One-time costs include the following:• Hardware acquisition. This cost includes the cost of mainframe, minicomputers, mi- crocomputers, and peripheral equipment, such as tape drives and disk packs. These cost figures can be obtained from the vendor.• Site preparation. This cost involves such frequently overlooked costs as buildingmodifications (e.g., adding air conditioning or making structural changes), equip-ment installation (which may include the use of heavy equipment), and freight charges. Estimates of these costs can be obtained from the vendor and the subcon- tractors who do the installation.• Software acquisition. These costs apply to all software purchased for the proposedsystem, including operating system software (if not bundled with the hardware), net-work control software, and commercial applications (such as accounting packages). Estimates of these costs can be obtained from vendors.• Systems design. These costs are those incurred by systems professionals performingthe planning, analysis, and design functions. Technically, such costs incurred up to this point are “sunk” and irrelevant to the decision. The analyst should estimate only the costs needed to complete the detailed design.• Programming and testing. Programming costs are based on estimates of the personnelhours required to write new programs and modify existing programs for the proposedsystem. System testing costs involve bringing together all the individual program mod- ules for testing as an entire system. This must be a rigorous exercise if it is to be mean- ingful. The planning, testing, and analysis of the results may demand many days of involvement from systems professionals, users, and other stakeholders of the system. The experience of the firm in the past is the best basis for estimating these costs.• Data conversion. These costs arise in the transfer of data from one storage mediumto another. For example, the accounting records of a manual system must be con-verted to magnetic form when the system becomes computer-based. This can repre- sent a significant task. The basis for estimating conversion costs is the number and size of the files to be converted.• Training. These costs involve educating users to operate the new system. In-housepersonnel could do this in an extensive training program provided by an outside or-ganization at a remote site or through on-the-job training. The cost of formal train- ing can be easily obtained. The cost of an in-house training program includes 190 Chapter 5: Systems Development and Program Change Activitiesinstruction time, classroom facilities, and lost productivity. This cost is often the first one cut to meet budgets, and such an action can be fatal to systems development (e.g., Hershey’s ERP implementation disaster was blamed in part on the drastic re- duction in employee training before “going live”).2 Accountants and auditors should be aware of the danger of cutting this important part of systems development.Recurring costs include the following:• Hardware maintenance. This cost involves the upgrading of the computer (increas- ing the memory), as well as preventive maintenance and repairs to the computer and peripheral equipment. The organization may enter into a maintenance contract with the vendor to minimize and budget these costs. Estimates for these costs can be obtained from vendors and existing contracts.• Software maintenance. These costs include upgrading and debugging operating sys-tems, purchased applications, and in-house developed applications. Maintenancecontracts with software vendors can be used to specify these costs fairly accurately. Estimates of in-house maintenance can be derived from historical data.• Insurance. This cost covers such hazards and disasters as fire, hardware failure,vandalism, and destruction by disgruntled employees.• Supplies. These costs are incurred through routine consumption of such items aspaper, magnetic disks, CDs, and general office supplies.• Personnel costs. These are the salaries of individuals who are part of the informationsystem. Some employee costs are direct and easily identifiable, such as the salaries ofoperations personnel exclusively employed as part of the system under analysis. Some personnel involvement (such as the database administrator and computer room person- nel) is common to many systems. Such personnel costs must be allocated on the basis of expected incremental involvement with the system.
đang được dịch, vui lòng đợi..