Chapter 6-1

Chapter 6-2 Accounting Information Systems, 1st Edition

IT Governance

Chapter 6-3

1. An overview of IT governance and its role in strategic management

2. An overview of the system development life cycle (SDLC)

3. The elements of the systems planning phase of the SDLC

4. The elements of the systems analysis phase of the SDLC

5. The elements of the systems design phase of the SDLC

6. The elements of the systems implementation phase of the SDLC

7. The elements of the operation and maintenance phase of the SDLC

8. The critical importance of IT governance in an organization

9. Ethical considerations related to IT governance

Study ObjectivesStudy ObjectivesStudy ObjectivesStudy Objectives

Chapter 6-4 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

How does a company decide,

which IT systems are appropriate?

which accounting software package to buy?

when it has outgrown its accounting software or when to upgrade the software?

whether to use IT systems to sell products on the web?

whether to establish a data warehouse for analyzing data such as sales trends?

whether to use ERP systems or customer relationship management (CRM) software?

Chapter 6-5 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

IT systems must be strategically managed.

Strategic management is the process of

determining the strategic vision for the organization,

developing the long-term objectives,

creating the strategies that will achieve the vision and objectives, and

implementing those strategies.

Chapter 6-6 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

Proper management, control, and use of IT systems is IT governance. IT Governance is defined as:

[A] structure of relationships and processes to direct and control the enterprise in order to achieve the

enterprise’s goals by adding value while balancing risk versus return over IT and its processes. IT governance provides the structure that links IT processes, IT resources and information to enterprise strategies and objectives.

Chapter 6-7 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

Management must focus on the following activities:

aligning IT strategy with the business strategy

cascading strategy and goals down into the enterprise

providing organizational structures that facilitate the implementation of strategy and goals

insisting that an IT control framework be adopted and implemented

measuring IT’s performance

Chapter 6-8 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

The board and top management must ensure that the organization has processes to accomplish the following:

1. Continually evaluate the match of strategic goals to the IT systems in use.

2. Identify changes or improvements to the IT system.

3. Prioritize the necessary changes to IT systems.

4. Develop the plan to design and implement those IT changes that are of high priority.

5. Implement and maintain the IT systems.

6. Continually loop back to step 1.

Chapter 6-9 SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic

managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

Company should have an

IT governance committee and

a formal process to select, design, and implement IT systems (system development life cycle, or SDLC).

Chapter 6-10

b. Writing programming code for IT systems.

IT governance includes all but which of the following responsibilities?

Concept CheckConcept Check

c. Insisting that an IT control framework be adopted and implemented.

d. Measuring IT’s performance.

a. Aligning It strategy with the business strategy.

SO 1 An overview of IT governance and its role in strategic SO 1 An overview of IT governance and its role in strategic managementmanagement

Introduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT GovernanceIntroduction to IT Governance

Chapter 6-11 SO 2 An overview of the system development life cycle (SDLC)SO 2 An overview of the system development life cycle (SDLC)

An Overview of SDLCAn Overview of SDLCAn Overview of SDLCAn Overview of SDLC

The systems development life cycle (SDLC) is a systematic process to manage the acquisition, design, implementation, and use of IT systems.

Operation and Maintenance

System Implementation

System DesignSystem Analysis

System Planning

Exhibit 6-1 An Overview of the Systems Development Life Cycle

Chapter 6-12 SO 2 An overview of the system development life cycle (SDLC)SO 2 An overview of the system development life cycle (SDLC)

An Overview of SDLCAn Overview of SDLCAn Overview of SDLCAn Overview of SDLC

Exhibit 6-2 Process Map of the System Development Life Cycle (SDLC)

Chapter 6-13 SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLCIT governance committee must monitor the IT system through feedback about network utilization, security breaches, and reports on the operation of the system.

IT governance committee should consider:

1) the assessment of IT systems and their match to strategic organizational objectives, and

2) the feasibility of each of the requested modifications or upgrades.

Chapter 6-14 SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Exhibit 6-3 System Planning Process Map

Chapter 6-15 SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

IT governance committee should evaluate the feasibility of each competing proposal.

Four feasibility aspects

1. Technical

2. Operational

3. Economic

4. Schedule feasibility

Feasibility Study

Chapter 6-16 SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

IT governance committee must decide which of the changes can be undertaken at the current time.

Next phases of the SDLC:

1. Formally announce the project.

2. Assign the project team that will begin the next phase, the systems analysis.

3. Budget the funds necessary to complete the SDLC.

4. Continue oversight and management of the project team and proposed IT changes.

Planning and Oversight of Proposed Changes

Chapter 6-17

b. Operational feasibility.

Which of the following feasibility aspects is an evaluation of whether the technology exists to meet the need identified in the proposed change to the IT system?

Concept CheckConcept Check

c. Economic feasibility.

d. Schedule feasibility.

a. Technical feasibility.

SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Chapter 6-18

b. Designing internal controls.

The purpose of the feasibility study is to assist in?

Concept CheckConcept Check

c. Designing reports for the IT system.

d. Prioritizing IT requested changes.

a. Selecting software.

SO 3 The elements of the systems planning phase of the SDLCSO 3 The elements of the systems planning phase of the SDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Elements of Systems Planning Phase of Elements of Systems Planning Phase of SDLCSDLC

Chapter 6-19 SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Elements of Systems Analysis Phase of Analysis Phase of SDLCSDLC

Elements of Systems Elements of Systems Analysis Phase of Analysis Phase of SDLCSDLC

Preliminary InvestigationThe purpose of the preliminary investigation is to determine whether the problem or deficiency in the current system really exists.

“go” or “no-go” decision

Exhibit 6-4System Analysis Process Map

Chapter 6-20

Inputs

Outputs

Processes

Controls

System Survey

SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

A systems survey requires collecting data about the current system, including the following:

Data storage

Transaction volumes

Errors

Chapter 6-21

Determination of User Requirements

SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

To gain a complete understanding of the system under study, the project team should not only observe and review documentation, but also seek the opinions and thoughts of those who use the system.

Interviews

Questionnaires

Chapter 6-22

Analysis of the System Survey

SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Analysis phase is the critical-thinking stage.

In many cases, the analysis phase may lead to business process reengineering (BPR).

“ fundamental rethinking and radical redesign of business processes to bring about dramatic improvements” in performance.

Chapter 6-23

System Analysis Report

SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

The report to inform the IT governance committee of the results of the systems survey, user needs determination, and BPR.

Chapter 6-24

b. Systems analysis.

Which phase of the system development life cycle includes determining user needs of the IT system?

Concept CheckConcept Check

c. Systems design.

d. Systems implementation.

a. Systems planning.

SO 4 The elements of the systems analysis phase of the SDLCSO 4 The elements of the systems analysis phase of the SDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Elements of Systems Analysis Phase of Elements of Systems Analysis Phase of SDLCSDLC

Chapter 6-25 SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Exhibit 6-5System Design Process Map for Purchased Software

Purchased Software

Chapter 6-26

When evaluating each proposal, the IT governance committee should consider:

1. Price of software or software modules

2. Match of system and user needs to features of the software

3. Technical, operational, economic, and schedule feasibility

4. Technical support provided by the vendor

5. Reputation and reliability of the vendor

6. Usability and user friendliness of the software

7. Testimonials from other customers

SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Chapter 6-27 SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Exhibit 6-6System Design Process Map for In-House Design

In-House Design

Chapter 6-28

Conceptual Design

Involves identifying the alternative conceptual design approaches to systems that will meet the needs identified in the system analysis phase.

SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Chapter 6-29

Evaluation and SelectionFeasibility assessments are:

1. Technical feasibility

2. Operational feasibility

3. Economic feasibility

4. Schedule feasibility

SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

In most cases, the cost–benefit analysis is the most important of the four tests.

Chapter 6-30

Detailed Design

The purpose of the detailed design phase is to create the entire set of specifications necessary to build and implement the system.

The various parts of the system that must be designed are the

SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

outputs,

inputs,

Processes,

data storage, and

internal controls.

Chapter 6-31

b. Purchase of software.

A request for proposal (RFP) is used during the?

Concept CheckConcept Check

c. Feasibility study.

d. In-house design.

a. Phase-in period.

SO 5 The elements of the systems design phase of the SDLCSO 5 The elements of the systems design phase of the SDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Elements of Systems Design Phase of Elements of Systems Design Phase of SDLCSDLC

Chapter 6-32 SO 6 The elements of the systems implementation phase of the SO 6 The elements of the systems implementation phase of the

SDLCSDLC

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

ParallelDirect cutover

Phase-inPilot

Exhibit 6-7Implementation and Operation Process Map

Chapter 6-33

b. Data conversion.

Which of the following steps within the systems implementation phase could not occur concurrently with other steps, but would occur at the end?

Concept CheckConcept Check

c. Software programming.

d. Post-implementation review.

a. Employee training.

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

SO 6 The elements of the systems implementation phase of the SO 6 The elements of the systems implementation phase of the SDLCSDLC

Chapter 6-34

b. parallel conversion.

Each of the following are methods for implementing a new application system except

Concept CheckConcept Check

c. Pilot conversion.

d. Test method conversion.

a. Direct cutover conversion.

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

Elements of Systems Implementation Elements of Systems Implementation PhasePhase

SO 6 The elements of the systems implementation phase of the SO 6 The elements of the systems implementation phase of the SDLCSDLC

Chapter 6-35

Management should receive regular reports regarding the performance of the IT system.

Examples of reports are:

IT performance

IT load usage and excess capacity

Downtime of IT systems

Maintenance hours on IT systems

IT security and number of security breaches or problems

IT customer satisfaction, from both internal and external customers. SO 7 The elements of the operation and maintenance phase of SO 7 The elements of the operation and maintenance phase of

the SDLCthe SDLC

Elements of the Operation and Elements of the Operation and Maintenance PhaseMaintenance Phase

Elements of the Operation and Elements of the Operation and Maintenance PhaseMaintenance Phase

Chapter 6-36

b. As part of the internal control structure of the organization.

The use of the SDLC for IT system changes is important for several reasons. Which of the following is not a part of the purposes of the SDLC processes?

Concept CheckConcept Check

c. As part of the audit of an IT system.

d. As partial fulfillment of management’s ethical obligations.

a. As a part of strategic management of the organization.

SO 7 The elements of the operation and maintenance phase of SO 7 The elements of the operation and maintenance phase of the SDLCthe SDLC

Elements of the Operation and Elements of the Operation and Maintenance PhaseMaintenance Phase

Elements of the Operation and Elements of the Operation and Maintenance PhaseMaintenance Phase

Chapter 6-37

Three major purposes are served by the continual and proper use of the IT governance committee and the SDLC:

1. The strategic management process of the organization

2. The internal control structure of the organization

3. The fulfillment of ethical obligations

SO 8 The critical importance of IT governance in an organizationSO 8 The critical importance of IT governance in an organization

Critical Importance of IT GovernanceCritical Importance of IT GovernanceCritical Importance of IT GovernanceCritical Importance of IT Governance

Chapter 6-38

Management has an ethical obligation to maintain a set of processes and procedures that assure accurate and complete records and protection of assets.

Employees should not subvert the process.

Consultants have at least four ethical obligations:

1. Bid the engagement fairly, and completely disclose the terms of potential cost increases.

2. Bill time accurately to the client.

3. Do not oversell unnecessary services or systems.

4. Do not disclose confidential or proprietary information.

SO 9 Ethical considerations related to IT governanceSO 9 Ethical considerations related to IT governance

Ethical Considerations Related to IT Ethical Considerations Related to IT GovernanceGovernance

Ethical Considerations Related to IT Ethical Considerations Related to IT GovernanceGovernance

Chapter 6-39

b. Employees.

Confidentiality of information is an ethical consideration for which of the following party or parties?

Concept CheckConcept Check

c. Consultants.

d. All of the above.

a. Management.

SO 9 Ethical considerations related to IT governanceSO 9 Ethical considerations related to IT governance

Ethical Considerations Related to IT Ethical Considerations Related to IT GovernanceGovernance

Ethical Considerations Related to IT Ethical Considerations Related to IT GovernanceGovernance

Chapter 6-40

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