For the pass tens year, there is more and more company are affected by computerize transaction processing and electronic telecommunication such as internet, intranet, extranet. Companies are increasingly multi-faceted information, from the traditional information system is no longer enough to provide in-depth understanding of the facts. Therefore, the company has to understand its business deeply and gather their hidden opportunities, hence, to compete with other, company has to change from manual to a new system name Enterprise Resource Planning (ERP). ERP is a system that have a common data based and supported by multi-purpose application software to link all system together to help a company manage its business such as, product planning, purchasing, inventory control, communicate with supplier and customer, provide customer service, tracking order, finance and human resource aspects. (Pankaj Sharma, 2004). The purpose of ERP is to help a company improving the on return on investment, it also acting as a decision support system to help the company to made better decision, streamline the communication and information flow between department to improve their business operation and achieve the business goal effectively and efficiently (Linda Bruton).
2.0 Benefits and Drawback of Enterprise Resource Planning (ERP)
2.1The benefits of ERP system
There are several benefits can be gained through implementation ERP system in an organization. According to Alexis Leon, ERP system may give several benefits on operational control, management control and strategic planning. (Alexis Leon, 2007)
2.11 Help reduce operating costs
ERP system is trying to incorporate business process together with all departments into a single wide enterprise information system. The main benefit of ERP system is to strengthen coordination of all departments and increase the operating efficiencies. The most obvious and immediate benefit from using ERP system we can expect or as we can see is reduce operating cost, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs. (Anthony, R. A., 2005)
2.12 Facilitate Day-to-Day Management
The second benefits from using ERP system is facilitate day-to-day management. The implementations of ERP systems foster the establishment of backbone data warehouses. ERP system allowed management to have up to the minute access to information for a better decision making and managerial control with no difficulties. ERP system helps to observe actual cost of activities and perform the costing of the activities. (Dan Remenyi, 2007)
2.13 Flexibility
The next advantage of using ERP system is the flexibility of the business function. With ERP, different language, currencies, accounting and etc can be encompassing into 1 system, and the overall management of a company's multiple locations can automatically be pack and implemented. In order to grapple with the company globalization, flexibility is very important, it can be say as a major advantage, it not only for development and maintenance, but also in term of management. (S. Parthasarthy, 2007)
2.14 Use of Latest Technology
The next advantage of implementing of ERP is to fully utilize the latest development in Information Technology. In order to grow and maintain that growth, the ERP vendors realize that the latest developments in the field of Informational Technology have to encompass by them. Without wasting of much time, those vendors quickly accommodate or change their existing system to the latest Information Technology, for example, open system, server technology intranet Computer Aided Acquisition and Logistics Support, electronic commerce and etc. With only this quick changes in the Information Technology, the flexible of the future business can only possible be change. (S. Parthasarthy, 2007)
2.2 Drawback of ERP system
Besides advantages, ERP system also has several drawbacks.
2.21 Expense and Time Implementation
Implement a full form of ERP system is very expensive and taken up a lot of time. Even though ERP system provide a lot of strategies advantage by a company TPS streamlining, a big firm also need to use up three to five year and spend about ten million dollar to develop a full and successful ERP system. (Ralph M. Stair, George Reynolds, George W. Reynolds, 2008)
2.22 Difficulty Implementing Changes
At certain circumstances, a company has to change their daily operation from the basic in order to meet with the ERP system best practice work process. This changes will cause those long time worker or high age work to quit their job or retired from the job instead of going through all this new changes. This will cause a firm to face a problem of shortage of experience worker. Sometime, the best thing or system not only cannot lead a firm to the best form but into the other way such as causing the firm operation disruption. (Ralph M. Stair, George Reynolds, George W. Reynolds, 2008)
2.23 Difficulty Integrating with Other System
Nowadays, a lot of company, they have their own other system that need to integrate with ERP system, for example, financial analysis program, e-commerce operation, and etc. (Ralph M. Stair, George Reynolds, George W. Reynolds, 2008). A lot of companies have the same problem such as having difficulties to integrate the other system with ERP system. (Inc Kogent, Kogent Learning Solutions, Inc, 2009). In order to do so, those companies have to spend additional money to buy certain software to create these links. (Sergio Tenreiro de Magalhaes, Hamid Jahankhani, Ali G. Hessami, 2010)
2.24 Risks in Using One Vendor
A firm mostly will not change to another vendor ERP system due to a high cost changing. (Sergio Tenreiro de Magalhaes, Hamid Jahankhani, Ali G. Hessami, 2010)
When or after a company adopted ERP system, the vendor are no longer or less interest to listen and concern about their customer. These will lead to a risk of the vendor will just let its product to be superannuated or out of business. When the firm selecting a ERP system, is not only choosing the best software, but also the best business partner. Choosing the wrong business partner will lead the firm to decease. (Ralph M. Stair, George Reynolds, George W. Reynolds, 2008)
3.0 Role and purpose of Accounting Information System (AIS)
Accounting can be defined as the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of information. (K.M. Vihermaa, 2008). Accounting Information System is a sub system of a company Managing Information System (MIS). Company use MIS to help company to find info for a better decision making and ensure the profitability of the business operation is maintain. The ordinary AIS are based on paper work that contained a company financial transaction. Nowadays, AIS has change to more computerize due to pass several ten years of the growth of technology, human are less using paper system but using latest AIS system. AIS have 3 main features, financial transaction recording, financial information reporting and non financial transaction process. The financial report will be produce after an accountant key in all related financial transaction data. Company management must make sure the size of the AIS and how much and what type of data to be collected. Data will input by human and process information, all information will recorded electronically, and with the human effort, will allow the manager to select the information faster. (Osmond Vitez, 2010). The purpose of accounting is to depict the firm profit and financial status in a more realistic way. A lot of country, their accounting is based on “true and fair†concept. (K.M. Vihermaa, 2008).
4.0 The impact on AIS by implementation a full ERP system.
Nowadays, most of the listed company has chosen ERP system as their major system, following by this, those companies had change their way of the accounting information is process, analyzed, audited, and disseminated. ERP adoptions lead to increased trade between the financial statements for information related to the reliability of information and reduce the need for external users. After implementing ERP system, the company realizes that there is reduce on lagging report and also increase in the level of discretionary accruals. These results should be of interest to the initial preparation of financial statements in the ERP industry, adopted or applied with a new version of ERP applications, auditors and the ERP system, customer service and supervision of financial market regulation and integration of. (Joseph F. Brazel, Li Dang, 2005)
5.0 Major Implication for AISs
