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CHAPTER 20
INTRODUCTION TO SYSTEMS DEVELOPMENT AND SYSTEMS ANALYSIS
Instructor’s Manual
Learning Objectives:
1. Explain the five phases of the systems development life cycle.
3. Explain the importance of systems development planning and
describe planning techniques.
5. Explain why system changes triggers behavioral reactions, what
6. Discuss the key issues and steps in systems analysis.
Questions to be addressed in this chapter include:
1. What process must be followed to obtain and implement a new
system?
2. What planning is necessary to ensure the system’s success? Who
will be involved, and how? Do special committees need to be
formed? What resources are needed? How should the planning be
documented?
3. How will employees react to a new system? What problems might
this change cause, and how can they be minimized?
4. How should the new system be “sold” to top management? How can
expected costs and benefits be quantified to determine whether
the system will be cost-effective?
Introduction
Companies usually change their systems for one of the following
reasons:
2. Technological changes
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4. Competitive advantage
6. Growth
8. Systems integration
9. Systems age and need to be replaced
Developing quality, error-free software is a difficult, expensive, and
time-consuming task.
This is illustrated by the following statistics:
1. An American Management Systems study revealed that 75 percent
2. The Gartner Group estimates the following:
▪ More than 40 percent of information technology (IT)
projects do not produce a satisfactory outcome.
3. A Standish Group International study found that
▪ More than 70 percent of software development projects are
delivered late,
4. A KPMG survey found that 35 percent of all major information
systems projects were classified as runaways—hopelessly
incomplete and over budget.
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Runaways can consume a great deal of time and money, and in the end
produce no usable results, as illustrated by the following examples:
1. Pacific Gas & Electric (PG&E) pulled the plug on a
client/server information system for all of its residential
2. California’s Department of Motor Vehicles decided to overhaul
its system, which was originally developed in 1965. It took an
equivalent of 18 programmers working for an entire year to add
FOCUS 20-1 illustrates how the IRS made attempts to replace its aging
system.
The IRS concluded that it needed to modernize its 40-year-old
computer system and operations.
What effect would this collapse have on the U.S. Government? In
the worst case scenario:
2. Tax revenues, hundreds of billions of dollars worth,
would not be collected.
3. To meet its obligation, the government would have to
borrow money, throwing the financial markets into a
panic.
A number of years ago, the IRS spent $3.3 billion on an upgrade
effort that failed.
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Systems Development
Whether systems changes are major or minor, most companies go through a
systems development life cycle.
The Systems Development Life Cycle
Figure 20-1 provides the five step process for the Systems Development
Life Cycle (SDLC):
1. Systems Analysis
• The information needed to purchase or develop a new
system is gathered.
• Requests for systems development are prioritized.
2. Conceptual Design
During the conceptual design, the company decides how to meet
user needs.
The first step is to identify and evaluate appropriate design
alternatives:
▪ Purchase the software.
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3. Physical Design
▪ Input and output documents are designed.
4. Implementation and Conversion
Implementation and conversion constitute the capstone phase
during which all the elements and activities of the system
come together.
5. Operations and Maintenance
Modifications are made as problems arise or as new needs
become evident.
Multiple Choice 1
The Gartner Group estimated the following:
a. That Nike ordered $90 million worth of shoes that did not sell.
Multiple Choice 2
In the IRS’s attempts to replace its aging information system, it lost
almost _____ million on the BSM project.
a. $1.2
b. $2.5
c. $3.0
d. $4.0
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Multiple Choice 3
The following are the five steps in the systems development life cycle:
1. Implementation and Conversion
The Players
Management
Top management’s most important roles are providing support and
encouragement for the development projects.
appropriate funds.
Accountants
Accountants may play three roles during systems design:
First, accountants must determine their information needs
and system requirements.
Information Systems Steering Committee
The purpose of the information systems steering committee is to
plan and oversee the information systems function.
Learning Objective Two
Discuss the people involved in systems
development and the roles they play.
Project Development Team
Each development project has a team of systems specialists,
managers, accountants and auditors, and users that guides its
development.
Systems Analysts and Programmers
Systems analysts study existing systems, design new ones, and
prepare specifications that are used by computer programmers.
Multiple Choice 4
Which of the following statement(s) are true?
a. Management assists the project development team.
b. The steering committee sets policies that govern the AIS.
Planning Systems Development
As shown in Figure 20-1 several activities must be performed at various
times throughout the SDLC. One such activity is planning.
Systems development planning is an important step for the following key
reasons:
1. Consistency. Planning enables the system’s goals and
2. Efficiency. Systems are more efficient, subsystems are
3. Cutting edge. The company remains abreast of the ever-present
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4. Lower costs. Duplication, wasted effort, and cost and time
5. Adaptability. Management is better prepared for future
resource needs, and employees are better prepared for the
changes that will occur.
Two types of systems development plans are needed: 1) individual
project plans prepared by project teams and 2) a master plan developed
by the information systems steering committee.
1. Project Development Plan
The basic building block of information systems planning is
the project development plan.
2. The Master Plan
A master plan is a long-range planning document that
specifies:
▪ What the system will consist of
FOCUS 20-2 explains why inadequate planning was one of the reasons why
EDS lost a significant amount of money in its contract with the U.S.
military.
EDS made the following mistakes:
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1. Had little previous experience with the military and did
not adequately plan for some of the requests
3. Did not properly plan and coordinate project tasks
Planning Techniques
Two techniques for scheduling and monitoring systems development
activities are the PERT and the GANTT Chart.
The program evaluation and review technique (PERT) requires that all
activities and the precedent and subsequent relationships among them be
identified.
The critical path is A(5) + D(4) + G(9) = 18 weeks.
A Gantt chart is a project scheduling technique that divides each
project into activities with estimated start and completion times.
Multiple Choice 5
The types of systems development plans that are needed include:
a. project development plan
e. B and C
Multiple Choice 6
In a master plan, a planning horizon of approximately _____ years is
reasonable, and the plan should be updated at least __________ a year.
a. 3; 2 to 3 times
Feasibility Analysis
As shown in Figure 20-3, a feasibility study (also called a “business
case”) is prepared during systems analysis and updated as necessary
during the remaining steps in the SDLC.
For example, Bank of America hired a software firm to replace a
20-year-old batch system used to manage billions of dollars in
institutional trust accounts.
After two years the new system was implemented despite
warnings that it was not adequately tested.
FOCUS 20-3 on page 668 describes a project at Blue Cross/Blue
Shield that was scrapped after 6 years of work and a $120 million
investment.
Five important aspects to be considered during a feasibility study are
as follows:
1. Economic feasibility. Will system benefits justify the time,
money, and other resources required to implement it?
2. Technical feasibility. Can the planned system be developed and
implemented using existing technology?
Calculating Economic Feasibility Costs and Benefits
In a recent survey, 9 out of 10 executives agree that information
technology could greatly enhance their competitive edge; however, only
6 out of 10 agreed that the necessary IT spending would be justified.
Some of the tangible and intangible benefits a company might obtain
from a new system are cost savings; improved customer service,
productivity, decision making, and data processing; better management
control; and increased job satisfaction and employee morale.
Initial outlay and operating costs are summarized in Table 20-2.
2. Software
4. Supplies and overhead
6. Documentation
8. Installation
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10. Financial
Capital Budgeting
Various feasibility measures are used to narrow the list of alternative
approaches that meet system requirements.
The following are three commonly used capital budgeting techniques:
1. Payback period. This is the number of years required for the
net savings to equal the initial cost of the investment.
Multiple Choice 7
__________ project was scrapped after 6 years of work and a $120
million investment.
a. Nike’s
Multiple Choice 8
The capital budgeting technique that considers the time value of money
is:
a. Payback period
b. IRR
Behavioral Aspects of Change
The behavioral aspects of change are crucial, because the best system
will fail without the support of the people it serves.
Organizations must be sensitive to and consider the feelings and
reactions of persons affected by change.
Why Behavioral Problems Occur
To minimize adverse behavioral reactions, one must first understand why
resistance takes place. Some of the more important factors include the
following:
1. Personal characteristics and background. Generally speaking,
2. Manner in which change is introduced. Resistance is often a
3. Experience with prior changes. Employees who had a bad
experience with prior changes are more reluctant to cooperate
when future changes occur.
4. Top-management support. Employees who sense a lack of top–
5. Biases and natural resistance to change. People with emotional
6. Disruptive nature of the change process. Requests for
information and interviews are distracting and place
7. Fear. Many people fear the unknown and the uncertainty
accompanying change. They also fear losing their jobs, losing
respect or status, failure, technology, and automation.
How People Resist AIS Changes
FOCUS 20-4 explains the resistance to change that the U.S. Department
of Defense has experienced in trying to update its information systems.
Major resistance often takes one of three forms: aggression, projection
or avoidance.
1. Aggression is behavior that is usually intended to destroy,
3. Dealing with problems through avoidance is a common human
trait. One way for employees to deal with a new AIS is to
avoid using it in the hope that the problem can be ignored or
that it will eventually go away.
Preventing Behavioral Problems
People’s reactions to change can be improved by observing the following
guidelines:
1. Meet users’ needs. It is essential that the form, content,
2. Keep communication lines open. Managers and users should be
fully informed of system changes as soon as possible.
3. Maintain a safe and open atmosphere. It is imperative that
4. Obtain management support. When possible, a powerful
6. Solicit user participation. Those who will use or be affected
by the system should participate in its development by
providing data, making suggestions, and helping make
decisions.
7. Provide honest feedback. To avoid misunderstandings, users
8. Make sure users understand the system. Effective use or
9. Humanize the system. System acceptance is unlikely if
10. Describe new challenges and opportunities. System developers
should emphasize important and challenging tasks that can be
performed with the new system.
11. Reexamine performance evaluation. Users’ performance
12. Test the system’s integrity. The system should be properly
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13. Avoid emotionalism. When logic vies with emotion, it rarely
14. Present the system in the proper context. Users are vitally
interested in how system changes affect them personally.
15. Control users’ expectations. A system is sold too well if
16. Keep the system simple. Avoid complex systems that cause
radical changes. Make the change seem as simple as possible
by conforming to existing organizational procedures.
Multiple Choice 9
Some of the reasons why employees resist new systems include(s):
a. fear
b. communications
Systems Analysis
When a new or improved system is needed, a written request for systems
development is prepared.
The five steps in the analysis phase and their objectives are shown in
Figure 20-4 and discussed in this section.
Initial Investigation
An initial investigation is conducted to screen projects.
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Table 20-3 provides the contents of the Shoppers Mart proposal,
representative of the information in a proposal to conduct systems
analysis.
Systems Survey
During the systems survey, an extensive study of the current AIS is
undertaken.
The objectives of a systems survey are as follows:
1. Gain a thorough understanding of company operations, policies,
and procedures; data and information flow; AIS strengths and
weaknesses; and available hardware, software, and personnel.
The advantages and disadvantages of four common methods of gathering
data are summarized here and in Table 20-4.
1. Interviews
An interview helps gather answers to “why” questions:
▪ Why is there a problem?
2. Questionnaires
Questionnaires are used when the amount of information to be
3. Observation
4. Systems documentation
Systems documentation describes how the AIS is intended to
work.
Document Findings and Model the Existing System
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The information gathered during the analysis phase must be documented
so it can be used throughout the systems development project.
Table 18-5 on page 677 provides a list of system analysis and design
tool techniques.
Analyze the Existing System
Once data gathering is complete, the survey team evaluates the AIS’s
strengths and weaknesses to develop ideas for designing and structuring
the new AIS.
Information Needs and Systems Requirements
Once a project is deemed feasible, the company identifies the
information needs of AIS users and documents systems requirements.
Table 20-6 is an example of systems requirements.
Figure 20-5 is a humorous view of the types of communication problems
associated with this process.
To illustrate the importance of accurately determining systems
requirements, consider the example of Corning Corporation. The company
Systems Objectives and Constraints
Many organizations take a systems approach to determining information
needs and system requirements.
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It is important to determine system objectives so that analysts and
users can focus on those elements most vital to the AIS’s success.
Table 20-7 provides the list of AIS objectives.
Common constraints include:
2. Management policies and guidelines
Strategies for Determining Requirements
1. Ask users what they need.
Documentation and Approval of User Requirements
Detailed requirements for the new AIS that explain exactly what the
system must produce should be created and documented.
Systems Analysis Report
Systems analysis is concluded by preparing a systems analysis report to
summarize and document the analysis activities and serve as a
repository of data from which systems designers can draw.
A go/no go decision may be made up to three times during systems
analysis:
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1. During the initial investigation
Multiple Choice 10
Questionnaires are conducted during the __________ step in systems
analysis.
a. feasibility study
b. systems survey