1

Chapter 13

Managing the Systems Development Life Cycle

Accounting Information Systems, 5th editionJames A. Hall

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

3

SDLC major phases

1. Systems strategy2. Project initiation3. In-house development4. Commercial packages5. Maintenance & support

Chapter 13

Chapter 14

Systems Development Life Cycle

1. Systems Strategy - Assessment - Develop Strategic Plan

1. Systems Strategy - Assessment - Develop Strategic Plan

2. Project Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis

2. Project Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis

3. In-house Development - Construct - Deliver

3. In-house Development - Construct - Deliver

4. Commercial Packages - Configure - Test - Roll-out

4. Commercial Packages - Configure - Test - Roll-out

5. Maintenance & Support - User help desk - Configuration Management - Risk Management & Security

5. Maintenance & Support - User help desk - Configuration Management - Risk Management & Security

System Interfaces, Architecture and User Requirements

Business Requirements

High Priority Proposals undergo Additional Study and Development

Feedback:User requests for New Systems

Selected System Proposals go forward for Detailed Design

New and Revised Systems Enter into Production

Business Needs and Strategy

Legacy Situation

Feedback:User requests for System Improvements and Support

Ch13

Ch13

Ch14 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

7

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.

8

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

9

Systems Strategy

Objective: link individual systems projects or applications to strategic objectives of firm.

STRATEGIC OBJECTIVES OF THE FIRM

BusinessPlan

SystemsPlan

SystemsProjects

10

1. Strategy Stage

Assess strategic information needsDevelop strategic systems planCreate action plans

11

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.

User FeedbackIdentifying user needs is fundamental to

everything elseDuring phase 1, pertains to substantial

problems, not minor systems modificationsFive key phases at this point in SDLC:

recognizing problemdefining problemspecifying system objectivesdetermining preliminary project feasibilitypreparing 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.

16

Preliminary Project FeasibilitySchedule feasibilityTechnical feasibility Operational feasibility Legal feasibilityEconomic feasibility

Rearrange author’s TELOS into a word you can recognize: STOLE

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

19

2. Project Initiation

A. Systems analysisB. Alternative conceptual designsC. Systems evaluation and selection

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

21

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. Survey2. Analysis of users’ needs

22

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

23

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

24

Fact-gathering techniques

ObservationTask participationInterviewsReview key documents

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

26

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 designsHow 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

27

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

Cost-Benefit Analysis: Identify Costs

Cost-Benefit Analysis: Identify Benefits—Tangible

Cost-Benefit Analysis: 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 break-even 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.

34

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.

35

How are Accountants Involved with SDLC?

As UsersAs members of

development team

As Auditors

36

The Role of the Accountant…

Systems Strategy Help reduce risk of creating unneeded,

unwanted, inefficient, ineffective systemsConceptual Design

Control implications Auditability of system

Systems Selection Economic feasibility

37