Strategic Information System AIS and ERP

Question: Discuss about the Strategic Information System Concepts of AIS and ERP. Answer: Introduction This report explains the significance of information systems in the business. In this report there are two case studies of the companies are given that indicates that how manual processing affects the operations of the business of the small and medium-sized companies. Moreover, it explains the concepts of AIS and ERP in the companies that will reduce the cost and time of the companies. Similarly, it also explains that the how AIS and ERP will help companies to reach the next level of the business. Finally, in this report, it explains that which software is best for the company according to its size and operations. Overview of Business process of Disk4u In the given case study of the company, it is identified that the business process of Disk4u is operated at a medium level in Sydney. The company wants to expand their business at a higher level so that they adopt the new technology and methods like e-commerce portal, sell products through phones and emails and from physical stores. This is definitely a good strategic move for the company to increase its business operations from adopting technological solutions. Similarly, it is also identified by the team of consultants during the presentation given to the owner is that the owner of the business is using manual accounting system to manage the overall activities of the business. Currently, Company has four outlets in Sweden so it is obvious that the business needs has few supply chain partners, sales, and marketing persons, finance and accounting process is involved. The supply chain management purchased the Blank Cds and instruments from the wholesalers and big retailers. Similarly, sales and marketing people helps to sell the products to the customers directly and indirectly. Accounts and Finance people will take care of the payments regarding the suppliers, customers and record daily income and expenses of the all the outlets. Therefore each business functions is interrelated to each other if there is one function is mismanaged it hampers the overall process of the company (Symmetry, 2016). For e.g. if the accounts and finance function makes an error it impacts the sales and supply chain management of the company. So it is considered that the team of consultants for the company to use the proper accounting softwares like Enterprise Resource Planning (ERP) and AIS that manages the overall operations of the business in an effective manner. Business Requirements of the Company Accounts and business reporting is the major part of the company to effectively run their operations. These are just like a fuel to successfully develop their business on next level. It seems that there is a requirement of Enterprise Resource Planning (ERP) and Accounting Information System (AIS) softwares for effective decisions and flawless reporting (Financialforce, 2016). The company has already a good staff but still company lag behind in competition due to manual process which cannot record the important activities that are beneficial for the business. The manual system is not offering the products at competitive prices. So these issues depict that the company needs the more information for running their operations successfully. The business needs to good accounting softwares that effectively helps in the below important areas of the business (Excitingip, 2016). Thus the main requirements of the business are A systematic method of accounting that enhances the quality of its process. ERP softwares integrated all business process and supports accounting information for strategic decisions. This softwares provides customized solutions to the operations of the business process. The company faced the challenges in the areas of the information which does not flow properly communicated at all the outlets of the company. Information related to the transactional and operational matters are required for effective decision making. The company is not effectively using the accounting information from the manual process that influences the other areas of the business such as information related to the cost, sales, payrolls, and overheads. The company required this information to make competitive pricing strategies (eresourceerp, 2016).The ERP supports the AIS of business to collect, manage and retrieve the information related to the accounts and finance by their owners, staff, suppliers, customers and auditors. Similarly, both software will provide accurate and valuable information to the company. System Requirements The company required the ERP or AIS in their business process. It seems that the both of the softwares achieved the objectives of the business. The ERP softwares is linked with the all the processes of the business and it will provide the central platform to the all the important information data of the company (Maditinos, et al., 2011). It is also integrated with the Accounting Information Software. Thus the AIS get the relevant information from the various processes of the business effectively and accurately. The AIS provides the valuable functions to the companys process which is listed below: This software extracts the data from the various transactions of the different outlets in the chronological order and it is recorded to Journal accounts. Journal accounts record the transactions related to any event of the company. They transfer data to the ledger accounts and from ledger accounts, it is recorded in the different accounts. Secondly, it will helps the owner of the company and their partners to take effectively analyze the information from the database. The information which is necessary for the management is financial statements and managerial reports (Granlund, 2011). Thirdly, AIS provides the greater control and transparency in the information. Moreover, the AIS provide the both options to the companys employees such as automated and manual instructions to operate. Generally, information comes from both sources internal and external sources. Internal sources are the workers of the company and the external sources are the customers, online orders via email, phones, and e-commerce website like eBay.Below given figure indicated the general process of AIS functioning in the company for finance and account activities at different functional levels. Figure 1: (Source: Gelinas, et al., 2011) Figure indicated the process of AIS in company Instructions and procedures are coded in the AIS software. The procedures and codes are mentioned in the manual and guidelines of the software. The coded encrypted language helps to keep information confidential according to their use. The simple training is required to give to the companys employees regarding coding. When any user login to the software they required the code to retrieve any information, and that code is given in the training manual of the software (HBR, 2016). Different codes meet the needs of the different users. For e.g. companys daily sales order of various outlets is recorded in the sales order tab. Similarly, inventory data and invoices are stores on the appropriate tabs which are opened through passwords and codes. Software selection Disk4U is the family owned business and it has around four outlets in the Sydney. It can be assumed that there are approximately 30 employees approximately working and the company has the medium operations and generates the revenue of around 10.5 million last year. So it is considered that the company is coming to medium size company. So that the company requires the effective solution for their business to reaches to the next level. As per the overall research, it is considered that the company can use the medium size business solutions. AIS software to effective runs their operations.ERP software is also good for the company but it is analyzed by the consultants that the cost of the software, maintenance, customization and installation is too high as compared to AIS. The consultants suggest to the owner of the company to choose below of the models of the software as per the requirements of the business needs. The models of the software are given below in the table. Models of the software Functions Cost MYOB Helps in payroll processing and helps in the calculations and accruals and tax calculations. It sets the best price of the items according to the customers at different outlets Helps in financial reporting, taxation calculations and accounting (Enterprise suit, 2016). It records the historical financial data and stores the records of the bill of materials. It provides the various customized financial templates for the users. $150 per user monthly The total cost of 30 users at all outlets yearly around $150*30*12= $54000 Quick books It helps in order processing, stock management. One of the tool supports the accounting methods of the each outlet and reduce the chances of data entry errors and gives real-time information on inventory updates. $100 per user The total yearly cost of the software including its users around $100 *20*12=24000 Microsoft Dynamics (GP, NAV, SP) Maintain the database of the customers of all the outlets and keep the information secure. It gives the central access through Microsoft access and outlook It measures the trend of the customers on daily basis (Sleeter, 2016). It also controls and monitors the supply chain management, finance, and business reporting. $150 on monthly basis and user accessibility are more than 100 users. $10 is the monthly user charges. The total cost around yearly for 3 users $150*30*12 =$54000 Vendor selection and Recommendation From the above-given functions and analysis of the softwares, it finds that these three versions of the AIS softwares are beneficial for the company to complete its operations. Moreover, this softwares versions come under the budget of the client i.e. total cost around $132,000 yearly. So the company chooses the one software and vendor from these three versions of the software i.e. MYOB, Microsoft Dynamics (GP, NAV, and SP), and Exact max. The company should choose MYOB and invest on it. MYOB Version is latest, customized, and user-friendly interface system according to the operations of the company, it provides the effective accounting management reporting, solve taxation matters, and quick reporting, and monitors the customer relationship management of the company. Overview of the company problem In the given case study of the company named Sun Gate which is the largest producer of the rice in Australia has faced the problem of the manual accounting and reporting process in their operation systems. It seems that the company has the wide process and large production still that they cannot take the effective decisions in their operations. It is indicated that the company is facing the problems in their financial records due to manual entry systems and it requires the lots of time to record the data of the financial activities on the daily basis. It increases the cost and time of the company that will be the major problem in the future years. Business Requirement An information system is the main base of any business it collaborates all the departmental functions of the business smoothly. The main departmental functions of the Sun Gate Company are the production, sales, and marketing, finance and accounting, and inventory management. It seems that the company needs the effective information management software or tool that integrates all the functions of the business effectively so that the management of the company can take the effective decisions and generates huge profits in the future. The company has the large production units and large staff so that it comes under the medium and large scale industries of the Victoria. Due to its large production capacity, the team of consultants advised the company department to use Enterprise Resource Planning (ERP) Software, which mitigates the manual problems of accounting and errors in daily basis which helps in the company to take an effective decision in the future. ERP is generally an automated s oftware that manages the internal and external resources of the company such as production department, financial assets, inventory management and human resources of the company. The Below given figure indicates the overview of the modules of the ERP in respective departments of the company. Figure 2: (Source: Adaxa, 2017) Above Figure indicated the functions of ERP in different departments Above given figure depicts that the how ERP effectively performed their key functions according to the different departments of the company. The information is collected from the users i.e. employees and that information stored in the server systems of the software and presents the logical solutions and conclusions to the management (Capterra, 2017).It provides growth, long-term profits and meet customer expectations and make the company more competitive. System Requirements The need of best ERP is important for any mid-size companies. The ERP systems come with different sizes and shapes according to the budgets of the company (Datix, 2017). Currently, company has faced the number of challenges regarding the weak information systems in the company it creates the errors in the financial data and creates more work for the clerical staff and other departments which increase the cost and time of the company. Various ERP softwares which can save the cost and time of the company. The benefits of the ERP system for the company are listed below. It integrates all the business functions automated and linked with production, procurement, finance, and marketing departments. The system matches the demand and supply constraints with the respective functional departments. It responds and monitors quickly according to the real-time For e.g. In peak hours of the production in the company it automatically plans and respond the new orders, and delivers the instructions to the workforce for future demand and supply conditions (Hasan, et al., 2011). Figure 3: Figure indicated the connectivity of ERP to all departments It also supports the compliance and regulatory levels of the company in the production process, including health and environmental regulations. It gives the automated notice to the company while there is an excess of use of production of rice during peak hours. It helps in strategic decision making for the company by analyzed the accurate financial forecasting, effective budgets, proper planning of the resources and allocation. It combines the financial and accounting information for day to day activities. It delivers products on time with high quality It reduces the order process time and delivers the orders quickly according to the needs of the company locally and internationally (Saeed, et al., 2011). Apart from the benefits, there are certain challenges to implementing the system in the company like the maintenance and customization of the software is pretty expensive. Sometimes it is difficult for the company to adapt the ERP to the workflow and structure of the business. Once it is implemented after that the company cannot change the system due to high switching cost. Selection of the Software As per the nature and analysis of the companys operations and benefits of the ERP/AIS, it finds that the company is required the effective information system which helps in to save the efforts and time of the company. There are many versions of the software available in the market according to the nature of the production companies. Sungate Foods company is the medium sized company and it is important for management to choose the best-customized software that addresses the issues of the company.ERP software is appropriate for the company as compare to AIS.AIS is suitable for small companies where the production level of the company is less. AIS is especially for the shops, hotels, and offices where the volume of the work is not too high and the staff of the company is limited. AIS software is limited to the accounts and payroll department and it only monitors the other activities but ERP is designed for management of resources in the company including financial management, CRM, suppl y chain management and inventory management that is also useful for the accounting department. Finally, it is identified by the team of the consultants the ERP software is appropriate for the company after comparing with AIS. There are many ERP versions of the softwares which is given in the below table according to its functions and budget of the company. Name of ERP softwares Functions and description Adaxa Suite Java based language software and supports on all operating systems such as Linux, windows, and DOS. The Annual cost of maintenance is low. After sales support service is good and available 24*7. It helps to manage the cash, prospects, and order management and invoicing and cash receipts of the company. With this information, company can recognize the cost of the different departments and it reduces the cost of the functional departments (Winman, 2016). It quickly helps in payments to the vendors and suppliers once received the invoice or purchase order from the supply chain department. It supports the international and national financial transactions formats of the accounting. So it is beneficial for the accounting departments to accept and evaluate the international transactions effectively without causing any delay. SYSPROs It is also Java enabled software Cost of maintenance is relatively high 12 hrs of customer service and sales support is available. A centrally based software platform which coordinates all the activities of the business The reporting format is standard and not accepts the customized reporting (SCC, 2016). It does not support the e-commerce platforms The payroll functions are limited and it does not support the international transactions. Finalization of the Vendor and Software As per the above comparisons of the softwares and vendors it is identified that both softwares address the requirements of the company but Adaxa Suit softwares has more features and it is available under the companys budget. and there are a lot of technical functions which is flexible as compared to Syspros. So after the detailed analysis of functionality of the both the softwares it has been identified that the Adaxa suit is appropriate ERP package that serves the needs of the company. From this software company can effectively perform their operations and mitigates the problem. Conclusion As per the above-given case studies, it is concluded that the AIS and ERP plays an important role in the operations of the both the companies. It is also found that the AIS is beneficial for the small and medium organizations and ERP is appropriate for Medium and large organizations. Moreover, it seems that the both organizations have chosen the different accounting softwares packages according to the needs and functionality of the companys operations. These systems provide the facility of flexibility in updating of its resources that address the problems of the company more effectively. 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