What is the proper way to handle system time ?

I admin an AIX box for a small company. The time on the AIX machine has to be changed twice a year for DST. I know I can set it to do this automagically but is that a good idea? I have read about people having problems with software databases and cron jobs... Is it possible to sync the AIX machine with a ntp server?

sync with ntp does not affect daylight savings. That is a politcal calendric bit of nonsense which ntp happily ignores.

Yes, you can sync with an ntp server. It is generally a very good idea because unix servers drift timewise.