CHAPTER 2
Foundational Concepts of the AIS
STUDY OBJECTIVES
This chapter will help you gain an understanding of the following concepts:
The interrelationships of business processes and the AIS
Types of accounting information systems
Client-server computing
Cloud computing
Accounting software market segments
Input methods used in business processes
The processing of accounting data
Outputs from the AIS related to business processes
Documenting processes and systems
Ethical considerations at the foundation of accounting information systems
Appendix: Basic concepts of the Resources, Events, Agents (REA) Model
Since Au Bon Pain, the Boston-based bakery-café chain, redesigned its interior restaurant spaces, many of its franchisees adopted a simultaneous roll-out of a new ordering system using Apple iPads. At these locations, customers are greeted by a server stationed near the front counter, where orders are taken and entered on the iPad's touch screen. Under a traditional ordering system, prior to the use of iPads, servers at Au Bon Pain took orders manually by writing them on a slip.
During the bustling lunch hour at the Au Bon Pain café at Harvard Square near Harvard University, many of the customers require service at the same time. Upgrading to the iPad system tremendously speeds up the process of taking customer orders. Lines tend to be shorter, as servers and customers can more readily handle the dozens of options available on an Au Bon Pain menu. The efficiency increase allows the cafe to increase revenue by serving more customers. In addition, some of the highest-volume Au Bon Pain franchises found that they are saving up to 1,000 sheets of paper per day since changing to the iPad ordering system.1
Some high-end restaurants are also adopting similar iPad ordering systems. For example, South Gate restaurant in New York's City's Central Park is using an iPad app to manage its wine list,2 which includes approximately 650 selections. The iPad provides customers with detailed information about the selections and allows them to search for a bottle by wine region, varietal, vintage, or price. Even fastfood restaurants such as McDonalds and casual eateries such as McAlister's Deli are experimenting with iPad ordering systems. Not only does this save much time and legwork for servers, it increases the overall operational efficiency of the restaurant. These systems also increase the accuracy and the pricing of items in the order.
As seen in this example, technology has allowed the hospitality industry to provide better, faster, and higher quality service to customers. This trend of taking restaurant orders with an electronic device continues to grow. In fact, many software companies offer a variety of systems that allow servers to take the customers' orders on a hand-held device such as an iPhone or iPod. These are examples of using IT to enable business processes. In addition to the changes for customers, the business processes and the accounting information systems must adapt to these new technologies. These handheld wireless order taking systems improve the business process of taking and filling customer orders, in addition to changing the way the data for each sales transaction are captured. The older method of writing food orders on a hand written ticket and then taking that ticket to a terminal to key in the order is not only less efficient, but more prone to errors. IT systems that reduce errors result in more accurate information in the accounting information system.
The point of these examples is to illustrate that business processes, IT systems, and the accounting information system are inextricably linked. Using IT to enable business processes will change these business processes as well as the manner in which accounting data are collected. This is true not only in the hospitality industry as in the examples above, but in all industries. All industries have been affected by technology and have in most cases revised business processes and accounting information systems to take advantage of this technology. IT systems have dramatically affected the input of data into accounting information systems, the manner in which data are processed, and the outputs of the accounting information system. This chapter begins by revisiting the fundamental concepts of business processes and accounting information systems, emphasizing the interrelationships of the two. It also describes accounting software and the various data input methods, processing, and output of accounting information systems. In addition, important tools in the use of accounting information systems are described. These tools are the methods to document accounting information systems and client-server computing.