Systems Implementation,
Operation, and Control
Chapter 13
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There are three major steps in systems
implementation.
Establish plans and controls.
Execute activities as planned.
Follow up and evaluate the new system.
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Systems Implementation
Systems Planning
and Analysis
Systems
Design
Establish Plans
and Controls
Execute
Activities
Follow Up
and Evaluate
New System
Systems Review
and Control
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Phase I: Establishing Plans and
Controls for Implementation
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These plans should incorporate three major
components:
A breakdown of the project into various
phases
Specific budgets applicable to each phase
Specific timetables applicable to each
project phase
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Phase I: Establishing Plans and
Controls for Implementation
Several different scheduling techniques
might be used to control implementation.
 What are some of these techniques?
– Gantt chart
– network diagram
– critical path
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Gantt Chart Example
Evaluate
Software
Planned Time
Actual Time
Select
Software
Select
Computer
Train
Employees
Test
System
1/1
2/1
3/1
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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5/1
6/1
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Simple Network Diagram
Contact
Vendors
Start
Review
Budget
Contact
Vendors
Evaluate
Software
Select
Software
Allocate
Funds
Select
Computer
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
Train
Employees
Complete
Implement
Computer
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Phase II: Executing
Implementation Activities
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What are examples of activities during
execution?
selecting and training personnel
installing new computer equipment
detailed systems design
writing and testing computer programs
system testing
standards development
documentation and file conversion
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Recognize Some of the Major
Human Factors Involved
In carrying out the implementation plan,
certain measures should be taken to provide
a smooth transition and ensure acceptance
on the part of company employees.
 What are some of these measures?
 It is desirable for management and the
systems team to make a formal
announcement regarding the project.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Documentation
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Good documentation can serve a wide range of
useful purposes :
training new employees
providing programmers and analysts with useful
information for future program evaluation and
modification activities
providing auditors with useful information for
evaluating internal controls
assisting in assuring that systems design
specifications are met
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Test Operations
Before the system is actually implemented,
it must be tested as a whole.
 There are three basic approaches to the
final testing of the system.
 What are these approaches?
1 Direct approach
2 Parallel operations
3 Modular conversion
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Test Operations
Direct Approach
Old System
New System
Old System
Parallel Operations
New System
Old System
Modular Conversion
Module A Module B Module C
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Phase III: Evaluating
the New System
Follow-up is necessary to ensure that the
new system operates as planned.
 What approaches can assist in follow-up
and evaluation?
– observations
– questionnaires
– performance measures
– benchmarks
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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The Information System Budget
The usual goal of financial control is to
increase the benefits gained from
information systems expenditures in the
sense of return on costs.
 Reducing overall costs is not a major goal.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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The Information System Budget
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Why?
The essential nature of information systems
is a service activity within a firm.
In relation to other costs, information systems
costs are not that large.
Costs are mostly fixed and remain unchanged
across a wide spectrum.
Information is a valuable resource.
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Acquisition and Insurance
Controls
Long-term leasing is a financing alternative
to outright purchase.
 Frequently, long-term leases include a
purchase option.
 Financially, the relative advantages of
leasing over purchasing are based on
traditional capital budgeting considerations.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Acquisition and Insurance
Controls
What other considerations are relevant to
the lease or purchase decision?
 Charges for regular equipment maintenance
and other support services
– charges for overtime usage in a lease
– purchase and sale options
– lease cancellation fees
– technological obsolescence
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Acquisition and Insurance
Controls
Customary insurance coverage may not
provide the protection necessary to cover
loss exposure.
 At a minimum, insurance coverage of
equipment is desirable.
 Insurance coverage for information systems
equipment may not cover the related data
storage media.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
There are many similarities between
information systems operations and other
manufacturing or production operations.
 What are some differences?
 The product (information) is often quite
difficult to measure and evaluate.
 Costs tend to be fixed or semivariable with
output.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
What is a chargeback system?
 It is a mechanism used to allocate costs to
users in an organization within the overall
framework of a responsibility accounting
system.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
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Chargeback systems take one of two general
forms:
Establishing predetermined rates or charges
(prices) for unit services
Collecting usage statistics and allocating
actual costs to users periodically based on
these usage statistics
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
What are transfer pricing systems?
 They are used to generate prices for
internally produced goods and services that
are exchanged between profit centers.
 The ideal situation in transfer pricing theory
occurs when all profit centers are highly
independent and completely autonomous
with respect to decision making.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
The transfer pricing approach is fraught
with difficulties and is rarely implemented
in practice.
 What are cost recovery systems?
 In a cost recovery system, information
systems operates as a cost center.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Financial Control Strategies
What are flexible rates?
 Flexible rates factor all or selected charging
units into priority classes.
 Each class is assigned a priority/price factor
to reflect its relative value to the user.
 Flexible rates are set to affect the user’s
demand for services rather than to strictly
reflect the cost of services provided.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Control Over Nonfinancial
Information System Resources
A number of nonfinancial factors relating
to information systems are important to
management from a control point of view.
 What are these factors?
– performance measures for hardware
– performance measures for software
– performance measures for personnel
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Control Over Nonfinancial
Information System Resources
Measuring hardware performance involves
the following:
– system utilization
– system downtime
– system responsiveness
 What is downtime?
 It is the percentage of time that all or part of
the network is unavailable for use.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Control Over Nonfinancial
Information System Resources
Evaluating software performance involves
the following:
 Survey systems users.
 Constantly monitor the software.
 Apply controls relating to personnel by
issuing the following:
– performance reports for data entry
specialists
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Control Over Nonfinancial
Information System Resources
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reports evaluating the efficiency of systems
operators
reports relating to the efficiency of
hardware repair persons
 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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Maintaining and
Modifying the System
In all operational systems, it becomes
necessary to make changes.
 Why?
 It is not possible to foresee all contingencies
during the design phase.
 Environmental conditions and information
needs change.
 The computer program may contain bugs.
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 2001 Prentice Hall Business Publishing, Accounting Information Systems, 8/E, Bodnar/Hopwood
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