Chapter Five

Systems Development and Systems Analysis

Because the environment is competitive and ever changing, organizations continually face the need for new,
faster, and more reliable ways of obtaining information. To meet this need, an information system must
continually undergo changes, ranging from minor adjustments to major overhauls. Companies change their
systems for a variety ofreasons:
– To respond to changes in user needs or business needs
– To take advantage of or respond to technology changes
– To accommodate improvements in their business process
– To gain a competitive advantage and/or lower costs
– To increase productivity
– To accommodate growth
– To accommodate downsizing or distribute decision making
– To replace a system that is aged and unstable
Important questions in designing a system are:
1. What process must the company go through to obtain and implement a new system?
2. What types of planning are necessary to ensure the system’s success?
3. How will employees react to a new system?
4. How should the new system be justified and sold to top management?
5. How can expected costs and benefits be quantified to determine whether the new system
will indeed be cost-effective?
The Systems Development Life Cycle: Whether systems changes are major or minor, most companies go
through a systems development life cycle. The systems development life cycle (SDLC) is a conceptual model
used in project management that describes the stages involved in an information system development
project, from an initial feasibility study through maintenance of the completed application. It is a logical
process by which systems analysts, software engineers, programmers and end-users build information
systems and computer applications to solve business problems and needs. Systems development
methodology can be used as a synonym for the life cycle. Systems development methodology is a very formal
and precise system development process that defines a set of activities, methods, best practices, deliverables,
and automated tools that system developers and project managers are to use to develop and maintain
information systems and software.
Frequently, several models are combined into some sort of hybrid methodology. Documentation is crucial
regardless of the type of model chosen or devised for any application, and is usually done in parallel with the
development process. Some methods work better for specific types of projects, but in the final analysis, the
most important factor for the success of a project may be how closely the particular plan was followed. In
general, an SDLC methodology follows the following steps:

1 | A short note for the course Accounting Information System

 1. The existing system is evaluated- deficiencies are identified. This can be done by interviewing users
of the system and consulting with support personnel.
2. The new system requirements are defined- in particular, the deficiencies in the existing system
must be addressed with specific proposals for improvement.
3. The proposed system is designed- plans are laid out concerning the physical construction,
hardware, operating systems, programming, communications, and security issues.
4. The new system is developed- the new components and programs must be obtained and installed.
Users of the system must be trained in its use, and all aspects of performance must be tested. If
necessary, adjustments must be made at this stage.
5. The system is put into use-this can be done in various ways. The new system can phased in,
according to application or location, and the old system gradually replaced. In some cases, it may be
more cost-effective to shut down the old system and implement the new system all at once.
6. Once the new system is up and running for a while, it should be exhaustively evaluated. Maintenance
must be kept up rigorously at all times. Users of the system should be kept up-to-date concerning the
latest modifications and procedures.

Romney and Steinhart identified the following five as the components of SDLC.
1. Systems analysis 4. Implementation and conversion
2. Conceptual design 5. Operations and maintenance
3. Physical design
Systems analysis is the first step in SDLC where in-depth understanding about a system starts. At this stage,
the information needed to purchase or develop a new system is gathered. Since analysis is too costly (in
terms of time, effort, money, etc), it is mostly started after the project is approved and green light is obtained
from the management. When a new or improved system is needed, a written request for systems development
is prepared. The request describes the current system’s problems, why the change is needed, and the
proposed system’s goals and objectives. It also describes the anticipated benefits and costs.

2 | A short note for the course Accounting Information System

System analysis is the stage of:
- studying the current business system
- understanding how the existing system works
- determining the weakness and strength of the existing system
- defining the business needs and requirements (user requirement determination and system
requirement determination independent of technology issues), etc

The Systems Development

Life Cycle: Systems Analysis
Systems Analysis
Do initial investigation
Do system survey
Do feasibility study Conceptual
Determine information needs Design
and system requirements
Deliver systems requirements

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There are five steps in the analysis phase:

1. Initial investigation- is conducted to screen projects. At this stage, the following are essential:
 Gaining a clear picture of the problem or need
 Determining the project's viability and expected costs and payoffs
 Evaluating the project's scope and the nature of the new AIS, and
 Recommending whether the development project should be initiated as proposed,
modified or abandoned.
At this stage the exact nature of the problems under review must be determined. Sometimes, what is thought
to be the cause of the problem is not the real source. If a project is approved, a proposal to conduct system
analysis is prepared. It is assigned a priority and added to the master plan, and the development team begins
the survey of the existing AIS.
2. Systems survey- at this stage, an extensive study of the current AIS is undertaken. It may take weeks or
months depending on the complexity and the scope of the system. The objectives of a system survey
include:
– Gain a thorough understanding of the company operations, policies, and procedures; data and
information flows; AIS strengths and weaknesses; and available hardware, software, and personnel.
– Make preliminary assessment of current and future processing needs, and determine the extent and
nature of the changes needed.
– Develop working relationships with users and build support for the AIS
– Collect data that identify user needs, conduct a feasibility analysis and make recommendations to
management.
Finally, the findings are documented, the existing system is modeled and analyzed and a survey report is
prepared.

3 | A short note for the course Accounting Information System

 1. Feasibility study- a more thorough feasibility analysis is conducted to determine the project's
viability. Especially important is economic feasibility. The feasibility analysis is updated as the
project proceeds and costs and benefits become clearer.
2. Information needs and systems requirements- once a project is deemed to be feasible, the
company identifies the information needs of the AIS users and documents system requirements.
the strategies for determining requirements include the following:
 Ask users what they need; Analyze existing system; Examine existing system use; &Create a
prototype
3. Systems analysis report- is the conclusion of the system analysis phase. It is used to summarize
and document the analysis activities and serve as a repository of data from which system
designers can draw. A go-no-go decision is generally made three times during system analysis:
 During the initial investigation- to determine whether to conduct a feasibility survey
 At the end of the feasibility study- whether to proceed to the information requirements
phase
 At the completion of the analysis phase- to decide whether to proceed to the next
phase.
Requirements determination tries to collect information on what system should do from many sources
like users, reports, forms, etc. Characteristics for gathering requirements are:
1. Impertinence—question everything
2. Impartiality—finds the best organizational solution and don’t try to justify the importance of
your suggestions at any cost.
3. Relaxation of constraints--assume that any thing is possible
4. Attention to detail—due consideration should be given to facts (information)
5. Reframing—analysis is a creative process. Try to address situations in a new way. Don’t
jump to conclusions thinking you have done the same thing before
System Design: System design is the evaluation of alternative solutions and the specification and
construction of a detailed computer based solution. It is also called physical design as it deals with
implementation issues. Systems analysis depends more on the logical aspect, implementation-
independent aspects of a system /the requirements.Systems design concentrates on the physical or
implementation-dependent aspects of a system (the systems technical specifications).
Conceptual design: In the conceptual systems design phase, a general framework is developed for
implementing user requirements and solving problems identified in the analysis phase. What are the
three steps in conceptual design?
1. Evaluate design alternatives.2. Prepare design specifications 3.Prepare conceptual systems design report.

4 | A short note for the course Accounting Information System

The system analysis phase is related to the conceptual design phase based on the diagram shown below:

Conceptual Systems Design

Systems
analysis

Prepare
Evaluate Prepare
conceptual
design design
systems
alternatives specifications
design report
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 Evaluate design alternatives:

 The design team should identify and evaluate design alternatives using the following criteria:
1. How well it meets organizational and system objectives
2. How well it meets users’ needs
3. Whether it is economically feasible
4. Its advantages and disadvantages
 Prepare design specifications:
 Once a design alternative has been selected, the team develops the conceptual design specifications
for the following elements:
1. Output 3. Data storage
2. Input 4. Processing procedures and operations
 Prepare conceptual systems design report:
 At the end of the conceptual design a conceptual systems design report is developed and submitted.
1. To guide physical systems design activities
2. To communicate how management and user information needs will be met
3. To help assess systems’ feasibility
Physical design

5 | A short note for the course Accounting Information System

 The Systems Development
Life Cycle: Physical Design
Physical Design
Design output
Design database
Implementation
Design input and Conversion
Develop programs
Develop procedures
Design controls
Deliver developed system
©2003 Prentice Hall Business Publishing, 16-14
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The above activities will come as a series of steps as shown by the diagram below:

Physical Systems Design

Output Program
design design

File and data Procedures

base design design

Input Controls
design design
©2003 Prentice Hall Business Publishing, 18-16
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Physical Systems Design: Output Design

 The objective of output design is to determine the characteristics of reports, documents, and screen
displays.

Physical Systems Design

 Physical design translates the broad,

user-oriented AIS requirements of
conceptual design into detailed
specifications that are used to code
and test the computer program.

Conceptual Physical
systems design systems design

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Physical Systems Design: File and Database Design

Physical Systems Design: Input Design
Physical Systems Design: Procedures Design
Physical Systems Design: Control Design
What are some control design considerations?
 Validity  Authorization Audit Control
 Accuracy  Security
 Numerical Control  Availability
 Maintainability  Integrity
Physical Systems Design Report
 At the end of the physical design phase the team prepares a physical systems design report.
 This report becomes the basis for management’s decision whether to proceed to the implementation
phase.

6 | A short note for the course Accounting Information System

 Implementation and conversion: Systems implementation is the process of installing hardware and
software and getting the AIS up and running. It includes the following activities.
The Systems Development
Life Cycle: Implementation and
Conversion
Implementation and Conversion
Develop plan
Install hardware and software
Train personnel, test the system
Operation
Complete documentation
and
Convert from old to new system Maintenance
Fine-tune and review
Deliver operational system

©2003 Prentice Hall Business Publishing, 16-15

Accounting Information Systems, 9/e, Romney/Steinbart

The relationship of the items in this phase and the conversion process (next phase) will be as shown below in
a series of activities.

Systems Implementation
Implementation planning

Develop and Prepare site; Select

test software install and and train
programs test hardware personnel

Complete Test system

documentation

Conversion
©2003 Prentice Hall Business Publishing, 18-27
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Systems Implementation: Implementation Planning

 An implementation plan consists of implementation tasks, expected completion dates, cost estimates,
and the person or persons responsible for each task.
 Planning should include adjustments to the company’s organizational structure.
Systems Implementation: Develop and test software programs
Systems Implementation: Site Preparation
Systems Implementation: Select and train personnel
Systems Implementation: Complete Documentation
Systems Implementation: Test the System
Systems Implementation: Conversion
 There are four conversion approaches.
1. Direct conversion 3. Parallel conversion
2. Phase-in conversion 4. Pilot conversion

7 | A short note for the course Accounting Information System

Operations and maintenance
The Systems Development
Life Cycle: Operation and
Maintenance
Feasibility analysis
Operation and Maintenance and decision points:
Operate system Economic
Feasibility
Modify system
Do ongoing maintenance Technical Feasibility

Deliver improved system Legal Feasibility

Scheduling
Feasibility
Systems
Operational
Analysis Feasibility

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Operation and Maintenance

 The final step in the SDLC is to

operate and maintain the new system.
 A postimplementation review should
be conducted on a newly installed
system.

Implementation Operation and

and conversion maintenance

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The key Players in System Development Process

The Players refer to who are the people involved in developing and implementing AIS?
 Management
 Accountants
 Information systems steering committee
 Project development team
 Systems analysts and programmers
 External players
What are top management’s roles?
o providing support and encouragement
o establishing system goals and objectives
o determine information requirements
What are accountants’ roles?
– determine their information needs
– may be members of the project development team
– play an active role in designing system controls
What are the steering committee’s roles?
– set policies that govern the AIS
– ensures top-management participation

8 | A short note for the course Accounting Information System

 – guidance and control
– facilitates coordination and integration of IS activities
What are the project development team’s roles?
– plan each project
– monitor project
– make sure proper consideration is given to the human element
What are the system analyst’s and programmer’s roles?
– study existing systems
– design new systems and prepare specifications
– write computer programs
Why is planning an important step in systems development?
– consistency
– efficiency
– cutting edge
– lower costs
– adaptability
What types of systems development plans are needed?
– project development plan
– master plan
Planning Techniques
 Two techniques for scheduling and monitoring systems development activities are:
a. PERT (program evaluation and review technique): PERT requires that all activities and the
precedent and subsequent relationships among them be identified.
b. Gantt chart: A bar chart with project activities listed on the left-hand side and units of time
across the top
Feasibility Analysis
 Systems analysis is the first step in the systems development life cycle (SDLC).
 A feasibility study (also called a business case) is prepared during systems analysis and updated as
necessary during the remaining steps in the SDLC.
 The steering committee uses the study to decide whether to terminate a project, proceed
unconditionally, or proceed conditionally.
 What five important aspects need to be considered during a feasibility study?
 Technical feasibility
 Operational feasibility
 Legal feasibility
 Scheduling feasibility
 Economic feasibility

9 | A short note for the course Accounting Information System

  Economic feasibility is the most frequently analyzed of the five aspects.
 What is the basic framework for feasibility analysis?
 capital budgeting model
 What are some capital budgeting techniques?
 Payback period
 Net present value (NPV)
 Internal rate of return (IRR)
Behavioral Aspects of Change
 Individuals involved in systems development are agents of change who are continually confronted by
people’s reaction and resistance to change.
 The best system will fail without the support of the people it serves.
 Why do behavioral problems occur?
 personal characteristics and background
 manner in which change is introduced
 experience with prior changes
 communication
 disruptive nature of the change process
 fear
 How do people resist AIS changes?
 aggression
 projection
 avoidance
 How can behavioral problems be overcome?
 meet needs of the users
 keep communication lines open
 maintain a safe and open atmosphere
 obtain management support
 allay fears
 solicit user participation
 make sure users understand the system
 provide honest feedback
 humanize the system
 describe new challenges and opportunities
 reexamine performance evaluation
 test the system’s integrity
 avoid emotionalism

10 | A short note for the course Accounting Information System