CHAPTER 5

CHAPTER 5: SYSTEMS DEVELOPMENT AND PROGRAM CHANGE ACTIVITIES PARTCIPANTS IN THE SDLC:    

Systems Professionals- individuals who build the system (systems analysts, systems engineers, and programmers) End Users- for whom the system is built (These include managers, operations personnel, accountants, and internal auditors) Stakeholders- individuals either within or outside the organization who have an interest in the system but are not end users Accountants/Auditors- The SDLC process is of interest to accountants and auditors for two reasons. First, the creation of an information system involve significant financial transactions. Accountants are as concerned with the integrity of this process as they are with any manufacturing process that has financial resource implications. The second reason is that the accountant’s responsibility is to ensure that the systems employ proper accounting conventions and rules, and possess adequate controls.

INFORMATION SYSTEMS ACQUISITION 1. IN-HOUSE DEVELOPMENT  Firms design and build their own information systems, customized 2. COMMERCIAL SYTEMS  Firms purchase from software vendors TYPES OF COMMERCIAL SYSTEMS  Turnkey systems. Completely finished systems and ready for installation, limited ability for customization  General Accounting Systems. Serves a wide variety of user needs, standardized systems typically sold in separate modules (e.g., accounts payable, accounts receivable, inventory control, etc.)  Special Purpose Systems. Standardized systems that deal with industry-specific procedures. (e.g., accounting systems for the medical field, banking industry)  Office Automation Systems. Improve the productivity of office workers (dbms, spreadsheet programs)  Backbone Systems. provide a basic system structure on which to build.  Vendor Supported Systems. Hybrid custom and commercial systems, software vendor develops and maintains custom systems for clients. ADVANTAGES OF COMMERCIAL SOFTWARE  Immediate implementation than custom systems  Cost is reduced  Reliability. commercial software is less likely to have errors than an equivalent in-house system. DISADVANTAGES OF COMMERCIAL SOFTWARE

 Independence. Firms are dependent on vendors for maintenance, greatest disadvantage  Commercial software are not customized according to the needs of the firm  Commercial software may be difficult to change or modify THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) SYSTEMS PLANNING-PHASE 1  Link individual system projects or applications to the strategic objectives of the firm  Basis is the organization’s business plan.  Where the firm wants to go and how to get there 1. Strategic Systems Planning. Allocation of systems resources at the macro level. Process is similar to budgeting resources for strategic activities. Technically not a part of the SDLC. 2. Project Planning. Basic purpose is to allocate scarce resources to specific projects. The product of this phase consists of two formal documents: the project proposal and the project schedule. Project Proposal. basis for deciding whether to proceed with the project (1. Recommend new or modified system. 2. shows that the proposed new system complements the strategic direction of the firm) Project Schedule. a budget of the time and costs for all the phases of the SDLC SYSTEMS ANALYSIS-PHASE 2  Foundation for the rest of the SDLC  Systems analysis report is the end result of the systems analysis phase. It presents the survey findings, the problems identified with the current system, the user’s needs, and the requirements of the new system.  Systems analysis involves 2 steps: 1. System Survey. Analyst gathers and analyzes relevant facts and use these to assess the current system. Fact-gathering techniques:  Observation  Task participation  Personal interviews  Reviewing key documents 2. Analysis Step. Systems analysis is an intellectual process that is commingled with fact gathering. The analyst is simultaneously analyzing as he or she gathers facts. It is therefore difficult to identify where the survey ends and the analysis begins. CONCEPTUAL SYSTEMS DESIGN-PHASE 3  Produce several alternatives that satisfy system requirements APPROACHES TO CONCEPTUAL SYSTEMS DESIGN 1. Structured Design. Designing systems from top-down. Usually documented by data flow and structured diagrams.

2. Object oriented approach. Build information systems from reusable standard components or objects. SYSTEM EVALUATION AND SELECTION-PHASE 4  optimization process that seeks to identify the best system from the alternatives or choices presented in phase 3  The deliverable product of the systems selection process is the systems selection report.  involves 2 steps: 1. Perform a detailed feasibility study T- technical feasibility. whether the system can be developed under existing technology or if new technology is needed E- economic feasibility. Availability of funds L- legal feasibility. The decision maker must be certain the proposed system falls inside all legal boundaries. O-operational feasibility. degree of compatibility between the firm’s existing procedures and personnel skills and the operational requirements of the new system S- schedule feasibility- firm’s ability to implement the project within an acceptable time 2. Perform a cost-benefit analysis DETAILED DESIGN-PHASE 5  produce a detailed description of the proposed system that both satisfies the system requirements identified during systems analysis and is in accordance with the conceptual design  after the detailed design, perform system design walkthrough to ensure that the design is free from conceptual errors that could become programmed into the final system APPLICATION PROGRAMMING AND TESTING-PHASE 6  select a programming language from among the various languages available that is suitable to the application  A procedural language requires the programmer to specify the precise order in which the program logic is executed. Procedural languages are often called third-generation languages  Event-driven languages are no longer procedural. Under this model, the program’s code is not executed in a predefined sequence. Instead, external actions or “events” that are initiated by the user dictate the control flow of the program  Object-Oriented Languages. Central to achieving the benefits of the object oriented approach is developing software in an object-oriented programming (OOP) language.  Programming the System. Regardless of the programming language used, modern programs should follow a modular approach. This technique produces small programs that perform narrowly defined tasks

SYSTEM IMPLEMENTATION-PHASE 7  Database structures are populated with data, New system is installed, system is documented  The system’s documentation provides the auditor with essential information about how the system works:  Designer and Programmer Documentation. Systems designers and programmers need documentation to debug errors and perform maintenance on the system  Operator Documentation. Computer operators use documentation called a run manual, which describes how to run the system.  User Documentation. documentation describing how to use the system (user handbook).  Cutover. process of converting from the old system to the new. It will usually follow one of three approaches: cold turkey, phased, or parallel operation.  Cold Turkey Cutover. Under the cold turkey cutover approach (also called the “Big Bang” approach), the firm switches to the new system and simultaneously terminates the old system.  Phased Cutover. Sometimes an entire system cannot, or need not, be cut over at once.  Parallel operation cutover involves running the old system and the new system simultaneously for a period of time

SYSTEMS MAINTENANCE-PHASE 8  Systems maintenance is a formal process by which application programs undergo changes to accommodate changes in user needs.