Question

Suppose you are a systems consultant for Top Accounting Professionals, CPAs. One of your clients, Seth Brown who owns a company which manufactures and sells customized furniture to customers considers upgrading its flat file based accounting information systems to more integrated accounting information systems. Seth' company does not have enough resources required to build a system in house. Commercial Software, Inc offers Seth to install the $300,000 commercial software system and train his employees. The system will handle inventories, receivables, payroll, accounts payable, and general ledger accounting. Seth is interested in this offer and asks for your advice.

Requirement: Discuss the major themes you would address in responding to Seth and identify the advantages and disadvantages of using a turnkey system to operate the organization’s accounting system.

Answer 1

As a system consultant for accounting professionals , I would give advice to Seth on the potential benefits and potential costs associated with the new commercial software system . as I am an outside consultant , I could provide a fresh perspective that other people in an organization do not possess but at the same time , as I am an outside consultant I may never know the true organisational culture . so, I would rely on the informations given by Seth to give any advice on the new system adaption process . firstly , I would like to know what are the main activities/transactions that Seth's company accounts for and the reason for switching from flat file based system to a turnkey system . based on the activity levels of the company I could advice Seth about what are the benefits they are going to reap by upgrading  their accounting information system. flat file based system is a basic and simple database system that stores giant data in tables and records and have no relation between the any other tables . an integrated commercial software system could reap way more benefits than flat file based system as it can perform numerous activities than flat file based system . also, I can give advice based on company's activity level that if the commercial software system is worth to Seth's company for the money they will spent for the system .I can advice Seth the benefits of a built system as it can be build based on the exact requirements of Seth . as Seth do not have enough resources to build a system in house he left no other option than to go for a turnkey system . so based on the informations collected from Seth about the company's activities and accounting requirements , I can advice Seth whether the benefits of upgrading the sytem exceeds the costs associated with the buying and the training of employees , and if the benefit does not exceed the costs , I can advice seth to look for an alternative turnkey system that set for Seths requirements and low in cost .

advantages of using a turnkey system :

1. time saving : as a turnkey sytem is directly purchased , time required to build a system can be saved

2.lower cost : when compared to the cost and resources required to build a system , turnkey system may seem lower cost .

however , upgrading the organization’s accounting system from a basic databse system such as flat file based system to a turnkey system that have additional requirements would result in improved / simplified accounting performance of the organisation .

disadvantages of using a turnkey system :

1. oversized designs and costs : turnkey systems may have additional designs which the organisation do not need but the owner should pay for as it cannot be bought seperately . when purchasing a system , it comes as a whole package and so the buyer is forced to pay for designs that he actually do not need .

2. failure of meeting owners expectations: turnkey system may not provide the exact requirements as built systems do .

when compared to built system, turnkey system may fail to meet the expectations of the organisations requiremenst and the money spent on purchasing the turnkey system may become a loss for the organisation .