Posted: May 25th, 2022
Replacing a Legacy AIS System
As technology continues to progress many of the legacy Accounting Information Systems (AIS) are continually being replaced with models that have increased functionality. The new systems have enhanced financial management and decision making capabilities as well as the capabilities to integrate with other information systems. The degree of value that a newer generation AIS system can add is largely depends on whether the implementation project is successful. The project implementation will as depend largely on whether the system is custom, outsourced or boxed and the design of the system to be introduced to the organization. This analysis will provide an overview of the benefits and disadvantages related to different types of system design. Based on the findings, a recommendation will be made and an overview of the software development lifecycle (SDLC) will be provided for consideration.
Value of New AIS Systems
There are a plethora of features that a contemporary AIS system can offer an organization. Some of the new features that are available in these systems can make an organization more competitive by automating many business processes, lowering transaction costs, and allowing faster access to real time company information (Kabir, N., 2010). If companies are using legacy AIS systems, they are most likely heavily dependent on manual processes. Manual accounting systems can slow the flow of information and a layer of redundancy to the accounting process. This can bog down the entire organization since management will not have access to the most up-to-date information.
There are also many other advantages to the implantation of a new generation system. For example newer systems can support growth strategies without the need to greatly expand human resources. Furthermore, new systems can offer features such as e-business solutions that can automatically integrate with the backend financial accounting. This can make expedite ordering and delivery functions for customers and reduce the need for internal processing. Furthermore, if the organization is geographically dispersed then new AIS systems can facilitate coordination of different division through automation and standardization.
The efficiencies gained through AIS systems in general are certainly beneficial to an organization. Computerized financial information systems are faster and more efficient in processing data. Workloads that previously took the accounting department weeks to do can now get done within a day. The next generations of AIS systems continue this trend and take the accounting capabilities to the next level (Oracle, 2011). Overall, one of the primary benefits is the cost effectiveness. Accounting information system reduces transaction costs which can save an organization substantially; especially with outsourcing (Bahi & Goyal, 2005). Thus the gains in efficiency, the access to update information, and the reduction in transaction costs all make upgrading legacy AIS systems a strategic and tactical goal for many organizations.
However, outsourcing any IT business functions or process development can carry substantial risks. A number of risks arise directly due to the fact that the organization loses a significant amount of control over systems development and must rely on their strategic partner (Dhar & Balakrishnan, 2006). One risk that is prevalent in such a scenario is that control over security issues is hard to maintain. When an organization outsources these critical IT functions then the handling of these functions will ultimately depend on the vendor’s capabilities and motivations. This carry be a worrisome situation especially when the company’s financial information is subject to outside contractors and these contractor’s offices are overseas.
1. Implement New AIS System (Internally Managed)
Lower Transaction Costs
Positions Company for Growth
Large Capital Investment
2. Modify Existing Legacy System
Minimal Capital Investment
Minimal Training Required
High Transaction Costs
Low Scalability and Growth Potential
3. Implement New AIS System (Oracle Outsourced)
Faster Project Schedule
Most Expensive Option
Less Flexibility in System Design
Based on the information included in the research, it is recommended that the company upgrade its existing legacy AIS system with a newer and robust AIS system. It is also suggested that an Oracle based off the shelf solution would provide an adequate foundation for a new system to be developed. One advantage to using a standardized Oracle system is that it is easily integrated with other business information systems and creates a more comprehensive platform for collaboration. Such a system could provide the organization a competitive advantage and position the organization for future growth. However, to achieve this position the company should also integrate business intelligence functionality into the new AIS system. This could provide the metrics that could accelerate the company’s growth.
The business intelligence functionality that should be included in the new AIS system can be categorized into groups to better illustrate the requirements. The three sub-categories are as follows (Staples, 2009):
1. Data Warehouse (DW) — companies need a place for data to reside and rules on how the data should be structured.
2. Business Intelligence — companies need a way to slice and dice the data and generate reports.
3. Analytics — companies need to extract the data, analyze trends, uncover opportunities, find new customer segments, and so forth.
The data warehouse function serves as the foundation for the most basic of data collection and storage. This data can include everything from financial transaction histories to customer information. However, this is nothing new since the legacy system must have had some sort of warehousing as well; yet the functionality of the new warehouse is greatly expanded.
The next category involves beginning to use this data to support the achievement of organizational goals. Reports generated around various metrics are the most basic example of Business Intelligence. Many of these reports are built into various off the shelf solutions by companies such as SAP, IBM, and Oracle (Staples, 2009). However, the most comprehensive BI solution is considered to be in the realm of business analytics. These tools are generally custom built to find the organization and make use of algorithmic functions to try to spot trends in the movements of the data in the data warehouse. Although such a system might be out of reach for the organization to pursue at this time, having the Oracle backbone for the new AIS system would make a such a feature possible for development in the future.
Bahi, B., & Goyal, S. (2005). Offshore outsourcing of information technology enabled supply chain functions: a transaction cost analysis. Logistics Systems and Management, 366-381.
Dhar, S., & Balakrishnan, B. (2006). Risks, Benefits, and Challenges in Global IT Outsourcing: Perspectives and Practices. Journal of Global Information Management, 39-71.
Kabir, N. (2010). Doing Business Online. Retrieved August 2, 2012, from http://businessknowledgesource.com/marketing/doing_business_online_private_b2b_exchanges_000204.html
Oracle. (2011, September). Roadmaps to Oracle Fusion Applications for Current Oracle Applications Customers. Retrieved from Oracle Fusion Applications: http://www.oracle.com/us/products/consulting/resource-library/roadmaps-to-fusion-app-508056.pdf
Staples, S. (2009, April 14). Analytics: Unlocking Value in Business Intelligence (BI) Initiatives. Retrieved from CIO: http://www.cio.com/article/489257/Analytics_Unlocking_Value_in_Business_Intelligence_BI_Initiatives?page=1&taxonomyId=3002
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