Accounting Information Systems: Planning and Analysis Introduction: The MOTE Approach Oakland University Department of Accounting & Finance Slides 1

History of IT l Phase I (circa ‘60s): Automating clerical functions by duplicating manual systems (e.g., payroll processing) l Phase II (circa ‘70s to ‘80s): Developing separate legacy systems l Phase III (‘90s): Cross-functional, event- driven, enterprise-wide systems

History of Accountant’s Role in Systems Development Accountant alone - manual system - described by Pacioli over 500 years ago 1970s and 1980s: Generally unable to develop computer systems - hired systems personnel to develop and manage the systems Role has been limited to that of user Now, software engineers are developing accounting systems with or without input from accountants

Traditional AIS “IT has benefited accounting... primarily by automating 500-year-old pencil-and- paper systems instead of employing the unlimited potential of modern computer technology” ( Walker & Denna, 1997)

Calls for Change VP of Lotus Development to AICPA: “CPAs who don’t keep up with this new technology are in danger of becoming road kill on the information highway” Labor markets are demanding expanded role as designer, evaluator and manager of IS

Current Environment  Lack of standardization for AIS Course »managerial to financial focus »from word processing and spreadsheet skills to systems design »conceptual skills only (no hands-on skills) »hands-on skills only (no framework)

What should be done?  Summary of Problem:  No consistent approach to teaching  Accounting graduates have inadequate IS skills  Solution  MOTE (developed at OU)  Systems emphasis in AIS courses  Three- course AIS sequence, plus an Information Systems Audit and Control Course  Business Information Systems & Accounting Major

Intent  Give Accounting Majors MIS skills  consulting track for CPA firms  AIS position in corporate setting  Give MIS majors accounting skills  Better systems analyst  Better systems designer

New AICPA Directions For IT assurance services identified by the AICPA: see

Curricular Strategy: The MOTE Approach  MO - Model-Oriented:  We use the SDLC logical framework: a systematic and orderly approach to systems development  We implement this framework by using the IE set of methodologies (developed by James Martin, 1989)

Stages of the Systems Development Life Cycle Planning Analysis Design Construction

Systems Planning l Also called Information Strategy Planning (ISP) l Concerned with top management goals, targets, and critical success factors l Concerned with how IT can be used to create new opportunities or competitive advantages l An overview model is created of the enterprise, its functions, data, and information needs l The overview model is split into areas appropriate for analysis

Systems Analysis l Decide what processes are needed to implement business strategy l Decide how processes interrelate l Decide what data is needed l Identify areas for systems design l Involve users extensively l Create activity models (AHD, ADD) l Create a fully normalized data model (ERD) l Create interaction models (REA) l Identify PADs, which contain business logic to enforce business rules l Remain independent of technology and current systems

Systems Design l External Design: Apply mapping rules to convert processes to procedures (to build windows, interfaces, dialogue boxes, forms, for activities that need to be automated) l Internal Design: Map to technical environment

Systems Construction l Generates programming code which results in programs designed to perform specific tasks for users l Physically structures the database (by generating DDL)

Curricular Strategy: The MOTE Approach  TE - Tool-Enhanced  Software development tool used is COOL:Gen™ 5.1 (a competitor is Oracle Designer)

COOL:Gen™ Implements Entire Systems Development Life Cycle PLANNING ANALYSIS DESIGN - External DESIGN - Internal (Technological Environment Mapping) CONSTRUCTION Phases: Source: Adapted from Sterling Software, Inc., 1997, p. 17.

Cool:Gen™ Tool Outputs Planning & Analysis Design Construction Organization Hierarchy, ERD, AHD, ADD, PAD A PrAD Graphic User Interface Generated Code, DDL (COBOL, C++, web-enable)

Advantages of the MOTE Approach  rigorous, yet flexible framework  structured logic, but not language-specific  relational database, but not vendor-specific  support for varied technological environments, e.g., block mode, batch processing, client-server, web-enabled systems  produces IT-savvy graduates

Desired Orientation l Systems Viewpoint »Input (resources), Process (convert), Storage (data), Output (product/service) (IPSO business template or pattern) »RDBMS vs. Legacy Systems –Tables vs. Journals & Ledgers –Signing Convention vs. Drs & Crs –Cross-functional vs. “Stovepipe” Systems –Diagramming vs. coding l A Focus on a Variety of User Needs »versus only what accountant wants