Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ACCOUNTANCY AND FINANCE
Sta. Mesa, Manila

Chapter 20:
Introduction to Systems Development and
Systems Analysis

Bagadiong, Paula B.
Bernal, Lenniel
Dela Isla, Claire Anne

BSA 3-11

Professor Ryan Roque

 I. Introduction

Systems development is the process of defining, designing, testing, and

implementing a new software application or program. It could include the internal
development of customized systems, the creation of database systems, or the
acquisition of third party developed software. Written standards and procedures must
guide all information systems processing functions. The organization’s management
must define and implement standards and adopt an appropriate system development
life cycle methodology governing the process of developing, acquiring, implementing,
and maintaining computerized information systems and related technology.

There are reasons why companies change their systems,

 Changes in user or business needs

 Technological changes
 Improved business processes
 Competitive advantage
 Productivity gains
 System integration
 System age and need to be replaced

Learning Objectives:

 Explain the five phases of the systems development life cycle.

 Discuss the people involved in systems development and their roles.
 Explain the importance of system development planning and its techniques.
 Discuss the various types of feasibility analysis and calculating economic
feasibility.
 Explain why system changes trigger behavioral reactions, what form the
resistance to change takes, and how to avoid or minimize the resulting
problems.
 Discuss the key issues and steps in system analysis

II. Discussion
SYSTEM DEVELOPMENT

 System Development Life Cycle:

Is a five-step process used to design and implement a new system.

STEPS:

1. Systems Analysis – this is where the information needed to purchase,

develop, or modify a system is gathered

2. Conceptual Design – this is where analysts decide how to meet user needs,
identify and evaluate design alternatives, and develops detailed specifications
for what the system is to accomplish and how it is to be controlled.
3. Physical Design – this is where broad, user-oriented conceptual design
requirements are translated into the detailed specifications used to code and
test software, design input or output, create files or databases, develop
procedures, and implement controls.
4. Implementation and Conversion – this is where the company hires and
trains employees, tests and modifies procedures, establishes standards and
controls, completes documentation, moves to the new system, and detects
and corrects design deficiencies.
5. Operations and Maintenance – this is where the system is periodically
reviewed and necessary modifications and improvements are made

Figure 1. Systems Development Life Cycle

 People involved in system development:
 1. Management – their roles are to emphasize the importance of involving users in
the process, to provide support and encouragement for development projects,
and to align systems with corporate strategies. They also determine information
requirements, assist analysts with cost and benefit estimates, assign staff to
development projects, and allocate funds for development and operation.
2. Users – they should communicate their information needs to system developers.
They also help in designing and testing to ensure complete and accurate
processing of data
3. Information Systems Steering Committee – they are the high-level
management who plan and oversee the information system function, setting the
information policies that govern the accounting information system, ensuring top-
management guidance and control, and coordinating and integrating systems
activities.
4. Project Development Team – a team of systems analysts and specialists,
managers, accountants, and users to guide its development. They plan each
project, monitor it to ensure timely and cost-effective completion, make sure
proper consideration is given to the human element, and communicate frequently
with users and hold regular meetings to consider ideas and discuss progress so
that there are no surprises upon project completion.
5. System Analysts and Programmers – they help users determine their
information needs, study existing systems and design new ones, and prepare the
specifications used by computer programmers.
6. External Players – these are the customers, vendors, external auditors, and
governmental entities.

PLANNING SYSTEMS DEVELOPMENT

Planning enables the system’s goals and objectives to correspond to the

organization’s overall strategic plan.

 System development Plans:

1. Project Development Plan – it is prepared by the project team, contains a

cost-benefit analysis. Developmental, and operational requirements, and a
schedule of the activities required to develop and operate the new
application.
 2. Master Plan – prepared by information steering committee, specifies what
the system will consist of, how it will be developed, who will developed it,
how needed resources will be acquired, and where the AIS is headed.

 Planning Techniques:

1. Program Evaluation and Review Technique (PERT) – A way to plan,

develop, coordinate, control, and schedule systems development activities. It
requires that all activities and the precedent and subsequent relationships
among them be identified.
2. Gantt chart – is a bar chart with project activities on the left-hand side and
units of time across the top. For each activity, a bar is drawn from the
scheduled starting date to the ending date, thereby defining expected project
completion time.

FEASIBILITY ANALYSIS

A feasibility study is prepared during systems analysis and updated as necessary

during the SDLC. It is prepared with input from management, accountants, systems
personnel, and users.

 Important Aspects to be considered during a Feasibility Study:

1. Economic Feasibility – determines whether system benefits justify the time,

money, and resources required to implement it.
2. Technical Feasibility – determines if a proposed system can be developed
given the available technology.
3. Legal Feasibility – determines is a proposed system will comply with all
applicable federal and state laws, administrative agency regulations, and
contractual obligations.
4. Scheduling Feasibility – determines if a proposed system can be
developed and implemented in the time allotted.
5. Operational Feasibility – determines if organization has access to people
who can design, implement, and operate the proposed system and if
employees will use the system.
  Capital Budgeting Techniques: Calculating Economic Feasibility

1. Payback Period – a return-on-investment technique used to calculate the

number of years required for the net savings of a system to equal its initial
cost.
2. Net Present Value (NPV) - a return-on-investment technique that discounts
all estimated future cash flows back to the present using a discount rate that
reflects the time value of money.
3. Internal Rate of Return (IRR) - a return-on-investment technique that
calculates the interest rate that makes the present value of total costs equal
to the present value of total savings.

BEHAVIORAL ASPECTS OF CHANGE

It is the positive and negative ways people react to change. Managing these
behavioral reactions is crucial to successfully implementing a new system.

 Why behavioral problems occur

1. Fear – People fear the unknown, losing their jobs, losing respect or status,
failure, technology and automation, and the uncertainty accompanying
change.
2. Top-managementsupport – Employees who sense a lack of top-
management support for change wonder why they should endorse it.
3. Experiencewithpriorchanges – Employees who had a bad experience with
prior changes are more reluctant to cooperate.
4. Communication – Employees are unlikely to support a change unless the
reasons behind it are explained.
5. Disruptivenatureofchange – Requests for information and interviews are
distracting and place additional burdens on people, causing negative feelings
toward the change that prompted them.
6. Mannerinwhichchangeisintroduced – Resistance is often a reaction to the
methods of instituting change rather than to change itself.
7. Biasesandemotions – People with emotional attachments to their duties or
coworkers may not want to change if those elements are affected.
8. Personalcharacteristicsandbackground – The younger and more highly
educated people are, the more likely they are to accept change.
  How people resist change

1. Aggression – resistance to chance intended to destroy, cripple, or weaken

system effectiveness, such as increased error rates, disruptions, or
deliberate sabotage.
2. Projection – resistance to change that blames anything and everything on
the new system, such that it becomes the scapegoat for all real and imagined
problems and errors.
3. Avoidance – resistance to change where users ignore a new information
system in the hope that the new system will eventually go away.

 Preventing Behavioral Problems

1. Obtain management support.

2. Meet user needs.
3. Involve users
4. Allay fears, and stress new opportunities.
5. Avoid emotionalism.
6. Provide training.
7. Reexamine performance evaluation.
8. Keep communication lines open.
9. Test the system.
10. Keep the system simple, and humanize it.
11. Control users' expectations.

SYSTEM ANALYSIS

When a new or improved system is needed, a written request for system development
is prepared.

 Steps in System Analysis

1. Initial Investigation – a preliminary investigation to determine whether a

proposed new system is both needed and feasible. Its objective is to
investigate each development activity to define the problem to be solved,
make a preliminary assessment of feasibility, prepare a proposal to conduct
system analysis.
 2. SystemSurvey – is an extensive study of the current accounting information
system that aims to gain an understanding of company operations, policies,
procedures, and information. Make preliminary assessments 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.
3. Feasibility Study – feasibility analysis is updated regularly as the project
proceeds and costs and benefits become clearer. Its objective develop a
more thorough feasibility analysis, especially with respect to economic costs
and benefits.
4. Information needs and system requirements – It identify information
needs of users, and determine objectives and requirements of the new
system.
5. System Analysis Report – is a comprehensive report summarizing system
analysis that documents the findings of analysis activities. It provide
management with the findings of the analysis phase.

III. Summary, Conclusion, Recommendation

This chapter focuses on five topics. The first is the systems development life cycle,
the process followed to obtain and implement a new accounting information system
(AIS). The second is the planning activities needed during development. The third is
preparing a feasibility analysis. The fourth topic is systems analysis, the first step in the
systems development life cycle.

Systems development is the process of defining, designing, testing, and

implementing a new software application or program. It could include the
internal development of customized systems, the creation of database systems, or the
acquisition of third party developed software. Accordingly, there are five phases of the
systems development life cycle: the systems analysis, conceptual design, physical
design, implementation and conversion, and operations and maintenance.

Planning is a basic management function involving formulation of one or

more detailed plans to achieve optimum balance ofneeds or demands with the
available resources. The planning process (1) identifies the goals or objectives to be
achieved, (2) formulates strategies to achieve them, (3) arranges
or creates the means required, and (4) implements, directs, and monitors all steps in
their proper sequence. The two systems development plans needed are: project
development plan and master plan.

The third topic is the feasibility study. Also known as business case, it is an investigation
to determine whether it is practical to develop a new application or a system. During a
feasibility study, there are five important aspects to be considered and these are
economic, technical, legal, scheduling, and operational. Among those five, the economic
feasibility is the one that can be easily quantify through the use of capital budgeting.

When a new or improved system is needed, a written request for systems development
is prepared. The request describes the current problems, the reasons for the change,
the proposed system’s objectives, and it anticipated benefits and costs. The five steps in
the analysis phase are initial investigation, systems survey, feasibility study,
informational needs and systems requirements, and system analysis report.

Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
COLLEGE OF ACCOUNTANCY AND FINANCE
Sta. Mesa, Manila

Chapter 21:
AIS Development Strategies

Bagadiong, Paula B.
Bernal, Lenniel
Dela Isla, Claire Anne

BSA 3-11

Professor Ryan Roque

I. Introduction
 Companies can experience a number of difficulties when developing an
accounting information system,

 Development requests are so numerous that projects are backlogged for years.
 User discover that the new AIS does not meet their needs.
 Development takes so long the system no longer meets company needs.
 Users do not adequately specify their needs because they do not know what
they need or they cannot communicate the needs to system developers.
 Changes are difficult to make after requirements are frozen.

There are three ways to obtain an information system, the purchasing software,
developing software in-house, and hiring a company to develop and operate the
system. There are also three ways to improve development process, business process
redesign, prototyping, and computer-aided software engineering tools.

Learning Objectives:

 Describe how organizations purchase application software, vendor services, and

hardware.
 Explain how information system departments develop custom software.
 Explain how users develop, use, and control computer-based information
system.
 Explain why organizations outsource their information systems, and evaluate the
benefits and risks of this strategy.
 Explain the principles and challenges of business process management.
 Describes how prototypes are used to develop an AIS, and discuss the
advantages and disadvantages.
 Explain what computer-aided software engineering is and how it is used in
system development.

II. Discussion
PURCHASING SOFTWARE

 Canned Software – programs for sale on the open market to a broad range
of users with similar needs.
 Turkey system – software and hardware sold as a package such that the
vendor installs the system and the user “turns on the key”, it is often written
by vendors who specialize in a particular industry.

Companies that buy AIS software follow the normal systems development life
cycle (SDLC) except for the following:

 During conceptual systems design, companies determine whether software

that meets AIS requirements is available.
 Some physical design and implementation and conversion steps can be
omitted.

 Selecting A Vendor

Hardware, service, maintenance, and other AIS resource decisions can be made
independently of the decision to make or purchase software. Vendors are found be
referrals, at conference, in industry magazines, on the Internet, or in the phone book.
Choosing must be done carefully because vendors with little experience, insufficient
capital, or poor product go out of business and leave their customers and products with
no support or resource. Problem can occur even when established vendors are
selected.

 Acquiring Hardware and Software

Companies that buy large or complex systems send vendors a request for
proposal (RFP). The best proposal are investigated to verify that company requirements
can be met. RFP is important because it:

 Saves time
 Simplifies the decision-making process
 Reduces errors
 Avoids potential for disagreement.

 Evaluating Proposals and Selecting System

 Proposal that lack important information, fail to meet minimum requirements, or
are ambiguous are eliminated. Proposals passing this preliminary screening are
compared with system requirements to determine whether all mandatory requirements
are met and how many desirable requirements to meet.

DEVELOPMENT BY IN-HOUSE INFORMATION SYSTEMS DEPARTMENTS

Organizations develop custom software when doing so provides a significant

competitive advantage. There is little benefit to a custom-written payroll or accounts
receivable system.
Custom software is created in-house or by an outside company hired to write the
software or assemble it from its inventory of program modules. When using outside
developer, company should maintains control over the development process as follows:

 Carefully select a developer that has experience in the company’s industry and
an in-depth understanding of how company conducts business
 Sign a contract that rigorously defines the relationship between the company and
the developer.
 Plan the project in detail and frequently monitor each step in the development.
 Communicate frequently and effectively.
 Control all costs and minimize cash outflows until the project is accepted.

 End-user-developed software

End-user computing (EUC) is the hands-on development, use, and control of

computer based information system by users. EUC is people using IT to meet their
needs rather than relying on systems professionals.

Appropriate end-user development:

 Retrieving information from company databases to produce simple reports or

to answer one-time queries.
 Performing “what-if”, sensitivity, or statistical analyses.
 Developing applications using software.
 Preparing schedules.

 Advantages of EUC:
  User creation, control, and implementation.
 Systems that meet user needs.
 Timeliness.
 Freeing up of systems resources.
 Versatility and ease of use.

 Disadvantages of EUC:

 Logic and development errors.

 Inadequate tested applications.
 Inefficient systems.
 Poorly controlled and documented systems.
 System incompatibilities.
 Duplication of systems and data; wasted resources.
 Increased costs.

 Managing and Controlling End-user Computing

Organizations must manage and control EUC. Giving the IS department control
discourages EUC and eliminates its benefits. A help desk supports and controls end-
user activities. Help desk duties include resolving problems, disseminating information,
evaluating new hardware and software products and training end users how to use
them, assisting with application development, and providing technical maintenance and
support. They also develop and implement standards for hardware and software
purchases, documentation, application testing, and security. That controls access to and
sharing of corporate data among end users, while ensuring that the data are not
duplicated and that access to confidential data remains restricted.

OUTSOURCING THE SYSTEM

Outsourcing is hiring an outside to handle all or part of an organization’s data

processing activities. It was initially used for standardized applications such as payroll
and accounting or by companies who wanted a cash infusion from selling their
hardware. In mainframe outsourcing agreements, outsources buy client computers, hire
the client’s IS employees, operate and manage the system on the client’s site
Advantages:
  A business solution.
 Asset utilization
 Access to greater expertise and better technology
 Lower cost
 Less development time
 Elimination of peaks-and-valleys usage.
 Facilitation of downsizing.

Disadvantages:

 Inflexibility
 Loss of control
 Reduced competitive advantage
 Locked-in system
 Unfulfilled goals
 Poor service
 Increased risk

BUSINESS MANAGEMENT

As organizations seek to improve their information system and comply with legal
and regulatory reforms, they are paying greater attention to their business processes.
Business process reengineering (BPR) is a drastic, one-time-event approach to
improving and automating business processes. However, it has had a low success rate.
With further improvements, BPR has evolved into business process management
(BPM), a systematic approach to continuously improving and optimizing an
organization’s business processes.

 Important principles:

 Business process can produce competitive advantages.

 Business processes must be managed end to end
 Business processes should be agile.
 Business processes must be aligned with organizational strategy and needs.

 Business processes management systems (BPMS)

 Automate and facilitate business process improvements. A BPMS can improve
communication and collaboration, automate activities, and integrate with other systems
and with other partners in the value chain. Some people claim that BPMS is the bridge
between IT and business. Many companies worldwide are successfully implementing
BPMS-based process.

 Four Major Components:

 A process engine to model and execute applications, including business

rules.
 Business analytics to help identify and react to business issues, trends, and
opportunities.
 Collaboration tools to remove communication barrier
 A content manager to store and secure electronic documents, images, and
other files.

PROTOTYPING

Prototyping is a system design approach in which a simplified working model of a

system is developed. Developers who use prototyping still got through the SDLC
discuss in Chapter 20, but prototyping allows them to condense and speed up some
analysis and design tasks. Prototyping helps capture user needs and helps developers
and users make conceptual and physical design decisions.

 Steps for Developing a System From a Prototype

 Advantages:
  Better definition of user needs.
 Higher user involvement and satisfaction.
 Faster development time.
 Fewer errors.
 More opportunity for changes.
 Less costly.

 Disadvantages:

 Significant user time.

 Less efficient use of system resourced.
 Inadequate testing and documentation.
 Negative behavioral reactions.
 Never-ending improvement.

COMPUTER-AIDED SOFTWARE ENGINEERING

Computer-aided software (or system) engineering (CASE) is an integrated

package of tools that skilled designer use to help plan, analyze, design, program and
maintain an information system. CASE software typically has a tools for strategic
planning, project and system management, database design, screen and report layout,
and automatic code generation.

III. Summary, Conclusion, Recommendation

Companies can use different strategies to obtain a new AIS. First, as the quality and
quantity of vendor-written software increases, more companies are purchasing it.
Second, IS departments develop the software or allow end users to develop it. Third,
they can buy software and modify it themselves or ask the vendor to modify it so it
meets company needs. Fourth, companies outsource data processing activities.

There are many ways to speed up or improve the development process. One
way is business process management, which is a systematic approach to continuously
improving and optimizing an organization’s business processes.

A second way is to design a prototype, a simplified working model of a system. A

prototype is quickly and inexpensively built and is given to users to” test-drive” so they
can decide what they like and dislike about the system. Their reactions and feedback
are used to modify the system, which is again given to the users to test. This iterative
process of trial usage and modification continues until the users are satisfied that the
system adequately meets their needs.

A third way to improve the development process is to use CASE tools to plan,
analyze, design, program, and maintain an information system. They are also used to
enhance the efforts of managers, users, and programmers in understanding information
needs.