Chapter 13—Managing the Systems Development Life Cycle
TRUE/FALSE
1. The majority of the cost of a system is incurred in the new systems development phase of the life
cycle.
ANS: F
2. According to the text, a stakeholder is an end user of a system.
ANS: F
3. The objective of systems planning is to link systems projects to the strategic objectives of the firm.
ANS: T
4. The Systems Development Life Cycle (SDLC) concept applies to specific applications and not to
strategic systems planning.
ANS: F
5. An accountant’s responsibility in the SDLC is to ensure that the system applies proper accounting
conventions and rules and possesses adequate control.
ANS: T
6. In the conceptual design phase of the Systems Development Life Cycle (SDLC), task force members
are focused on selecting the new system design.
ANS: F
7. When determining the operational feasibility of a new system, the expected ease of transition from the
old system to the new system should be considered.
ANS: T
8. One-time costs include operating and maintenance costs.
ANS: F
9. When preparing a cost-benefit analysis, design costs incurred in the systems planning, systems
analysis and conceptual design phases of the Systems Development Life Cycle are relevant costs.
ANS: F
10. A tangible benefit can be measured and expressed in financial terms.
ANS: T
11. Instead of implementing an application in a single “big-bang” release, modern systems are delivered in
parts continuously and quickly
ANS: T
12. When the nature of the project and the needs of the user permit, most organizations will seek a precoded commercial software package rather than develop a systems in-house.
ANS: T
13. All of the steps in the Systems Development Life Cycle apply to software that is developed in-house
and to commercial software.
ANS: F
14. Mixing technologies from many vendors improves technical feasibility.
ANS: F
15. The first step in the SDLC is to develop a systems strategy
ANS: T
16. System maintenance is often viewed as the first phase of a new development cycle.
ANS: T
17. Project initiation is the process by which systems proposals are assessed for consistency with the
strategic systems plan and evaluated in terms of their feasibility and cost-benefit characteristics.
ANS: T
18. When the nature of the project and the needs of the user permit, most organizations will create the
system in-house rather than rely on a commercial package.
ANS: F
19. Existing (maintained) applications are the prototypes for their new versions.
ANS: T
20. Because of the robustness of modern technology, businesses today see infrequent changes in their IT
systems and much longer system life spans.
ANS: F
MULTIPLE CHOICE
1. When studying the detailed feasibility of a new project
a. prototyping does not affect the schedule feasibility analysis
b. the need for user training will influence the schedule feasibility analysis
c. protection from fraud and errors will influence the schedule feasibility analysis
d. a cost-benefit review will affect the schedule feasibility analysis
ANS: B
2. Protection from inadvertent disclosures of confidential information is part of the detailed
a. operational feasibility study
b. schedule feasibility study
c. legal feasibility study
d. economic feasibility study
ANS: C
3. A cost-benefit analysis is a part of the detailed
a. operational feasibility study
b. schedule feasibility study
c. legal feasibility study
d. economic feasibility study
ANS: D
4. Examples of one-time costs include all of the following except
a. hardware acquisition
b. insurance
c. site preparation
d. programming
ANS: B
5. Examples of recurring costs include
a. software acquisition
b. data conversion
c. personnel costs
d. systems design
ANS: C
6. Site preparation costs include all of the following except
a. crane used to install equipment
b. freight charges
c. supplies
d. reinforcement of the building floor
ANS: C
7. The testing of individual program modules is a part of
a. software acquisition costs
b. systems design costs
c. data conversion costs
d. programming costs
ANS: D
8. When implementing a new system, the costs associated with transferring data from one storage
medium to another is an example of
a. a recurring cost
b. a data conversion cost
c. a systems design cost
d. a programming cost
ANS: B
9. An example of a tangible benefit is
a. increased customer satisfaction
b. more current information
c. reduced inventories
d. faster response to competitor actions
ANS: C
10. An example of an intangible benefit is
a. expansion into other markets
b. reduction in supplies and overhead
c. more efficient operations
d. reduced equipment maintenance
ANS: C
11. A tangible benefit
a. can be measured and expressed in financial terms
b. might increase revenues
c. might decrease costs
d. all of the above
ANS: D
12. Intangible benefits
a. are easily measured
b. are of relatively little importance in making information system decisions
c. are sometimes estimated using customer satisfaction surveys
d. when measured, do not lend themselves to manipulation
ANS: C
13. Which technique is least likely to be used to quantify intangible benefits?
a. opinion surveys
b. simulation models
c. professional judgment
d. review of accounting transaction data
ANS: D
14. The formal product of the systems evaluation and selection phase of the Systems Development Life
Cycle is
a. the report of systems analysis
b. the systems selection report
c. the detailed system design
d. the systems plan
ANS: B
15. One time costs include all of the following except
a. site preparation
b. insurance
c. programming and testing
d. data conversion
ANS: B
16. Recurring costs include all of the following except
a. data conversion
b. software maintenance
c. insurance
d. supplies
ANS: A
17. All of the following are reasons why new systems fail except
a. the user is not involved in the development of the system
b. system requirements are not clearly specified
c. systems analysts rely on prototyping models
d. system development techniques are ineffective
ANS: C
18. The systems steering committee is responsible for all of the following except
a. assigning priorities
b. determining whether and when to terminate systems projects
c. analyzing the technical feasibility of the project
d. budgeting funds for systems development
ANS: C
19. Strategic systems planning is important because the plan
a. provides authorization control for the Systems Development Life Cycle
b. will eliminate any crisis component in systems development
c. provides a static goal to be attained within a five-year period
d. all of the above
ANS: A
20. Project feasibility includes all of the following except
a. technical feasibility
b. conceptual feasibility
c. operational feasibility
d. schedule feasibility
ANS: B
21. The degree of compatibility between the firm’s existing procedures and personnel skills and the
requirements of the new system is called
a. technical feasibility
b. operational feasibility
c. schedule feasibility
d. legal feasibility
ANS: B
22. The ability of a system to protect individual privacy and confidentiality is an example of
a. schedule feasibility
b. operational feasibility
c. legal feasibility
d. economic feasibility
ANS: C
23. The systems project proposal
a. provides management with a basis for deciding whether or not to proceed with the project
b. supplies an input to the project planning activity
c. links the objectives of the proposed system to the system’s scheduling requirements
d. prioritizes the proposal in relation to other system proposals
ANS: A
24. Which step is not used to evaluate a systems proposal? An analysis of the project’s
a. feasibility factors
b. ability to eliminate nonessential activities and costs
c. ability to provide a competitive advantage to the firm
d. use of Computer Aided Software Engineering (CASE) tools in developing the system
proposal
ANS: D
25. Reasons that a new systems implementation may be unsuccessful include all of the following except
a. organizational restructuring required by the new system results in displaced workers
b. end users do not understand the strategic merits of the new system
c. employees are not trained to use the system
d. system development team members include representatives from end-user departments
ANS: D
26. Typically a systems analysis
a. results in a formal project schedule
b. does not include a review of the current system
c. identifies user needs and specifies system requirements
d. is performed by the internal auditor
ANS: C
27. A disadvantage of surveying the current system is
a. it constrains the generation of ideas about the new system
b. it highlights elements of the current system that are worth preserving
c. it pinpoints the causes of the current problems
d. all of the above are advantages of surveying the current system
ANS: A
28. Systems analysis involves all of the following except
a. gathering facts
b. surveying the current system
c. redesigning bottleneck activities
d. reviewing key documents
ANS: C
29. The systems analysis report does not
a. identify user needs
b. specify requirements for the new system
c. formally state the goals and objectives of the system
d. specify the system processing methods
ANS: D
30. After the systems analysis phase of the System Development Life Cycle (SDLC) is complete, the
company will have a formal systems analysis report on
a. the conceptual design of the new system
b. an evaluation of the new system
c. users’ needs and requirements for the new system
d. a comparison of alternative implementation procedures for the new system
ANS: C
31. The accountant’s role in systems analysis includes all of the following except
a. specify audit trail requirements
b. prepare data gathering questionnaires
c. suggest inclusion of advanced audit features
d. ensure mandated procedures are part of the design
ANS: B
32. The role of the steering committee includes
a. designing the system outputs
b. resolving conflicts that arise from a new system
c. selecting the programming techniques to be used
d. approving the accounting procedures to be implemented
ANS: B
33. Project planning includes all of the following except
a. specifying system objectives
b. preparing a formal project proposal
c. selecting hardware vendors
d. producing a project schedule
ANS: C
34. Aspects of project feasibility include all of the following except
a. technical feasibility
b. economic feasibility
c. logistic feasibility
d. schedule feasibility
ANS: C
35. Which of the following is not a tool of systems analysts?
a. observation
b. task participation
c. audit reports
d. personal interviews
ANS: C
36. When developing the conceptual design of a system,
a. all similarities and differences between competing systems are highlighted
b. structure diagrams are commonly used
c. the format for input screens and source documents is decided
d. inputs, processes, and outputs that distinguish one alternative from another are identified
ANS: D
37. The role of the accountant/internal auditor in the conceptual design phase of the Systems Development
Life Cycle includes all of the following except
a. the accountant is responsible for designing the physical system
b. the accountant is responsible to ensure that audit trails are preserved
c. the internal auditor is responsible to confirm that embedded audit modules are included in
the conceptual design
d. the accountant is responsible to make sure that the accounting conventions that apply to
the module are considered by the system designers
ANS: A
SHORT ANSWER
1. Why is it important that the systems professionals who design a project not perform the detailed
feasibility study of the project?
ANS:
Objectivity is essential to the fair assessment of each project design. To ensure objectivity, an
independent systems professional should perform the study.
2. List at least three one-time costs and three recurring costs in system development.
ANS:
One time costs include: hardware acquisition, site preparation, software acquisition, system design,
programming and testing, data conversion, training.
Recurring costs include: hardware maintenance, software maintenance, insurance, supplies, personnel
costs.
3. ____________________ benefits can be measured and expressed in financial terms, while
____________________ benefits cannot be easily measured and/or quantified.
ANS:
Tangible, intangible
4. What is a systems selection report?
ANS:
A systems selection report is a formal document that consists of a revised feasibility study, a costbenefit analysis, and a list and explanation of intangible benefits for each alternative design. The
steering committee uses this report to select a system.
5. Why is the payback method often more useful than the net present value method for evaluating
systems projects?
ANS:
Because of brief product life cycles and rapid advances in technology, the effective lives of
information system tends to be short. Shorter payback projects are often desirable.
6. Contrast reactive and proactive management styles.
ANS:
Reactive management responds to problems only when they reach a crisis state and can no longer be
ignored. In this situation, problem resolution is generally suboptimal. Proactive management is alert
for early signs of problems and actively looks for ways to improve the organization’s systems. This
allows adequate time for planning and implementing solutions.
7. Explain why accountants are interested in the legal feasibility of a new systems project.
ANS:
Legal feasibility identifies conflicts between the proposed system and the company’s ability to
discharge its legal responsibilities. Accountants are often tasked with the legal requirements associated
with developing the internal control system and securing information from inappropriate disclosure.
8. Explain an advantage of surveying the current system when preparing a systems analysis for a new
systems project.
ANS:
An analysis of the current system:
will identify what aspects of the current system should be retained
will facilitate the conversion from the old to the new system
may uncover causes of reported problems
9. What are two purposes of the systems project proposal?
ANS:
First, it summarizes the findings of the study conducted to this point into a general recommendation
for a new or modified system. This enables management to evaluate the perceived problem along with
the proposed system as a feasible solution. Second, the proposal outlines the linkage between the
objectives of the proposed system and the business objectives of the firm. It shows that the proposed
new system complements the strategic direction of the firm.
10. List two ways that a systems project can contribute to the strategic objectives of the firm.
ANS:
A new system can improve the operational performance by eliminating nonessential activities and
costs, provide a method of differentiating the product or service from the competitors, and provide
information that will help improve management decision-making.
11. List four types of facts that should be gathered during an analysis of a system.
ANS:
data sources; information users; data stores; processes; data flows; controls; transaction volumes; error
rates; resource costs; bottlenecks; and redundant operations
12. What is the Internal Business Process Perspective?
ANS:
Metrics based on this perspective allow the manager to know how well their business is running, and
whether its products and services conform to customer requirements.
13. What is the Learning and Growth Perspective?
ANS:
Learning and growth constitute the essential foundation for success of any organization. This
perspective includes employee training and corporate cultural attitudes related to both individual and
corporate self-improvement
14. When a company is doing financially well, why is the Customer Perspective measure important?
ANS:
These are leading indicators: if customers are not satisfied, they will eventually find other suppliers
that will meet their needs. Poor performance from this perspective predicts of future decline, even
though the current financial picture may look good. The Customer Perspective includes objective
measurements such as customer retention rate, as well as more subjective criteria such as market
research and customer satisfaction surveys.
15. Distinguish between escapable and inescapable costs. Give an example.
ANS:
Escapable costs are directly related to the system, and they cease to exist when the system ceases to
exist. An example would be an annual software support fee for purchased software. If the system
ceases to exist, the support for the software will no longer be necessary. Inescapable costs, on the other
hand, represent costs which will not be eliminated if the system is scrapped. An example would be an
overhead charge for office space in a building which is owned by the company. If the system ceases to
exist, these costs will be allocated to the remaining departments.
16. Why is cost-benefit analysis more difficult for information systems than for many other types of
investments organizations make?
ANS:
The benefits of information systems are oftentimes very difficult to assess. Many times the benefits are
intangible, such as improved decision making capabilities. Also, maintenance costs may be difficult to
predict. Most other investments that organizations make, i.e. purchase of a new piece of equipment,
tend to have more tangible and estimable costs and benefits.
17. What does assessing user feedback involve?
ANS:
1. recognizing the problem
2. defining the problem
3. specifying system objectives
4. determining project feasibility
5. preparing a formal project proposal
ESSAY
1. Explain the five stages of the systems development life cycle?
ANS:
Systems Strategy. The first step in the SDLC is to develop a systems strategy, which requires an
understanding the strategic business needs of the organization. This may be derived from the
organization’s mission statement, an analysis of competitive pressures on the firm, and the nature of
current and anticipated market conditions. These needs reflect the organizations current position
relative to where it needs to be long term to maintain strategic advantage.
Project Initiation. Project initiation is the process by which systems proposals are assessed for
consistency with the strategic systems plan and evaluated in terms of their feasibility and cost-benefit
characteristics. Alternative conceptual designs are considered and those selected enter the construct
phase of the SDLC.
In-House Development. As mentioned earlier, some organizations have such unique information
needs that they can only be adequately met through internal development. The in-house development
step includes analyzing user needs, designing processes and databases, creating user views,
programming the applications, and testing and implementing the completed system.
Commercial Packages. When the nature of the project and the needs of the user permit, most
organizations will seek a pre-coded commercial software package rather than develop a new system
from scratch.
Maintenance and Support. Maintenance involves both acquiring and implementing the latest
software versions of commercial packages and making in-house modifications to existing systems to
accommodate changing user needs. Maintenance may be relatively trivial, such as modifying an
application to produce a new report or more extensive, such as programming new functionality into a
system. Another aspect of maintenance includes a establishing a user support infrastructure. This could
include help desk services, providing user training and education classes, and documenting user
feedback pertaining to problems and system errors.
2. What is the balanced scorecard?
ANS:
The balanced scorecard (BSC) is a management system that enables organizations to clarify their
vision and strategy and translate them into action. It provides feedback both from internal business
processes and external outcomes to continuously improve strategic performance. When fully deployed,
the balanced scorecard transforms strategic planning from an academic exercise into operational tasks.
3. Define the feasibility measures that should be considered during project analysis and give an example
of each.
ANS:
Technical feasibility is an assessment as to whether the system can be developed under existing
technology or if new technology is needed. An example might be a situation where a firm wants to
completely automate the sales process. A question would be-Is technology available that allows sales
to be made without humans?
Economic feasibility is an assessment as to the availability of funds to complete the project. A question
would be-Is it cost feasible to purchase equipment to automate sales?
Legal feasibility identifies any conflicts with the proposed system and the company’s ability to
discharge its legal responsibilities. An example would be a firm that is proposing a new mail order
sales processing system for selling wine.
Operational feasibility shows the degree of compatibility between the firm’s existing procedures and
personnel skills and the operational requirements of the new system. Do the firm have the right work
force to operate the system? If not, can employees be trained? If not, can they be hired?
Schedule feasibility pertains to whether the firm can implement the project within an acceptable time
frame. An example would be a new ticket sales system for a sports team. The system would need to be
implemented prior to the start of the new season.
4. Explain the role of accountants in the conceptual design stage.
ANS:
Accountants are responsible for the logical information flows in a new system. Alternate systems
considered must be properly controlled, audit trails must be preserved, accounting conventions and
legal requirements must be met. The auditability of a new system depends in part on its design
characteristics.
5. Contrast the feasibility study performed in the systems analysis phase of the Systems Development
Life Cycle (SDLC) with the study performed in the systems selection phase of the SDLC.
ANS:
A preliminary feasibility study for the project as a whole is performed in the systems analysis phase of
the SDLC. Five aspects to project feasibility are considered: technical feasibility, economic feasibility,
legal feasibility, operational feasibility, and schedule feasibility. The preliminary analysis is based
largely on the judgment and intuition of the systems professionals.
In the systems selection phase of the SDLC, the same five feasibility factors are considered for the
specific system features that have been conceptualized and for each conceptual design alternative. The
economic feasibility study in the detailed analysis includes a cost-benefit analysis for each alternative.
6. Explain why the Systems Development Life Cycle is of interest to accountants. What is the
accountant’s role in the Systems Development Life Cycle?
ANS:
The information system requires a significant financial investment. Accountants are concerned that the
capital investment involved in acquiring an information system is properly handled. Also, the
information system gathers the data used to prepare financial statements. Accountants must be certain
that the information system is applying accounting principles properly and that the system itself has
adequate internal controls. Any deficiencies in the information system could result in misstated
financial statements.
Accountants have three roles in the Systems Development Life Cycle. Accountants are users of the
information system and as such must be able to communicate their needs to the systems designers.
These needs include audit trail requirements, depreciation models, and other accounting techniques.
Accountants are members of the SDLC development team and are expected to provide information
about the requirements of the system including security needs. Finally, accountants are auditors of the
information system and determine what audit features should be designed into the system.
7. What are three problems that account for most system failures?
ANS:
Most system failures can be traced to three problems:
a. poorly specified system requirements, due to communication problems between users and systems
professionals, the iterative nature of the process, and the need to rework parts of the system;
b. ineffective development techniques for presenting, documenting, and modifying systems
specifications; and
c. lack of user involvement during critical development stages.
8. What is Industry analysis and why do managers do it.
ANS:
Industry Analysis provides management with an analysis of the driving forces that affect their
industry and their organization’s performance. Such analysis offers a fact-based perspective on the
industry’s important trends, significant risks, and potential opportunities that may impact the
business’s performance.
9. Why is the announcement of a new systems project so critical to project success?
ANS:
Change is threatening to many individuals. A new system can be perceived as putting jobs at risk in the
name of “efficiency,” as a threat to organizational structure, and as requiring job skills that some users
fear they lack. The announcement of a new system must include upper management support and an
explanation of the business rationale for the system and the expected benefits for ultimate users.
10. Contrast the preliminary project feasibility study with the feasibility study performed in the systems
evaluation and selection phase of the SDLC.
ANS:
A preliminary feasibility study for the project as a whole is performed in the systems needs analysis
phase of the SDLC. Five aspects to project feasibility are considered: technical feasibility, economic
feasibility, legal feasibility, operational feasibility, and schedule feasibility. The preliminary analysis is
based largely on the judgment and intuition of the systems professionals.
In the systems evaluation and selection phase of the SDLC, the same five feasibility factors are
considered for the specific system features that have been conceptualized and for each conceptual
design alternative. The economic feasibility study includes a cost-benefit analysis for each alternative.
11. Part of systems planning is a project feasibility study. Several feasibility issues can be raised. What are
they? Explain the key concerns.
ANS:
The key feasibility issues include: technical, economic, legal, operational, and schedule. Technical
feasibility relates to whether the proposed system can be developed with existing technology or
requires new. Economic feasibility relates to cost questions. Legal feasibility relates to the firm’s
ability to discharge is legal responsibilities under the proposed system. Operational feasibility concerns
the compatibility of the new and old systems, including personnel issues. Schedule feasibility relates to
meet target deadlines.
12. Explain the role of accountants in the conceptual design stage.
ANS:
Accountants are responsible for the logical information flows in a new system. Alternate systems
considered must be properly controlled, audit trails must be preserved, accounting conventions and
legal requirements must be met. The auditability of a new system depends in part on its design
characteristics.
13. Classify each of the following as either a one-time or recurring costs:
training personnel
initial programming and testing
system design-one
hardware costs
software maintenance costs
site preparation
rent for facilities
data conversion from old system to new system
insurance costs
installation of original equipment
hardware upgrades
ANS:
training personnel-one-time
initial programming and testing-one-time
system design-one-time
hardware costs-one-time
software maintenance costs-recurring
site preparation-one-time
rent for facilities-recurring
data conversion from old system to new system-one-time
insurance costs-recurring
installation of original equipment-one-time
hardware upgrades-recurring
14. What is competency analysis and why do managers do it.
ANS:
Competency Analysis provides a complete picture of the organization’s effectiveness as seen via four
strategic filters: Resources, Infrastructure, Products/Services and Customers. By assessing these
factors, an organization can develop an accurate view of its relative strengths, weaknesses and core
competencies. The analysis helps in developing strategic options, which are based on an understanding
of the future environment and firm’s core competencies. Strategic opportunities may include market
entry options or new product development options.