Planning System PDF

T
OPIC TWO
Planning System
2012 UMT
Advanced Accounting Information Systems
Learning Objectives
1. Explain how a firms business strategy shapes its information system 2. Describe the project identification and selection process. 3. Explain the importance of systems development planning and describe planning techniques. 4. Explain what is meant by critical path scheduling and describe the process of creating Gantt charts and network diagrams. 5. Discuss the various types of feasibility analysis and calculate economic feasibility.
2012 UMT Advanced Accounting Information Systems 2
Learning Objective 1
Explain how a firms business strategy shapes its information system
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Assessing Strategic Information Needs

Strategic systems planning involves the allocation of resources at the macro level.
usually a time frame of three to five years
Key inputs in developing a sound systems strategy include:

strategic business needs of the organization situations involving legacy systems end user feedback
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Strategic Business Needs

Vision and mission systems strategy requires an understanding of top managements vision, which has shaped the organizations business strategy Industry and competency analysis industry analysis: the driving forces that affect the industry and their organizations performance, such as important trends, significant risks, and potential opportunities competency analysis: a complete picture of the organizations effectiveness as seen via four strategic filters: resources, infrastructure, products/services, and customers
Legacy Systems
Use legacy components to help develop an architecture description.
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End User Feedback

Identifying user needs is fundamental to everything else During phase 1 (Hall, 5th Ed), pertains to substantial perceived problems rather than minor systems modifications Has five key phases at this point in the SDLC: recognize problems define problems specify systems objectives determine feasibility and contributions of projects
may entail prioritizing individual projects
preparing a formal project proposal

End User Feedback: Recognizing the Problem

The need for a new, improved information system is manifested through various symptoms. Symptoms may seem vague and innocuous or go unrecognized initially. The point at which the problem is recognized is often a function of managements philosophy. reactive management - responds to problems only when they reach a crisis state proactive management - alert to subtle signs of problems and aggressively looks for ways to improve
End User Feedback: Defining the Problem

Managers and end users should avoid leaping to a single definition of a problem keep an open mind and gather facts before deciding learn to intelligently interact with systems professionals An interactive process between managers/end users and systems professionals is necessary to arrive at an accurate problem definition. The next three stages of the end user feedback process involve this interactive process.
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End User Feedback: Specifying System Objectives

The strategic objectives of the firm and the operational objectives of the information systems must be compatible. At this point, the objectives only need to be defined in general terms.
End User Feedback: Preparing a Formal Project Proposal

A systems project proposal provides management with a basis for deciding whether or not to proceed with the project. It summarizes the findings of the study and makes a general recommendation. It outlines the linkage between the objectives of the proposed system and the business objectives of the firm.
Describe the project identification and selection process.
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Identifying and Selecting Systems Development Projects
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The Process of Identifying and Selecting IS Development Projects
Identifying potential development projects.

Identification from a stakeholder group. Each stakeholder group brings their own perspective and motivation to the IS decision.
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The Process of Identifying and Selecting IS Development Projects Top-down source are projects identified by top management or by a diverse steering committee. Bottom-up source are project initiatives stemming from managers, business units, or the development group. The process varies substantially across organizations.
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The Process of Identifying and Selecting IS Development Projects (Cont.)
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Classifying and ranking IS development projects.

Using value chain analysis or other evaluation criteria
Value chain analysis: the process of analyzing an organizations activities for making products and/or services to determine where value is added and costs are incurred.
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Selecting IS development projects.

Based on various factors. Consider both short- and long-term projects. Select those most likely to achieve business objectives. Is a very important and ongoing activity.
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One method for deciding among different projects or alternative designs is:
For each requirement or constraint: Score = weight X rating. Each alternative: sum scores across requirements/constraints. Alternative with highest score wins.
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Explain the importance of systems development planning and describe planning techniques.
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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.
Well discuss these plans and a number of techniques to develop them.
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Weve all experienced the disasters that occur when we fail to plan. When you got it home, you realized it wasnt compatible with your existing printer and scanner. Furthermore, it wasnt 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. Suppose you bought a personal computer on impulse without thinking about what you wanted to do with it.

Systems development planning is an important step for the following key reasons:
Consistency with the organizations 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.
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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.
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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.
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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.
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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.

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 23 times/yeareven 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 techniques
Two techniques for scheduling and monitoring systems development activities are:
Program Evaluation and Review Technique (PERT) Gantt Charts
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Planning techniques
Two techniques for scheduling and monitor systems development activities are:
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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:
Arrowsrepresenting activities that require time and resources. Nodesrepresenting 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.
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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 & Nails (1) (Bill) Build Base (2) (Bill) Nail Together (2) (Bill) Paint & Decorate (3) (Sara)
Design Birdhouse (2) (Bill)
Sell (2) (Sara)
Buy Paint (1) (Sara)

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Build Roof (1) (Bill)

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Example
Activity A B C D D Average time 2 Weeks 8 Weeks 4 Weeks 3 Weeks 2 Weeks
A and B can take place simultaneously. C follows A. D is to follow A and can be completed Independently of C. E follows B and C. Calculate the earliest event times, latest event times, slack times and the duration of the critical path.
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Network diagram
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Planning techniques
Two techniques for scheduling and monitor systems development activities are:
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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
1 Design birdhouse Buy wood & nails Buy paint Build roof Build base Nail together Paint & decorate Sell
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Period 5 6
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Gantt charts
Show the sequence and duration of each activity within a project
The bar for each activity runs from the start date to the completion date of that activity
Explain what is meant by critical path scheduling and describe the process of creating Gantt charts and network diagrams.
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Representing and Scheduling Project Plans

Key differences between Gantt Charts and Network Diagrams:
Gantt charts
Show task durations. Show time overlap. Show slack time in duration.
Network diagrams
Show task dependencies. Do not show time overlap, but show parallelism. Show slack time in boxes.
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Representing Project Plans

Resources any person, group of people, piece of
equipment, or material used in accomplishing an activity
Critical Path Scheduling a scheduling technique

whose order and duration of a sequence of task activities directly affect the completion date of a project
Critical Path a sequence of task activities whose

order and durations directly affect the completion date of a project.
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Representing Project Plans (Cont.)

Networking diagramming is a critical path scheduling technique and used when tasks:
Are well-defined and have a clear beginning and end point. Can be worked on independently of other tasks. Are ordered. Serve the purpose of the project.
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Calculating Expected Time Durations using PERT PERT (Program Evaluation Review
Technique) a technique that uses optimistic, pessimistic, and realistic time estimates to calculate the expected time for a particular task.
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Using Project Management Software

Many powerful software tools exist for assisting with project management. Special-purpose project management software is also available. For example, Microsoft Project can help with
Establishing a project starting or ending date. Entering tasks and assigning task relationships. Selecting a scheduling method to review project reports.
Using Project Management Software (Cont.)

Microsoft Project Gantt Charts:
Black line at top indicates a summary activity (composed of subtasks). Diamond shape indicates a milestone.
Microsoft Project Network Diagrams:

Hexagon shape indicates a milestone. Red boxes and arrows indicate critical path (no slack).
Discuss the various types of feasibility analysis and calculate economic feasibility.
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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:

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Management Accountants skilled in controls and auditing Systems personnel Users

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
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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?
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:

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Cost savings and other benefits Initial outlay costs Operating costs Other costs
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.
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Benefits might include:
Cost savings. Improved customer service, productivity, decision making, or data processing. Better management control. Increased job satisfaction and employee morale.
A rigorous cost-benefit analysis is a good strategy for ensuring the benefit of new information technology exceeds the cost.
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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.
Makes up 6575% of the organizations system efforts.
The primary operating cost is maintaining the system.

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.
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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.
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 Calculates the effective interest rate techniques: that would result in

a net present value of zero for the project. Payback period Select projects with higher IRRs. Net present value (NPV) Internal rate of return (IRR)
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End of Topic 2
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Advanced Accounting Information Systems

Explain how a firms business strategy shapes its information system

Advanced Accounting Information Systems

Assessing Strategic Information Needs

Key inputs in developing a sound systems strategy include:

Advanced Accounting Information Systems

Strategic Business Needs

Advanced Accounting Information Systems

End User Feedback

preparing a formal project proposal

End User Feedback: Recognizing the Problem

End User Feedback: Defining the Problem

Advanced Accounting Information Systems

End User Feedback: Specifying System Objectives

End User Feedback: Preparing a Formal Project Proposal

Describe the project identification and selection process.

Advanced Accounting Information Systems

Identifying and Selecting Systems Development Projects

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects

Identifying potential development projects.

Advanced Accounting Information Systems

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Classifying and ranking IS development projects.

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Selecting IS development projects.

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Chapter 4 2012 UMT

2008 by Prentice Hall Advanced Accounting Information Systems

The Process of Identifying and Selecting IS Development Projects (Cont.)

Advanced Accounting Information Systems

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

Well discuss these plans and a number of techniques to develop them.

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

PLANNING SYSTEMS DEVELOPMENT

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

Advanced Accounting Information Systems

Advanced Accounting Information Systems

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

A schedule of activities to develop and operate the new application.

Advanced Accounting Information Systems

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

PLANNING SYSTEMS DEVELOPMENT

The CIO should determine:

PLANNING SYSTEMS DEVELOPMENT

Advanced Accounting Information Systems

PLANNING SYSTEMS DEVELOPMENT

Advanced Accounting Information Systems