Chapter 13Managing the Systems Development Life Cycle

TRUE/ !LSE 1. The majority of the cost of a system is incurred in the new systems development phase of the life cycle. ANS: F 2. According to the te t! a sta"eholder is an end user of a system. ANS: F #. The o$jective of systems planning is to lin" systems projects to the strategic o$jectives of the firm. ANS: T %. The Systems &evelopment 'ife (ycle )S&'(* concept applies to specific applications and not to strategic systems planning. ANS: F +. An accountant,s responsi$ility in the S&'( is to ensure that the system applies proper accounting conventions and rules and possesses ade-uate control. ANS: T .. /n the conceptual design phase of the Systems &evelopment 'ife (ycle )S&'(*! tas" force mem$ers are focused on selecting the new system design. ANS: F 0. 1hen determining the operational feasi$ility of a new system! the e pected ease of transition from the old system to the new system should $e considered. ANS: T 2. 3ne4time costs include operating and maintenance costs. ANS: F 5. 1hen preparing a cost4$enefit analysis! design costs incurred in the systems planning! systems analysis and conceptual design phases of the Systems &evelopment 'ife (ycle are relevant costs. ANS: F 16. A tangi$le $enefit can $e measured and e pressed in financial terms. ANS: T

11. /nstead of implementing an application in a single 7$ig4$ang8 release! modern systems are delivered in parts continuously and -uic"ly ANS: T 12. 1hen the nature of the project and the needs of the user permit! most organi9ations will see" a pre4 coded commercial software pac"age rather than develop a systems in4house. ANS: T 1#. All of the steps in the Systems &evelopment 'ife (ycle apply to software that is developed in4house and to commercial software. ANS: F 1%. :i ing technologies from many vendors improves technical feasi$ility. ANS: F 1+. The first step in the S&'( is to develop a systems strategy ANS: T 1.. System maintenance is often viewed as the first phase of a new development cycle. ANS: T 10. ;roject initiation is the process $y which systems proposals are assessed for consistency with the strategic systems plan and evaluated in terms of their feasi$ility and cost4$enefit characteristics. ANS: T 12. 1hen the nature of the project and the needs of the user permit! most organi9ations will create the system in4house rather than rely on a commercial pac"age. ANS: F 15. < isting )maintained* applications are the prototypes for their new versions. ANS: T 26. =ecause of the ro$ustness of modern technology! $usinesses today see infre-uent changes in their /T systems and much longer system life spans. ANS: F MULT"#LE C$%"CE 1. 1hen studying the detailed feasi$ility of a new project a prototyping does not affect the schedule feasi$ility analysis . $ the need for user training will influence the schedule feasi$ility analysis

. c protection from fraud and errors will influence the schedule feasi$ility analysis . d a cost4$enefit review will affect the schedule feasi$ility analysis .

ANS: = 2. ;rotection from inadvertent disclosures of confidential information is part of the detailed a operational feasi$ility study . $ schedule feasi$ility study . c legal feasi$ility study . d economic feasi$ility study .

ANS: ( #. A cost4$enefit analysis is a part of the detailed a operational feasi$ility study . $ schedule feasi$ility study . c legal feasi$ility study . d economic feasi$ility study .

ANS: & %. < a . $ . c . d . amples of one4time costs include all of the following e cept hardware ac-uisition insurance site preparation programming

ANS: = +. < amples of recurring costs include a software ac-uisition . $ data conversion

. c personnel costs . d systems design .

ANS: ( .. Site preparation costs include all of the following e cept a crane used to install e-uipment . $ freight charges . c supplies . d reinforcement of the $uilding floor .

ANS: ( 0. The testing of individual program modules is a part of a software ac-uisition costs . $ systems design costs . c data conversion costs . d programming costs .

ANS: & 2. 1hen implementing a new system! the costs associated with transferring data from one storage medium to another is an e ample of a a recurring cost . $ a data conversion cost . c a systems design cost . d a programming cost .

ANS: = 5. An e ample of a tangi$le $enefit is a increased customer satisfaction .

$ more current information . c reduced inventories . d faster response to competitor actions .

ANS: ( 16. An e ample of an intangi$le $enefit is a e pansion into other mar"ets . $ reduction in supplies and overhead . c more efficient operations . d reduced e-uipment maintenance .

ANS: ( 11. A tangi$le $enefit a can $e measured and e pressed in financial terms . $ might increase revenues . c might decrease costs . d all of the a$ove .

ANS: & 12. /ntangi$le $enefits a are easily measured . $ are of relatively little importance in ma"ing information system decisions . c are sometimes estimated using customer satisfaction surveys . d when measured! do not lend themselves to manipulation .

ANS: ( 1#. 1hich techni-ue is least li"ely to $e used to -uantify intangi$le $enefits> a opinion surveys .

$ simulation models . c professional judgment . d review of accounting transaction data .

ANS: & 1%. The formal product of the systems evaluation and selection phase of the Systems &evelopment 'ife (ycle is a the report of systems analysis . $ the systems selection report . c the detailed system design . d the systems plan .

ANS: = 1+. 3ne time costs include all of the following e cept a site preparation . $ insurance . c programming and testing . d data conversion .

ANS: = 1.. ?ecurring costs include all of the following e cept a data conversion . $ software maintenance . c insurance . d supplies .

ANS: A 10. All of the following are reasons why new systems fail e cept a the user is not involved in the development of the system

. $ system re-uirements are not clearly specified . c systems analysts rely on prototyping models . d system development techni-ues are ineffective .

ANS: ( 12. The systems steering committee is responsi$le for all of the following e cept a assigning priorities . $ determining whether and when to terminate systems projects . c analy9ing the technical feasi$ility of the project . d $udgeting funds for systems development .

ANS: ( 15. Strategic systems planning is important $ecause the plan a provides authori9ation control for the Systems &evelopment 'ife (ycle . $ will eliminate any crisis component in systems development . c provides a static goal to $e attained within a five4year period . d all of the a$ove .

ANS: A 26. ;roject feasi$ility includes all of the following e cept a technical feasi$ility . $ conceptual feasi$ility . c operational feasi$ility . d schedule feasi$ility .

ANS: = 21. The degree of compati$ility $etween the firm,s e isting procedures and personnel s"ills and the re-uirements of the new system is called

a . $ . c . d .

technical feasi$ility operational feasi$ility schedule feasi$ility legal feasi$ility

ANS: = 22. The a$ility of a system to protect individual privacy and confidentiality is an e ample of a schedule feasi$ility . $ operational feasi$ility . c legal feasi$ility . d economic feasi$ility .

ANS: ( 2#. The systems project proposal a provides management with a $asis for deciding whether or not to proceed with the . project $ supplies an input to the project planning activity . c lin"s the o$jectives of the proposed system to the system,s scheduling re-uirements . d prioriti9es the proposal in relation to other system proposals .

ANS: A 2%. 1hich step is not used to evaluate a systems proposal> An analysis of the project,s a feasi$ility factors . $ a$ility to eliminate nonessential activities and costs . c a$ility to provide a competitive advantage to the firm . d use of (omputer Aided Software <ngineering )(AS<* tools in developing the system . proposal

ANS: & 2+. ?easons that a new systems implementation may $e unsuccessful include all of the following e cept

a . $ . c . d .

organi9ational restructuring re-uired $y the new system results in displaced wor"ers end users do not understand the strategic merits of the new system employees are not trained to use the system system development team mem$ers include representatives from end4user departments

ANS: & 2.. Typically a systems analysis a results in a formal project schedule . $ does not include a review of the current system . c identifies user needs and specifies system re-uirements . d is performed $y the internal auditor .

ANS: ( 20. A disadvantage of surveying the current system is a it constrains the generation of ideas a$out the new system . $ it highlights elements of the current system that are worth preserving . c it pinpoints the causes of the current pro$lems . d all of the a$ove are advantages of surveying the current system .

ANS: A 22. Systems analysis involves all of the following e cept a gathering facts . $ surveying the current system . c redesigning $ottlenec" activities . d reviewing "ey documents .

ANS: ( 25. The systems analysis report does not

a . $ . c . d .

identify user needs specify re-uirements for the new system formally state the goals and o$jectives of the system specify the system processing methods

ANS: & #6. After the systems analysis phase of the System &evelopment 'ife (ycle )S&'(* is complete! the company will have a formal systems analysis report on a the conceptual design of the new system . $ an evaluation of the new system . c users, needs and re-uirements for the new system . d a comparison of alternative implementation procedures for the new system .

ANS: ( #1. The accountant,s role in systems analysis includes all of the following e cept a specify audit trail re-uirements . $ prepare data gathering -uestionnaires . c suggest inclusion of advanced audit features . d ensure mandated procedures are part of the design .

ANS: = #2. The role of the steering committee includes a designing the system outputs . $ resolving conflicts that arise from a new system . c selecting the programming techni-ues to $e used . d approving the accounting procedures to $e implemented .

ANS: =

##. ;roject planning includes all of the following e cept a specifying system o$jectives . $ preparing a formal project proposal . c selecting hardware vendors . d producing a project schedule .

ANS: ( #%. Aspects of project feasi$ility include all of the following e cept a technical feasi$ility . $ economic feasi$ility . c logistic feasi$ility . d schedule feasi$ility .

ANS: ( #+. 1hich of the following is not a tool of systems analysts> a o$servation . $ tas" participation . c audit reports . d personal interviews .

ANS: ( #.. 1hen developing the conceptual design of a system! a all similarities and differences $etween competing systems are highlighted . $ structure diagrams are commonly used . c the format for input screens and source documents is decided . d inputs! processes! and outputs that distinguish one alternative from another are identified .

ANS: &

#0. The role of the accountant@internal auditor in the conceptual design phase of the Systems &evelopment 'ife (ycle includes all of the following e cept a the accountant is responsi$le for designing the physical system . $ the accountant is responsi$le to ensure that audit trails are preserved . c the internal auditor is responsi$le to confirm that em$edded audit modules are included . in the conceptual design d the accountant is responsi$le to ma"e sure that the accounting conventions that apply to . the module are considered $y the system designers

ANS: A S$%RT !&S'ER 1. 1hy is it important that the systems professionals who design a project not perform the detailed feasi$ility study of the project> ANS: 3$jectivity is essential to the fair assessment of each project design. To ensure o$jectivity! an independent systems professional should perform the study. 2. 'ist at least three one4time costs and three recurring costs in system development. ANS: 3ne time costs include: hardware ac-uisition! site preparation! software ac-uisition! system design! programming and testing! data conversion! training. ?ecurring costs include: hardware maintenance! software maintenance! insurance! supplies! personnel costs. #. AAAAAAAAAAAAAAAAAAAA $enefits can $e measured and e pressed in financial terms! while AAAAAAAAAAAAAAAAAAAA $enefits cannot $e easily measured and@or -uantified. ANS: Tangi$le! intangi$le %. 1hat is a systems selection report> ANS: A systems selection report is a formal document that consists of a revised feasi$ility study! a cost4 $enefit analysis! and a list and e planation of intangi$le $enefits for each alternative design. The steering committee uses this report to select a system. +. 1hy is the pay$ac" method often more useful than the net present value method for evaluating systems projects> ANS: =ecause of $rief product life cycles and rapid advances in technology! the effective lives of information system tends to $e short. Shorter pay$ac" projects are often desira$le.

.. (ontrast reactive and proactive management styles. ANS: ?eactive management responds to pro$lems only when they reach a crisis state and can no longer $e ignored. /n this situation! pro$lem resolution is generally su$optimal. ;roactive management is alert for early signs of pro$lems and actively loo"s for ways to improve the organi9ation,s systems. This allows ade-uate time for planning and implementing solutions. 0. < plain why accountants are interested in the legal feasi$ility of a new systems project. ANS: 'egal feasi$ility identifies conflicts $etween the proposed system and the company,s a$ility to discharge its legal responsi$ilities. Accountants are often tas"ed with the legal re-uirements associated with developing the internal control system and securing information from inappropriate disclosure. 2. < plain an advantage of surveying the current system when preparing a systems analysis for a new systems project. ANS: An analysis of the current system: will identify what aspects of the current system should $e retained will facilitate the conversion from the old to the new system may uncover causes of reported pro$lems 5. 1hat are two purposes of the systems project proposal> ANS: First! it summari9es the findings of the study conducted to this point into a general recommendation for a new or modified system. This ena$les management to evaluate the perceived pro$lem along with the proposed system as a feasi$le solution. Second! the proposal outlines the lin"age $etween the o$jectives of the proposed system and the $usiness o$jectives of the firm. /t shows that the proposed new system complements the strategic direction of the firm. 16. 'ist two ways that a systems project can contri$ute to the strategic o$jectives of the firm. ANS: A new system can improve the operational performance $y eliminating nonessential activities and costs! provide a method of differentiating the product or service from the competitors! and provide information that will help improve management decision4ma"ing. 11. 'ist four types of facts that should $e gathered during an analysis of a system. ANS: data sourcesB information usersB data storesB processesB data flowsB controlsB transaction volumesB error ratesB resource costsB $ottlenec"sB and redundant operations 12. 1hat is the /nternal =usiness ;rocess ;erspective> ANS: :etrics $ased on this perspective allow the manager to "now how well their $usiness is running! and whether its products and services conform to customer re-uirements .

1#. 1hat is the 'earning and Crowth ;erspective> ANS: 'earning and growth constitute the essential foundation for success of any organi9ation. This perspective includes employee training and corporate cultural attitudes related to $oth individual and corporate self4improvement 1%. 1hen a company is doing financially well! why is the (ustomer ;erspective measure important> ANS: These are leading indicators: if customers are not satisfied! they will eventually find other suppliers that will meet their needs. ;oor performance from this perspective predicts of future decline! even though the current financial picture may loo" good. The (ustomer ;erspective includes o$jective measurements such as customer retention rate! as well as more su$jective criteria such as mar"et research and customer satisfaction surveys. 1+. &istinguish $etween escapa$le and inescapa$le costs. Cive an e ample. ANS: <scapa$le costs are directly related to the system! and they cease to e ist when the system ceases to e ist. An e ample would $e an annual software support fee for purchased software. /f the system ceases to e ist! the support for the software will no longer $e necessary. /nescapa$le costs! on the other hand! represent costs which will not $e eliminated if the system is scrapped. An e ample would $e an overhead charge for office space in a $uilding which is owned $y the company. /f the system ceases to e ist! these costs will $e allocated to the remaining departments. 1.. 1hy is cost4$enefit analysis more difficult for information systems than for many other types of investments organi9ations ma"e> ANS: The $enefits of information systems are oftentimes very difficult to assess. :any times the $enefits are intangi$le! such as improved decision ma"ing capa$ilities. Also! maintenance costs may $e difficult to predict. :ost other investments that organi9ations ma"e! i.e. purchase of a new piece of e-uipment! tend to have more tangi$le and estima$le costs and $enefits. 10. 1hat does assessing user feed$ac" involve> ANS: 1. recogni9ing the pro$lem 2. defining the pro$lem #. specifying system o$jectives %. determining project feasi$ility +. preparing a formal project proposal ESS!( 1. < plain the five stages of the systems development life cycle> ANS:

Systems Strategy) The first step in the S&'( is to develop a systems strategy! which re-uires an understanding the strategic $usiness needs of the organi9ation. This may $e derived from the organi9ation,s mission statement! an analysis of competitive pressures on the firm! and the nature of current and anticipated mar"et conditions. These needs reflect the organi9ations current position relative to where it needs to $e long term to maintain strategic advantage. #ro*ect "nitiation) ;roject initiation is the process $y which systems proposals are assessed for consistency with the strategic systems plan and evaluated in terms of their feasi$ility and cost4$enefit characteristics. Alternative conceptual designs are considered and those selected enter the construct phase of the S&'(. "n+$o,se Development) As mentioned earlier! some organi9ations have such uni-ue information needs that they can only $e ade-uately met through internal development. The in4house development step includes analy9ing user needs! designing processes and data$ases! creating user views! programming the applications! and testing and implementing the completed system. Commercial #ac-ages) 1hen the nature of the project and the needs of the user permit! most organi9ations will see" a pre4coded commercial software pac"age rather than develop a new system from scratch. Maintenance an. S,pport) :aintenance involves $oth ac-uiring and implementing the latest software versions of commercial pac"ages and ma"ing in4house modifications to e isting systems to accommodate changing user needs. :aintenance may $e relatively trivial! such as modifying an application to produce a new report or more e tensive! such as programming new functionality into a system. Another aspect of maintenance includes a esta$lishing a user support infrastructure. This could include help des" services! providing user training and education classes! and documenting user feed$ac" pertaining to pro$lems and system errors. 2. 1hat is the $alanced scorecard> ANS: The /alance. scorecar. )=S(* is a management system that ena$les organi9ations to clarify their vision and strategy and translate them into action. /t provides feed$ac" $oth from internal $usiness processes and e ternal outcomes to continuously improve strategic performance. 1hen fully deployed! the $alanced scorecard transforms strategic planning from an academic e ercise into operational tas"s. #. &efine the feasi$ility measures that should $e considered during project analysis and give an e ample of each. ANS: Technical feasi$ility is an assessment as to whether the system can $e developed under e isting technology or if new technology is needed. An e ample might $e a situation where a firm wants to completely automate the sales process. A -uestion would $e4/s technology availa$le that allows sales to $e made without humans> <conomic feasi$ility is an assessment as to the availa$ility of funds to complete the project. A -uestion would $e4/s it cost feasi$le to purchase e-uipment to automate sales> 'egal feasi$ility identifies any conflicts with the proposed system and the company,s a$ility to discharge its legal responsi$ilities. An e ample would $e a firm that is proposing a new mail order sales processing system for selling wine.

3perational feasi$ility shows the degree of compati$ility $etween the firm,s e isting procedures and personnel s"ills and the operational re-uirements of the new system. &o the firm have the right wor" force to operate the system> /f not! can employees $e trained> /f not! can they $e hired> Schedule feasi$ility pertains to whether the firm can implement the project within an accepta$le time frame. An e ample would $e a new tic"et sales system for a sports team. The system would need to $e implemented prior to the start of the new season. %. < plain the role of accountants in the conceptual design stage. ANS: Accountants are responsi$le for the logical information flows in a new system. Alternate systems considered must $e properly controlled! audit trails must $e preserved! accounting conventions and legal re-uirements must $e met. The audita$ility of a new system depends in part on its design characteristics. +. (ontrast the feasi$ility study performed in the systems analysis phase of the Systems &evelopment 'ife (ycle )S&'(* with the study performed in the systems selection phase of the S&'(. ANS: A preliminary feasi$ility study for the project as a whole is performed in the systems analysis phase of the S&'(. Five aspects to project feasi$ility are considered: technical feasi$ility! economic feasi$ility! legal feasi$ility! operational feasi$ility! and schedule feasi$ility. The preliminary analysis is $ased largely on the judgment and intuition of the systems professionals. /n the systems selection phase of the S&'(! the same five feasi$ility factors are considered for the specific system features that have $een conceptuali9ed and for each conceptual design alternative. The economic feasi$ility study in the detailed analysis includes a cost4$enefit analysis for each alternative. .. < plain why the Systems &evelopment 'ife (ycle is of interest to accountants. 1hat is the accountant,s role in the Systems &evelopment 'ife (ycle> ANS: The information system re-uires a significant financial investment. Accountants are concerned that the capital investment involved in ac-uiring an information system is properly handled. Also! the information system gathers the data used to prepare financial statements. Accountants must $e certain that the information system is applying accounting principles properly and that the system itself has ade-uate internal controls. Any deficiencies in the information system could result in misstated financial statements. Accountants have three roles in the Systems &evelopment 'ife (ycle. Accountants are users of the information system and as such must $e a$le to communicate their needs to the systems designers. These needs include audit trail re-uirements! depreciation models! and other accounting techni-ues. Accountants are mem$ers of the S&'( development team and are e pected to provide information a$out the re-uirements of the system including security needs. Finally! accountants are auditors of the information system and determine what audit features should $e designed into the system. 0. 1hat are three pro$lems that account for most system failures> ANS: :ost system failures can $e traced to three pro$lems: a. poorly specified system re-uirements! due to communication pro$lems $etween users and systems professionals! the iterative nature of the process! and the need to rewor" parts of the systemB

$. ineffective development techni-ues for presenting! documenting! and modifying systems specificationsB and c. lac" of user involvement during critical development stages. 2. 1hat is /ndustry analysis and why do managers do it. ANS: "n.,stry !nalysis provides management with an analysis of the driving forces that affect their industry and their organi9ation,s performance. Such analysis offers a fact4$ased perspective on the industry,s important trends! significant ris"s! and potential opportunities that may impact the $usiness,s performance. 5. 1hy is the announcement of a new systems project so critical to project success> ANS: (hange is threatening to many individuals. A new system can $e perceived as putting jo$s at ris" in the name of 7efficiency!8 as a threat to organi9ational structure! and as re-uiring jo$ s"ills that some users fear they lac". The announcement of a new system must include upper management support and an e planation of the $usiness rationale for the system and the e pected $enefits for ultimate users. 16. (ontrast the preliminary project feasi$ility study with the feasi$ility study performed in the systems evaluation and selection phase of the S&'(. ANS: A preliminary feasi$ility study for the project as a whole is performed in the systems needs analysis phase of the S&'(. Five aspects to project feasi$ility are considered: technical feasi$ility! economic feasi$ility! legal feasi$ility! operational feasi$ility! and schedule feasi$ility. The preliminary analysis is $ased largely on the judgment and intuition of the systems professionals. /n the systems evaluation and selection phase of the S&'(! the same five feasi$ility factors are considered for the specific system features that have $een conceptuali9ed and for each conceptual design alternative. The economic feasi$ility study includes a cost4$enefit analysis for each alternative. 11. ;art of systems planning is a project feasi$ility study. Several feasi$ility issues can $e raised. 1hat are they> < plain the "ey concerns. ANS: The "ey feasi$ility issues include: technical, economic, legal, operational, and schedule. Technical feasi$ility relates to whether the proposed system can $e developed with e isting technology or re-uires new. <conomic feasi$ility relates to cost -uestions. 'egal feasi$ility relates to the firm,s a$ility to discharge is legal responsi$ilities under the proposed system. 3perational feasi$ility concerns the compati$ility of the new and old systems! including personnel issues. Schedule feasi$ility relates to meet target deadlines. 12. < plain the role of accountants in the conceptual design stage. ANS: Accountants are responsi$le for the logical information flows in a new system. Alternate systems considered must $e properly controlled! audit trails must $e preserved! accounting conventions and legal re-uirements must $e met. The audita$ility of a new system depends in part on its design characteristics.

1#. (lassify each of the following as either a one4time or recurring costs: training personnel initial programming and testing system design4one hardware costs software maintenance costs site preparation rent for facilities data conversion from old system to new system insurance costs installation of original e-uipment hardware upgrades ANS: training personnel4one4time initial programming and testing4one4time system design4one4time hardware costs4one4time software maintenance costs4recurring site preparation4one4time rent for facilities4recurring data conversion from old system to new system4one4time insurance costs4recurring installation of original e-uipment4one4time hardware upgrades4recurring 1%. 1hat is competency analysis and why do managers do it. ANS: Competency !nalysis provides a complete picture of the organi9ation,s effectiveness as seen via four strategic filters: ?esources! /nfrastructure! ;roducts@Services and (ustomers. =y assessing these factors! an organi9ation can develop an accurate view of its relative strengths! wea"nesses and core competencies. The analysis helps in developing strategic options! which are $ased on an understanding of the future environment and firm,s core competencies. Strategic opportunities may include mar"et entry options or new product development options.