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Fully Automated Input-At the opposite extreme, the fully automated system employs a terminal as the input device. Again, input data are obtained from source documents. Once input, data are displayed on the screen, edited, and stored in the system for processing during later steps. This approach, becoming more cost-effective as the cost of terminals decreases, is an excellent method of ensuring accurate data input. Since reports can be no more accurate than the source data, this is a critical feature.

Data Manipulation

Manipulation is the process by which data are converted into meaningful information. There are five basic steps in manipulation: classifying, sorting, calculating, recording, and summarizing. The example below illustrates each of these; the means (automation or manual processing) by which manipulation occurs is discussed later.

Classifying-This involves coding source data according to a logical framework so they can be easily retrieved through other processing steps. In accounting systems, the MAS serves this purpose.

Sorting-Depending upon the purpose of the manipulation step, source data are categorized into meaningful groups. For example:

If the purpose of the manipulation is to produce functional cost center expense reports, then the source documents are sorted by cost center code.

If the purpose of the manipulation is to compare expenses by location, then the source documents are sorted by location code.

If the purpose of the manipulation is to compare expense trends over time, then the expense data are sorted chronologically.

Calculating-This is the process in which data are added, subtracted, multiplied, divided, or in which more complex mathematical procedures are performed. Calculations result in such "quantities" as percentages, totals, ratios, costs, statistical measures (e.g., Chi-square), and so on. For example, calculations may generate information concerning the account balance of a particular grant with comparisons between planned and actual revenues.

Recording-Sometimes the calculations (performed above) do not lead to a complete answer but only provide intermediate information that will in turn be used to produce the desired end product. When this occurs the results of the calculations

are recorded or stored so they may be used later. For example, To develop unit costs* three separate calculations are required (i.e., direct labor costs, other direct costs, and indirect costs per service type). The answers from each calculation are recorded and then combined with the recorded results to reach the unit cost.

Summarizing--This requires setting out manipulation results in a clear, concise manner. The precise format of the summary depends on the audience to whom the report is addressed. For example, unit costs may be summarized:

By type of cost (direct labor, other direct costs, and indirect costs) if the granting agency is concerned about the ratio of indirect to direct costs.

By unit of service if the report is to be used to develop a suggested sliding contributions scale.

It is easy to see that although each step can be conducted manually, a computer can be very helpful in the more tedious data processing steps. More quickly and accurately than the human hand, the computer can classify, sort, manipulate, report on, and summarize large volumes of data. Hence, there can be enormous value in the automated approach to data processing.

Although this is shown as step 4, it really must be attended first because all other data processing steps depend on the kind of reports AAA managers need.

Thus, the most important task in designing a financial management and accounting "system" is determining what data are most relevant to managers and how data will be used.

Report preparation is greatly enhanced by automation and actually is an almost automatic outgrowth of the data manipulation step.

Whether

Data can be stored in manual or automated files for future use. manual or automated, the files should be easy to access (e.g., by use of the MAS) and purge (i.e., eliminating information that has no further use).

See Chapter XIV.

2. HARDWARE AND SOFTWARE: A CLARIFICATION OF TERMS

Automated data processing systems are comprised of hardware and software. The distinction between these two "wares" is illustrated by analogy to a player piano:

The piano itself is equivalent to the hardware-the computer. It is simply a machine that without some instruction sits mute.

The punched tape that drives the piano corresponds to the computer software. It tells the hardware which keys to activate and which pedals to depress. Without the piano, the music tape (like the computer program or software) is incapable of making music.

The hardware and software are mutually dependent.

To carry the analogy further, if the cocktail bar in which the piano is to be installed stresses a modern tempo, the piano must be driven to play contemporary songs. However, if the proprietor is only able to find music tapes from the 1930s, the piano will be of little value in entertaining the clientele. Or if the piano can accommodate tapes 14 inches wide and contemporary songs are produced on tapes 12 inches wide, the proprietor faces an equally difficult situation. In the same way, the computer hardware and software must be compatible.

3.

A FRAMEWORK FOR EVALUATION: ELEVEN SYSTEMS EVALUATION

CRITERIA

As AAAs begin to explore data processing alternatives, they should be concerned with 11 critical system characteristics:

The system must be available as needed-Can the system be available when and as often as needed? Is there a waiting time to purchase the system or to obtain assistance in implementing it? Is the system still in the developmental stages and, if so, is a reasonable deadline likely to be met? If the system is to be shared by more than one organization, will the AAA be able to exercise priority on using the system? Are the foreseeable timelags tolerable given the AAA's data processing needs?

system

The system must be reliable at all times-Is the processing
reliable? (For example, if equipment is used, does it function
smoothly? If manual processing is employed, are the individuals de-
pendable?) Is there a backup process that can handle the work if
the equipment or individuals are out of commission? Are the facili-
ties for repair competent, responsive, and timely?

The system must stress security of information-Given the confiden-
tial nature of records, are the processing procedures designed to safe-
guard all information? Do processing procedures comply with the
Federal regulations? What routine precautions are taken to protect
information from damage from fire, flood, blackouts, or other dis-
asters?

The system must be able to turn around information in a reasonable time-Turnaround time is the length of time between step 2 of the data processing cycle (data entry) and step 4 (report output). Does the system produce routine reports on time? Does the system have the capacity to turn around nonroutine reports as needed with little delay?

If "off the shelf" software is used, it should be thoroughly suited to the AAA's needs. Many AAAs will find that prepackaged software systems (the piano music tapes) are well suited to some of their needs. What are the AAA's information needs? Does the prepackaged software meet them? Are mismatches between AAA needs and software capabilities tolerable, considering the expense of building a software package from the ground up or making programming modifications? Can the software be tailored in any way to make it more suitable? Can the AAA obtain proprietary rights to the software (i.e., buy the software rather than lease or rent it) so that changes can be made in it or so that the AAA will be protected if the software company goes out of business?

The automated system probably should be accompanied by considerable programming consultation services-If the AAA entertains the thought of purchasing hardware, what assistance does the hardware vendor offer in writing programs (software) for the computer? What is the cost of these services? What type of staff resources will the AAA require to develop and maintain its own software? What type of assistance can be expected after the initial startup period for such services as modifying or adding programming capabilities?

The system should be expandable enough to grow with the AAA over coming years-What financial management and other applications are needed? What is the maximum volume of transactions that can be handled by the system? How is the cost of additional transactions accrued? What additional hardware costs will be incurred to support expanded capacity?

The system should be relatively easy to install-If the system is to be installed on AAA premises, what renovations and physical accommodations will have to be made to the environment? How much space will be required and what functions will be displaced in allocating space to a computer?

The system should be fairly easy to implement-What time schedules can be predicted for the various implementation phases? What level and type of staff resources are required to implement the system? What types of training will be necessary to get staff "on board" the system? What types of forms will have to be designed for data origination and input?

The system should be simple to operate-What type and how many trained staff will be required to operate the system on a daily basis? What type of staff will be required to upgrade or modify the system over time?

The system should be cost-effective-Although these last questions are more difficult to answer, one must at least ask "What are the true costs of the system, including hardware, software (initial procurement or development), processing costs, staff salaries and training, installation and startup costs?" Are there any "hidden" costs? What are the guarantees that the costs will not increase rapidly? How do the costs of the alternative systems compare with the costs of the data processing (probably manual) system currently in place and are any increases in cost justified?

In short, this list gives the AAA a point of departure. By asking the questions, the AAA can begin to get an idea about the relative attributes of alternative systems.

As a primer on the various alternatives, the following Sections discuss-in broad brush strokes-the merits of the three major data processing alternatives. Keep in mind that within these broad categories the particular characteristics of individual systems vary considerably. Nothing can substitute for a penetrating analysis prior to committing to a data processing alternative.

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In-House Small-Business Computers: The Wave Of The Future

The evolution of computer technology has been rapid, and computers have grown in the direction of wider applications and user orientation. Until recently, however, computers remained sufficiently complex and costly that their utility in small businesses was severely limited. In the early 1970s, the industry branched in a radical direction applying advanced technology to a line of computers appropriate for small-business use.* For the first time the possibility of an AAA buying or leasing its own computer has become reasonable.

What is a small-business computer? In the broadest sense, a computer has five important components:

Input Mechanisms-Recall that step 2 in the data processing cycle requires that original data be entered into the system.

Small business is usually defined in the computer science literature as being between 50 to 150 employees and having not more than $5 million in annual funds. Clearly many AAAs fall within this definition.