AFM341 Lecture 3: Intro to Systems Development
SchoolUniversity of Waterloo
DepartmentAccounting & Financial Management
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Class 3: Intro to Systems Development
● The SDLC provides a structured set of steps to aid companies in designing and building systems
● IT projects have a high failure rate, but managers can adopt strategies to mitigate the risks
● Waterfall and agile are two systems development methodologies that guide project teams
through the day-to-day activities of systems development
Managing IT Changes
● In order to guide employees though the design and implementation of IT systems, organizations
undertake a series of steps referred to as the systems development life cycle:
○ Systems analysis: Gathering information, setting project goals, and determining system
○ Conceptual design: Describing the desired features and operations of the system
including screen layouts, business rules, and process diagrams.
○ Physical design: Taking all of the detailed design documents and transforming (e.g.,
coding, testing) them into the actual system.
○ Implementation and conversion: Placing the system into production so users can begin
to perform actual business operations with the system.
○ Operations and maintenance: Performing changes, corrections, additions, and upgrades
to ensure the system continues to meet the business goals.
Who is Involved in the SDLC?
● Information Systems Steering Committee: Executive level, plans and oversees IS function;
facilitates coordination with integration of systems activities
● Project Development Team: Plan and monitor project progress
● Programmers: Write and test programs according to analysts specifications
● Systems Analysts: Determine information needs, prepare specifications for programmers
● Management: Get users involved in the process, provide support for development projects,
align projects to meet organizations strategic needs
● Users: Communicate needs to system developers, help design and test to ensure complete and
accurate processing of data
Systems Development Planning
● Proper planning provides for achieving goals and objectives
● Two types of plans are often used in systems development projects:
○ Project Development Plan: Specific to a project and authored by the project team
identifies people, hardware, software, and financial resources needed
○ Master Plan: Long-range and authored by steering committee outlining prioritized
projects and timetables
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● A variety of tools can aid in the systems planning process, including:
○ Program evaluation and review technique (PERT):
Diagram that depicts all project activities that
require time and resources with completion
○ Gantt chart: Bar chart that organizes activities on
the left hand side and project time scheduled with a
bar drawn to show the progress to date for that
Business Case (Feasibility Analysis)
● Economic - Do benefits of new system justify the costs (time and resources) to implement?
● Technical - Can we use existing technology?
● Legal - Does a new system comply with regulations, laws, and contractual obligations?
● Scheduling - Can the system be developed in the time allotted?
● Operational - Do we have the people to design and implement the system? Will people use the
● Payback period - Calculate the number of years required for the net savings to equal the initial
cost of investment
● Net Present Value (NPV) - Estimate future cash flows with discounted rate for time value of
● Internal Rate of Return (IRR) - Calculates the interest rate that makes the present value of total
costs equal to the present value of total earnings
Managing IT Changes
● In 2018, about $3.65 trillion was spent on IT (Gartner), including devices, data center
equipment, enterprise software, and IT services.
● However, only about a third of such IT projects are seen to fully succeed.
The Triple Constraint
● Common reasons why IT projects fall behind schedule
Makes an IT Project Risky?
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