Chapter 13
Managing the
Systems
Development
Life Cycle
Accounting Information Systems, 5th edition
James A. Hall
1
The Systems Development
Life Cycle (SDLC)
Logical sequence of activities used to:
identify new systems needs
develop new systems to support those needs
SDLC is a model for reducing risk through
planning, execution, control, and
documentation
SDLC major phases
1.
2.
3.
4.
5.
Systems strategy
Project initiation
In-house development
Commercial packages
Maintenance & support
Chapter 13
Chapter 14
3
Systems Development Life Cycle
Business Needs and
Strategy
Legacy Situation
Business Requirements
1. Systems Strategy
- Assessment
- Develop Strategic Plan
System Interfaces, Architecture and
User Requirements
Ch13
Feedback:
User requests for New Systems
High Priority Proposals undergo
Additional Study and Development
2. Project Initiation
- Feasibility Study
- Analysis
- Conceptual Design
- Cost/Benefit Analysis
Ch13
Feedback:
User requests for System
Improvements and Support
Selected System Proposals go
forward for Detailed Design
3. In-house Development
- Construct
- Deliver
4. Commercial Packages
- Configure
- Test
- Roll-out
Ch14
New and Revised Systems
Enter into Production
5. Maintenance & Support
- User help desk
- Configuration Management
- Risk Management & Security
Ch14
Ch14
Overview of Phases 1 and 2
Phase 1 - Systems Strategy
Understand strategic needs of organization
Examine organization’s mission statement
analyze competitive pressures on the firm
examine current and anticipated market conditions
Consider information systems’ implications pertaining
to legacy systems (flat file systems)
consider concerns registered through user feedback
produce a strategic plan for meeting these various and
complex needs
Produce timetable for implementation
Overview of Phases 1 and 2
Phase 2 - Project Initiation
assess systems proposals for consistency with strategic
systems plan
evaluate feasibility and cost-benefit characteristics of
proposals
consider alternative conceptual designs
Select design to enter the construct phase of SDLC
examine whether proposal will require in-house
development, a commercial package, or both
Participants in Systems
Development
 Systems Professionals (for internally developed systems)
 Systems analysts
 Systems designers
 Programmers
 End Users
 Managers
 Operations personnel
 Accountants *
 Internal auditors *
 Stakeholders
 Accountants *
 Internal auditors *
 External auditors
Note Accountants &
Internal Auditors fill
multiple roles.
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Systems Steering
Committee
 Provides guidance, reviews status of systems projects
 Typically includes CEO, CFO, CIO, senior
management from user areas and computer
services, and internal auditor.
 Typical responsibilities are:
resolving conflicts
reviewing projects and assigning priorities
budgeting funds
reviewing status of projects
determining whether projects should be continued
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Systems Strategy
Objective: link individual systems projects
or applications to strategic objectives of
firm.
STRATEGIC OBJECTIVES OF THE FIRM
Business
Plan
Systems
Plan
Systems
Projects
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1. Strategy Stage
Assess strategic information needs
Develop strategic systems plan
Create action plans
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Strategic Information Needs
Overview of business strategy
Vision & mission – formal mission statement
Industry & competency analysis
Legacy systems – often mixture of old & new
technologies – systems that have evolved over
time.
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User Feedback
Identifying user needs is fundamental to everything
else
During phase 1, pertains to substantial problems,
not minor systems modifications
Five key phases at this point in SDLC:
recognizing problem
defining problem
specifying system objectives
determining preliminary project feasibility
preparing a formal project proposal
User Feedback:
Recognizing the Problem
The need for a new, improved information system
is manifested through various symptoms.
Symptoms may seem vague and innocuous or go
unrecognized initially.
The point at which the problem is recognized is
often a function of management’s philosophy.
reactive management - responds to problems only
when there is a crisis
proactive management - alert to subtle signs of
problems and aggressively looks for ways to improve
User Feedback:
Defining the Problem
Managers and end users should…
avoid leaping to a single definition of a problem
keep an open mind and gather facts before deciding
learn to intelligently interact with systems professionals
An interactive process between managers/end
users and systems professionals is necessary to
arrive at an accurate problem definition.
The next three stages of the end user feedback process
involve this interactive process.
User Feedback:
Specifying System Objectives
Strategic objectives of firm and operational
objectives of the information systems must
be compatible.
At this point, objectives only need to be
defined in general terms.
Preliminary Project
Feasibility
Schedule feasibility
Technical feasibility
Operational feasibility
Legal feasibility
Economic feasibility
Rearrange author’s
TELOS into a word
you can recognize:
STOLE
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User Feedback:
Preliminary Project Feasibility-STOLE
 Schedule feasibility – can project be completed by
an acceptable time period?
 Technical feasibility - is the necessary technology
available?
 Operational feasibility - can procedural changes be
made to make the system work?
 Legal feasibility – does system fall within legal
boundaries?
 Economic feasibility – are funds available and
appropriate for the system?
User Feedback:
Preparing Formal Project Proposal
A systems project proposal provides management
with basis for deciding whether or not to proceed
with project.
It summarizes findings of the study and makes
general recommendation.
It outlines the linkage between objectives of the
proposed system and the business objectives of
the firm.
Decision based on greatest benefits with lowest
costs
2. Project Initiation
A. Systems analysis
B. Alternative conceptual designs
C. Systems evaluation and selection
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Project Initiation
The second phase in SDLC involves:
Understanding users’ needs and problems
proposing multiple alternative solutions
assessing alternatives in terms of feasibility
and cost-benefit characteristics
Selecting best option and proceeding to
construct phase
examining whether the selected option will
require in-house development, a commercial
package, or both
A. Systems Analysis
A business problem must be fully understood
before a solution can be formulated.
A defective analysis will lead to a defective
solution.
Systems analysis is a 2-step process
1. Survey
2. Analysis of users’ needs
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Survey Current System
Advantages of surveying current system
Identifies aspects of old system that should
be kept
Aids in planning implementation of new
system
May help determine cause of problems
Disadvantages
May stifle (discourage) new ideas
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Facts to Gather in Survey/Analysis
 Facts about systems:
Transaction volumes
Data sources
Users
Data stores
Processes
Data flows
Controls
Error rates
Resource costs
Bottlenecks & redundant operations
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Fact-gathering techniques
Observation
Task participation
Interviews
Review key documents
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Analysis Step
Systems analysis is an intellectual process that is
commingled with fact gathering.
A formal systems analysis report, prepared and
presented to Steering Committee, should contain:
reasons for system analysis
scope of study
problem identified with current system
statement of user requirements
resource implications
recommendations
B. Conceptualization of
Alternative Designs
Purpose: produce alternative conceptual
solutions that satisfy requirements identified
during systems analysis
Help to reach consensus between users and systems
professionals on alternative designs
How much detail should be included?
enough to highlight differences between critical
features of competing systems, not the similarities
Examples: inputs, outputs, processes and any special
features
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C. Systems Evaluation & Selection
Formal mechanism for selecting
one system from set of alternative
conceptual designs.
 Selection process is two steps:
Detailed feasibility study
• Similar to Preliminary feasibility study, but
more details
Cost-benefit analysis
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Cost-Benefit Analysis:
Identify Costs
Cost-Benefit Analysis:
Identify Benefits—Tangible
Identify Benefits—
Intangible
Comparing Costs and
Benefits
Two methods commonly used for evaluating the
costs and benefits of information systems:
Net Present Value Method: deduct the present value of
costs from the present value of benefits over the life of the
project.
The optimal choice is the project with the greatest net
present value.
Payback Method: do break-even analysis of total costs
(one-time costs plus present value of recurring costs) and
total benefits (present value of benefits). After the breakeven point, the system earns future profits.
The optimal choice is the project with the greatest future
profits.
How Should We Get the
System?
Once optimal system is selected, decide how
to acquire it:
develop the system in-house: best for systems that
need to meet unique and proprietary business
needs
Obviously only for large organizations
purchase commercial software: best for systems
that are expected to support “best industry
practices”
a mix of first two approaches: make in-house
modifications, to varying degrees, of commercial
system to meet the organization’s unique needs
Announcing the New System
Project…
can be the most delicate aspect of the SDLC.
End user support is critical to success.
All end users need to be made to understand
the objectives of the new system.
End users and managers who view the new
system as a potential benefit to their jobs,
rather than a threat, are more likely to
cooperate with the project.
Why Are Accountants
Involved with SDLC?
Creation/purchase of IS
consumes significant resources
and has financial resource
implications.
Quality of AISs and their output
rests directly on SDLC activities
that produce them.
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How are Accountants
Involved with SDLC?
As Users
As members of
development team
As Auditors
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The Role of the Accountant…
Systems Strategy
Help reduce risk of creating unneeded, unwanted,
inefficient, ineffective systems
Conceptual Design
Control implications
Auditability of system
Systems Selection
Economic feasibility
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