Chapter 1

CHAPTER 1
BUSINESS
STRATEGY, CURRENT
IT TRENDS &
IMPACT TO
ACCOUNTING
IT and YOU
IT and BUSINESS
Topic Objectives
Understand
different types of
Business strategies and Business

tactics and roles of IT
Examine
current technology trends
Understand
the impact of IT to
accounting profession
5
Business or Technology First?

Projects that focus first on
technology, rather than business
objectives, are destined for failure
Is
this true?
Then, what should it be?
BUSINESS STRATEGY & IT

Threat of New Entrants
Bargainin
g power
of
Suppliers
RIVALRY AMONG
COMPETITORS
Bargainin
Bargainin
g power
power
g
of
of
Customer
Customer
ss
Threats of Substitute
Products or Services
Porter, M. (1979) Five Forces Mode
Porters Three Generic Strategies

Focus strategy
Differentiation strategy
Overall cost strategy
Run-Grow-Transform (RGT) Framework
Overall cost
strategy
Focus &
Differentiation
strategy
Differentiation
strategy
9
The Business of Change

Business
strategies How
business adapts to business and
technological changes?
Business tactics Recommended
techniques to implement the
business strategies
10
&
R&
ER
GE
RG
ME
ER
M
IIO
N
ON
IIT
S
T
I
U
S
I
Q
U
C
Q
A
C
A
BEST
PRACTIC
EU
DOW
O
NU
I
T
N
CO
NSIZI
E
M
S
E
V
O
S
NG
SE
IMPR
ER
RV
VIIC
CE
EC
CE
EN
T
NT
TR
N
RIC
IC
GLO
EMPOWERM
BA
L
DED ENT
N
E
T
EX ERPRIS
TRA
ENT
NG DI
E
BUSINESS
STRATEGIES
Best Practices
12
Best Practices
A technique or methodology that, through

experience and research, has proven to reliably
lead to desired results
Methods used by industry leaders to achieve
optimum results from a given business process
(e.g. ABM, JIT, benchmarking, Kaizen etc)
In terms of accounting systems, BP usually
studied to reduce transaction-processing time
and therefore the cost per transaction e.g. faster
customer billing, e-purchasing
Hence need to model the software functionality
around the business process.
13
Continuous improvement
(e.g. Kaizen)
14
Continuous improvement
(e.g. Kaizen)
A set of activities designed to bring gradual, but
continual improvement to a process through
constant review
Kaizen (lean manufacturing) is an operational
strategy oriented toward achieving the shortest
possible cycle time by eliminating waste (derived
from the Toyota Production System)
Principles:
Human resources are the most important
company asset
Processes must evolve by gradual improvement
rather than radical changes
Improvement must be based on
statistical/quantitative evaluation of process
perform
Financial management systems must offer the
15
same capabilities to model processes and store
Downsizing
16
Downsizing
Big
is beautiful?
Focuses on reducing corporate
headcount, particularly low-added
value areas, e.g. clerical and middle
management (accounting
department?)
Consequence - more demands on the
remaining people and systems
Hence financial management
systems should be more efficient and
able to deliver greater business
17
intelligence.
Empowerment
18
Empowerment
Give
workers more autonomy and

responsibility
From a system perspective: give
workers access to the data and
software tools to do their job more
efficiently
Financial management systems need
to deliver flexible query and reporting
tools with features such as data
drilldown to empower accounting
users (i.e. OLAP)
E.g. to resolve vendor enquiry about
19
an
unpaid bill, need access to
Extended enterprise
20
Extended enterprise
Recognises
less boundaries between

organisation, its suppliers and customers
Holistic view of an organisation: the
organisation itself, its strategic partners,
and its outside service providers
(internal and external value-chain)
Financial systems must support ecommerce and messaging functionality
to effectively communicate with its
extended enterprise partners.
21
Global trading
22
Global trading
Think-globally,
act-locally strategy
Financial systems must be able to
handle basic requirements of global
trading: multi-currency
management, revaluation,
consolidation and translation
reporting, and multinational
statutory compliance, document, and
report production
At the same time allow managers to
act locally by deploying software that
23
is sensitive to local language,
Mergers and acquisition (M & A)
24
Mergers and acquisition (M & A)

Forces
the integration of
technological infrastructures
Demands that systems can easily
integrate into alternative system
architectures and accounting
software that may be scaled up to
meet the higher processing or more
complex functional needs required to
manage the post-merger scenario.
25
Service centric
26
Service-centric
Ability to understand customers and suppliers
better and communicate with them more
effectively
Financial management systems, especially
receivable, order entry and billing systems,
payables, and purchasing contain useful
information about customers/suppliers
Hence need data mining functions to unlock
the information
Accounting systems is expected to provide
self service functionality that allows
customers and vendors to maintain and query
their own data.
27E.g. Parcel/Courier Services
CROSS
FUNCTIO
NAL
ABM
BPR
OUTSOU
RCE
JIT
BUSINESS TACTICS
Activity-Based Management
ABM - a discipline that focuses on the management

of activities as the route to improving organisational
performance and the value received by its customers
ABC a method of assigning costs based on activities
Financial system must deliver 3 functions as a
minimum to handle ABC:
To capture analysis at the transaction level in order
to tag transactions to activities for recognising
activity costs
To query functional modules in order to gather the
information needed to truly represent a crossfunctional activity
To allocate costs on a rule-driven basis against
activities in order to build accurate picture of the
total activity cost.
29
Business process reengineering

(Reengineering)
A tactical implementation of a continuous
improvement strategy (analysis,
restructuring, and continuous improvement
of business process)
Rethinking and radical redesign of business
process improve cost, quality, speed, and
service.
Financial systems that have been designed
to be moulded around business processes,
usually those with a strong workflow
component or delivered with high functional
granularity are the types of applications
30
that
can take best advantage of BPR efforts
Cross functional team
31
Cross-functional teams
Workgroups
that cross the functional

boundaries of a business
Accounting system perspective:
workgroups whose working world
crosses application boundaries and
combines functionality from multiple
modules
Financial systems must allow the
assembly of functions around a user
group.
32
Just In Time (JIT)
33
Just in time (JIT)

Quality control for eliminating waste in
inventory by ensuring constant flow of items
Best practice strategy
System perspective: being able to identify at
any point in time the current state of a
transaction, particularly when a transaction
has reached the completion of its business
process
Demands accounting systems functionality
that provides the ability to query and manage
the status of a transaction irrespective of the
application module that currently owns the
transaction
Requires close integration between modules
such as sales ordering and purchasing to
34
create back-to-back transactions for faster
Outsourcing
35
Outsourcing
Replacing the internal services or products

with external services or products, usually for
cost cutting purposes
An implementation of the extended enterprise
and downsizing strategies reflects the
attempt by a business to focus on core
competencies
Accounting systems may become the next big
outsourcing project
Application service provider (ASP) a software
houses partner which will host a companys
software so that business can log on to an
applications as and when needs to.
36
Emerging IT trends 2013

1.
2.
3.
4.
5.
6.
Big data
Bring Your Own Device (BYOD)
Cloud computing
Internet of things
Mobile devices and applications
Social media/social network
The Star, Dec 31, 2012
Forbes, 2012
37
Mobile Platform
38
39
Mobile Platform (Whats app)

However, when analysing
WhatsApp by country,
Malaysia comes out top
with 77% of mobile
internet users on
WhatsApp, followed
shortly by South Africa
and Singapore at 76%.
In comparison, China,
South Korea and Japan
have less than 4% of
mobile internet users
using WhatsApp, partly
due to the popularity of
apps like WeChat, Kakao
Talk and LINE.
40
http://wearesocial.net/
Social media/network
41
Social network
42
http://www.slideshare.net/fullscreen/wearesocialsg/we-are-socials-guide-to-social-digital-mobile-in-
Social network
43
http://wearesocial.sg/blog/2012/10/social-digital-mobile-a
44
45
46
47
BYOD
48
Cloud computing
49
Internet of things
50
Big data
51
Where does accountant fit?
Information
systems?
Accounting
?
Information
Technology?
52
Business?
IT and accountants
Whether you are a financial analyst or controller, internal
controls auditor, external auditor, fraud investigator, or C-level
executive, Janis Parthun, Senior Technical Manager at the AICPA,
suggests, you are likely to be exposed to information technology
if you interact with data.
(AICPA, 2012)
As enterprises set out on the journey to becoming digital
businesses, identifying and employing the right technologies at
the right time will be critical. If they get it right, accounting
practicesandtheir clients stand to leverage the opportunities
and meet the challenges presented by the pace and
pervasiveness of technological change.
(GARTNER Report )
53
AICPA top ten technology priorities

2012
54
Source: AICPA (2013). Top 10 Initiatives Survey Re
Conclusion
Organisations need to consider the impact to
their competitive advantage prior to invest on
IT related solutions
Applicability of various IT solutions depend
very much on business strategy being
pursued by the organization
Execution of various strategies & tactics to
some extent affect financial function of the
organisation (availability and accessibility of
information)
Use of IT would facilitate more efficient
provision of financial and non-financial
information to support execution of business
55
Conclusion
Emerging technology nowadays offer great

opportunities & challenges for business to
sustain competitive advantages.
Integration of various IT tools into business
raises concern among the accountant
particularly on the risks and internal control
measures.
56

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Chapter 1 - Overview

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Business strategies and Business

current technology trends

Business or Technology First?

BUSINESS STRATEGY & IT

Porter, M. (1979) Five Forces Mode

Porters Three Generic Strategies

Overall cost strategy

Run-Grow-Transform (RGT) Framework

The Business of Change

A technique or methodology that, through

workers more autonomy and

less boundaries between

Mergers and acquisition (M & A)

Mergers and acquisition (M & A)

ABM - a discipline that focuses on the management

Business process reengineering

Cross functional team

that cross the functional

Just In Time (JIT)

Just in time (JIT)

Replacing the internal services or products

Emerging IT trends 2013

Mobile Platform (Whats app)

Where does accountant fit?

AICPA top ten technology priorities

Source: AICPA (2013). Top 10 Initiatives Survey Re

Emerging technology nowadays offer great

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