MSIT 3840 Case Study 3 – Managing the move to the cloud

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MSIT3410‐01

Case Study 3 – Managing the move to the cloud

Questions:

Which cloud-based accounting information system should Pia select and why?

A: Pia should select system 3 because unlike the other two systems it has high level of efficient interface and it can integrate upon request. System 3 offers a high monthly price among the three systems but the good thing is there is no extra transaction fees. Moreover, Pia can also get 2 hours of accounting services in this monthly package.

Should Pia be worried about possible lock-in with either accountant or system provider?

A: No, as Pia is choosing system 3 as her cloud based AIS it would be very good for her business because this system is tied with accounting services and Pia would easily manage the services as accountant as well. Because Pia would be the one who will use the system there is no chance of lock-in if she hired an accountant. As the system is automated there will no big problems or lock-in in the future as well.

How should Pia mitigate the possible data security risks?

A: She should ensure all the accounting transaction raw data are stored in one single place and she could re-check it everyday to make sure the accountant is doing the way she wants. Pia also can use a good antivirus in her transaction computer to make sure the data is safe and locked from outside theft.

Is price an important factor when choosing the system?

A: Yes, price is an important factor when choosing the system. Because business growth has to effect on the efficiency of operations, Pia must consider the benefits and costs when choosing a system. Over all, the fee should always beneficial to the company.

What is the optimal division of work between Pia and the accountant? Should pia outsource all the accounting tasks, use selective outsourcing, or keep all tasks to herself? Evaluate each accounting task on the suitability to outsourcing in the cloud context. Use Table 3 provided in Appendix 1 and discuss the implications of your choices.

A: Pia should manage payroll and payments and the accountant should manage sales, purchases and reporting. Pia should use selective outsourcing. Because her main reason in considering outsourcing is to have more time in concentrating on the core of the business pharmacy and to make it happen, she must let the other accounting task be outsourced by the cloud system rather than doing all the work by herself or letting an employee do the expertise of an accountant.

For Example: In the payroll section Pia will do Personnel register maintenance, Basic payroll data maintenance, Payroll calculations. And in the payments, she should be able to manage Periodic VAT payments Salary payments, Payments for purchases, travel and other expenses, Monthly payroll tax payments.

And, I think the Purchasing, Reporting responsibilities like: Supplier register maintenance, Receiving purchase invoices, Handling purchase invoices, Handling purchase, travel & other costs, Purchases ledger maintenance, Preparation of balance sheet and income statement, Preparation and sending of VAT, Preparation and sending of annual salary reports and Preparation and sending of annual pension insurance reports can be done by the professional accountant.

Also, they can share the sales accounting responsibilities like: Client register maintenance, Product register maintenance, Sending sales invoices, Handling of sales invoices, Sending note of complaint, Sales ledger maintenance.

How to ensure a good fit between the selected system and the work arrangement?

A: It is important to ensure a good fit between the selected system and the work arrangement. First of all, to define whether the system is effective or not. Then, arrange the work step by step in the system. Before arrange the work in system concern about user oriented and must set of critical decision concerning the task. Finally, set the work with the system integrate them properly according to business.

What are the transaction costs incurred by the decision?

According to the table 2, transaction fee is Euro 0.95/transaction ( charged for sales & purchases invoice and monthly salary payments). Accounting services cost approximately Euro 65/hour. Different system has different price per month.

What about long term strategy? Reflect on the implications of your choices in the future.

A: In long term, Pia will observe the benefits of moving to the cloud accounting system, as she adopt it for getting more time. So, she will able to focus more on management and strategy development of her pharmacy. If this system will not provides her enough benefit as she expected she can shift to another cloud accounting system or if she found moving to another cloud accounting system is not helpful then she can abandon it.

Case Analysis:

Identify the most important facts surrounding the case.

The pharmacy business in Helsinki is very competitive and at the same time, highly regulated by the state.

The overall accounting process in Kluuvin Apteekki consists of five main groups of tasks: sales, purchases, payments, reporting and payroll.

The market of outsourcing financial administration is highly competitive in Finland.

The main value of cloud computing for businesses derives from offering resources in an economical, scalable and flexible manner, which are affordable and attractive to IT customers and investors.

Identify the key issue or issues.

Kluuvin Apteekki is a small player on the market, with very little influence on either suppliers or buyers to persuade them to switch to e-invoicing.

Payroll processing in Kluuvin Apteekki is quite complex as nine out of the 16 employees work part-time.

Accounting reporting requires good knowledge of the tax regulations and a vision related to the financial of the company.

Privacy and data security seemed like a big deal with all these Internet services.

The prospect of being locked-in into one software provider was not very appealing.

Cloud-related integration issues.

3.Specify alternative courses of action.

Alternative 1: System 1

Alternative 2: System 2

Alternative 3: System 3

4.Evaluate each course of action.

Alternative 1: System 1 is the cheapest of the three systems and it is also the only international provider. But it only has 9 years of business experience in cloud-based accounting information systems. Its user interface is object-oriented and the target user of the system is the client company. More importantly, its third-party reporting and payment service integration is limited. This does not meet Pia’s needs for cloud computing systems. As it is the only international provider, the company may not be familiar with Finnish local tax laws.

Alternative 2: The system user interface of System 2 is function-oriented and the target users are accountants. Its usage fee is in the middle, but it has hidden consumption like system 1, such as transaction fees and accounting fees. It is a separate system from the accounting department and is limited to customer-specific customization of standard settings. It cannot integrate with third-party systems.

Alternative 3: The price of System 3 is the most expensive of the three systems, but it has no transaction fees and includes two hours of accounting services. This reduces hidden consumption. Like System 2, it is also a function-oriented system. It is linked to the accounting system and can be customized according to user needs. It can integrate third-party systems with limited requirements. System 3 is pretty old and trusted for many years.

5.Recommend the best course of action.

A: In conclusion, System 3 is the most suitable for Pia. It has a high level of efficient interface and can be integrated on request. Although it provides a high monthly price, it does not have a lot of hidden consumption. Because pia cannot pay the increased costs, it is very suitable to choose system 3 as a cloud-based accounting information system. System 3 has 30 years of business history in the field of cloud computing accounting information management systems, so it has extensive experience.




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