Construct, deliver, and maintain accounting information systems: SDLC major phases and system requirements

1. 1 Chapter 14 Construct, Deliver, and Maintain Systems Projects Accounting Information Systems, 5 th edition James A. Hall

2. 2 SDLC major phases 1. Systems strategy 2. Project initiation 3. In-house development 4. Commercial packages 5. Maintenance & support Chapter 14 Chapter 13

3. Systems Development Life Cycle 1 . Systems S trategy - A ssessment - Develop S trategic P lan 1 . Systems S trategy - A ssessment - Develop S trategic P lan 2 . P roject Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis 2 . P roject Initiation - Feasibility Study - Analysis - Conceptual Design - Cost/Benefit Analysis 3 . I n-house D evelopment - Construct - Deliver 3 . I n-house D evelopment - Construct - Deliver 4 . Commercial Packages - C onfigur e - T est - R oll-out 4 . Commercial Packages - C onfigur e - T est - R oll-out 5 . M aintenance & S upport - U ser help desk - C onfiguration M anagement - R isk M anagement & S ecurity 5 . M aintenance & S upport - U ser help desk - C onfiguration M anagement - R isk M anagement & S ecurity S ystem Interfaces, Architecture and U ser R equirements S ystem Interfaces, Architecture and U ser R equirements B usiness R equirements B usiness R equirements High Priority Proposals undergo Additional Study and Development High Priority Proposals undergo Additional Study and Development Feedback : User requests for New Systems Feedback : User requests for New Systems Selected System Proposals go forward for Detailed Design Selected System Proposals go forward for Detailed Design New and Revised Systems Enter into Production New and Revised Systems Enter into Production Business Needs and Strategy Legacy Situation Feedback : User requests for System Improvements and Support Feedback : User requests for System Improvements and Support Ch13 Ch13 Ch14 Ch14 Ch14

4. Overview of Phases 3, 4 and 5 z Phase 3 - In-House Development y appropriate when organizations have unique information needs y steps include: x analyzing user needs x designing processes and databases x creating user views x programming the applications x testing and implementing the completed system

5. Overview of Phases 3, 4 and 5 z Phase 4 - Commercial Packages y when acceptable, most organizations will seek commercial software package y advantages: x lower initial cost x shorter implementation time x better controls x rigorous testing by the vendor y risks: x must adequately meet end users needs x must be compatible with existing systems

6. Overview of Phases 3, 4 and 5 z Phase 5 - Maintenance and Support y acquiring and implementing the latest software versions of commercial packages y making in-house modifications to existing systems to accommodate changing user needs y may be relatively trivial, such as modifying an application to produce a new report, or more extensive, such as programming new functionality into a system

7. Phase 3 In-house Development

8. 8 3 problems that account for most system failures 1. Poorly specified systems requirements communication problems time pressures 2. Lack of user involvement in systems development/selection 3. Ineffective development techniques (for internally developed systems) systems developer end user

9. Prototyping z Provides preliminary working version of the system z Built quickly and relatively inexpensively with the intention it will be modified z End users work with the prototype and make suggestions for changes. y A better understanding of the true requirements of the system is achieved.

10. Computer-Aided Software Engineering (CASE) z CASE technology uses computer systems to build computer systems. z CASE tools are commercial software products consisting of highly integrated applications that support a wide range of SDLC activities.

11. 11 PERT charts z Used to show relationship among key activities of a systems project z Probably used more for in-house development (than commercial software acquisition)

12. A D G B C F H I Purchase Equipment Install and Test Equipment Design Data Model Create Data Structures E Design Process Code Programs Test Programs Prepare Documentation Convert Data Files Test System Train Personnel Cut Over to New System A-D 3 Weeks A-B 4 Weeks A-C 4 Weeks D-F 2 Weeks B-F 5 Weeks C-E 5 Weeks E-F 3 Weeks F-G 3 Weeks F-I 3 Weeks F-H 4 Weeks H-I 4 Weeks G-I 3 Weeks Construct Phase Deliver Phase Project Evaluation and Review Technique (PERT) PERT charts show the relationship among key activities that constitute the construct and delivery process.

13. Structured Design Approach z A disciplined way of designing systems from the top down z Starts with the big picture of the proposed system and gradually decomposes it into greater detail so that it may be fully understood z Utilizes data flow diagrams (DFDs) and structure diagrams (not necessary to study DFDs)

14. Systems Design z Follows a logical sequence of events: y model the business process and design conceptual views y design normalized database tables y design physical user views (output and input views) y develop process modules y specify system controls y perform system walkthroughs

15. Data Modeling z Formalizes data requirements of the business process as conceptual model z Entity-relationship diagram (ERD) y primary tool for data modeling y used to depict the entities or data objects in system z Each entity in ER diagram is a candidate for a conceptual user view that must be supported by database.

16. Normalization z User views in data model must be supported by normalized database tables . z Normalization of database tables: y A process of organizing tables so that entities are represented unambiguously y Eliminates data redundancies and associated anomalies y Depends on the extent that the data requirements of all users have been properly specified in the data model y The resulting databases will support multiple user views z More detail in chapter 9 about data normalization

17. Physical User Views: Output Views z Output is the information produced by the system to support user tasks and decisions. z Output attributes: -relevant -summarization -except orientation - timely -accurate -complete -concise

18. Designing Hard Copy Input z Items to Consider: y How will the document be handled? y How long will the form be stored and in what type of environment? y How many copies are required? y What size form is necessary? x Non-standard form can cause printing and storage problems.

19. Designing System Controls z The last step in the detailed design phase z Need to consider: y computer processing controls y data base controls y manual controls over input to and output from the system y operational environment controls z Allows the design team to review, modify, and evaluate controls with a system-wide perspective that did not exist when each module was being designed independently

20. Systems Walkthrough z Usually performed by the development team y Ensure that design is free from conceptual errors that could become programmed into the final system z Some firms use a quality assurance (QA) group to perform this task. y An independent group of programmers, analysts, users, and internal auditors

21. 21 S Y S T E M The Delivery

22. 22 Delivering a system z Appropriate for commercial software or in-house development y Test entire system y Document the system x Designer/Programmer documentation (in-house) x Operator documentation (more centralized than distributed) x User documentation x Accountant/Auditor documentation

23. 23 Conversion of databases z Appropriate for commercial software or in-house development y Transfer of data from old system to new system y Validate data before conversion y Reconcile data after conversion y Keep backup copies of old data!

24. 24 Converting to New System Three approaches: z Cold turkey cutover (Big Bang) - firm switches to new system on particular day and simultaneously terminates old system. Riskiest approach. z Phased cutover - modules are implemented in piecemeal fashion. Risk of devastating failure can be reduced. z Parallel cutover - old system and new system are run simultaneously. Safest , yet costliest , approach.

25. 25 Role of Accountants in Construct & Deliver Phases z Accountant should: y Provide technical expertise re: GAAP, GAAS, SEC regulations, SoX, IRS code. y Specify documentation standards y Verify control adequacy

26. Phase 4 Commercial Packages

27. 27 4. Commercial Software z Four factors have stimulated growth of commercial software: y relatively low cost y prevalence of industry-specific vendors y growing demand by small businesses y trend of organizational downsizing and distributed data processing

28. 28 Types of Commercial Software z Turnkey systems: completely finished and tested systems -- ready for implementation. z Backbone systems: provide basic system structure on which to build. z Vendor-supported systems: custom-developed and maintained by vendor for customer. z ERP systems are difficult to classify because they have characteristics of all of the above .

29. 29 Commercial Software z Advantages y Implementation time y Cost y Reliability z Disadvantages y Dependence on vendors y Need for customized systems y Maintenance

30. 30 Steps in Choosing a Commercial Package 1. Needs analysis 2. Send out Request for Proposals (RFP) to prospective vendors to serve as comparative basis for initial screening. 3. Gather facts about each vendors system using multiple sources and techniques. 4. Analyze findings and make final selection.

31. Phase 5 Maintenance and Support

32. Maintenance and Support z Approximately 80% of the life and costs of SDLC z Can be outsourced or done in-house z End user support is a critical aspect of maintenance that can be facilitated by: y knowledge management - method for gathering, organizing, refining, and disseminating user input y group memory - method for collecting user input for maintenance and support

33. The Iceberg Effect

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