Target’s AIS Failure: What Went Wrong and How to Avoid It
One of the companies that implemented an AIS change to its operations and failed is The Target Corporation. When it comes to the details about the company, its products, and its operations, the target corporation is a retail corporation that is based in America with its headquarters at Minneapolis in Minnesota. The corporation is involved in the operation of hypermarkets and discount department stores all over America. Target has made a reputation for itself for its affordable goods. It was founded in 1902 and over the years the corporation has had numerous acquisitions hence expansion. The main focus of the corporation lies in general merchandise which includes common household goods, electronics, toys, apparel among many more products including groceries. The company has also established its own privatized labels in addition to providing affordable, stylish fashion items for both merchandisers and consumers.
By 2023, the company was operating 1950 stores all over the USA. The corporation has adopted the multichannel retail strategy and it has hence combined physical retail stores with its online shopping platform creating efficiency and convenience for its customers. In addition, a lot of investment in technology has been made by the company to enhance the efficiency of its supply chain as well as improve customer service and experience. Finally, when it comes to the Fortune 500 list of the largest corporations in the US, the company is ranked number 32 (Quinn, 2023). In addition to this, the company has been ranked top when it comes to the most philanthropic companies in America. It is also important to note that attempts to make the corporations an international players have been futile.
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There are several reasons why the AIS implementation at Target Corporation might have failed. The first one is technical glitches during the implementation of the AIS. Such might lead to data inconsistencies leading to unreliable financial reports. It can also lead to system disruptions and downtime which hinder normal operations. Extended downtime can also prevent the efficient and on-time processing of financial transactions, in addition to leading to a loss in data and transactions leading to permanent irreversible financial records damage. It can also lead to an AIS system that is prone to data breaches by unauthorized parties (Quinn, 2023). Security breaches might lead to regulatory non-compliance and financial data that is compromised. Finally, technical glitches can lead to an incompatibility between the AIS system and the existing software and hardware bringing implementation challenges.
The second one is employees who lack sufficient training in the system. This might result in different scenarios such as employees not being able to input data correctly into the new system leading to errors in financial transactions. Insufficient training may also lead to delays as employees may struggle to navigate the system hence delays in transaction processing. Insufficient training might also lead to a lack of confidence by employees in the new system hence they become reluctant to adopt and embrace it in addition to not being aware of best practices while using the systems which can create vulnerabilities within the system. Finally, not knowing how to use the system can lead to employees quitting the job as they get demoralized in addition to wastage of resources due to rapid unnecessary troubleshooting which might overwhelm the IT department for instance.
Another reason for AIS failure might be due to the staff resisting change resulting in inadequate user adoption hence reverting to the old systems, resistant employees may also be unwilling to learn about the new system, making errors when making entries to the system, leading to discrepancies in financial reports. This might also lead to a breakdown of communication between the management and the workforce, preventing the swift resolution of challenges in addition to project delays as most of the company resources might be used to solve challenges related to implementation. Finally, such employees may enter data inaccurately compromising the integrity of the financial information they provide hence the system generating unreliable reports.
The final cause of failure in AIS implementation is poor coordination and communication between various departments. First, this leads to vague accountability metrics for the various departments leading to tasks that might be overlooked, neglected, or duplicated. It can also lead to different goals in different departments hence no achievement of similar objectives. In addition, it can also lead to employees that feel disconnected from the project and hence might not understand how it works creating resistance to the change among employees. Finally, poor communication might lead to failure by different departments to address cross-functional aspects as well as consideration of AIS implementation’s cross-functional impacts.
Bearing in mind the causes of the AIS implementation failure listed above, to avoid failure in the AIS implementation, first, it is important to train all the employees on the AIS. This reduces instances such as data entry errors which might lead to errors in recording financial transactions. It also eliminates delays and inefficiencies as the employers will have an understanding of how to efficiently navigate the system. In addition to this, it makes the employees less resistant to change hence they embrace the system and see how it can enhance efficiency in their work. In addition to this, it reduces rates of error and makes employees understand how to communicate with the various departments hence a seamless integration of the AIS system among all departments hastening issue resolution, having clear accountability metrics for all employees as well as avoiding data duplication and inconsistencies (Shapiro, 2020).
Second, is having comprehensive pilot and testing programs. These avert the glitches mentioned above, enabling the identification and rectification of any technical or issues that may arise in the operation of the AIS system. This can be done via a simulation that mimics the real-world situations (Quinn, 2023). This facilitates fixing and reduction of potential glitches in the AIS system, and a reduction in system failure as well as data errors. Pilot and testing programs also ensure that the AIS is compatible with the hardware and software systems of the corporation hence a smooth and efficient transition. Finally, this also allows future users to provide feedback on what can be done to improve the AIS system and make it seamless for their use.
Another way of ensuring AIS implementation success is the early engagement of key stakeholders of the AIS including the heads of departments and the end users. These individuals are very important in the successful implementation of the AIS system. This step involves getting their views, ideas, concerns, and important feedback on the design of the AIS. This also reduces resistance as it creates a sense of ownership of the AIS in addition to addressing concerns that they might have with the system. Finally, it is very important to come up with a strategy to manage the change within the corporation. First, this includes training the necessary stakeholders on the use of the AIS system hence making the stakeholders mentally ready for the change. It is also important to effectively communicate the changes to these stakeholders and to make them understand what role they will in the implementation of the AIS system. Finally, the early engagement of key stakeholders ensures an alignment of the culture of the organization with the goals of the AIS implementation (Hall, 2008).
The two areas impacted by the AIS failure include the management of expenses. Failure in the implementation AIS system often leads to difficulties in recording and tracking expenses correctly. This in turn can lead to not being able to accurately determine the cost structure in a corporation, a wrong or flawed allocation of resources as well as flawed or incorrect profitability figures. Another area impacted by failure in AIS implementation is the recognition of revenue. This is because as stated above, failure in AIS implementation can lead to an erroneous allocation of sales transactions and this affects the revenue recognition. First, this can lead to compliance issues with regulatory bodies, lead to a misinformation of important stakeholders such as the management of the corporation as well as misrepresent the financial performance metrics of the organization. This will no doubt affect perceptions of the organization.
When it comes to solving the financial issues mentioned above, the first step is having a reconciliation procedure in place which will enable the identification and correction of any errors. It is also very important to train the staff that use this system in how to efficiently use the system, as this is one of the major factors that leads to errors in AIS system implementation as seen above. In addition to this, it is important to have strong internal controls to make sure there are accurate revenue recognition processes. When it comes to solving issues related to expense management, it is important to carry out regular audits for the verification of how accurate the recorded expenses are, have an effective tracking system of expenses within the AIS system, and ensure employees are trained on how to accurately record expenses.
Designing a monitoring system to monitor the areas above in the future should inculcate several measures such as the establishment of relevant Key Performance Indicators that reflect the health and correctness of financial data such as profit margins, implementing a continuous transaction monitoring within the AIS using data analytics such as identifying outliers and developing real-time dashboards that are easy to interpret to enable the management to visualize important financial metrics. This also includes training employees on how to effectively use AIS tools, having external audits of financial statements generated from the AIS system and ensuring a swift response to the responses from such audits, having clear straightforward channels for feedback from the AIS users and continuous improvement initiatives to the AIS systems.
References
Hall J. A. (2008). Accounting information systems (6th ed.). South-Western Cengage Learning.
Quinn, M( 2023). The Routledge handbook of accounting information systems (2nd ed.). (2023). . Routledge. February 29, 2024
Romney M. B. & Steinbart P. J. (2009). Accounting information systems (11th ed.). Pearson Prentice Hall.
Shapiro, D( 2020). Applications of accounting information systems (First). (2020). . Business Expert Press. February 29, 2024