Principles Of Accounting II Assignment 1

Article

Journal of Entrepreneurship and Business 46

Abstract - The work systems of organizations nowadays depend on IT. Hospitality industry is one of the industries affected by the IT revolution. Studies on the use of Accounting Information Systems (AIS) in the hotel industry, especially in developing countries, are limited. Thus, this research attempts to fill the knowledge gap by exploring the adoption of AIS in the Malaysian context. The research adopts a survey approach where the data were collected through a postal questionnaire from senior accounting managers in three, four, and five star rated hotels. A total of 101 completed and usable questionnaires were gathered from a total of 367 mailed questionnaires, giving a response rate of 27.52%. The findings confirm the wide use of computerized accounting systems in the hotels, although, the extent of the AIS use is relatively unsophisticated with the focus on basic accounting modules and fundamental accounting-based applications. Keywords: Accounting Information Systems (AIS), Hotel Industry, Malaysia

  1. Introduction Accounting information guides the whole operation of an organization by evaluating previous performance, controlling current operations, and forecasting future operations and outcomes. The use of information technology (IT) improves the functions of recording, processing data, reporting, and other aspects of accounting information through the accounting information systems (AIS). The internal users, especially managers, may make inappropriate decisions due to lack of accounting information and this may place the future of the whole organization in jeopardy. An organization requires accounting information produced by the AIS to enable it to manage and control its financial and other resources better compared to the traditional manual system of recording process. The importance of the tourism industry to the Malaysian economy provides an ideal location to investigate the status of AIS adoption. The hotel industry is a major contributor to the revenue of the tourism sector. According to the Central Bank of Malaysia, in 2013, the tourism industry contributed a total of Ringgit Malaysia (RM) 70.4 billion in terms of

The Status of Accounting Information Systems (AIS) Adoption in the Hotel Industry

Journal of Entrepreneurship and Business

E-ISSN: 2289-8298

Vol. 3, Issue 1, pp. 46 - 59. June, 2015

Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan

Locked Bag 36, 16100 Pengkalan Chepa Kota Bharu, Kelantan, Malaysia

http://fkp.umk.edu.my/journal/index.html

Date Received: 2nd March 2015 Date Accepted: 14th April 2015

DOI: 10.17687/JEB.0301.04

Ainon Ramli Faculty of Entreprenuership and Business Universiti Malaysia Kelantan, Malaysia. Email: [email protected]

This work is licensed under a Creative

Commons Attribution 3.0 Unported License

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foreign earnings, which constituted 7.2% of gross domestic product (GDP). The revenue received from tourism continues to increase as shown in Table 1 below. Table 1: Tourist arrivals and receipts (Source: Tourism Malaysia)

The tourism industry in general and the hospitality industry in particular is a very important contributor to the Malaysian economy. With the government support to further increase the quality of the whole industry, the implementation of IT is one of the principal components of success in the sector. Successful implementation of IT is crucial because with effective IT and internet-based technologies, hospitality companies can achieve substantial cost savings and increase productivity and revenue over time (Ham et al., 2005). The accounting information system (AIS) is part of the whole IT system and is very important to the accounting department and to management in general. The reports generated by the AIS are required by all managers in all departments within a hotel. The hotel managers rely on these reports to make most of the important management decisions. AIS offers many new technologies for running a business efficiently, especially in decision making processes and therefore all businesses, whether small or large, can benefit from using these technologies. One of the distinctive contributions of this study to the field of accounting and IS, is the exploration of the usage of the AIS. Most of the existing studies are based on countries such as United States, United Kingdom, Canada, Australia, Hong Kong, and China. The pursuit of IT in various regional countries is diverse and the use of IT also varies tremendously among different countries. Thong (1999) stated that there are many differences between developing countries such as Malaysia and other developed economies. Therefore, it would be interesting to compare the findings of one part of the world to those of other parts. The findings of this study will be of interest to agencies in Malaysia such as the Malaysian Association of Hotels (MAH), the Ministry of International Trade and Industry (MITI), the Malaysian Industrial Development Authority (MIDA), Tourism Malaysia, and other related bodies, which are responsible for the development of IT and the hotel industry in Malaysia. 2. Literature Reviews Accounting Information Systems (AIS) have various definitions. Hall (2008), for example, defined AIS as a sub-system of management information systems. For the purpose of this study, AIS will be defined as a computer-based system that transforms an organization’s business events into accounting information for internal and external users. The major function of the AIS is to process financial and non-financial transactions. In addition, there are many types of AIS in the market; among those which are popular in the hotel industry include the Hotel Information System (HIS), SUN accounting system, Quickbook, UBS, IFCA, Fidelio opera system, Biztrack accounting system, Accounting package (ACCPAC), and System Application and Product (SAP).

Year Arrivals (Mill) Receipts (RM) 2010 24.58 56.5 billion 2011 24.71 58.3 billion 2012 25.03 60.6 billion 2013 25.72 65.44 billion

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In hotel businesses, IT starts when customers are looking for products and ends when the customers have fulfilled all their needs. Therefore, in a hotel, IT starts and ends with customers (Watkins, 1995). Thus, hotels can benefit from the investment in IT if hotel staff work more efficiently with IT to better assist customers and customers also have a better experience with the hotels, as noted by Law and Jogaratnam (2005). In their survey of Hong Kong hotels, they found that IT was used to replace the existing paper-based system to improve customer service and to enhance operational effectiveness (Law and Jogaratnam, 2005). The hospitality business is about providing accommodation, food, and other services to customers and therefore, the operations of hospitality focus on how organizations go about delivering their products/services to the customer. Accommodation and food service are two different kinds of operations and thus, it is essential to differentiate between the two. Johnson (1987) proposed the concept of three main types of operation, which are product processing operations, customer processing operations, and information processing operations. An accommodation operation is predominantly ‘a customer processing operation’. This kind of operation requires very little product and information processing. On the other hand, a food service operation is a product processing operation related to meals, which require a ‘meal experience’ for customers (customer processing element) and also some limited information processing (Jones, 1996). Medlik and Ingram (2000) stated that hotels provide accommodation for those who are away from home and this is the primary function of a hotel. Providing sleeping accommodation is also the most distinctive hotel product. They pointed out that hotels have three main activities, which are: (1) earning from the sleeping accommodation or room revenue; (2) hotel reception with uniformed services (servicing arrivals and departures); and (3) housekeeping. The food and beverage service is another major activity in a hotel. This activity requires more employees than the sleeping accommodation because dealing with food is relatively labour intensive. Hotels supply food and refreshments to their resident guests as well as to non-residents and thus, sales from food supply are also a major source of income to hotels (Medlik and Ingram, 2000). Hotel operations need IT crucially and thus, IT development is very important for effective hotel operations in the 21st century (Winston, 1997) with the primary role of IT in the lodging industry being to improve productivity (Ham et al., 2005). The hospitality industry needs IT to improve operational efficiency, reduce costs, and enhance service quality. Previous studies have shown the positive influence of the use of IT on the development of competitive advantage for the hospitality industry (Cho and Olson, 1998; Clemons, 1986; Porter, 1985; McFarlan, 1984). Studies by Ham et al. (2005) and David et al. (1996) concluded that investment in certain back office applications may not contribute to the improvement of hotels’ performance within the short-term period but it is expected to improve performance in the long-run. According to Whitelaw (2008), to use IT effectively, managers need to be proficient at understanding IT and its capabilities and limitations. Using IT does not mean that the traditional hospitality management is taken over, but IT helps managers and other users to manage work more efficiently. Connolly and Olsen (2000) argued that the use of IT requires more investment capital and organizations become more dependent on IT, which

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has a greater impact on the organization. Thus, IT and the business are merged and it is far more difficult nowadays to distinguish between technology decisions and business decisions. Executives of finance, human resource, operations, and marketing need to be proficient in IT or they cannot take full advantage of the benefits offered by the IT. The importance of IT in the organization cannot be ignored and thus, they need to take IT into consideration when making important company decisions (Connolly and Olsen, 2000). AIS is a unified structure within an entity (Wilkinson et al., 2000). All the financial and non-financial economic data occurring in an organization will be transformed into accounting information, in order to satisfy the information needs of a variety of users. AIS is, to a large extent, the application of IT to accounting systems and AIS stands at the crossroads of two disciplines namely accounting and information systems and thus, AIS is often viewed as computerized accounting systems (Bagranoff et al., 2008). The accounting department in a hotel will assist other departments regarding the appropriate procedures that should be followed by each department for providing the expected products and services to customers following established hotel policies and procedures (Hales, 2005). For example, managers in the front office will work with the Income Journal clerk by reviewing the daily room revenue information. They can compare actual sales with forecasted, budgeted, and previous year’s sales. They also work with the Accounts Payable clerk by forwarding invoices for payment, checking on account numbers, researching invoice problems, and ensuring that all invoices approved for payment are correct. Then, they hand the day’s work over to the Night Auditor who will check-in any remaining guests and begin the process of auditing the day’s work (Hall, 2008). Managers in the restaurant and catering departments work with the accounting office in much the same manner, as the front office managers. However, instead of market segments, these managers are interested in meal period information (breakfast, lunch, and dinner) to analyze their sales (Hales, 2005). Departments which do not produce any revenue, such as the sales and marketing, human resources, and engineering departments will interact with the Accounts Payable clerk only with regard to invoices for payment (Hales, 2005). If a hotel uses a centralized computerized system to process the data, this is normally performed by one or more large computers housed at a central site that serve users throughout the organization. These IT activities are consolidated and managed as a shared organizational resource where end-users compete for these resources on the basis of need and the IT function is usually treated as a cost center whose operating costs are charged back to the end-users (Hall, 2008). 3. Methodology For the purpose of the survey, the data were collected from a sample of hotels listed in the records of Tourism Malaysia and the Malaysian Association of Hotels (MAH). A list of three, four, and five star hotels was obtained from these two sources. These are comprehensive lists of hotels in Malaysia, maintained by government organizations and updated regularly. The latest versions of the records were used and therefore there is confidence that the study used a complete list of Malaysian three, four, and five star rated

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hotels. The list was limited to three, four, and five star hotels, because hotels with a lower rating of stars are unlikely to engage in any sophisticated AIS. Thus, it was expected that the selected hotels were the most likely potential users of AIS which was appropriate for this research. The lists from the two sources were compared. Some hotels may be registered in both agencies but some hotels may only appear in one of the agencies. A total of 390 hotels registered with Tourism Malaysia and 429 with the Malaysian Association of Hotels were involved in the research. Hotels which appeared in both lists were contacted on the telephone to confirm their addresses, current status, and to identify the individuals best suited to respond to the survey. The quality of respondents is an important factor in an empirical study. The respondents were required to have extensive knowledge about the accounting system currently used in their hotel. Therefore, for this study, the senior accounting executive or accounting manager was identified as the target respondent. Telephone calls were made to each hotel in the final list to verify the name and addresses of the target respondents. During the calls, target respondents were also asked to agree to respond to the questionnaire. The phone calls helped ensure that the questionnaire would be delivered to the right person and to an accurate address and this helped to ensure an acceptable response rate. After the above refinement, a total of 367 hotels remained in the list. 4. Findings and Discussions The target respondent for this study was the senior person in the accounts department, who represents the department and accounting users as a whole to the upper level management and also influences the AIS design, IT utilization, and performance. Questions were about respondents’ education level, number of years in the position, number of years with the hotel, and experience with accounting systems and IT. The results are presented and discussed below (Table 2). Table 2: Profile of the Respondents

Job title n % Education level

n % No. of years in the hotel industry

n %

Accountant / Account manager

48 50.0 Master or higher

10 10.4 Less than 1 year 2 2.0

Finance manager

30 31.3 Degree 54 56.3 1 to 5 years 51 52.0

General manager

3 3.1 Diploma 27 28.1 More than 5 years to 10 years

23 23.5

Assistant accountant

15 15.6 SPM/STPM 5 5.2 More than 10 years 22 22.5

Total 96 100 Total 96 100 Total 98 100 According to previous studies (Jobber, 1991; Frankfort-Nachmias and Nachmias, 1996), one of the weaknesses of mail questionnaires is that the researcher has no control over who answers the question. Table 1 exhibits the respondents’ position in the sample. It can be seen that almost 85% of the respondents hold senior managerial positions. Of the respondents, most were accountants or accounts managers or finance managers, who were

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expected to deal directly with the AIS. In certain hotels, the accounting and finance departments were combined and therefore, finance managers could be accepted as the senior person responsible for the accounting department. In order to obtain appropriate responses to the questionnaire, it is important that respondents have experience in the hotel and in an accounting capacity. The extent of accounting and IT education received can be reflected from the educational levels of the respondents. They were asked about their educational level as a background to accounting and IT, apart from their experience at the job. Table 2 shows the breakdown in relation to this information. A majority, or 56% of the respondents had a university degree and another 10% had a Masters degree. A total of 28% had a diploma and only 5% of the respondents had high school qualifications. It can be concluded that the respondents were sufficiently educated to provide reliable responses. Table 2 also provides information about the number of years that the respondents have worked in the hotels which reflects the level of familiarity with the systems and operations of the hotels. From the total of 101 in the sample, 98 respondents answered these questions. Only 2 respondents had less than one year of experience in the hotel industry. More than half of the respondents have between 1 to 5 years experience in the systems used in the hotels’ operations. This group of respondents appeared to have good knowledge about their tasks and also have a good grounding in the hotels’ operations. Respondents who had 5 to 10 years experience and more than 10 years in the hotel industry accounted for 24% and 23%, respectively. It is believed that these two groups of respondents would have a high level of experience and familiarity with the hotels’ operations as a whole and therefore, have sufficient knowledge to respond appropriately. Table 3: Respondents’ AIS experience

Experience in: Little Experience

Low experience

Good experience

Extensive experience

Total

Using AIS 1 (1) 4 (4) 78 (79) 16 (16) 99 (100) Implementing AIS 2 (2) 8 (8) 71 (73) 16 (17) 97 (100) Maintain/modifying AIS 2 (2) 16 (17) 68 (72) 9 (9) 95 (100) Overall AIS ability 1 (1) 3 (4) 66 (80) 12 (15) 82 (100)

# Numbers in the brackets ( ) refer to the percentage Previous studies have shown that appropriate computer literacy directly affects satisfaction with computer based information systems (Nelson and Cheney, 1987; Lee, 1986). In addition, it has been suggested that those with appropriate computer experience were more at ease when participating in AIS activities. Therefore, this study acknowledges experience in accounting information systems as important knowledge that is expected to improve the usage and satisfaction with the AIS. In the questionnaire, respondents were asked to indicate their experience with AIS on each of the four dimensions of experience. The 7-point scale ranging from “1” (low) to “7” (high) was used for this purpose. To simplify the data, the responses for point scale 7 were called “extensive experience”, point scales 5 and 6 were combined into one category called “good experience”. Similarly, point scales 2 and 3 were combined into one category called “low experience” and point scale 1 was called “little experience”. The “neutral” category i.e. point scale 4, was called ‘average experience’. Table 3 shows the breakdown of their experience into four groups of little, low, good, and extensive experiences. Almost all

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(95%) respondents had good to extensive experience in using AIS. Experience in implementing AIS shows a high percentage (90%) for respondents with experience from good to extensive experiences. Respondents also had important knowledge of maintaining and modifying the AIS, with 81% of them having good experience or above. Again, 95% of them believed that they had good and extensive ability in overall AIS experience thus far. The slightly lower number of respondents in the ‘overall AIS ability’ item probably reflects their reluctance to make judgments about the AIS that they have not experienced. Table 4: Profile of the responding hotels

As noted in Table 4, the sample was almost equally split between independent and chain types of hotel. The Ministry of Tourism Malaysia uses certain criteria that determine a hotel rating and differentiates hotels according to their classes. The data shows the proportions of 50%, 28%, and 22%, respectively for each of the 3, 4, and 5 star hotels. The latest list of registered hotels published by the Ministry of Tourism Malaysia shows that 54% of all hotels are rated 3, 4, and 5 stars. Organization size is characterized by turnover or by number of employees. Table 2 also classifies samples according to total number of full time employees. It shows that a full range of hotel size was covered. Approximately 29% had up to 100 employees and about 27% of the respondents came from hotels with full time employees between 101and 200. The balance of the 44% respondents worked with over 200 employees. A somewhat similar picture emerged in relation to the number of rooms; for example, almost 40% had between 151 – 300 rooms and almost 20% had over 300 rooms. Turnover for the latest financial year was also requested by the survey; however, only 67 of the 101 respondents provided this information. Almost one fifth of the respondents had a turnover of greater than RM25 million. This along with full time employees’ number seemed to be considered highly confidential by certain hotels and probably difficult to compute.

n % n % Type of hotels No. of full time employees A chain hotel 45 45.5 Less than 100 22 28.6 An independent hotel 54 54.5 101 to 200 21 27.2 Total 99 100.0 201 to 300 18 23.4 More than 300 16 20.8 No. of rooms Total 77 100.0 Less than 150 rooms 44 43.6 151 to 300 38 37.6 Hotel star rating More than 300 19 18.8 3 star 51 50.5 Total 101 100.0 4 star 28 27.7 5 star 22 21.8 Turnover (RM) Total 101 100.0 Less than 10 millions 30 44.8 10 million to 25 millions 25 37.3 More than 25 millions 12 17.9 Total 67 100.0

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The use of AIS Of the total respondents, 86 provided the name of the accounting system currently used in their hotels. From the list provided (Table 5), UBS has the highest usage among the hotels in Malaysia. Other highly used accounting systems include the SUN accounting system and IFCA. There were more than 30 different accounting systems used by the hotels, so the range of systems in use is quite wide. Table 5: Types of AIS

The types of IT adopted are shown in Table 6. The most common technologies adopted by the sample in the study were accounting-based applications (such as payroll, receivables, payables, general ledger, order entry, and billing), which accounted for about 86% of the types of IT adopted. This finding is consistent with claims made by previous studies (Foong, 1999; Wilson and Sangster, 1992; Raymond and Magnenat, 1982) that accounting was the most important and widely used application. The next most adopted type was local area network (80%), while the remaining four technologies were adopted less frequently: external network (53%), database systems (52%), decision support systems, and related management system (46%). Table 6: Types of IT Types of IT / Hotel star rating

Total Number of positive responses Total (n = 101) 3 (n = 51) 4 (n = 28) 5 (n = 22)

Accounting-Based Applications 43(84) 23(82) 20(91) 86(85) Local Area Network 36(70) 24(86) 20(91) 80(79) External Network 25(49) 15(54) 13(59) 53(52) Database Systems 22(43) 15(54) 15(68) 52(51) Decision Support Systems 21(41) 13(46) 12(55) 46(45) Related Management Systems 14(27) 16(57) 16(73) 46(45)

# Numbers in brackets ( ) refer to the percentage Table 7 reveals the breakdown of the types of processing adopted by the responding hotels, another important criterion of technological sophistication. The results show that there are differences between 3, 4, and 5 star hotels in terms of processing modes with 62% of the 5 star hotels using two or more processing modes, while only 22% and 20%, of the 4 star and 3 star hotels did so, respectively.

Accounting Systems n % Accounting Systems n % UBS 10 12 Quickbook 2 2 IFCA 7 8 OBM accounting system 2 2 SUN accounting system 6 7 HOS and UBS 1 1 Fidelio Opera Reservation System

5 6 Fidelio Opera Reservation System and SUN accounting system

5 6

HOS 3 4 UBS and Roomaster 1 1 Guest Centrix 3 4 Other accounting system 35 41 BISTRAK Accounting 2 2 IFCA and CPS/HIS/SAP 2 2 IFCA and UBS 2 2 Total 86 100

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Table 7: Types of processing Types of processing / Hotel star rating

Frequencies Total (n = 98)

Cumulative Percentage 3 (n = 50) 4 (n = 27) 5 (n = 21)

Batches only 17(34) 8(30) 3(14) 28(29) 100 Online batches only 9(18) 8(30) 0(0) 17(17) 70 Online batches and real time only 14(28) 5(18) 5(24) 24(24) 53 Batches and online batches 2(4) 1(4) 2(9) 5(5) 29 Batches and online real time 7(14) 2(7) 3(14) 12(12) 24 Online batches and online real time 0(0) 2(7) 5(24) 7(7) 12 Batches and online batches and online real time

1(2) 1(4) 3(14) 5(5) 5

# Numbers in brackets ( ) refer to the percentage The applications portfolio is the criterion used to measure the informational dimensions of IT sophistication of the responding hotels. Table 8 shows the results of the types of computer applications used by the responding hotels. The results show that the hotels use and maintain the three basic accounting modules included in most of the popular accounting packages, i.e. accounts receivables (87%), accounts payable (86%), and general ledger (84%). Financial accounting also shows a high percentage (81%) from the responding hotels, followed by payroll with 74%. More than half of the hotels also maintain billing, online reservation, purchasing, and inventory. However, the utilization of management accounting types of modules such as cost accounting, budgeting, budget variances, and operational planning and control is still minimal. Table 8: Types of computer applications Types of computer applications / Star rating

Frequencies Total (n = 101) 3 (n = 51) 4 (n = 28) 5 (n = 22)

1. Accounts receivables 43 (84) 25(89) 20(91) 88(87) 2. Accounts payable 42(82) 26(93) 19(86) 87(86) 3. General ledger 39(76) 27(96) 19(86) 85(84) 4. Financial accounting 40(78) 23(82) 19(86) 82(81) 5. Payroll 34(67) 23(82) 18(82) 75(74) 6. Billing 27(53) 17(61) 15(68) 59(58) 7. Online reservation system 25(49) 19(68) 14(64) 58(57) 8. Purchasing 23(45) 18(64) 16(73) 57(56) 9. Inventory 19(37) 18(64) 15(68) 52(51) 10. Cost accounting 15(29) 7(25) 11(50) 33(33) 11. Online payment and receipting system 17(33) 8(28) 7(32) 32(32) 12. Budgeting 13(25) 13(46) 6(27) 32(32) 13. Order entry 9(18) 12(43) 9(41) 30(30) 14. Budget variances 7(14) 15(53) 6(27) 28(28) 15. Personnel management 10(20) 6(21) 8(36) 24(24) 16. Operational planning and control 11(22) 3(11) 3(14) 17(17)

# Numbers in brackets ( ) refer to the percentage The functional dimension of IT sophistication of the responding hotels was measured by the sources of software. Table 9 shows the results of several sources of software listed in the questionnaire. 5 star and 4 star hotels showed a high percentage (86% and 78%, respectively) of use of external expertise to modify the purchased packages or external custom-developed software. It can be assumed that the 5 star and 4 star hotels are larger

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companies that need and can better afford the systems to fulfill the specific requirements of the hotel operations. Only 47% of the 3 star hotels used external expertise to modify or custom-develop software because they are unlikely to have a large or separate IT department. Thus, they resort to the use of standard unmodified packages (39%) purchased from vendors or in other words, they utilize ready-made (off-the-shelf) packages. The figures also show that internal modified and internal custom developed software is less featured. This finding suggests a reliance of hotels on external expertise such as vendors and consultants to assist them in modifying or developing their computer-based information systems. Table 9: Sources of software Sources of software / Hotel star rating

Number of positive responses Total (n = 101) 3 (n = 51) 4 (n = 28) 5 (n= 22)

Standard-unmodified 20 (39) 7 (25) 5 (23) 32(32) Standard-modified externally 18 (35) 13 (46) 12 (54) 43(43) Externally custom-developed 6 (12) 9 (32) 7 (32) 22(22) Standard-modified internally 6 (12) 5 (18) 1 (5) 12(12) Internally custom-developed 4 (8) 3 (11) 2 (9) 9(9)

# Numbers in brackets ( ) refer to the percentage Table 10 shows the results of the types of IT planning adopted by the samples in the study. The results show that there are differences in the types of IT planning between the 3, 4, and 5 star rated hotels. More than half of the 5 star hotels conducted all IT planning listed with financial resources at the highest with 64%, followed by implementation, planning and post-implementation review each with 59%. Information requirement analysis and human resources planning were the least important types of planning conducted by the 5 star hotels, with 55% and 50%, respectively. The results reveal that 4 star hotels are more concerned about information requirement analysis and implementation planning than other IT planning, as 64% and 61%, respectively, of these hotels undertook them. The other three types of IT planning were less used, as only 39% of 4 star hotels engaged in financial resources planning and in post- implementation review. Less than half of the 3 star hotels engaged in any of the listed IT planning types. Only 49% and 39% conducted financial resources and human resources planning, respectively. The remaining three planning aspects show low involvement by these hotels with only 37%, 33%, and 24% involved, respectively. Table 10: Types of IT planning undertaken Types of IT planning/Hotel star rating

Number of positive responses Total (n = 101) 3 (n = 51) 4 (n = 28) 5 (n = 22)

Financial resources planning 25(49) 11(39) 14(64) 50(50) Implementation planning 19(37) 17(61) 13(59) 49(49) Information requirement analysis 17(33) 18(64) 12(55) 47(47) Human resource planning 20(39) 6(21) 11(50) 37(37) Post-implementation review 12(24) 11(39) 13(59) 36(36)

# Numbers in brackets ( ) refer to the percentage Looking at the overall results, these findings suggest that financial resource planning is the most important IT usage commonly considered by higher rated hotels in Malaysia. Implementation planning and information requirement analysis are also considered

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important to these hotels and this might be explained by the simplicity of the computer- based IS adopted as revealed in Tables 4.11 and 4.13. The low percentage of human resource planning (37%) and post-implementation review (36%) adopted by the responding hotels might be explained by the lack of internal IT expertise among these hotels 5. Discussion on the adoption of AIS in the hotel industry Computer systems are widely used in Malaysia; however, the extent of AIS usage in the hotel industry is unknown. This current study represents the first attempt at obtaining information about the status of AIS adoption among three, four, and five star rated hotels. The findings obtained from the survey about the current status of AIS use and also the extent of information system sophistication (ISS) helped to answer this question. AIS can be stand-alone; however, integration with other IS in an organization can improve usage and benefits offered by the AIS. Thus, the AIS adoption and the extent of ISS should be viewed together in order to know the extent of AIS usage in an organization to create a complete picture. In the surveyed hotels, UBS accounting is the most widely adopted among the types of accounting packages available in the market. The adoption of any brand of computerized accounting by the hotels in the survey confirmed the use of IT systems instead of the traditional manual accounting in the hotel industry. It was found that none of the three, four, and five star rated hotels in Malaysia were using manual accounting systems in this increasingly technological era. The survey indicated that the most common technologies adopted by the hotels are accounting-based applications such as payroll, account receivables, and payables. This result is consistent with previous studies in other types of organizations in other countries (Foong, 1999; Wilson and Sangster, 1992; Raymond and Magnenat, 1982). Another highly adopted technology revealed by the study is the use of local area network, which is a computer network that interconnects computers within the organization by using the network media. The high use of this local area network shows that departments within an organization are connected for easy communication and information transfer/sharing. The connectivity to outside communication could be possible with links using an external network. However, external networks were less adopted by the hotels in the survey, which gives the impression that they are not using this medium to communicate with outside parties such as customers and suppliers within the supply chain. The study also discovered that database systems are not regarded as an important technology by the hotels. A database is an organized pool of logically-related data. Data is stored within the data structures of the database. All important data are stored in the database for the purpose of sharing the information with the entire departments within the organization. With low adoption of this technology, the hotels do not use the IS to its fullest extent, that is, to share information as much as they could and this shows scope for future development. Finally, decision support systems and related management systems are also at a low level of adoption among the hotels. A decision support system is a computer- based information system that supports business or organizational decision-making activities such as word-processing, graphics and presentation packages, and spreadsheets. Related management systems, for example inventory management, purchasing, operations

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planning and control, help organizations to plan and organize the business operations more efficiently and effectively; however, these are seen as less important to the hotels surveyed. In terms of types of processing, the findings show that the batch processing type is still popular among the hotels in the survey. The key characteristic of batch processing is that all the data is collected first. For example, in the payroll systems, the hours worked by each employee need to be collected first. It is then entered into the system in one go (a batch of data) and processed. The gradually increasing use of online and real-time types of processing by the hotels indicate that the trend is moving towards this more advanced type of processing. Online processing means that data is processed by the system as it is entered and the user typically waits a short time for a response, for example in the hotel booking system. The real time processing is a sub-set of online processing. The data is entered and processed right away. This is done quickly, as the processing of data must be completed and an output produced in time to affect the next input. For example, the stock control system in a supermarket or hotel shop operates instantaneously in reading barcodes and looking up prices. The findings also revealed that the hotels make extensive use of the basic accounting modules of accounts receivable, accounts payable and general ledgers, as well as financial accounting and payroll. However, the hotels make less use of billing, online reservation, purchasing, and inventory modules. Minimal usage is also shown of management accounting types of modules of cost accounting, budgeting, budget variances, and operational planning and control. Other optional modules of financial analysis, online payment and receipting, order entry, and personnel management are also at a relatively low level of utilization. The results generated by the current study are in line with the results obtained previously (Cragg, 1989; Montazemi, 1987; Malone, 1985), where most of the hotels adopted transaction-oriented systems to only support operational and administrative tasks. Enquiry about the sources of software shows that the four and five star rated hotels in Malaysia are generally larger companies and thus, they are using external custom- developed software or they have a purchased package, modified externally. They often have a higher standard of software to meet their specific requirements with regard to their hotel operations. However, a majority of the three star rated hotels use standard un- modified software. Internally modified and internal custom developed software are not popular in the hotels in Malaysia, because of a lack of internal expertise to deal with such difficult tasks. Finally, the study was also interested in the types of IT planning which overall revealed that a few of the hotels undertake various aspects of IT planning. Financial resources planning is the most frequently undertaken by half of the hotels, followed by implementation planning, and information requirement planning. Lack of IT planning by the responding hotels can generally be explained by the lack of IT expertise in the organizations. 6. Conclusion To conclude, the three, four and five star rated hotels in Malaysia used AIS in managing daily accounting related routines and in producing accounting and management reports. However, the extent of the AIS usage is still minimal with a higher focus on basic

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accounting modules and accounting based applications. The AIS usage is to support operational and administrative tasks rather than to help in the hotels’ high-level business decision-making. The study by Law and Jogaratnam (2005) of Hong Kong hotels also revealed similar results where IT was not fully utilized by hotel decision makers to help them in their business strategies. References Bagranoff, N. A., Simkin, M.G. & Strand, C. (2008). Core concepts of accounting information

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