W4 - Hall Asia Edition PP - ch13

Chapter 13
Managing the Systems

Development Life Cycle
Principles of Accounting Information

Systems, Asia Edition
James A. Hall
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Objectives for Chapter 13
• Be able to identify the key stages in the SDLC.
• Recognize how a firm’s business strategy will shape
its information system.
• Understand the relationship between strategic
systems planning and legacy systems.
• Understand what transpires during systems
analysis.
• Understand the TELOS model for assessing project
feasibility.
• Be familiar with cost-benefit analysis issues related
to information systems projects.
• Understand the role of accountants in the SDLC.
2
The Systems Development Life
Cycle (SDLC)
 A logical sequence of activities used to:
 identify new systems needs
 develop new systems to support those needs
 A model for reducing risk through planning,
execution, control, and documentation
 The SDLC model may be shown in five stages.
 We’ll look at the first two in this chapter and the
remaining three in chapter 14.
3
System Development Life Cycle
Figure 13-1
4
Overview of Phases 1 and 2
5
Overview of Phases 1 and 2
6
Systems Development Participants
7
Systems Steering Committee
 Usually includes the CEO, CFO, CIO, senior
management from user areas and computer
services, and internal auditors
 Typical responsibilities:
 provide guidance
 resolve conflicts
 review projects and assigning priorities
 budget and allocate funds
 review the status of projects
 determine whether projects should be continued
8
Phase 1
Systems Strategy

James A. Hall
Assessing Strategic Information
Needs
 Strategic systems planning involves the
allocation of resources at the macro level.
 usually a time frame of three to five years
 Key inputs in developing a sound systems
strategy include:
 strategic business needs of the organization
 situations involving legacy systems
 end user feedback
10
Strategic Business Needs
 Vision and mission
 systems strategy requires an understanding of top
management’s vision, which has shaped the
organization’s business strategy
 Industry and competency analysis
 industry analysis: the driving forces that affect the
industry and their organization’s performance, such
as important trends, significant risks, and potential
opportunities
 competency analysis: a complete picture of the
organization’s effectiveness as seen via four
strategic filters: resources, infrastructure,
products/services, and customers
11
Legacy Systems
Use legacy components to help develop an
architecture description.
End User Feedback
 Identifying user needs is fundamental to
everything else
 During phase 1, pertains to substantial
perceived problems rather than minor systems
modifications
 Has five key phases at this point in the SDLC:
 recognize problems
 define problems
 specify systems objectives
 determine feasibility and contributions of projects
• may entail prioritizing individual projects
 preparing a formal project proposal
13
End 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 they reach a crisis state
 proactive management - alert to subtle signs of
problems and aggressively looks for ways to improve
14
End 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.
15
End User Feedback:
Specifying System Objectives
 The strategic objectives of the firm and
the operational objectives of the
information systems must be
compatible.
 At this point, the objectives only need to
be defined in general terms.
End User Feedback:
Preliminary Project Feasibility-TELOS
 Technical feasibility - is the technology necessary
available? (ex: comp selling perfume, when they want to provide platform to sell the
perfume, they decide to do website, are the users able to smell the order?)
 Economic feasibility - are the funds available and

appropriate for the system?
 Legal feasibility - does the system fall within legal
boundaries?
 Operational feasibility - can procedural changes be
made to make the system work?
 Schedule feasibility - can the project be completed
by an acceptable time period?
17
End User Feedback:
Preparing a Formal Project Proposal
 A systems project proposal provides
management with a basis for deciding
whether or not to proceed with the project.
 It summarizes the findings of the study and
makes a general recommendation.
 It outlines the linkage between the
objectives of the proposed system and the
business objectives of the firm.
18
Strategic Systems Plan
19
Relationship Between Priority,
Cost, and Strategic Impact
Figure 13-3
20
Create an Action Plan:
the Balanced Scorecard
21
The Balanced Scorecard
Primary objective: capture information on orthogonal
dimensions that are important to every organization
financial: how do we look to our shareholders?
customer: how do we look to our customers?
internal business process: what must we excel at?
learning and growth: can we continue to improve?
Second objective: prevent the proliferation of reports and
information. Concentrate only on critical success factors to
which everyone in the organization will pay attention.
22
Balanced Scorecard for Online Banking
Figure 13-4
23
Phase 2
Project Initiation

James A. Hall
 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 the best option and proceeding to
the construct phase
 examining whether the selected option will
require in-house development, a commercial
package, or both
25
26
Survey of Current Systems
 Advantages:
 identifies aspects of the old system which should
be retained in the new system
 aids in planning the implementation of the new
system
 may allow conclusive determination of the cause
of the reported problems
 Disadvantages:
 the current physical tar pit
 can stifle new ideas
27
The Survey Step
 Fact-gathering techniques include observing,
participating, interviewing, and reviewing
documents.
 Facts must be gathered regarding:
 data sources and data stores
 users
 processes
 data flows
 controls, especially audit trails
 transaction volumes
 error rates
 resource costs
 bottlenecks and redundant operations
28
The Analysis Step
 Systems analysis is an intellectual process
that is commingled with fact gathering.
 A formal systems analysis report, prepared
and presented to the steering committee,
contains:
 reasons for system analysis
 scope of study
 problem identified with current system
 statement of user requirements
 resource implications
 recommendations
29
The Conceptualization Phase
 Purpose: produce alternative
conceptual solutions that satisfy the
requirements identified during systems
analysis
 How much detail?
 enough to highlight the differences
between critical features of competing
systems rather than their similarities
30
Alternative Conceptual Designs
for a Purchasing System
Figure 13-6
31
Systems Evaluation and Selection
 A critical juncture in the SDLC
 a formal mechanism for selecting the
one system from the set of alternative
conceptual designs that will go forward
for construction
 an optimization process that seeks to
identify the best system
 a structured decision-making process
that reduces uncertainty and risk
32
The Role of Accountants
 Accountants ensure that the following are
considered during evaluation and selection:
 only escapable (relevant) costs are used in
calculations of cost savings benefits
 reasonable interest rates are used in measuring
present values of cash flows
 one-time and recurring costs are completely and
accurately reported
 realistic useful lives are used in comparing
competing projects
 intangible benefits are assigned reasonable
financial values
33
Detailed Feasibility Study
 Similar to the preliminary project
feasibility analysis (TELOS), but now
more detailed and oriented to deciding
on a specific system design. Examine:
 technical feasibility
 economic feasibility
 legal feasibility
 operational feasibility
 schedule feasibility
34
Cost-Benefit Analysis:
Identify Costs
35
Identify Benefits—Tangible
36
Identify Benefits—Intangible
37
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.
38
How Should We Get the System?
 Once the 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
 purchase commercial software: best for systems
that are expected to support “best industry
practices”
 a mix of the first two approaches: make in-house
modifications, to varying degrees, of a
commercial system to meet the organization’s
unique needs
39
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.
40
Why are Accountants Involved
with SDLC?
 The creation of an information system
consumes significant resources and has
financial resource implications.
 The quality of accounting information
systems and their output rests directly
on the SDLC activities that produce
them.
41
How are Accountants Involved
with SDLC?
 As end users who must provide a clear
picture of their problems and needs
 As members of the development team
 As auditors who must ensure that the
system is designed with appropriate
internal controls and computer audit
techniques.
42
The Accountant’s Role in Systems
Strategy
 Auditors should routinely review the
organization’s systems strategy.
 Careful systems planning is a cost-effective
way to reduce the risk of creating
unneeded, unwanted, inefficient, and
ineffective systems.
 Both internal and external auditors have
vested interests in this outcome.
The Accountant’s Role in
Conceptual Design
 Accountants should be responsible for the
conceptual system…
 and the systems professionals for the physical
system.
 If important accounting considerations are
not conceptualized at this point, they may
be overlooked, exposing the organization
to potential financial loss.
 The auditability of a system depends in
part on its design characteristics.
44
The Accountant’s Role in Systems
Selection
 Economic feasibility is a primary concern to
accountants. Accountants should ensure that:
 use only escapable costs in calculations of cost-savings
benefits
 use reasonable interest rates in measuring present
values of cash flows
 one-time v. recurring costs are accurately reported
 use realistic useful lives in comparing competing projects
 intangible benefits are assigned reasonable financial
values
45

W4 - Hall Asia Edition PP - ch13

Uploaded by

Copyright:

Available Formats

W4 - Hall Asia Edition PP - ch13

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

W4 - Hall Asia Edition PP - ch13

Uploaded by

Copyright:

Available Formats

Chapter 13

Managing the Systems

Principles of Accounting Information

Principles of Accounting Information

 Economic feasibility - are the funds available and

Principles of Accounting Information

You might also like