Deck 15: Accounting and Enterprise Software

Question 1

Find an article about a company that has adopted a business application suite. Identify the company and its basic characteristics (such as location, products, and number of employees). What are some cost savings realized by the company? Were there specific efficiencies identified as a result of the ERP implementation? Were there problems implementing the system? How long did it take for the company to complete the implementation? Were there cost or time over-runs?

Answer 1

The XYZ Limited, an integrated steel manufacturing company. It produces 5 different kinds value added steel products. The production facilities- 5 factories are located all in different states. It has more than 200 retail outlets across the length and breadth of the company.
The company is planning to expand overseas through acquisition on coal mines and also to establish retail outlets. The company has recently implemented ERP systems to better integrate its functions. The company achieved the following cost benefits due to ERP implementation - reduced inventory, with real time data about customer demand and inventory across the factories, the company could effectively reduce its inventory, with availability of data on receivables status on a real time bases, and company improved its collection efficiency.
Further, the whole production and distribution processes have become more responsive to customer demand. The major problems the company faced while implementing ERP was that of training its employee before and during the implementation stage. Further, employees have to be trained post implementation stage also. There was a significant cost and time over run as halfway through the implementation, the company decided to increase the scope of the ERP system.

Question 2

Accounting and enterprise software can be expensive. Which of the following is likely to be the highest cost associated with a new AIS?
a. The cost of new hardware
b. The cost of implementing and maintaining the new system
c. The cost of the software
d. The cost of converting old data for the new system

Answer 2

Solution: Accounting and enterprise software can be very expensive owing to a number of factors like the cost of hardware, cost of software, cost of converting old data for new system and cost for implementing maintaining the new system. Among all these costs, the cost of implementing and maintaining new system is highest owing to training cost of employees, periodic maintenance of new software and updation. Therefore, option b is correct.

Question 3

While you are likely to purchase a middle-end accounting software package from a value- added reseller (VAR), why should you be cautious about hiring one to recommend a software package for your business?

Answer 3

Unlike basic accounting software, middle range software usually cannot be bought off the shelf. Middle range software is usually sold through qualified retailers or value added reseller (VAR). Such retailers provide additional services like installation, implementation, training and customization.
However, one should be cautious about appointing such VAR as a consultant for recommending software packages as these retailers have specific arrangements with one or the other software companies. Thus, the recommendations they give might not be in the best interest of the company as the resellers would try to promote the product of the company offering him the maximum financial benefit.

Question 4

In selecting a new AIS, a company's management should:
a. Always hire a consultant
b. Always consult with your accountant during the decision process
c. Never rely on your accountant for help in this decision
d. Always use an Internet software service to make the decision

Question 5

Which accounting software features are likely to be the most important for the following businesses? Search the Internet for an example of an AIS that you would recommend for each of these owners and include your rationale for that product.
a. A boutique shop that sells trendy ladies clothing
b. A small business specializing in custom golf clubs, replacement shafts for clubs, replace- ment grips for clubs, and similar repairs
c. A local CPA firm with three partners, five associates, and two administrative employees
d. A pet breeder that specializes in Burmese kittens
e. A businessthat sellsand rentsSegwaysin Washington, DC, which is locatedon Constitution Avenue, near the Lincoln Memorial
f. A high-end men's clothing business that has 4 stores that are all located in the same large metropolitan city (56 employees), and the owner is contemplating additional locations for stores in nearby cities

Question 6

What are some of the consequences to a company that makes a poor decision in selecting a new AIS?

Question 7

Low-end accounting software is increasingly complex and sophisticated. However, software costing only a few hundred dollars is not likely to:
a. Provide information to multiple stores where a company operates more than one
b. Include a chart of accounts that users may customize to suit their industry
c. Provide all the information needed to optimize customer and supplier relationships
d. Provide information for budgeting decisions

Question 8

Components of an ERP's architecture typically include:
a. A centralized database and application interfaces
b. Internet portals and multiple databases
c. A centralized database running on a mainframe computer
d. Business intelligence and multiple databases

Question 9

The difference between the price tag for middle-market accounting software versus an ERP system can be millions of dollars. What can these high-end systems do that the less expensive enterprise accounting packages cannot?

Question 10

Why do businesses typically need to engage in business process reengineering when they adopt an ERP? Identify at least four key aspects of a successful BPR project.

Question 11

Which of the following reasons might explain why a small business owner would hire a CPA firm or a software consultant to help select accounting software?
a. To train employees to use the software
b. To help the firm identify useful reports for decision making
c. To help with rescue/recovery needs should a disaster occur
d. All of the above

Question 12

Visit the software Web sites of two low-end accounting software package vendors and then two ERP vendors. Analyze the descriptions of the software and then describe the differences you see between the low-end packages and the ERP systems.

Question 13

Discuss the differences between traditional ERP and extended enterprise systems.

Question 14

Define the concept of ''scalability.'' Explain why it might be a good idea for owners of small businesses-and managers in larger businesses-to understand this concept.

Question 15

Which of the following accounting software programs would be appropriate for a small business (e.g., a sole proprietorship with 20 employees)?
a. SAP
b. QuickBooks
c. NetSuite
d. Oracle

Question 16

Tom O'Neal always wanted to own his own business. When he was in high school, he worked evenings and most weekends at a neighborhood bicycle shop. When Tom went to college at the nearby State University, he still came home in the summers and worked at the bike shop. On graduation from college, with his accounting degree in hand, the sole proprietor (Steven Judson) of the bike shop invited Tom to become a full partner in the bike shop. Steven told Tom that he really wanted to grow the business and thought that Tom was just the person to help him do this. Tom decided to join Steven. Over time, the business grew, and they opened two more bike shops in neighboring cities. Sales increased to more than $3.5 million during the past year, and the 3 bike shops now employ 14 full-time workers and another 6 part-time employees. Although Steven and Tom hired an accountant who was keeping their books for them and producing the financial statements each year, the partners thought they needed much more information to really run their business efficiently. They thought that they might need to make an investment in information technology to take their business to the next level.
a. Would you recommend that Steven and Tom consider an investment in IT?
b. Visit the Web sites of the vendors that offer the appropriate-size software packages for this business. What are some of the features of possible software packages that Steven and Tom should consider?
c. Would you advise Steven and Tom to hire a consultant? Support your recommendation with appropriate research citations (e.g., business articles that offer this type of advice-what rationale do they give?).

Question 17

DiscusssomeofthebasicfeaturesofanERP.How do these features distinguish an ERP from an integrated accounting software program?

Question 18

B&R, Inc., is one of the world's largest manufacturers and distributors of consumer products, including household cleaning supplies and health and beauty products. Last year, net sales revenues exceeded $5 billion. B&R has multiple information systems, including an integrated accounting system, a computerized manufacturing information system, and a supply chain management software system. The company is considering an ERP system to be able to conduct more of its business over the Internet. B&R hired National Consulting Firm (NCF), and NCF recommended the move to an ERP system, which would have e-commerce interfaces that will allow B&R to sell its products to its business customers through its Web site. The cost-benefit justification for the new software, which comes with an estimated price tag of $100 million (including consultant fees and all implementation and training costs) shows that B&R can expect great cost savings from improved business processes that the ERP system will help the company to adopt. NCF implements the ERP, adopting the industry's best practices for many of the business processes.
a. What are the likely advantages of an ERP system for B&R?
b. Visit the Web sites of the major ERP vendors. What are some of the characteristics you notice about their customers?
c. B&R has heard some horror stories from other CEOs about ERP implementations. What are some of the concerns B&R should address as they move forward with this project?

Question 19

Midlevel accounting software:
a. Can only be deployed through a server networked with desktop computers
b. May be purchased in modules that match various business processes
c. Will not be appropriate for a multinational company because these programs cannot
handle foreign currencies
d. Is generally inappropriate for a company operating in a specialized industry, such as retail or not-for-profit

Question 20

Linda Stanley and State University (Transitioning from a Legacy System to an ERP) Linda Stanley is the vice president for Computing and Information Services at State University (SU), a medium-size, urban university that has experienced a 3% growth in enrollments every year for more than a decade. The university now has almost 22,000 students, just under 12,000 faculty and staff, nearly $1 billion in revenues, and can currently accommodate 5,000 students in residence halls. In addition, the state legislature has financially supported infrastructure development for SU to help accommodate the sustained growth in enrollments. The campus has significantly and positively impacted the visual appearance and the economy of the city where it is located. The number of legacy systems across campus has adequately served SU in the past, but with the growth in enrollments, the university has also increased the number of faculty, support staff, and services. Currently, the core applications at SU include Blackboard, Lotus Domino, Web self-service, and legacy administrative applications for all other purposes. In recent meetings with the provost of the university, Linda and her staff have responded to a number of concerns and problems from the deans of academic departments on campus, as well as a number of the support departments, such as payroll, student financial aid, and HR. As Linda pointed out to the provost and deans, universities have unique technology challenges, such as an open technology environment 24 hours a day, 7 days a week, and that is 365 days a year, not just when school is in session. She also mentioned that SU has other factors that impact the effectiveness of IT services-such as their urban location and the rapid growth of the university over the past decade. Linda reminded the provost that she and her staff were diligently working on a number of major technology initiatives for SU, including network reengineering, e-mail consolidation, telephony modernization, helpdesk/customer care redesign, and classroom technology. Last week, the provost called Linda and asked her to meet him at the coffee shop in the Student Commons-he wanted to ask her opinion about a technology issue. In the discussion, the provost reflected on the growth of SU and wondered aloud if the university might be at a stage of maturity where they really should consider the entire technology infrastructure of the university. He pointedly asked Linda what she thought-should they consider purchasing an ERP? Of course, Linda was not prepared to discuss this question in great depth and told the provost that she would do some research and make an appointment in a couple of weeks to have a more meaningful discussion of the issue. When she returned to her office, she sched uled a meeting with her staff for the next day so that she could go over the provost's request with them and then assign different parts of this research project to them. Linda reminded everyone that they had a limited amount of time to pull the information together-that she needed to deliver the Executive Summary to the provost in the next few weeks.
Requirements
(Note: Some Internet research is required to properly respond to the following case questions.)
1. Search the Internet and find ERP solutions that might be suitable for a university, such as SU. What are the primary modules for this type of ERP? Briefly describe the functions of each module.
2. What business processes would most likely be affected if SU implemented an ERP?
3. Since this is a state university, the Board of Visitors and the State Legislature will need to see a report on the expected costs and benefits of an ERP, both tangible and intangible. Although you don't have any dollar amounts, identify some typical costs and benefits that Linda should include in her executive summary.
4. Should Linda use consultants? If so, what types of support should she expect from them?
5. Search the Internet-can you find an expected timeline for implementation of an ERP at a university? Do you think Linda should include a possible timeline in her report to the provost? Why or why not?

Question 21

What are some of the benefits of a centralized database architecture? What are some of the difficulties in moving from multiple databases or files to a centralized database structure?

Question 22

Springsteen, Inc. (Enterprise Resource Planning System) Springsteen, Inc., is a large furniture manufacturer, located in Asbury Park, New Jersey. It sells to furniture wholesalers across the United States and internationally. Revenues last year exceeded $500 million. Currently, the company has over 100 legacy information systems. Recently, Wendy Stewart (CIO) met with Bruce Preston (CFO) and Patricia Fisher (CEO) to discuss some technical problems occurring in these systems. Patricia noted that several competitors have implemented ERP systems, and she wondered if maybe it wasn't time for Springsteen to do the same. Wendy and Bruce agreed, with some reservations. Each had heard that Hershey couldn't ship its candy bars one Halloween because of problems with an SAP implementation. They'd heard other horror stories as well. Bruce thought maybe a best-of-breed solution would be less costly. Patricia suggested that they all meet with a consulting team from Warren-Williams (WW), a global consulting firm. The meeting takes place the next week. Present are Wendy Stewart (CIO), Bruce Preston (CFO), Patricia Fisher (CEO), Clarence Martin (Analyst, WW), Rosalita Jones (Analyst, WW), and Steve Johnson (Analyst, WW).
Patricia: Opens the meeting. Her role is to manage the discussion and look for a decision. She talks about what she thinks an ERP might be able to do in terms of providing competitive advantages, particularly with respect to business processes.
Bruce: Discusses what the dollar costs and benefits of an ERP are and the expected effect on the bottom line.
Wendy: Explains the architecture of an ERP and explains the technical issues associated with implementing these systems.
Clarence: Tries to sell the project any way he can. He also tells the company repre sentatives what his firm will do for them, the expected cost of the system, and the implementation schedule to be expected.
Rosalita: Explains the potential risks and benefits of such a system for Springsteen, focusing on the benefits.
Steve: Describes the functionality of an ERP-what the various modules are and so on. He also talks about options for extending the ERP through the Internet to integrate the supply chain.
Requirements
Note: This case is designed for in-class role play. Each actor and assigned support staff have 20 minutes to prepare for the meeting. The support staffers are the other class members. During the meeting, one support staff member for each role will capture the main points brought out during the meeting, relative to that role. For example, a scribe for Wendy Stewart would make a list of every technical issue brought out in the meeting. The meeting is scheduled to last approximately one-half hour.

Question 23

Which of the following is a distinguishing characteristic of an enterprise-wide (ERP) system?
a. Must be a hosted solution
b. Multiple databases
c. Integration of business functions
d. Low cost

Question 24

A new company will have no business processes in place. How would the owner go about selecting an appropriate AIS for the new company? Should the owner consider acquiring an ERP package immediately?

Question 25

An organization will always need to upgrade to a new AIS if:
a. A major competitor buys a new package
b. Customers complain about late deliveries
c. The company wants to begin doing business over the Internet
d. None of the above are necessarily reasons to buy new accounting software