978-0134474021 Chapter 21 Solutions Manual Part 1

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CHAPTER 21

AIS DEVELOPMENT STRATEGIES

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

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?

The accountant is likely to be:

A major user of the computer output

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Ch. 21: AIS Development Strategies

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?

Certainly not all instances of use or failure to use packaged software are as dramatic or as clear-cut

as this. Nor in all cases will packaged software meet the functional requirements at a reasonable

cost in an acceptable time frame. A careful evaluation of packaged software, however, can result in

a system that performs admirably and cost effectively for data processing users.

a. Some possible reasons why the city was unable to produce a quality, workable system are:

Poor management.

b. The city would have been better off purchasing canned software for the following reasons:

They could have saved themselves a great deal of money.

c. There are certainly enough cities, and hence a large enough market, for there to be quality

software available. A city of 45,000 shouldn’t have an overly complex system, such that none

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Accounting Information Systems

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 operate the organization’s accounting system.

Major themes that should be touched upon in responding to Fender’s inquiry include:

The need for a feasibility study to determine whether a new system is technically,

economically, and operationally feasible for Fender’s dealership.

Advantages of a turnkey system

Less expensive than internally built systems and the total package may be better priced.

Takes less time and human resources to develop and run.

Disadvantages of a turnkey system:

Software or hardware may not be completely suited to company’s needs.

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Ch. 21: AIS Development Strategies

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.

Prototyping is an approach to systems design in which a simplified working model of a system is

developed that is, a scaled-down, experimental version of the system requested by the users.

The last step is making the system operational. The two choices are to use the already developed

prototype or to use the prototype as a model for developing a new system.

Some of the advantages of prototyping include:

Better definition of user needs

Some of the disadvantages of prototyping include:

Requires a significant amount of users’ time

Prototyping is appropriate when

there is a high level of uncertainty about what is needed

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Accounting Information Systems

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. 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?

Business process management (BPM) is a systematic approach to continuously improving and

optimizing an organization’s business processes. Grace may be resistant to BPM and its attendant

changes and new technology because:

Tradition: Grace has been at the business for 30 years and the old way of doing things has

Student answers as to how to present the recommendations to Clint Grace will vary depending on

the perception of the student. However, some general guidelines are:

Recognize that it may be hard to convince Grace. Therefore, you must plan your strategy well.

Be aware of potential problems and seek to avoid them.

Be sensitive to the feelings and reactions of persons affected by the change. Inform Mr. Grace

Having Grace very involved in the project will help him feel like the ideas that are instituted are

You must provide honest feedback to Grace on all suggestions. Tell him which of his and his

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Ch. 21: AIS Development Strategies

SUGGESTED ANSWERS TO THE PROBLEMS

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.

In practice, a system study must be conducted to determine what Don Otno needs before a credible

decision can be made about these alternatives.

a. List the advantages and disadvantages of each vendor’s approach.

Advantages of canned (packaged software)

Lower cost of development. Some estimates indicate a software package may cost

between 1/20 and 1/5 of the estimated cost of in-house development.

Software is more reliable. Other users have used the system, providing more “testing” in

a live environment.

Disadvantages of canned (packaged software)

It may not be possible to find a package that meets the users’ unique and specific needs.

Operating procedures and practices constraints may require business process changes.

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Accounting Information Systems

Advantages of Custom Software

Software that exactly meets (at least theoretically) the user’s needs.

Disadvantages of Custom Software

Most costly software development approach.

Quality programmers may be expensive, hard to find, etc.

Advantages of Modified Software

Software that is more likely to meet user’s needs than canned software.

Disadvantages of Modified Software

May be hard to find programmers willing to modify code.

b. Recommend a course of action for Don and support your decision.

There isn’t enough information to reach a definitive answer. It is probable that supporters for

all three approaches can be found when discussing this in class. Letting the students support

By way of summary: Generally, packaged software is best if it is available and of acceptable

quality, versatility, etc. If the software is acceptable to Otno (that is, it is sufficiently close to

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Ch. 21: AIS Development Strategies

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?

The contractor did not fully understand what was required because the agency had not

Project phases were not approved before the next phase began. When the conceptual

The contract did not contain acceptance-testing procedures and criteria.

Documentation standards were never developed and documentation was poor, causing

Extensive changes were made by the agency. The contract was amended 13 times to

In summary, the problems were caused by poor planning, poor problem definition, inadequate

system specifications, poor project management, and poor communication.

How could the agency have better managed the systems development project?

Done a better job of defining what the system was to accomplish.

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Accounting Information Systems

Negotiated a better price upfront

What could the contractor have done differently?

Refused to begin until an adequate problem definition and system requirements were

developed.

b. Can we conclude from this case that organizations should not have custom software

written for them? Explain your answer.

No, we cannot generalize that companies should not have custom software developed for

21.3 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).

Student answers will vary depending upon what they find.

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Ch. 21: AIS Development Strategies

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.

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