MANAGING THE SYSTEMS DEVELOPMENT LIFE CYCLE

1 13 James A. HallChapterAccounting information SYSTEMS , 4th. the SDLCS tudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page 13-1 CHAPTER 13 MANAGING THE SYSTEMS DEVELOPMENT life CYCLEThe DEVELOPMENT of a new information system is a complicated effort. But it must be done. Manual SYSTEMS are eventually automated and old SYSTEMS become obsolete either throughchanging needs in the organization or the introduction of new technology which makes old dreams more attainable, or both. This process is not a quick one. But SYSTEMS are notreplaced every and the next chapter present a very complete discussion of the SYSTEMS DEVELOPMENT lifecycle (SDLC). Chapter 13 introduces the SDLC and presents some of the tools that havedeveloped to automate the DEVELOPMENT process. It then covers the SYSTEMS strategy, andproject initiation, the first two stages of the objectives of this chapter are:!

2 To be able to identify the key stages in the SYSTEMS DEVELOPMENT life CYCLE ;!ro recognize how a firm s business strategy will shape its information SYSTEMS ;!to understand the relationship between strategic SYSTEMS planning and legacy SYSTEMS ;!to understand what transpires during SYSTEMS analysis;!to understand the TELOS model for assessing project feasibility;!to be familiar with cost-benefit analysis issues related to information SYSTEMS projects;and!to understand the role of accountants in the SDLC. 13 James A. HallChapterAccounting information SYSTEMS , 4th. the SDLCN otesStudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page SYSTEMS DEVELOPMENT life CycleThe system DEVELOPMENT life CYCLE (SDLC) is a model, orapproach, to the DEVELOPMENT of new SYSTEMS that guides theprocess to assure that the new system will be the best for SDLC is a five phase a system strategy; project is initiated by evaluating systemsproposals; for developing the system in-house areconsidered; packages are considered; and support follow the developmentand installation of the new chapter covers the first two phases.

3 The latter 3 arediscussed in Chapter in SYSTEMS DevelopmentThere are three broad groups of participants in theprocess: SYSTEMS professionals, end users, StrategyIt should not surprise you that SYSTEMS projects should beconsistent with the strategic objectives of the firm. With thatfocus, a steering committee is formed that will assess theorganizations strategic information needs, develop a strategicsystems plan, and create action Strategic information NeedsJust as a company plans its budget according to priorities,strategic SYSTEMS planning requires care. The book discussesthree key issues that must be considered in the Business NeedsSeveral issues are important: the vision and missionof the organization so that system DEVELOPMENT isconsistent, and the results of industry andcompetency analysis where is the industry going,and how does the business fit. 13 James A. HallChapterAccounting information SYSTEMS , 4th.

4 The SDLCN otesStudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page SystemsHow does the old system support the mission of thecompany? How should the company move forwardwith its new system ? The process is helped by thedevelopment of an architecture description a formalmap of the existing system . See Table 13-1, on FeedbackIt is important for the organization to learn as muchas possible from users about the key problems thatmust be corrected by a new system . This is done in afive phase the problem the sooner that theproblem is recognized, the easier it can befixed. This process will be dependent onwhether management is reactive the problem not just listingsymptoms. This is not necessarily an easytask. And it can require extensive effort bythe managers and computer remaining three phases must system objectives in terms ofwhat the new system must do, in project feasibility decidingwhat approach will lead to success.

5 Thisprocess is aided by the acronym TELOS which identifies various feasibility issues:technical, economic, legal, operational, a formal project proposal to givemanagement the information needed fordeciding whether or not to proceed with theproject. The proposal will do two things:summarize the findings of the study andshow how the proposed system supports thebusiness objectives of the firm. See Fig. 13-2, on page 670 for a sample proposal. 13 James A. HallChapterAccounting information SYSTEMS , 4th. the SDLCN otesStudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page a Strategic SYSTEMS PlanAfter multiple proposals are prepared, the steering committeeand SYSTEMS professionals must evaluate the pros and cons ofeach and an Action PlanGetting from the strategy to action is not an easy task. Thebalanced scorecard is a management system that helps makethings happen.

6 It also helps managers evaluate the benefits thattechnology can bring to the business. Four perspectives canhelp view the organization better: learning and growth, internal business, customer, and InitiationThe project selected will be chosen based on detailedunderstanding of the user problems and of the proposedsolutions. The chosen project will move on toe theconstruction AnalysisSystems analysis is a process that is crucial to the success ofthe project. It is a two step process which looks first at thecurrent system and then evaluates users s The Survey StepBefore planning a new system , it is important that thecurrent system be evaluated carefully and thoroughly. There are both disadvantages and advantages of sucha survey. The survey itself is basically fact gathering. It will look at many different aspects of the currentsystem: data sources, users, data stores, processes,data flows, controls, transaction volumes, errorrates, resource costs, and bottlenecks and redundantoperations.

7 A number of different techniques areused: observation, task participation, personalinterviews, and reviewing key documents. All thisinformation is needed for the second Analysis StepThis step ends with the preparation of a formalsystems analysis report which presents managementand/or the steering committee the results of thesurvey, the identification of the problem(s) and the 13 James A. HallChapterAccounting information SYSTEMS , 4th. the SDLCN otesStudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page 13-5requirement of the new system . See Fig. 13-5, onpage 678 as an of Alternative DesignsThere is often more than one way to meet the requirement of anew system . This phase produces multiple plans for evaluationin the next phase. These plans should be general but include allthe inputs, processes, outputs and special features in a mannerthat permits comparison. Fig.

8 13-6, on page 679 shows twodata flow diagrams for two alternative purchasing is a start in the process of Evaluation and SelectionThis process is designed to identify the best system choice. Assuch, it is a very important process involving two a Detailed Feasibility StudyFor each alternative design, the feasibility issuesraised earlier should be reevaluated by informedevaluators including the project manager, userrepresentatives and SYSTEMS professionals. The groupshould also include a member of the internal auditstaff. The key areas of feasibility (TELOS) must beconsidered in greater detail: technical feasibility is greatly improvedwhen well-established technology is used ; economic feasibility can be better evaluatednow that technical details are known, but anychanges in the economic climate must alsobe considered; legal feasibility deals with sensitive dataetc.; operational feasibility considers the skillsneeded to properly use the system and theimplied need for training; and schedule feasibility considers the time thenew system can be up and running vs.

9 Whenit is Cost-Benefit AnalysisNew system DEVELOPMENT projects can have very highcosts. This is an investment for the business andshould be evaluated using cost-benefit analysis. Thisis not necessarily easy since identification of the total 13 James A. HallChapterAccounting information SYSTEMS , 4th. the SDLCN otesStudy Notes Prepared by H. M. Savage South-Western Publishing Co., 2004 Page 13-6costs and benefits are much harder to identify that inmany other types of invesments. There are three basicsteps to the CostsAs in any cost-benefit analysis, there are twobasic types of cost. One-time and text will give you a good appreciation ofthese costs. See Table 13-2, on page 682and the accompanying examining a system proposal, onetime costs include: hardware acquisitioncosts, site preparation, software acquisition, SYSTEMS design, programming and testing,data conversion, and costs include hardwaremaintenance, software maintenance,insurance, supplies, and BenefitsBenefits of a new system may be bothtangible and intangible.

10 Table 13-3, onpage 684 summarizes the tangible benefitsin a not surprising way increased revenuesand cost reduction. Despite the importanceof many intangible benefits, they are muchharder to measure and quantify. Table 13-4,on page 685 lists many and theaccompanying text Costs and BenefitsThe text presents examples of using two keymethods for comparison: the net-presentvalue method and the payback your cost accounting class. to 13-9(a) and (b), on pages 686-688support the SYSTEMS Selection ReportThe primary output of this evaluation is the systemselection report which includes the feasibility study,cost-benefit analysis and discussion of benefits ofeach alternative. A recommendation is this stage, the decision on how the system will bebuilt should be clear. There are three possibilities,develop in-house, buy, or combine. 13 James A. HallChapterAccounting information SYSTEMS , 4th.