New Accounting Information Systems Failure


In every organization, processing of data to facilitate the decision-making process is important. This process begins with data collection and classification. The accounting information system (AIS) serves these functions, but it focuses on financial information. Romney and Steinbert (2012) define the AIS as a system for collection, recording, and storage coupled with processing of data required in the process of making organizational decisions.

Alzoubi (2011) describes the AIS to comprise “hardware, software, brainware, procedures, databases, and network communications technology” (p.10). In the process of implementing new AIS, failure is undesired; however, in many situations, it is inevitable. This paper draws from examples of failure in the implementation of changes in the AIS in two different organizations.

In the first organization, which I have worked for, documentation of failures of the AIS is not available in the public domain, but I have made efforts to describe the failures through my experience, while working for it in the accounting department. The second organization is IBM. The failure of implementation of the AIS changes at IBM is freely available within the public domain. Hence, various aspects leading to its failure provide important lessons for various organizations seeking to implement changes in their AIS future

Implementation of the AIS

Accounting Information System collects and processes financial information for dissemination to various organizational stakeholders including governments and external agents. In the process of installing the AIS in an organization, the implementation entails one of the most essential stages. Indeed, while the development of the AIS may be accomplished without challenges, the implementation phase may result in partial or even permanent failures of adoption of changes in the AIS. For the organization that I worked for, failure of the AIS occurred at the implementation phase due to various challenges.

The organization operates in the manufacturing industry. The old AIS focused on the evaluation of performance of the organization and it had decision constructs for products’ costing coupled with financial reporting. The organization deployed three main costs control centers in an effort to assign various production costs coupled with determination of productivity levels. The control centers tracked controllable costs, indirect costs, uncontrollable costs, and direct costs.

In the structure of operation of the organizations, there were a myriad of services centers, which provided services support to one another. They also provided services to the three centers of production costs control via step-method. The AIS depended on the top-down leadership approaches in the calculation of budget amounts provided to various production centers’ managers. These budgets had controllable, uncontrollable, direct, and indirect costs arising from overheads allocations. The system also tied the incentive systems for employees to the organization’s consolidated profitability fund kitty.

The new AIS system was develop to address various challenges related to the old system. It was expected to deploy bottom-up approaches in managing organizational costs. This aspect required purchasing of new AIS software to enhance real time costing coupled with evaluation of performance of the organization.

The new system was scheduled for implementation in a manner that ensured assignment of departmental production costs on ‘the user basis.’ This move would ensure that the new system facilitated various departments to produce accounting reports containing only costs that are controlled by managers of the various production centers. This scenario could only occur if budgeting function shifted from leaders at the top most hierarchical positions to the service department managers.

In addition, the new system was to ensure that service centers support the production centers. Employees in both centers would share profits, and thus eliminate the challenge for consolidation of employees’ incentives to the organization’s consolidated profitability fund kitty. On evaluation of the new AIS, the accounting controller in the organization believed the change was important as it delivered benefits to all organizational stakeholders. Unfortunately, its implementation failed.

Failure factors for the AIS

Organizational structure contributes to success or failure of implementation of the AIS within organizations. Scott (2001) holds that organizational structure directly affects information systems within organizations. The new AIS at the organization depended on computerized information system for its operations. This assertion suggests that it was subject to the company’s information system operations.

Beydokhti, Hafezi, Vaezi, and Beydokhti (2011) support this argument by adding that hierarchical “organizational structure that contains a basic framework information system circulates information in accordance with the information in hierarchical organizational structure” (p.17). Complex organizational structures create the necessity for the development of more complex AIS implementation controls, which in turn reflect more complexity in decision loops for information systems facilitating the AIS change.

Even in relatively simple organizational hierarchical structures, aspects characterizing an organization such as organizational politics, styles of leadership, culture of an organization, organizational stakeholders, and goals and missions of an organization also affect the implementation of any organizational change including the AIS change (Scott, 2001).

User resistance to adoption of change

The operation of the new AIS at the organization relied on the purchased the AIS software to simplify accounting tasks. This task involved the alteration of the traditional approaches of accounting practices. Alzoubi (2011) notes that implementation of the AIS changes in an organization is characterized by resistance as a reaction to “technological implementation of changes” (p.9).

The change at the organization attracted all sorts of fear from employees in the accounting department, which was in charge of the change implementation. People feared losing jobs, their work procedures being disrupted and increased concerns over the need to learn new skills for use of the systems, which they feared could set avenues for demotion for those unable to perfect their skills towards the use of the system fast enough.

Any change in an organization can bring better ways of doing work and create opportunities for career growth of employees and the managerial staff such as becoming more equipped with proficiency in new technologies. However, employees commonly anticipate the worst implications for adoption of change (Romney & Steinbert, 2012). This observation was the case for the organization. Managers could not accept breakdown of the hierarchically allocated organizational tasks associated with the old AIS.

The fact that the new AIS systems required learning made people at the organization to develop perceived fear for the tasks’ complexity. This aspect truncated to the failure of the systems since “users’ perceived tasks’ complexity relates to how well they can adopt to the system and negatives around it” (Alzoubi, 2011, p.13). This assertion suggests that the perception of complication of tasks on the implementation of the new AIS negatively correlates with successful implementation of the AIS.

Lack of clear communication on the purpose of the AIS change to all stakeholders

The implementation of change in the AIS requires good will from all organizational stakeholders. In the organization that I worked for, the change development team did not engage in ardent communication of the benefits accruing from the adoption of the new AIS. Failure to communicate effectively affects negatively the quality of the new AIS due to failure of different key players to make optimal contributions to the successful implementation.

Wongsim and Gao (2011) argue, “Information quality dimensions have a positive relationship with accounting information system adoption process” (p.7). The quality of information is also important in enhancing the adoption of change in the AIS. Even if the change in the AIS at the organization requires software and computer system to enhance expedition of financial information, supply of data into the system is important. The data is derived from various people. Therefore, if such people have a negative perception about the purpose of the new system, the information supplied into the AIS system suffers quality challenges.

Senior Executives and management support

The adoption of change in the AIS in the organization required alteration of the decision-making process from top-down to bottom-up. This move required the support of senior management and top executives. The implementation required the ceding of some hierarchical powers, but this suggestion was not well received in the organization. In a bid to avoid the failure of the implementation of the system, support from the senior management in creating user awareness about the likelihood of the adoption of the systems in resolving problems affecting the productivity of the organization was important.

This assertion suggests that the senior management and executives needed to bring together all the change implementation participants and inculcate positive attitude towards the change process. The rationale for this role of executives and seniors management in enhancing implementation of change in the AIS rests on the argument that the senior executives and managers “have a direct impact on thinking of users, their participating, and helping on rapidly implementing information systems” (Scott, 2001, p.105). Indeed, the senior executives’ awareness for the new AIS portrays solutions to various subordinates on the problems to be resolved by the system.

The involvement of senior managers and executives in solution selection can increase the adoption of the new AIS. Alzoubi (2011) supports this rationale by claiming that being in the “choosing and installation stages could be a successful criterion for the AIS implementation” (p.16). The senior management and executives can also influence the type and nature of information availed for processing by the AIS to foster transparency and mitigation of risks of misstatement of accounting reports through falsified supply of information fed into the new AIS.

Evaluation of failure

System failure for the new AIS can occur at design, implementation, or operational phase. At the design phase, the system architecture is developed, which requires inputs from all organizational strategic decisions and plans’ developers. In the organization, this aspect was not exhausted optimally. Consequently, the implementation of change in the AIS started prematurely.

While information systems’ experts in charge of the technical aspects of the new AIS system design did their work exhaustively, inadequate involvement of the senior management in the design phase marked the initial stages for failure of the adoption of change in the AIS. The most significant failure occurred at the implementation phase. In a bid t avoid system failure, apart from the active involvement of all executives and managers in the design phase, their total commitment in the implementation phase was required.

The rationale for holding this position is that after design and testing of the system, the technical designers pave the way for organizational system implementers – mainly the system users, to proceed with the implementation process. On resistance to adoption of change, bureaucratic implementation is applied. However, even this option requires the senior executives and management to exercise their power of coercion; unfortunately, this exercise could not take place since they were also uninformed and they did not embrace the new system positively.

How the AIS implementation best practices reduce failure

The implementation of best practices while adopting change in the AIS is important in helping to mitigate failure. Best practices help in drawing the attention of all organizational stakeholders to the desired change. Through the engagement of the stakeholders in the process of making decisions and determination of the functionality levels of the AIS, failure mitigation becomes a possibility. In essence, failure at the implementation phase originates from unanswered interrogatives on the overall purpose and implications of new AIS by implementers. Such questions should have been answered in good time so that where necessary change is made at design and early phases of implementation of new AIS.

The above arguments suggest that best practices in the implementation of the AIS acts as the check for possible failure or inconsistency of a system with organizational stakeholders’ anticipations. The rationale for adoption of best practices in the implementation of the AIS to avoid failure oscillates around the need to plan for organizational change. Planning helps in forecasting likely friction in actual change implementation process. Consequently, such challenges are addressed early enough through corresponding changes in the AIS’ architectural designs. This way, best practices help in ensuring that all players approach the process of implementation with good will and enthusiasm.

List of Best practices that organizations should use to avoid failure

Experience in implementation of change in the AIS provides various lessons for other organizations seeking to implement such changes. Such lessons help in the development of best practices to mitigate failures of the implementation process as discussed below.

System expectations

New accounting information systems must meet the anticipations of the users. Wongsim and Gao (2011) state that the capacity of the AIS to “meet the expectations of users is one aspect that could contribute to the success or failure of an information system” (p.9). The significance of this best practice is exemplified by a case where a department within an organization anticipates the discretion of developing a system and its implementation to fall under it.

Where an organization considers outsourcing the work, people within the department may fail to embrace the new system. Before full-scale implementation of the AIS, implementation of pilot systems encompasses an important step towards testing the capacity of systems to meet user anticipation (Hines & Carrington, 2010). Where challenges such as failure to meet functionality anticipations by the system user are encountered, they can be corrected in the full-scale system design and implementation process.

Organizational culture

The implementing new accounting information system calls for an appropriate organizational cultural context. Culture defines the ways of executing organizational tasks. If the culture fosters top–down managerial practices, the implementing change in the AIS requiring the cultures of bottom-up managerial practice will attract challenges leading to failure of implementation.

Consequently, changing the organizational culture to correspond to the requirements of new AIS encompasses one of the best practices in the successful implementation of changes in the AIS in any organization. By first changing the culture in the departments affected by the new AIS, it means the implementation of the system only amounts to furthering already normalized way of doing work.

System impacts

New AIS produces both negative and positive impacts on organizations. Before the implementation of such a system, evaluation of its likely impacts is incredibly important. It helps in adopting appropriate strategies for communication change to reduce possible negative impacts on the operation of organizations.

Through the evaluation of the implication of new AIS, redesigning of the system becomes possible so that the system does not change the perceptions of its expected users on the organization. This assertion implies that the AIS’s design should ensure the improvement of the productivity of employees or making their work of generation of financial information easier, but not create the perception of insecurity among its users.

System use

In order to mitigate the challenges of resistance for change adoption, an organization should run the old AIS in parallel with the new system over the learning period. This aspect gives employees with difficulties in use of the new system an alternative system to complete similar set of tasks in an effort to eliminate the perception of likelihoods of demotion on failure to achieve certain performance levels.

Parallel system also provides an organization with an opportunity to measure the utilization levels of the new system, which helps in determining whether the new AIS has simplified or complicated the process. Higher rates or preference rates in the new AIS use in comparison to an old system indicate its positive reception by employees, which is a key indicator for system’s success.

Deployment of financial management systems

Successful implementing of financial management systems such as the AIS requires organizations to consider certain principles that they should not follow to avoid failure. The previous discussion in this paper indentifies negligence of even one organizational stakeholder in the design and implementation stages of new AIS as one of such principles. An attempt to implement new AIS at IBM provides other principles that organizations seeking to implement new AIS with success should not consider.

Two important principles are failure to manage proactively and loosening the new AIS’ implementation scope. Managing proactively implies that the management personnel within an organization deserve to take central roles in the implementation process of the new AIS. IBM calls for the management to adopt project management approaches in the implementation of new AIS programs (Hines & Carrington, 2010). This requirement accompanies the deployment of methodologies proven to provide substantive guidance to projects’ success, utilization of risks management approaches, and streamlining various oversight roles coupled with responsibilities to enhance accountability in the implementation process.


The implementation of new AIS involves targeting to achieve specific outcomes as defined in the scope of a new program. Therefore, ensuring success in the implementation process calls for program implementation managers to tighten the project scope. This goal is accomplished through delivering “functionality in phased successive chunks targeting specific processes and outcomes” (Hines & Carrington, 2010, p.56).

The implementation of the principle calls for organizations to set clear milestones in a bid to avoid failure followed by successive evaluation of the implementation process in the effort to determine the extent to which specific milestones have been achieved. In a bid to ensure the achievement of full functionality of all phases of the different components of the implementation process, organizations should focus at particular priority areas separately. This process involves intense learning and the leant lessons should be applied in other phases to mitigate duplication of past mistakes.


Alzoubi, A. (2011). The Effectiveness of the Accounting Information Systems under the Enterprise Resources Planning (ERP). Research Journal of Finance and Accounting, 2(11), 10-19.

Beydokhti, A., Hafezi, S., Vaezi, M., & Beydokhti, A. (2011). Study of Influencing Factors in Successful Implementation of Accounting Information Systems (AIS) On Listed Companies of Tehran Stock Exchange. International Journal of Finance, Accounting and Economics Studies, 1(2), 15-27.

Hines, D., & Carrington, A. (2010). What We Know: Lessons Learned Implementing Federal Financial Systems Projects. Web.

Romney, M., & Steinbert, P. (2012). Accounting Information Systems (12th ed.). Upper Saddle River, NJ: Pearson.

Scott, G. (2001). Principles of Management Information System. New York, NY: McGraw-Hill.

Wongsim, M., & Gao, J. (2011). Exploring Information Quality in Accounting Information System Adoption. New York, NY: IBIMA Publishing.