ACCTING2503 · Accounting Systems And Analytics
AIS Development Strategies
Once a firm decides it needs a new accounting information system, the first strategic question is where the system comes from. ACCTING 2503 gives you three routes — buy packaged software, build in-house, or outsource — each a trade-off of control and customisation against speed, cost and risk. Buying means picking a package through a Request for Proposal (RFP) and scoring vendors on weighted criteria; building can create competitive advantage but is slow and risky; outsourcing buys expertise at the cost of control. On top of the routes sit the methods that make development succeed — BPM (versus the drastic, one-off BPR), prototyping for unclear requirements, and CASE tools. This is Week 7 (Romney Ch. 23); it is tested in Test 1 and, more heavily, as a case question in the closed-book final exam.
What this chapter covers
- 011. Three ways to obtain an AIS — buy vs build vs outsource as a control-vs-cost spectrum
- 022. Purchasing packaged software — off-the-shelf, turnkey, and cloud (ASP)
- 033. Cloud service models — SaaS vs PaaS vs IaaS (app vs platform vs infrastructure)
- 044. The RFP purchasing process — define needs → bid → evaluate → demo → select
- 055. Point-scoring vendor evaluation — score × weight, summed; and its limitation
- 066. In-house development & end-user computing (EUC) — advantage, risks, control problem
- 077. Outsourcing — expertise and predictable cost versus loss of control and lock-in
- 088. Methods that improve development — BPM vs BPR, BPMS vs ERP, prototyping, CASE tools
Point-scoring two AIS packages on weighted criteria
- +2State the method. A vendor's weighted score = the sum, over every criterion, of (criterion weight × that vendor's score). Highest total wins. The weights encode what the firm actually values.
- +2Vendor P. (8 × 0.50) + (5 × 0.30) + (9 × 0.20) = 4.00 + 1.50 + 1.80 = 7.30.
- +2Vendor Q. (6 × 0.50) + (9 × 0.30) + (6 × 0.20) = 3.00 + 2.70 + 1.20 = 6.90.
- +2Recommend and evaluate. P (7.30) beats Q (6.90), so select P — even though Q is cheaper, functional fit carries the heaviest weight (0.50) and P is far stronger there. Limitation: point-scoring cannot value non-quantifiable factors (strategic risk, cultural fit, lock-in), and the ranking is only as sound as the chosen weights.
Key terms
- RFP (Request for Proposal)
- A formal document sent to candidate vendors stating required functionality, data volumes, performance and constraints, so they submit comparable bids the firm can evaluate objectively.
- Turnkey system
- Hardware and software supplied together as a single ready-to-run package, so the buyer can 'turn the key' and operate it with one vendor accountable.
- SaaS / PaaS / IaaS
- Cloud (ASP) service models: SaaS delivers a finished application, PaaS delivers a platform (OS + database) to build and run your own app, IaaS delivers raw infrastructure (servers, storage, firewalls). The more the vendor manages, the less you control.
- Point-scoring evaluation
- A weighted-criteria vendor comparison: score each vendor on each criterion, multiply by the criterion weight, and sum; the highest weighted total wins. It cannot capture non-quantifiable factors.
- End-user computing (EUC)
- Users building and controlling their own simple systems (spreadsheets, small databases). Fast and user-fitting, but prone to calculation errors, poor control and weak documentation because it skips the SDLC's testing.
- Outsourcing
- Contracting the development and/or operation of the AIS to an external provider — gaining expertise and predictable cost, but risking loss of control, reduced competitive advantage and lock-in.
- BPM vs BPR
- Business Process Management is systematic, continuous improvement of processes; Business Process Re-engineering is a drastic, one-time, radical redesign with a low success rate. A BPMS is process-centred, whereas an ERP is data-centred.
- Prototyping
- Building a simplified working model, showing it to users, and iterating to clarify uncertain requirements — 'build a little, show, revise.' Its purpose is to refine needs, not to become the final system.
AIS Development Strategies FAQ
When should a firm build in-house instead of buying a package?
Build in-house when the process is genuinely distinctive and could deliver a competitive advantage that no off-the-shelf product provides. Buying is better when requirements are standard, because packages are faster, cheaper and already tested. The trade-off is control and fit versus time, cost and project risk.
What is the difference between SaaS, PaaS and IaaS?
SaaS is a finished application you just log in and use; PaaS is a platform (operating system plus database and runtime) on which you deploy your own application; IaaS is raw infrastructure — virtual servers, storage and networking — that you build up from the OS. The vendor manages more of the stack as you move from IaaS to PaaS to SaaS.
Why does issuing an RFP improve the purchasing decision?
An RFP forces the firm to define its requirements clearly before approaching vendors, then lets it compare bids on an apples-to-apples basis (cost, function, support) and creates an objective, documented basis for selection — directly reducing the risk of a poor AIS choice.
How is BPM different from BPR, and what does a BPMS do?
BPM is continuous, systematic process improvement; BPR is a radical, one-off redesign that historically has a high failure rate. A BPMS (business process management system) automates process improvement and, as a bonus, strengthens separation of duties and provides a continuous audit trail. Remember: a BPMS is process-centred while an ERP is data-centred.
When is prototyping the right approach, and what is its main risk?
Prototyping fits when requirements are unclear, fuzzy or first-of-a-kind, because iterating a working model with users clarifies what they actually need. The main risks are the 'never-ending iteration' feeling and pushing a rushed, un-hardened prototype into production without proper testing, documentation and controls.
Exam move
Week 7 almost always appears as a case question, so drill the trade-offs rather than memorising lists. For any sourcing case, run the same four moves: state the options, apply them to the firm's facts (are its processes distinctive? what is its budget and skill base? are requirements clear?), evaluate both sides of the trade-off, then conclude with a justified recommendation. Have three cross-cutting facts ready to earn top marks: the four consequences of a poor AIS selection (strategic, operational, control, cost); the SaaS/PaaS/IaaS distinction; and the BPR-versus-BPM and BPMS-versus-ERP pairs. Practise the point-scoring arithmetic until it is automatic, and rehearse the prototyping and re-engineering cases — knowing not just what each method is but exactly when it is appropriate is what separates a pass from a distinction.
