Lecture 08

Chapter 20
Introduction to Systems Development and Systems Analysis (Part 1)

20-1
Copyright © 2012 Pearson Education
Learning Objectives
 Explain the five phases of the systems development life cycle.
 Discuss the people involved in systems development and the roles they
play.
 Explain the importance of systems development planning and describe
planning techniques.
 Discuss the various types of feasibility analysis and calculate economic
feasibility.
 Explain why system changes trigger behavioral reactions,
What form this resistance to change takes, and how to avoid or
minimize the resulting problems.
 Discuss the key issues and steps in systems analysis.
Copyright © 2012 Pearson Education 20-2

Introduction
 As the environment, technology, and competition change, an

information system must continually undergo changes.
 These changes range from minor adjustments to major overhauls.
 Occasionally, the old system is scrapped and replaced.

Introduction
 Why update systems?

 User or business changes
 Technology changes
 To improve business process
 Create competitive advantage
 Increase productivity gains
 Integrate multiple systems
 Aging systems need replacement

Introduction
 Skipping or skimping on systems development processes cause

runaways that consume time and money and produce no usable
results.
 Omitting basic systems development steps becomes tempting but

may lead to disaster as developers create well-structured systems that
fail to meet user needs or solve business problems.

Introduction
 This chapter discusses five topics:

 Systems development life cycle
 Planning activities during the systems development life cycle
 Feasibility analysis
 Behavioral aspects of change
 Systems analysis

Systems Development Life Cycle
(SDLC)
 Whether systems changes are major or minor, most
companies go through a systems development life cycle.
 In this section, we discuss the steps in the cycle and the
people involved.

Stages in SDLC
System Analysis
Operations & Conceptual

Maintenance Design
Implementation &
Physical Design
Conversion

SDLC Steps
1. Systems analysis
2. Conceptual design
3. Physical design
4. Implementation and conversion
5. Operation and maintenance

SDLC Step 1 – System Analysis
 As organizations grow and change, they may need more

or better information.
 Systems analysis is the first step. It includes:
 Initial investigation
 Involves gathering the information needed to

buy or develop a new system and determining
whether it is a priority.


 Systems survey
 If the system is a priority, survey the existing

system to define the nature and scope of the
project and identify the strengths and
weaknesses of the system.


 Systems survey
 Feasibility study
 Involves an in-depth study of the proposed

system to determine whether it’s feasible.


 Systems survey
 Determination of information needs and system requirements
 Involves finding out and documenting what

users and management need.
 This is the most important aspect of systems
analysis.


 Systems survey
 Determination of information needs and system requirements
 Delivery of systems requirements
 Involves preparation of a report summarizing

the systems analysis work.
 This report is submitted to the information
systems steering committee.
SDLC Steps
1. Systems analysis
3. Physical design

SDLC Step 2 – Conceptual Design
 In the conceptual design phase, the company decides how

to meet user needs.
 Tasks in this phase include:
 Identify and evaluate design alternatives
 Possibilities include:
 Buying software
 Developing in-house
 Outsourcing


to meet user needs.
 Develop design specifications
 Involves writing up details of what the system is to

accomplish and how it is to be controlled and developed.


to meet user needs.
 Develop design specifications
 Deliver conceptual design requirements
 These requirements will be forwarded to the information
systems steering committee.

SDLC Steps
1. Systems analysis
3. Physical design

SDLC Step 3 – Physical Design
 In the physical design phase, the broad, user-oriented

requirements of the conceptual design are translated into
detailed specifications that can be used by programmers
to code the programs.
 Tasks include:
 Design outputs, database, and inputs
 Develop programs
 Develop procedures
 Design controls
 Deliver developed system
 Goes to information systems steering committee

SDLC Steps
1. Systems analysis
3. Physical design

SDLC Step 4 – Implementation &
Conversion
 This is the capstone phase during which everything comes
together.
 Tasks include:
 Develop an implementation and conversion plan.
 Needed because of the complexity and importance of this phase.
 Install any new hardware and software.
 Train personnel.
 New employees may need to be hired and trained or existing employees
relocated.
 Test the system and make any needed modifications.
 Complete the documentation.
 Convert from the old to the new system.
 Deliver operational system.
 Send the final report to the IS steering committee

SDLC Steps
1. Systems analysis
3. Physical design

SDLC Step 5 – Operation & Maintenance
 Once the system is up and running, operations and
monitoring continue.
 Tasks include:
 Fine-tune and do post-implementation review.
 Operate the system.
 Periodically, review and modify the system.
 Do ongoing maintenance.
 Deliver improved system.

The Players
 Many people are involved in developing and successfully
implement an AIS, including:
 Top management
 Accountants
 The information systems steering committee
 The project development team
 Systems analysts
 Computer programmers
 External player

The Players
 Top management
 Accountants
 External player

The Players
 Top management’s role in systems development is to:
 Provide support and encouragement a clear signal that user
involvement is important.
 Help align the systems with corporate strategies.
 Establish system goals and objectives.
 Review IS department performance and leadership.
 Establish policies for project selection and organizational
structure.
 Participate in important systems decisions.

The Players
 User management needs to:
 Determine information requirements for departmental projects.
 Assist systems analysts with project cost-benefit estimates.
 Assign key staff members to development projects.
 Allocate funds.

The Players
 Top management
 Accountants
 External player

The Players
 Accountants also play an important role in systems
development:
 As AIS users, they must determine their information needs and
systems requirements and communicate them to system
developers.
 As members of project development teams or steering
committees, they help management in the development process.
 As controllers and auditors:
 Designing system controls and monitoring and testing these controls.
 Ensuring the system is easy to audit.
 Controls and “auditability” need to be built in early to minimize
costs and inefficiencies later.

The Players
 Top management
 Accountants
 External player

The Players
 The information systems steering committee is an
executive-level committee whose duty is to plan and
oversee the IS function.
 Consists of high level management, such as:
 Controller
 IS Manager
 User department managers
 Sets policies to govern the AIS and assure top-management
participation, guidance, and control.
 Attempts to encourage goal congruence and reduce goal conflict.

The Players
 Top management
 Accountants
 The information systems steering committee
 External player

The Players
 The project development team includes systems specialists,
managers, accountants, auditors, and users whose responsibility is to
guide development.
 Their job:
 Plan each project.
 Monitor to ensure timely and cost-effective completion.
 Ensure the human element is considered.
 Communicate project status to top management and steering committee.
 Communicate and meet with users to:
 Consider ideas
 Discuss progress
 Eliminate surprises
 The team approach produces more effective results and better user
acceptance.

The Players
 Top management
 Accountants
 The project development team
 External player

The Players
 Systems analysts study existing systems, design new
ones, and prepare specifications that are used by
programmers.
 They interact with technical personnel and users to bridge the
gap.
 They are responsible for ensuring the system meets user needs.

The Players
 Top management
 Accountants
 Systems analysts
 External player

The Players
 Computer programmers write the computer programs,
using the specs developed by the systems analysts.
 They also modify and maintain existing programs.

The Players
 Top management
 Accountants
 Systems analysts
 Computer programmers
 External player

The Players
 External players include:
 Customers
 Vendors
 Auditors
 Governmental entities
 Their needs must also be met in systems development.

SDLC
 Eventually, a major modification or system replacement is
necessary, and the systems development life cycle (SDLC) will
start over.
 In addition to the preceding five phases, three activities are
performed throughout the life cycle:
 Planning.
 Managing behavioral reactions to change.
 Assessing ongoing feasibility.

Planning System Development
 The organization should have plans for:

 The long range.
 Each systems development project.
 Each phase of each systems development project.
 Systems development planning is an important step for

the following key reasons:
 Consistency with the organization’s strategic plan.
 Efficiency achieved through coordination of the subsystems.
 Cutting edge technology and techniques.
 Lower costs due to lack of duplication, wasted effort, time
overruns, and cost overruns.
 Adaptability for future changes.

 When a system is poorly planned, a company must often

return to a prior phase and correct errors and design
flaws. (refer Figure 20.2)
 These returns are costly and result in delays, frustration,
and low morale.

Figure 20.2 Reasons for returning to a prior SDLC phase

 Two types of systems development plans are needed:

 Project development plan developed by the project team.
 Master plan developed by the IS steering committee


 Project development plan developed by the project
team.

 Project development plans contain:

 A cost-benefit analysis.
 Developmental and operational requirements, including:
 Human resources
 Hardware
 Software
 Financial resources
 A schedule of activities to develop and operate the new
application.


 Project development plan developed by the project team.

 A master plan specifies:

 What the system will consist of
 How it will be developed.
 Who will develop it.
 How needed resources will be acquired.
 Where the AIS is headed.
 It also provides:
 Status of projects in process.
 Prioritization of planned projects and criteria for
establishing priorities.
 Timetables for development.

 Projects with highest priority in the master plan are first
to be developed.
 These decisions are made by top management.
 Planning horizon:
 About a 3-year horizon.
 With updates at least 2–3 times/year—even more frequently
in some companies.
 The CIO should determine:
 How soon technologies will be in wide use.
 Whether the company should adopt late or early.
 What business opportunities might arise from new
technologies.

 Planning techniques
 Two techniques for scheduling and monitoring systems
development activities are:
 Program Evaluation and Review Technique (PERT)
 Gantt Chart.

 Gantt Charts

Planning Technique—PERT Chart
 A PERT diagram requires that all activities in a project be
identified along with the activities that precede and
follow them.
 These activities are used to draw a PERT diagram, which
consists of a network of:
 Arrows—representing activities that require time and
resources.
 Nodes—representing completion and initiation of activities.

Planning Technique—PERT Chart
 Completion time estimates are made, and the critical path

is determined.
 Critical path—the path requiring the greatest amount of
time.
 If any activity on the critical path is delayed, the whole
project is delayed.
 Resources may be shifted to the critical path to reduce the
delay.

 Gantt Charts

Planning Technique—GANTT Chart
 A Gantt chart is a bar chart with project activities on the

left and time across the top.
 For each activity, a bar of expected time is drawn from
the scheduled starting date to the ending date.
 As activities are completed, the bar is filled in.

Figure 20.3 Sample Gantt chart

 Advantage:
 Able to show graphically the entire schedule for a large,
complex project, including progress to date and status.
 Disadvantage:
 The chart does not show the relationship between activities
like the PERT chart does.

Feasibility Analysis
 During the systems analysis phase, a feasibility study (aka, a

business case) is prepared and is updated during the
remaining steps in the SDLC.
 The extent of the feasibility study depends on the size and
nature of the system.
 Feasibility team should include input from:
 Management
 Accountants skilled in controls and auditing
 Systems personnel
 Users

 The feasibility study and its updates are used by the steering
committee as the project proceeds to decide whether to:
 Terminate the project
 Proceed
 Proceed if specific problems are resolved

 Five aspects need to be considered during a feasibility study:

 Economic
 Will system benefits justify the time, money, and resources
required to implement it?
 Technical
 Can the system be developed and implemented using existing
technology?
 Legal
 Does the system comply with all applicable federal and state laws,
administrative agency regulations, and contractual obligations?

 Five aspects need to be considered during a feasibility study:

(cont.)
 Scheduling
 Can the system be developed and implemented in the time allotted?
 Operational
 Does the organization have access to people who can design,
implement, and operate the proposed system? Will people use the
system?

Capital Budgeting: Economic Feasibility
 Capital budgeting
 Economic feasibility is probably the most important and
frequently analyzed aspect.
 Most organizations use a capital budgeting return on investment
technique to evaluate the economic merits of different system
alternatives.
 This examination requires a careful investigation of costs and
benefits, which includes:
 Cost savings and other benefits
 Initial outlay costs
 Operating costs
 Other costs

 When possible, benefits and costs should be estimated and

included even if they are not easily quantifiable.
 If some costs and benefits cannot be accurately estimated,
they should at least be listed, along with the likelihood of
their occurrence and their expected impact.

 Benefits might include:

 Cost savings.
 Improved customer service, productivity, decision making, or
data processing.
 Better management control.
 Increased job satisfaction and employee morale.
 The primary operating cost is maintaining the system.

 Makes up 65–75% of the organization’s system efforts.

 Initial outlay and operating costs include:

 There are three commonly used capital budgeting techniques:

 Payback period
 Net present value (NPV)
 Internal rate of return (IRR)

 Payback period
 Calculates the number of years before the new savings from the
project equal the initial cost of the investment.
 Select projects with shorter payback periods.

 Net present value (NPV)

 Calculates and sums the discounted future cash flows of the
costs and benefits, using a discount rate that reflects the time
value of money.
 The initial outlay costs are deducted from the discounted cash
flows to obtain the NPV.
 A positive NPV indicates the alternative is economically
feasible.
 Select projects with higher positive NPV.

 Internal rate of return (IRR)

 Calculates the effective interest rate that would result in a net
present value of zero for the project.
 The IRR is compared with a minimum acceptable rate to
determine acceptance or rejection.
 Select projects with higher IRRs.

End of Part 1
 To be continued…
Copyright 2012 © Pearson Education, Inc. publishing as Prentice Hall 20-72

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Chapter 20

Introduction to Systems Development and Systems Analysis (Part 1)

 Discuss the key issues and steps in systems analysis.

Copyright © 2012 Pearson Education 20-2

 As the environment, technology, and competition change, an

 These changes range from minor adjustments to major overhauls.

 Occasionally, the old system is scrapped and replaced.

Copyright © 2012 Pearson Education 20-3

 Why update systems?

Copyright © 2012 Pearson Education 20-4

 Skipping or skimping on systems development processes cause

 Omitting basic systems development steps becomes tempting but

Copyright © 2012 Pearson Education 20-5

 This chapter discusses five topics:

Copyright © 2012 Pearson Education 20-6

Copyright © 2012 Pearson Education 20-7

Operations & Conceptual

Copyright © 2012 Pearson Education 20-8

Copyright © 2012 Pearson Education 20-9

 As organizations grow and change, they may need more

 Involves gathering the information needed to

Copyright © 2012 Pearson Education 20-10

 As organizations grow and change, they may need more

 If the system is a priority, survey the existing

Copyright © 2012 Pearson Education 20-11

 As organizations grow and change, they may need more

 Involves an in-depth study of the proposed

Copyright © 2012 Pearson Education 20-12

 As organizations grow and change, they may need more

 Involves finding out and documenting what

Copyright © 2012 Pearson Education 20-13

 As organizations grow and change, they may need more

 Involves preparation of a report summarizing

Copyright © 2012 Pearson Education 20-15

 In the conceptual design phase, the company decides how

Copyright © 2012 Pearson Education 20-16

 In the conceptual design phase, the company decides how

 Involves writing up details of what the system is to

Copyright © 2012 Pearson Education 20-17

 In the conceptual design phase, the company decides how

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 In the physical design phase, the broad, user-oriented

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 Their needs must also be met in systems development.