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The Relationship between Business Processes and AIS

Table of Contents

........................................................................................................................... 2 The Importance of IT in AIS................................................................................. 3 Explanation of AIS............................................................................................ 3 Describe several of Information technologies in AIS........................................3 Explanation of benefits of IT used in AIS..........................................................4 Critically Evaluate Their Relevant to Business Process in Business Organizations ............................................................................................................................ 5

Describing business processes in business organizations................................5 Discussion of relevance of information technologies to business processes in business organizations..................................................................................... 6 9.In competitive global business environment, to satisfy customer demand, business process must become agile and adaptive. Therefore, IT advancement takes a more central role in business process effectiveness. Several IT used in business process such as Electronic data interchange (EDI) and ERP............................................................................................................ 6 10.EDI is a communication standard that enables business partners to exchange routine documents such as purchasing orders electronically. For example, computerized network enables purchaser and the supplier to exchange purchase orders and invoices electronically in the form of images. [5].................................................................................................................... 6 11.ERP is a companywide management system which weave together all of a companys major business function. The major objective of ERP systems is to tight integrate the functional areas of the organization, and to able seamless information flows across the functional areas. Thus, ERP also supports management attempts to harness and leverage organizational knowledge.[9] ......................................................................................................................... 6 Difficulties in employing AIS and Business Process.............................................7 Conclusion........................................................................................................... 7

References...............................................................................................................................8

Introduction 1. In an increased competitiveness, economic uncertainty, ever-increasing regulation and global turmoil environment, quality information and continually improve operational efficiency are imperative to the success of a business. Many businesses are turning to

information technology (IT) to address these challenges. Almost all departments or areas within business organization reap rewards from IT applications. The aim of this paper is to describe and assess the role of IT in Accounting Information System (AIS) and business processes, as well as difficulties in adopting IT in businesses. Besides, examples of businesses that have exploited the advantages of business processes and AIS are also assessed. The Importance of IT in AIS Explanation of AIS 2. Boockholdt [2] defines accounting information systems as systems that operate functions of data gathering, processing, categorizing and reporting financial events with the aim of providing relevant information for the purpose of score keeping, attention directing and decision-making. An accounting information system can be a manual system, or a computerized one. However, todays information technology advancements have replaced manual accounting systems with computerized ones. Modern AISs use specialized databases and processing designed specifically for accounting operations. This means that much of the base processing capabilities come delivered with the accounting or enterprise software. Describe several of Information technologies in AIS 3. Modern data warehouses and data mining enable accountants to manage the flood of data in todays organizations so that they can keep track of the transactions and internal controls of an organization more effectively. [7]

4. Corporate intranets and portals offer a personalize, single point of access through a Web browser to critical business information located inside and outside organization. AIS use these technologies to consolidate transaction data from legacy systems to provide an overall view of internal projects. This view contains the current costs charged to each project the number of hours spent on each project by individual employees, and how actual costs compare to projected costs. [7] 5. Accounting application software performs the organizations accounting function, which are repetitive and high volume. Accounting software captures and maintains data of each business transaction, and manipulates them as necessary. Accounting applications adhere to relatively standardized procedures, handle detailed data, have a historical focus, and offer a range of reports.[7] Top 2010 accounting software is Peachtree Complete, MYOB Business Essentials, and QuickBooks Pro. [1] Explanation of benefits of IT used in AIS 6. Modern technology has improved AIS in term of timeliness, collaboration, and accuracy. Computerized accounting systems can process large amounts of financial information quickly. Thus, it is capable of generating reports of any balance as required for any duration which is within the accounting period. Besides, IT also helps AIS share knowledge base across internals and externals of an organization. Most importantly, by eliminating most human errors, IT has improved accuracy of reports and information which have critical impact on decision-making process. For all these reasons, AIS is now much better than in earlier times, because of the advantages of IT.

Example of successful IT adoption in AIS 7. ZBMS Sdn. Bhd is a Malaysian construction company. The company employed automated AIS software known as Contract Plus Financial & Project Accounting package commercially developed by a private company (ZYXW) that enable the

company ZBMS to generate monthly financial statement more quickly and accurately. The company also achieves more effective management of resources; better control of cost, budgeting and forecasting. As a result, the system enhances the well being of ZBMS to pursue its projection of continuing business profit. [8] Critically Evaluate Their Relevant to Business Process in Business Organizations Describing business processes in business organizations. 8. A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. [3]

Discussion of relevance of information technologies to business processes in business organizations 9. In competitive global business environment, to satisfy customer demand, business process must become agile and adaptive. Therefore, IT advancement takes a more central role in business process effectiveness. Several IT used in business process such as Electronic data interchange (EDI) and ERP. 10. EDI is a communication standard that enables business partners to exchange routine documents such as purchasing orders electronically. For example, computerized network enables purchaser and the supplier to exchange purchase orders and invoices electronically in the form of images. [5] 11. ERP is a companywide management system which weave together all of a companys major business function. The major objective of ERP systems is to tight integrate the functional areas of the organization, and to able seamless information flows across the functional areas. Thus, ERP also supports management attempts to harness and leverage organizational knowledge.[9] Examples of exploiting ERP in Business Process 12. Armour, an American sports apparel company, adopted ERP stem from Lilly Software Associates. Under the ERP, system that come in via phone, fax, or email are entered manually and orders placed via electronic data interchange register automatically. The system also provides warehouse management systems, inventory-planning capabilities

and it eliminates the manual work of printing orders, running them down to the warehouse, and handling them to the people who fill the boxes. [4],[7] Difficulties in employing AIS and Business Process 13. Although IT adoption in AIS and business process makes considerable business sense, there are a number of challenges that could slow its adoption. The first challenge is heavy IT expenses on purchasing, updating IT applications and training the staff personnel. Secondly, the success of AIS and business process depend on the fit between IT applications and businesss structure and design. Finally, one of difficulties is the resistance to adopt new technology of employees. Therefore, to employing AIS and business process effectively, businesses should consider these issues carefully. Conclusion 14. In current business environment, advancements in information technology, which have enabled companies to automate, streamline AIS and business process effectively and efficiently, have become main competitive differentiators for any successful company. IT keeps businesses flexible and adaptive to customers demand and environment. However, although IT could bring many benefits, it also carries potential challenges. The challenges need to be carefully considered and controlled in order for them not to turn destructive or to offset the advantages of IT.

References: [1] Accounting Software Review. (2010). Retrieved from Top Ten Review: http://accounting-software-review.toptenreviews.com/ [2]Boockholdt, J. (1999). Accounting Information Systems Transaction Processing and Control. The Mac-Graw-Hill companies. [3]Business process. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Business_process [4]D.Navas. (2003). Under Amour Gears Up for Triple Digit Growth. Supply Chain System Magazine . [5]Huggins-Chan, S. (n.d.). EDI. Retrieved from http://ksi.cpsc.ucalgary.ca/courses/54795/seanh/edi.html [6]K.Forgarty. (2004). Under Armour: No Sweat. Baseline Magazine . [7]Rainer, Turban, & Potter. (2007). In Introduction to Information Systems.Supporting and Transforming Business. John Wiely & Sons,Inc. [8]Sori, Z. M. (2009). Accounting Information Systems (AIS) and Knowledge. American Journal of Scientific Research ,pp 36-44. [9] Sumner, M. (2005). Enterprise Resource Planning. Prentice Hall.