CHAPTER 3

Systems Development

Assistant Professor A.S.Kannan & Ato Tariku Berasso

 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
• Companies change their systems for a variety of
reasons:
– 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
 INTRODUCTION

• Developing quality, error-free software is difficult,

expensive, and time-consuming.
• Projects tend to deliver less than expected and consume
more time and money.
• A KPMG survey found that 35% of all major information
systems projects were classified as runaways—
hopelessly incomplete and over budget.
– Major cause of runaways: Skimping on systems development
processes.
• 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 the following four

topics:
– Systems development life cycle
– Planning activities during the systems
development life cycle
– Feasibility analysis
– Behavioral aspects of change
• Systems analysis will be discussed in the
next chapter.
SYSTEMS DEVELOPMENT LIFE CYCLE

• Whether systems changes are major or

minor, most companies go through a
systems development life cycle.
• In this chapter, we discuss the steps in the
cycle and the people involved.
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis [elaborated in Chapter-4]
– Conceptual Design [elaborated in Chp-5]
– Physical Design [elaborated in Chp-5]
– Implementation and Conversion [elaborated in
Chapter-6]
– Operation and Maintenance [elaborated in
Chapter-6]
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis
– Conceptual Design
– Physical Design
– Implementation and Conversion
– Operation and Maintenance
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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 DEVELOPMENT LIFE CYCLE

• As organizations grow and change, they may

need more or better information.
• Systems analysis is the first step. It includes:
– Initial investigation
– 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 DEVELOPMENT LIFE CYCLE

• As organizations grow and change, they may

need more or better information.
• Systems analysis is the first step. It includes:
– Initial investigation
– Systems survey
– Feasibility study
 Involves an in-depth study of the proposed
system to determine whether it’s feasible.
SYSTEMS DEVELOPMENT LIFE CYCLE

• As organizations grow and change, they may

need more or better information.
• Systems analysis is the first step. It includes:
– Initial investigation
– Systems survey
– Feasibility study
– 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 DEVELOPMENT LIFE CYCLE

• As organizations grow and change, they may

need more or better information.
• Systems analysis is the first step. It includes:
– Initial investigation
– Systems survey Involves preparation of a report
– Feasibility study summarizing the systems analysis work.
– Determination of  information
This report isneeds and to
submitted system
the information
requirements systems steering committee.
– Delivery of systems requirements
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis
– Conceptual Design
– Physical Design
– Implementation and Conversion
– Operation and Maintenance
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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
SYSTEMS DEVELOPMENT LIFE CYCLE

• In the conceptual design phase, the company

decides how to meet user needs.
• Tasks in this phase include:
– Identify and evaluate design alternatives
– Develop design specifications
 Involves writing up details of what the system is to
accomplish and how it is to be controlled and
developed.
SYSTEMS DEVELOPMENT LIFE CYCLE

• In the conceptual design phase, the company

decides how to meet user needs.
• Tasks in this phase include:
– Identify and evaluate design alternatives
– Develop design specifications
– Deliver conceptual design requirements
 These requirements will be forwarded to the
information systems steering committee.
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis
– Conceptual Design
– Physical Design
– Implementation and Conversion
– Operation and Maintenance
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis
– Conceptual Design
– Physical Design
– Implementation and Conversion
– Operation and Maintenance
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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.
SYSTEMS DEVELOPMENT LIFE CYCLE

• The five stages in the systems

development life cycle are:
– Systems analysis
– Conceptual Design
– Physical Design
– Implementation and Conversion
– Operation and Maintenance
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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.
SYSTEMS DEVELOPMENT LIFE CYCLE

• 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
• These three activities will be discussed in this
chapter.
 Additionally, the first phase in the SDLC, systems
analysis, will be discussed in more detail.
THE PLAYERS

 Many people are involved in developing and

successfully implementing an AIS, including:
 Top management
 Accountants
 The information systems steering committee
 The project development team
 Systems analysts
 Computer programmers
 External players
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 players
THE PLAYERS

• Top management’s role in systems development

is to:
– Provide support and encouragement and 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

 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 players
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.
– They are also active in:
• 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

 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 players
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

 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 players
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

 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 players
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

 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 players
THE PLAYERS

• Computer programmers write the

computer programs, using the specs
developed by the systems analysts.
• They also modify and maintaining existing
programs.
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 players
THE PLAYERS

• External players include:

– Customers
– Vendors
– Auditors
– Governmental entities
• Their needs must also be met in systems
development.
PLANNING SYSTEMS DEVELOPMENT

• Several activities must be performed at various

times throughout the SDLC.
• One of these activities is planning.
• The organization should have plans for:
– The long range
– Each systems development project
– Each phase of each systems development project
• We’ll discuss these plans and a number of
techniques to develop them.
PLANNING SYSTEMS DEVELOPMENT

• We’ve all experienced the disasters that occur when we

fail to plan.
• Suppose you bought a personal computer on impulse
without thinking about what you wanted to do with it.
• When you got it home, you realized it wasn’t compatible
with your existing printer and scanner.
• Furthermore, it wasn’t equipped for broadband internet
access and you had been hoping to switch to
broadband.
• By the time you spend the money and buy the parts to
equip the computer to do what you want it to do, you find
that you could have bought a leading-edge computer for
less money.
PLANNING SYSTEMS DEVELOPMENT

• 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.
PLANNING SYSTEMS DEVELOPMENT

 When a system is poorly planned, a company

must often return to a prior phase and correct
errors and design flaws.
 These returns are costly and result in delays,
frustration, and low morale.
PLANNING SYSTEMS DEVELOPMENT

 Two types of systems development plans

are needed:
- Individual project plans developed by the
project teams.
- A master plan developed by the IS steering
committee.
PLANNING SYSTEMS DEVELOPMENT

 Two types of systems development plans

are needed:
- Individual project plans developed by the
project teams.
- A master plan developed by the IS steering
committee.
PLANNING SYSTEMS DEVELOPMENT

• Individual project 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
PLANNING SYSTEMS DEVELOPMENT

 Two types of systems development plans

are needed:
- Individual project plans developed by the
project teams.
- A master plan developed by the IS steering
committee.
PLANNING SYSTEMS DEVELOPMENT

• 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
PLANNING SYSTEMS DEVELOPMENT

• Projects with highest priority 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 SYSTEMS DEVELOPMENT

• Planning Techniques
– Two techniques for scheduling and
monitoring systems development
activities are:
• Program Evaluation and Review Technique
(PERT)
• Gantt Charts
PLANNING SYSTEMS DEVELOPMENT

• Planning Techniques
– Two techniques for scheduling and
monitor systems development activities
are:
• Program Evaluation and Review
Technique (PERT)
• Gantt Charts
PLANNING SYSTEMS DEVELOPMENT

• 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 SYSTEMS DEVELOPMENT

• The critical path in a PERT diagram is the

path requiring the greatest amount of time.
• If an activity on the critical path is delayed,
the whole project is delayed.
• Resources may be shifted to the critical
path to reduce the delay.
 • SAMPLE PERT CHART
– For building and selling a birdhouse.
– Each block contains a task and a time estimate (may
include best time, worst time, and average time)
– May indicate who will be responsible for the task.

Buy Wood Build

& Nails Base
(1) (2)
(Bill) (Bill)

Design Nail Paint &

Sell
Birdhouse Together Decorate
(2)
(2) (2) (3)
(Sara)
(Bill) (Bill) (Sara)

Buy Build
Paint Roof
(1) (1)
(Sara) (Bill)
PLANNING SYSTEMS DEVELOPMENT

• Planning Techniques
– Two techniques for scheduling and
monitor systems development activities
are:
• Program Evaluation and Review Technique
(PERT)
• Gantt Charts
PLANNING SYSTEMS DEVELOPMENT

• 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.
• As activities are completed, the bar is filled in.
• The Gantt chart makes it easy to eyeball the
chart and understand the current status of a
project.
• But the chart does not show the relationship
between activities like the PERT chart does.
 SAMPLE GANTT CHART

Complete
Testing
In Development

Milestone

Period
1 2 3 4 5 6 7 8 9 10
Design birdhouse
Buy wood & nails
Buy paint
Build roof
Build base
Nail together
Paint & decorate
Sell
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:
– Management
– Accountants skilled in controls and auditing
– Systems personnel
– Users
FEASIBILITY ANALYSIS

• 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
FEASIBILITY ANALYSIS

• Five aspects need to be considered during a

feasibility study:
– Technical feasibility
• Is the technology there to do it?
– Operational feasibility
• Do we have people who can do it, and will it get used?
– Legal feasibility
• Does it comply with legal, regulatory, and contractual
obligations?
– Scheduling feasibility
• Can it be done in time?
– Economic feasibility
• Will the benefits exceed the costs?
FEASIBILITY ANALYSIS

• Calculating Economic Feasibility Costs and

Benefits
– Economic feasibility is probably the most important
and frequently analyzed aspect.
– This examination requires a careful investigation of
costs and benefits.
– It typically uses a capital budgeting model that
considers:
• Cost savings and other benefits
• Initial outlay costs
• Operating costs
• Other costs
FEASIBILITY ANALYSIS

• 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.
FEASIBILITY ANALYSIS

• Benefits might include:

– Cost savings.
– Improved customer service, productivity,
decision making, or data processing.
– Better management control.
– Increased job satisfaction and employee
morale.
FEASIBILITY ANALYSIS

• Costs might include:

– Equipment costs
• Initial outlay plus ongoing operating costs
– Software costs
• Costs of acquiring, maintaining, supporting, and operating
– Human resource costs
• Salaries, as well as costs of hiring, training, and relocating staff
– Site preparation costs
– Installation and conversion costs
– Supplies
– Overhead
– Financial charges
• The primary operating cost is maintaining the system.
• Makes up 65-75% of the organization’s system efforts
FEASIBILITY ANALYSIS

• Capital Budgeting
– Most organizations use a capital budgeting
return on investment technique to evaluate
the economic merits of different system
alternatives.
– There are three commonly used techniques
• 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.
FEASIBILITY ANALYSIS

• Capital Budgeting
– Most organizations use a capital budgeting
return on investment technique to evaluate
the economic merits of different system
alternatives.
– There are three commonly used techniques
• Payback period
• Net present value (NPV)
• Calculates and sums the discounted future cash flows
of the costs and benefits.
• Select projects with higher positive NPV.
FEASIBILITY ANALYSIS

• Capital Budgeting
– Most organizations use a capital budgeting
return on investment technique to evaluate
the economic merits of different system
alternatives.
– There are three
• Calculates commonly used techniques
the effective interest rate that would result in
• Payback periodvalue of zero for the project.
a net present
• •NetSelect projects
present valuewith higher IRRs.
(NPV)
• Internal rate of return (IRR)
BEHAVIORAL ASPECTS OF CHANGE

• The best system will fail without the

support of the people it serves.
• So the behavioral aspects of change are
crucial.
• You need to be aware of and sensitive to
the types of behavioral problems that can
result from change.
BEHAVIORAL ASPECTS OF CHANGE

• Why Behavioral Problems Occur

– Employees will tend to view change as good if
they believe it will affect them positively and
vice versa.
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
• Employees are more likely to accept change if they are:
– Young;
– Highly educated; or
– Comfortable with technology.
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
• The rationale used to sell the system may need to vary
with the job responsibilities of the employees involved.
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
• Fool me once, shame on me . . .
• Let’s see if I even give you a
second chance.
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
– Top management support
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
– Top management support
– Communication
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
• Employees may be too
– Top management supportemotionally attached to their
– Communication duties, i.e., “sacred cows.”
– Biases and natural resistance to change
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
– Top management support
– Communication • Disturbances often create
– Biases and natural resistance to change
negative feelings.
– Disruptive nature of the change process
BEHAVIORAL ASPECTS OF CHANGE

• To minimize adverse behavioral reactions,

it helps to understand why resistance
occurs:
– Personal characteristics and background
– Manner in which change is introduced
– Experience with prior changes
– Top management
• May include
support
fear of:
– Communication
– The unknown
– Biases and –natural
Failure resistance to change
– Technology
– Disruptive nature of the change process
– Fear – Losing respect or status
– Losing their jobs
BEHAVIORAL ASPECTS OF CHANGE

• How People Resist AIS Changes

– Resistance to change often takes one of
three forms:
• Aggression
• Behavior intended to destroy, cripple, or weaken the
system’s effectiveness.
• Examples: Increased error rates, disruptions, or
deliberate sabotage.
BEHAVIORAL ASPECTS OF CHANGE

• How People Resist AIS Changes

– Resistance to change often takes one of
three forms:
• Aggression
• Projection
• Blaming the new system for any and every unpleasant
occurrence, i.e., the system becomes a scapegoat.
• To preserve the integrity of the system, these
criticisms must be controlled or answered.
BEHAVIORAL ASPECTS OF CHANGE

• How People Resist AIS Changes

– Resistance to change often takes one of
three forms:
• Aggression
• Projection
• Avoidance
• “If I don’t use this thing, maybe it will go away!”
FEASIBILITY ANALYSIS

• Reactions to change can be improved by

observing the following guidelines:
– Meet user’s needs with respect to the form,
content, and volume of system output.
– Keep communication lines open. Managers
and users should be fully informed about:
• What changes are being made
• Why
• How it will benefit them
• Who to contact with questions
FEASIBILITY ANALYSIS

– Maintain a safe and open atmosphere.

• If employees become hostile, it’s an uphill battle
you probably won’t win.
– Obtain management support.
– Allay fears.
• To the extent possible, reassure employees that no
major job losses or responsibility shifts will occur.
• If employees are terminated, severance pay and
outplacement services should be provided.
FEASIBILITY ANALYSIS

– Solicit user participation.

• It is ego enhancing, challenging, and intrinsically
satisfying.
• Users who participate will be more committed to
using the system.
– Provide honest feedback.
• Explain which suggestions are and are not being
used and why.
– Make sure users understand the system.
• Don’t underestimate training needs.
FEASIBILITY ANALYSIS

– Humanize the system.

• Employees shouldn’t feel the computer is
controlling them or has usurped their positions.
– Describe new challenges and opportunities.
• The system can provide greater job satisfaction
and increased opportunities.
– Reexamine performance evaluation.
• Are performance standards and criteria realistic in
light of the change?
– Test the system’s integrity.
• It’ important to minimize bad impressions
FEASIBILITY ANALYSIS

– Avoid emotionalism.
• Emotional issues should be allowed to cool, handled in
a non-confrontational manner, or sidestepped.
– Present the system in the proper context.
• Address the concerns of the people to whom you’re
speaking, not the concerns of management or
developers.
– Control the user’s expectations
• Don’t oversell, and be realistic.
– Keep the system simple
• Avoid complex systems that cause radical changes.
FEASIBILITY ANALYSIS

 Ignoring the preceding steps can leave to

behavior issues that are difficult or
impossible to reverse.