Abstract

This particular report is an evaluation on AIS through case analysis and presentation involving AIS failure, possible alternatives the firm may have had and just how the management should have strategized to avert the failure. In the end, the paper reveals best practices for migration from another system to AIS.

To change the Accounting Information System (AIS) best practices

Accounting info systems (AIS) has transformed business processes on a worldwide scale. When financial data is entered into the AIS, financial statements and reports are created at several business levels to make profitability certain. Steinbart and romney (2012) revealed that the accounting systems process information to offer data to users so that they can not only plan, but also manage and operate respective businesses. Given this situation, accounting info system are viewed as a method which helps management in their planning and balance processes by offering data that is both reliable and relevant for decision making. The essential objective of accounting systems is providing accounting data to outside parties, operational personnel and the management.

Case presentation

An American automotive manufacturer, American LaFrance (ALF), manufactured fire aerials, fire engines as well as emergency apparatus like ambulance and rescue cars. Established in 1873, ALF had probably been the pioneer in fire apparatus production in the United States and by the mid-2000s was recognized as the top brand of custom made fire-fighting, rescue cars as well as ambulances (Huber and Daft, 1986; Bhagwani, 2009). In 2008, ALF underwent a fiscal problem and then recognized that this failure was caused by IBM's unsuccessful Enterprise Resource Planning (ERP) execution. Precisely, the information filed in the bankruptcy court of law, recognized that the issues took place when ALF had stemmed out as an independent firm from its parent company Freightliner, its prior owner. Of the transition, ALF outsourced manufacturing, payroll, inventory, and accounting process services to its prior owner. As component of the transition, ALF created a separate ERP system to give support to the company subsequent to the separation from Freightliner (Bhagwani, 2009). Regardless of the excessive complications experienced by ALF, they made an effort to figure out the IBM’s ERP software. Nevertheless, American LaFrance was not able to solve these major conflicts and underwent loss consequently. The consequences included, incapacity to manage inventory, distribute finished products as well as produce cash flow. This particular liquidity crisis is exactly what inevitably bankrupted this multinational enterprise.

Lessons learned

The procedure for applying a financial management info product is a rigorous process which must be perfectly planned prior to initiation of project. The project unit that's tasked with the integration of the AIS must be properly trained in addition to knowledgeable in order to confirm positive system results. When applying an accounting info system, it's imperative that the company is actually prepared and ready; in order to devote the attention that's essential to make the AIS work properly for their specific needs (Bhagwani, 2009). Because no company is actually the same, one will find divergent factors which figure out the failure or success of applying an AIS in a company.

The evaluation of the costs wasn't huge in this case simply because they chose to file for bankruptcy. Additionally, when ALF got independence from Freightliner, they didn't understand just how to keep an eye on the brand-new systems since they were not aware of it (Bhagwani, 2009).

Factors resulting in the failure

Employees weren't adequately trained. Businesses will occasionally take short cuts due to cost and time related with training employee might be pricey. This however can lead to the business not being in a position to reach its anticipated bottom-line (Iskandar, 2015). Lack of workforce training may also lead to staff members having to question other personnel that are experts in utilizing the systems for assistance thereby decreasing efficiency of coworkers as well as enhancing costs for the company.

Bad system planning is yet another contributory element. Management at times could have impractical expectations and goals from the AIS or maybe the product might be way too complicated to understand... Therefore, the management must set practical and achievable expectations and goals. Management must make a feasibility evaluation and deal with 5 key aspects (legal, technical, scheduling, economic, as well as operational feasibility) (Iskandar, 2015).
Lack of enough comprehensive system testing is actually the other key component that contributed to the AIS failure in this case. Inadequate system testing can be quite expensive for an enterprise. Testing ought to be done to learn and do away with issues in the development phase, as prematurely as possible (Iskandar, 2015). To decrease this threat firms must use debugging methods to be capable of learning and eliminating problems. Businesses must also test the system by using testing techniques like; processing test information, walk through along with acceptance tests.

Effect on the company

The primary risk was the point that the AIS wasn't prepared properly. All through the contract period, Freightliner didn't effectively record inventory and info was lost during this time. After the separation took place, the change from one accounting system to ALF's novel ERP system led to system collapse by losing data which cost the firm nearly one hundred million dollars (Bhagwani, 2009).

Since ALF's inventory wasn't being tracked properly and there were several instances where accounts didn't balance, there was no "red flag" to suggest that errors have occurred in the AIS. ALF's system was created to let them both input and output data related to inventory. Nevertheless, after the change in systems took place from Freightliner to ALF, inventory along with other significant data pertaining to the business had been lost and became unrecoverable (Bhagwani, 2009). Because this data had been unrecoverable, a number of orders as well as details had been lost and the firm was unable to deliver and satisfy the customer needs, which is the real reason why they faced bankruptcy.

The link between senior management and the failure

Responsibility

The ALF management team had the duty of making sure that the AIS that's implemented worked properly and was capable to meet its goals together with the organizational objectives and goals. The profitable execution of an accounting info system is thought to be led by a task manager in order to dedicate time, budget, along with strategizing for the workflow and process. The staff members must additionally be properly trained before the transformation is actually made to the new AIS. The project staff must take sufficient time to ensure that they pick an alternative AIS after going through extensive training and technical support.

Possible alternative plan of action

Managers may have helped reduce the danger of behavioral issues by electing a task manager who could help rally, boost employee 's moral and encourage the entire workforce to support as well as cooperate with the systems deployment. The manager must involve anyone that's influenced by the transformation to the brand-new system. Management must let staff members offer suggestions and assistance in the decision-making process. Management requires to make employees aware which feedbacks will be utilized and which won't be used and reasons for the same. When they do this, employees start to be more skillful, better trained, as well as, a lot more dedicated to making use of the novel system. Thirdly management must properly communicate with everyone who's going to be impacted by the system change. The worker must be advised of the changes which are likely to be made as well as the advantages the changes can provide to them. Top Management must help ease employee concerns and stress by dealing with the fears and also give confidence that job losses as well as responsibility-transfer won't take place. Management must also reassure workers that they are going to be correctly trained on how they can make use of the AIS.

Stages wherein substantial failure occurred

The sizable failure to the AIS system took place in design stage. This is really because the business requirements might have been taken into consideration when developing the accounting system. The business might have averted the failed system results in the design phase by sticking with the subsequent business needs that should have been resolved by the AIS. The business requirements comprise of the…