Question

You are a systems consultant for a large CPA firm. The firm pays for your membership in a country club with the expectation that you will meet and impress potential clients. At your club’s annual golf tournament, Frank Fender, an automobile dealer, describes a proposal from Turnkey Systems and asks for your opinion. The system will handle inventories, receivables, payroll, accounts payable, and general ledger accounting. Turnkey personnel would install the $40,000 system and train Fender’s employees. Before even getting into a turnkey system specifically, identify the major themes you would touch on in responding to Fender. Now identify the advantages and disadvantages of using a turnkey system to operate the organization’s accounting system.

Answer 1

Major themes you would touch on in responding to Fender :

1.The need for a feasibility study to determine whether a new system is technically, economically, and operationally feasible for Fender's dealership.
2. The need to identify the dealership's needs and prepare specifications based on those needs.
3.The importance of requesting proposals from competing vendors and systematically comparing them.
4. The possibility of using EDP consultants to help and of outsourcing the system.

Advantages of a turnkey system

Less expensive than internally built systems and the total package may be better priced.

Takes less time and human resources to develop and run.

Experts are available for both the application software and hardware.

The vendor cannot pass the responsibilityfor a problem off on someone else.

A single vendor may also facilitate system start-up and conversion as well astraining on how to use the system.

Warranties are usually available.Simplified selection processCosts are reduced since it is not necessary to match software with hardware meaning that it is less likely thatvarious items of hardware and software will be incompatible.

Disadvantages of a turnkey system:

Software or hardware may not be completely suited to company's needs.

Software modification may not be available or covered.