projects is the absence of a strong urgency and acceptance towards the change that is to be brought about in the organizational processes through the introduction and subsequent use of the new system. The senior management of the case company should have developed a strong vision that would present a clear view of the compelling reasons underlying the change in the accounting information maintenance, explain how the new environment would foster organizational growth and effectiveness and also highlight the ways in which this change would benefit both the internal and external stakeholder groups of the organization. Also, the senior managers should have conducted an in depth stakeholder analysis in order to understand the probability of the success of the new information system. An appropriate stakeholder analysis would have enabled the company to obtain insights into the level of influence and the expected reactions to the transformations in the organizations. The managers of the corporation could have used these insights to build up leadership action strategies and change coordination and management networks. Apart from this, the active monitoring and management of the stakeholders would have increased the commitment level of the stakeholders into the project and would have facilitated the successful implementation of the accounting system (Ferguson and Seow, 2011, pp.16-20). A suitable stakeholder management strategy combined with change management, communications and training plans would have been a strategic move on the part of the senior managers to increase the chances of success and acceptance of the new accounting information system. Answer 3 It can be identified that the most significant failure of the accounting information system project in the Nigerian Railway Corporation occurred in the phase of the implementation of the system. The system design phase of this accounting system was a robust one which led to the development of an information system which should have been a largely efficient and successful one. However, the accounting information system had a very short lived operational phase due to the numerous problems faced by it during the implementation phase. Any company should take into consideration a wide array of varied factors while implementing a system. An adequate consideration of the strengths and weaknesses in the organization pertaining to the use of the accounting information system is deemed to be major reason for the failures in the implementation phase of the system. The implementation part of any information system is one of the most sensitive and significant phases of the project. The acceptance of the human resource teams of any new information system is a pre requisite for the success of the system. As such, the Nigerian Railway Corporation should have prepared the human resource departments before the launch of the accounting information system so that the usability and commerciality of the system did not face serious problems. Also, the complexity of the accounting information system introduced in the Nigerian Railway Corporation was another main reason why the human resource departments were unable to accept the new system and developed a strong resistance towards this system. Therefore, the Nigerian Railway Corporation should have focused on conducting a primary analysis of how ready the organization and its resources were to manage the implementation of a system that would bring in a metamorphic change in the way accounting information are handled and managed in the company. The corporation could have taken up the best practices of accounting information system management starting from the streamlining of the roles and responsibilities of the people associated with the system in order to mitigate the risks and promote the accountability of the system (Brynjolfsson and Hitt, 2003, pp.190-200). Then, the company should have adopted suitable system implementation processes through the creation of a project charter for aligning the expected goals and benefits of the new system with the scope for change within the organization. The use of best practices of accounting would also help to develop clear guidelines for all levels of employees regarding their role and function within the established accounting information system. In a nutshell, the consideration of the best practices of a new information system development and implementation would have been an intelligent and beneficial move on the part of the management of the Nigerian Railway Corporation. Answer 4 Implementing the best practices can be considered to be a way in which the failure of the new accounting information system could have been prevented. The reengineering method of best practice and the incremental method of best practice would have been helpful for setting the right ground for the launch of a new project within the Nigerian Railway Corporation. The company should have adequately considered the capacity requirements of the project. The best practice of identifying the resource and capacity requirements and mapping them with the level of commitment of resources required for the system would have been a beneficial way of strengthening the system. The best practices are not only useful in preparing the organization and its employees for change but also help to increase the efficiency of the information system in the future by developing an organizational culture and environment of acceptance towards change. The use of best practices for information system management would have enabled the Nigerian Railway Corporation to evaluate the accounting information system from all possible dimensions that may act as the barriers to the successful implementation of it. These dimensions may include risks, change, quality and other issues. Change management is essential for identifying, controlling, resolving and analyzing the change request associated with the system and hardware requirements of an information system in a timely manner. A successful change management procedure incorporated within the best practices approach would have enabled the Nigerian Railway Corporation to provide a basic foundation for the coming phases of the implementation process. Quality management would involve the objective evaluation of the assets, deliverables, work products and processes as well as services against the defined standards, descriptions and procedures. Risk management involves the practice of mitigating, anticipating and monitoring potential risks that may affect the system, its objectives and usability in the future. All these best practice approaches would have helped the Nigerian Railway Corporation to support the implementation and subsequent operation of the accounting information system by providing a supporting framework for the project. The best practices not only prepare the organization for the adoption of the new processes but also help in managing the core issues and reducing the barriers related to the use of the system. Answer 5 The Nigerian Railway Corporation could use the reengineering best practices in order to recover from the failure of the accounting information system. Proactive management: The Company should start with the proactive management of the existing accounting information system so that was to improve the system can be found out. The proactive management would include the risk analysis and the formulation of strategies to mitigate the potential risk. The company should establish suitable risk management and performance management frameworks that would incorporate value management, support the agency objectives and goals, communicate and monitor the potential risk areas to the internal and external stakeholders etc. Control Points: The Corporation can also establish appropriate control points within the different phases of the implementation of the new accounting information system. The control points would help the company to review the progress of the accounting information system and map these progresses with the pre defined objectives of the accounting information system implementation process. These control points would also help to set up the milestone schedule for this process of the organization. The company can use the control points to measure the budget allocated or the system against the cost incurred till the implementation phase along with evaluating the degree to which the users are complying with the requirements of the system. Training programs: The establishment of training programs would also act as a best practice that would support the success of the new information technology project. Both formal and informal learning mechanisms help the employees to become more adept to changes and also make them capable of controlling the information systems rather than being controlled by these automated systems. This would ensure that the employees of the company are more prepared to accept the transformation that would result from the implementation of the new system. Also, this would foster a culture of learning and acceptance through the development of necessary skills. The employees should be made more aware of the requirements from them regarding ethical practices and an undistorted representation of the accounting information in the systems. This would enable the company to develop a functional and useful system that would add value to the accounting information maintenance process. Assumption considerations: The best practices in different accounting functions like budgeting, billing, accounts payable, accounts receivable collections and documentations should be integrated into the accounting information system through the use of appropriate assumptions. Post implementation review: The Nigerian Railway Corporation should use the practice of reviewing the implementation process of the accounting information system. This would be an extended part of the monitoring and controlling of the implementation as well as the operational process of the accounting information system. This would also help to map the degree of commitment of resources, the involvement of the stakeholders, the complexity of the systems, the usability and effectiveness of the system and the role of the managers in the accounting information system. Answer 6 As per the information provided by IBM, some basic requirements can be identified for the successful deployment of financial management systems. The engagement of the stakeholders of the company in the financial management system is one of the most significant requirements. Both the internal like the employees as well as the external stakeholder groups like the customers and investors should be engaged in the process of altering or replacing the existing financial manager system. Simplification of the overall processes of the business would help to enhance the chances of the success and sustainability of the new financial management system. This can be done through a review of the existing business processes and by removing the out of the box or redundant processes in the total workflow. The setting up of milestones and the identification and achievements of positive factors that add to stakeholder value creation is a main criterion for the successful use of any financial management system. Also, concentrating one single area on a prioritized basis would be useful to adopt and deliver functionality in a step by step approach. These areas may be selected on the basis of their importance in the overall financial management. For example, this may include a functional process area within financial management like the accounts payable or it may be an organizational process area like an agency, department or component. The commitment of both physical and human resources should be done in order to reduce the chances of resistances in the schedule of implementation and operation of the accounting system. The accounting information systems should be designed on the basis of the requirements of the company, the accounting methods and principles followed by the company and the prevailing level of acceptance and adoption among the managers and other employees of the company. The role of the mangers should be clearly highlighted and they should be made aware of the exact goals and objectives of the accounting information system so that they can manage the system to ensure adequate accounting transparency, authentic representation of accounting information and support for the internal as well as external audit committees. References Brynjolfsson, E. & Hitt, L. M. (2003). Computing productivity: firm-level evidence, Review of Economics and Statistics, 85(1), pp.793-808. Ferguson, C., & Seow, P. S. (2011). Accounting information systems research over the past decade: past and future trends. Accounting & Finance, 51(1), pp. 235-251. Gordon, L. A., Loeb, M. P., & Lucyshyn, W. (2003). Sharing information on computer systems security: an economic analysis. Journal of Accounting and Public Policy, 22(6), pp. 461-485. Heeks, R. (2002). Information systems and developing countries: failure, success, and local improvisations. The Information Society, 18(2), pp. 101-112. Read More