Business Process Analysis: Optimizing Management Accounting Services with IT and Re-engineering

This report delves into the analysis and optimization of a business process model for outsourced management accounting services. It identifies participants, inputs, and outputs, analyzes the current process, highlighting its strengths and inefficiencies. The report then explores how IT and process re-engineering can address these inefficiencies, suggesting ways to improve data management, communication, and overall efficiency. Finally, it proposes a new business process model, outlining its operation and the benefits it offers through the integration of technology and re-engineered workflows.

Business Process Analysis
1

Table of Contents
Introduction....................................................................................................................................3
1. Identify participants, inputs, and outputs............................................................................4
2. Develop the current business process model and explain it step by step..........................7
3. Identify current strengths and inefficiencies that exist in the current system..................9
4. Explain the ways in which the business process inefficiencies can be corrected through
the use of IT and process re-engineering...................................................................................12
5. Suggest the ways in which technology can improve the business process.......................15
6. Describe the proposed business process model and explain how the new re-engineering
system would operate..................................................................................................................17
Conclusion....................................................................................................................................20
References.....................................................................................................................................21
2

Introduction
The above report aims to analyze as well as articulate business processes. Besides, it aims to give
the reader the understanding of the necessity and importance of management accounting system
in any business organization, be it a manufacturing concern or service-oriented industry.
Accordingly, there must be a proper business process model in every industry. There must be a
concept of business process re-engineering whose main purpose is to evaluate and monitor
existing business process model being followed at present.
The given report deals with a situation in which a particular or specified business organization
used to follow an outdated business process model which needs to be modified to cater the needs
and requirements of the current environment. As a result, an attempt has been made to carefully
analyze and interpret the existing business model and the requirement to switch over the new and
upgraded business process model.
3

1. Identify participants, inputs, and outputs.
Participants:
The various participants included in the outsourced management accounting services are those
persons or corporates that are included in the formulation and implementation of such
management accounting services or those professionals that are not included in its
implementation but will get affected by its formulated or implementation in any manner. As
such, they are also participants.
Image 1: Participants of proposed business process
Source: By Author, 2018
From the above diagram, the reader or user of the report will get an idea about the various
participants of the proposed business model.
1. Small & medium enterprises or organizations: These are the organizations or business
enterprises that are will formulate and implement the proposed business process in the business
organization. These organization will have to confirm themselves whether it will be beneficial
for them to apply such business process in their organizational structure.
2. Personnel or employees of entities: It is the employees working thereunder who will actually
work in such a manner that any or new business process will be implemented. As such, it is the
4
Competitors
Small &
medium
businesses
Several pilot
clients
Personnel or
employees of
entities

next step after the final decision of the management of the concerned business regarding the
implementation of the business process.
3. Pilot clients: Since the business process is in the pilot phase, it is under testing phase and as
such, several and various pilot clients used to perform various operations and tasks thereon.
4. Competitors: After the implementation of the business process, the competitors of the
concerned business enterprise will also get affected. Since they want to retain market share, they
will also try to implement and imply such business process in their organization as well.
Inputs:
The inputs to business process are some transactions or documents that need to be uploaded to
the business process and accordingly, they will be processed and at the end, the final outcome
will be derived.
The basic and prominent inputs required in the business process can be explained below in the
form of a diagram:
Image 2: Inputs required in the management accounting system
Source: By Author, 2018
It can be observed from the above diagram that there are various inputs that are required in the
management accounting system. It is important to note that the above inputs are exhaustive and
5
Accounts receivable
copies Customer information
Supplier information Details regarding
creditors payment
Inputs required in the
business process

as such there can be other inputs as well. Since the accounting software is in the pilot phase,
there cannot be any specific list depicting all the possible lists of inputs.
Outputs:
By properly and adequately inserting and applying the inputs, the required and desired outputs
can be achieved. The outputs can be defined or expressed in many terms or ways including
quantitative and qualitative terms. For the better result, everyone must apply inputs keeping into
consideration the outputs that it wants from the management accounting system.
Accordingly, the outcomes or outputs that can be obtained from the management accounting
system can be listed below:
 Proper recording of data
 Updated data regarding the amount to be paid to the creditors
 Correct processing of invoices
 Suitable and correct expense claim processing
6

2. Develop the current business process model and explain it step by step.
The General Management Accounting Services current process can be explained with the help of
diagram as depicted below:
Image 3: A Current business process model of GMAS
Source: By Author, 2018
The above flow chart explains the diagrammatic representation of current GMAS process model
in the sequential order that exists in the current scenario.
There are various specified steps which need to be adhered and followed strictly and that too in
the pre-determined sequence. Following such steps in sequence will help to achieve the desired
output and outcome.
In the first step, the sales department of the concerned business organization has to send contract
copies to the Accounts Receivable (AR). This will inform the AR to know in advance the
amount that needs to be recovered from the accounts receivable. Accordingly, they create two
copies of invoices meant for different purposes. The major and predominant purpose of accounts
receivable is to maintain information relating to the amount that can be recovered from
customers. The invoice should be properly dated and stamped. Besides, all the necessary details
should be mentioned or specified on the invoice. In the absence of any information, there is no
use of invoice.
7
Sales
team send
copies of
contracts
to A/R
Copies of
invoice is
created
Amount
will be
received
from
client
Reports
will be
generated
by AR

On the date of maturity, if any customer fails to make payment then the concerned AR
department have to send a reminder to that particular or specified customer. In case, the default is
made by the more than one customer, then AR needs to prepare a list of those customers who
have failed to make payment on the due date or on the date on which they were required to make
payment.
One copy of the invoice is created for reference purpose so that can be referred in the foreseeable
future. This will help the concerned business organizations to prevent themselves from further
litigations and penal provisions.
The amount will be received from the customers on or before the date specified. If, it is found
necessary, the customers can be given reasonable discount or rebate or cash-back so that they can
be motivated to make further purchases in the nearby future. This will indirectly help to maintain
customer loyalty and it will help to retain existing customers.
At the end of a certain and specified period, the AR department of the concerned department of
the organization prepares various types of reports relating to AR. This will help the readers and
uses to understand an in-depth knowledge regarding the various classifications of AR and its
other related information.
The only purpose of the current business model is to fulfill the requirements of top or strategic
level management since they are the one who is responsible for maintaining necessary or
adequate organizational structure in their concerned business enterprise. For this purpose, they
must continuously evaluate and monitor their existing business or management process. The
business model must cater to the needs of the current environment scenario. Only suitable and
correct business model will help to achieve the overall organizational objectives as goals.
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3. Identify current strengths and inefficiencies that exist in the current system.
There are many flaws or weaknesses in the current business process. The concerned business
organization needs to make suitable modifications or changes that will remove the weaknesses or
errors in the current management accounting process.
The major current strengths in the current system are as follows:
 There is proper documentation of the records pertaining to the accounts receivable due to which
there are very fewer chances of any error or omission in relation to accounts receivable. Any
mistake or fraud in information relating to accounts receivable can prove a disaster to the
company. A continuous loophole can bring closure to the business operations of the business
organization.
 There is a direct and proportionate relationship between the inputs and concerned outputs. This is
imperative for a company in such a tough competition area. The absence of identifying and
determining relationship will create difficulties to such organization. This information is equally
relevant for the determination of relationship that exists between cost, volume, and profit.
 The company is well aware of the amount and quantity of resources that it requires to achieve the
desired output. Thus it knows clearly about the inputs that are required so that required outcome
can be achieved. This has been possible only because their management system facilitates them
to properly identify and determine the inputs or resources that it wants and that too in priority
order. There are many organizations which clearly don’t know about their requirement.
9
Proper documentation and maintenance of records
Direct relationship between inputs and outputs
Full knowledge about the quantity and amount of resources

Image 4: Major strengths of the current systems
Source: By Author, 2018
The loopholes or weaknesses in the current business process are as follows:
 There is lack of coordination and management among the various departments or segments
functioning or operating within the business organization. Maintaining effective coordination is
of utmost importance to the business organization otherwise it cannot achieve the goals where it
wants to be in the foreseeable future.
 All the data and information pertaining to quantitative data is maintained in records only.
Keeping into consideration the modern and dynamic environment, it is essential to maintain data
online and that too on real-time basis. Retaining data in real-time will facilitate all the concerned
departments or segments to coordinate with each other. This will also make the transaction
processing system efficient as well as effective.
 The invoices are prepared in written format. The management information system should be
modified in such a way that the invoices can be generated from the customized accounting
software. Such generation of invoices will reduce the possibility or chances of errors in such
invoices. There is no chance of any alteration or modification in the invoices since all the
invoices have been generated from the software. Accordingly, there is no possibility of any
window dressing. In other words, there is no billing software in the management accounting
software. Any misplace of invoice will lead the business organization to face litigations as well
as penal provisions.
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Image 5: Major weaknesses in the current systems
Source: By Author, 2018
11
Lack of coordination and cooperation
Data is maintained in records only
There is no billing software

4. Explain the ways in which the business process inefficiencies can be corrected through the
use of IT and process re-engineering.
Different ways can be suggested through which the inefficiencies of the current process which
has been followed in the organization can be corrected with the use of IT and re-engineering
(Chandna and Ansari, 2012). The current software Global Management Account Services which
is used by the organization is facing various problems and difficulties (Five technologies, 2018).
According to this software, the competitiveness, in the long run, will totally dependent on the
efficiency and the effectiveness of the processes of the business (Goksoy, et. al., 2012). The
process which is used for the invoicing and claiming should be changed as it’s a lengthy process.
The use of IT can help in the improvement of the business inefficiencies (Goksoy, et. al., 2012).
As with the use of the IT the software will be able to track all the details related to the accounts
receivable, payable and invoicing (Five technologies, 2018). There are various other ways also
which can enhance the business efficiency. Some of which are:
Image 6: Enhancement of business inefficiencies through the use of IT.
Source: By Author, 2018
Centralized Database: The database should be centralized so that the easy access can be done
to the data for all needs. Whenever the reports are demanded the data can be easily exported to
the excel files and the external systems (Five technologies, 2018).
Instant Access: Through the use of the IT the data can be easily accessed by the individuals
everywhere and anywhere which will, in turn, increase the efficiency of the business (Five
12
Centralised Data Base
Instant Access
Ability to Scale

technologies, 2018). The software which is currently used by the organization is not easily
accessible to the current technologies will help in improving the same.
Ability to Scale: As soon as the use of the system is increased, the opportunity to integrate the
related functions also increases. These opportunities welcome the new requirements in the
business for each product.
Through the business process re-engineering also the business process inefficiency can be
improved as it has been identified as one of the best ways of improvement in the organization
(Five technologies, 2018). It involves introducing the great idea in the business to increase the
productivity. There are various benefits which will be provided to the organization such as:
Image 7: Advantages of the re-engineering
Source: By author, 2018.
Cost Effectiveness: The re-engineering means the introduction of the new ideas in the existing
system so it involves the less amount of the cost as compared to that of the new ideas
(AbdEllatif, et. al., 2017). The system of the re-engineering will help to avoid the risk factors in
the organization.
Quality Improvement: By the improvement in the existing system of the organization the
employees will get the responsibilities and hence the quality and the quantity of the output will
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Cost
Effectiveness
Quality
Improvement
s
Lower Risks Exposure of
Business Rules
Advantages
of Re-
Engineering

increase (AbdEllatif, et. al., 2017). With the increase in the quality of the organizational
products, the competitive spirit of the organization will increase in the external market.
Lower Risks: With the enactment of the re-engineering in the organization the risk factors will
reduce. So this will enable the improvements in the working conditions of the employees and
also through these techniques business benefits can be achieved (Goksoy, et. al., 2012).
Exposure of Business Rules: The process of the re-engineering means to bring the
improvements in the existing system of the organization (AbdEllatif, et. al., 2017). Once the
existing system of the organization is improved it will also lead to the exposure.
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5. Suggest the ways in which technology can improve the business process.
Improvements in the business process and technology are parallel to each other (Chandna and
Ansari, 2012). Continuous improvement in the existing policies of the organization helps to increase the
efficiency and maintain the accountability (Bodawala, 2018). The business process improvements can
be done through the technology in the various ways:
Image 8: Business process improvements through Technology
Source: By Author, 2018.
Know the product and its potential: The capability of the product is evaluated that how long it
will benefit in the near future. This evaluation is done as it provides the benefit to the business
process (Bodawala, 2018). The feedback is taken from the members of the other departments and
they are asked to prepare the proper plan that how the new technology will be implemented in
the organization so that the actual results can be calculated.
Ask Why: The employees of the organization must be asked that why they want to implement
the new technology and how that will impact their working in the organization. Once the
technology will change the working processes of the organization will also change (Bodawala,
2018). With this change, the employees and the organization both will get the opportunity for
potential enhancements.
Create Ongoing Dialogue: The employees from the organization should be asked about the
various improvements which should be made in the organization so as to increase the efficiency
15
Know the
product and
its potential
Ask Why
Create
Ongoing
Dialogue
Create
Enthusiasm
Sooner is
better than
later

and the effectiveness of the business. People should talk about the struggles and the positive
changes that can be made.
Create Enthusiasm: Enthusiasm should be shown by the making the life easy of the employees
by the use of the technology (Bodawala, 2018). The meetings should be conducted in the
organization in which the discussions related to the use of the technology should be explained.
This will make the relation between the different departments strong by sharing the information
about the use of the technology to the full potential level. Through this, the challenges related to
the technology will also be solved by the employees itself (Bodawala, 2018).
Sooner is better than later: The people working in the organization are forced to use the new
technology. But for the employees, it is very difficult as they are used to working with the old
technology which they are using on the daily basis (Bodawala, 2018). So the conversation related
to the implementation of the new technology should be done at the sooner stage so that it is
comfortable both for the organization as well as the employees.
These are the ways in which the technology helps the organization in increasing the business
processes.
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6. Describe the proposed business process model and explain how the new re-engineering
system would operate.
Image 9: Business Process Model
Source: By Author, 2018.
The proposed business model will benefit the employees of the organization as with the
implementation of this method with the use of technology will increase the efficiency of the
business. This model deal with the various stages which start from the sales teams and ends with
the delivery of the quality products by the validation of the IT department. The stages are
explained below:
Sales Team: The work of the sales team is to sign the copies of the contract and send back to
the accounts receivable department. When the contract has been signed the copies received by
the sales department will be integrated through the use of the technologies. With the use of the
technology as soon as the contract will be signed by the clients it will directly reflect in the
accounts of the sales team so that the further actions can be taken easily and on the right time.
Accounts Receivable: Once the contract has been approved by the sales department the next
department which comes into the picture is the accounts receivable department. This department
is responsible for maintaining all the information of the customers related to the contract. When
the information in the contract is matched with the available information with the accounts
17
Sales
Team
Accounts
Receivable
Team
Payroll
Compliance
Team
IT
Department

receivable department then the billing of the client is done (Insights, 2018). As in the earlier
process, all the data was maintained manually but now with the technology, the database of the
clients and the related information will be maintained properly. And the different copies of the
invoice for the particular department will also be generated by the use of re-engineering
technologies. Out of the copies, one copy is sent to the client and the other one is kept by the
organization to maintain the records. With the re-engineering the existing system will be
replaced with the new one by generating it with the computerized technologies so that only one
invoice is to be printed (Insights, 2018). The payment of the client is also tracked by this
department if the payment has not been made by the client so the invoices are generated and sent
to the client for the reminder to proceed the payment (Chandna and Ansari, 2012). This all work
was earlier very difficult to track without the use of the technology but now with re-engineering
technology, the client’s information and the payment can easily be tracked. They prepare the
report on the weekly basis and send them to the compliance team.
Payroll: The work of the payroll department is that they maintain the records of the payments
and the employee’s maintenance. As all the employees in the organization get the fixed amount
of salary every month expects the sales department because they get the commission on every
contract signed and accepted (Insights, 2018). With the re-engineering, the payroll can easily
track the number of days the employees were on leave and decide the salary of the particular
department accordingly.
Compliance Team: A Compliance team is responsible to keep the check on all the compliance
activities going in the organization. The compliance activities include all those activities which
are going in the organization against the organizational rules and regulations. With technology,
the organization can keep a check on the compliance of the organization.
IT Department: IT department comes at the end in the business process model of the
organization as it is responsible for maintain the reports related to all the contracts of the
organization and then send those to the management (Insights, 2018). The management asks for
such report as they evaluate the actual performance of the company and the employees through
these reports.
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The re-engineering system in this business model will operate as all the operations which were
going manually in the organization will now be enhanced with the use of the technology and the
results will be produced on the real-time basis (Insights, 2018).
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Conclusion
It can be concluded that the use of technology in the organization is of most importance. With
the use of the technology, the working in the organization both for the employees and the
organization becomes easier. IT is providing an increase in the power of the computing for the
secured integrants. So, to improve the process of the business in the organization the use of the
technology and its implementation is important. The implementation of the technology in the
organization provided the employees an effective way of working. It also showed the results on
the real-time basis which is better for the enhancement of the organization. For the ease of
understanding of the technologies the process has been explained which reveals that how the
technology will operate in the organization for the better working of the business processes. The
current inefficiencies in the current system of working have also been highlighted in the report so
as to correct them through the use of technology and re-engineering.
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