Accounting information systems controls and process 2nd tunnwe weickgenannt chapter 06

Chapter 6-9 SO 1 An overview of IT governance and its role in strategic management Introduction to IT Governance Introduction to IT Governance Company should have an ► IT governance com

Chapter

6-1

Prepared by Coby Harmon University of California, Santa Barbara

Westmont College

Chapter

6-3

1. An introduction to 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 Objectives

Study Objectives

Chapter

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

Introduction to IT Governance

Introduction 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 management

Introduction to IT Governance

Introduction 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 management

Introduction to IT Governance

Introduction 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 management

Introduction to IT Governance

Introduction 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 management

Introduction to IT Governance

Introduction 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 management

Introduction to IT Governance

Introduction 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?

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 management

Introduction to IT Governance

Introduction to IT Governance

Question

Chapter

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

An Overview of SDLC

An Overview of SDLC

The systems development life cycle (SDLC) is a

systematic process to manage the acquisition, design,

implementation, and use

Maintenance

System Implementation

System Design System Analysis

System Planning

Exhibit 6-1

An Overview of the Systems

Development Life Cycle

Chapter

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

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

IT 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 SDLC

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

Exhibit 6-3

System Planning Process Map

Chapter

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

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

The IT governance committee must evaluate proposed

changes to IT systems in terms of their usefulness in

assisting the organization to achieve its objectives.

This need to match IT systems to organizational objectives

also highlights the need for the IT governance committee to

include as its members top management such as the CEO,

CFO, CIO, and other high-level managers.

Match of IT Systems to Strategic Objectives

Chapter

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

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

IT governance committee should evaluate the feasibility of

each competing proposal.

Four feasibility aspects

Chapter

6-17 SO 3 The elements of the systems planning phase of the SDLC

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

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

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

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

Question

Chapter

6-19

b Designing internal controls.

The purpose of the feasibility study is to assist in?

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 SDLC

Systems Planning Phase of SDLC

Systems Planning Phase of SDLC

Question

Chapter

6-20

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

whether the problem or deficiency

in the current system really exists.

“go” or “no-go” decision

Exhibit 6-4

System Analysis Process Map

Chapter

6-21

InputsOutputsProcessesControls

System Survey

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

Systems Analysis Phase of SDLC

Systems Analysis Phase of SDLC

A systems survey requires collecting data about the

current system, including the following:

Data storageTransaction volumesErrors

Chapter

6-22

Determination of User Requirements

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

Systems Analysis Phase of SDLC

Systems Analysis Phase of SDLC

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

6-23

Analysis of the System Survey

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

Systems Analysis Phase of SDLC

Systems Analysis Phase of SDLC

Analysis phase is the critical-thinking stage.

In many cases, the analysis phase may lead to business

process reengineering (BPR).

BPR has been defined as “fundamental rethinking and radical

redesign of business processes to bring about dramatic

improvements” in performance.

Chapter

6-24

System Analysis Report

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

Systems Analysis Phase of SDLC

Systems Analysis Phase of SDLC

The report to inform the IT governance committee of the

results of the systems survey, user needs determination, and

BPR.

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

Systems Analysis Phase of SDLC

Systems Analysis Phase of SDLC

Question

Chapter

6-26 SO 5 The elements of the systems design phase of the SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

Exhibit 6-5

System Design Process Map for Purchased

Software

Purchased Software

Chapter

6-27

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 SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

Chapter

6-28 SO 5 The elements of the systems design phase of the SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

Exhibit 6-6

System Design Process Map for In-House Design

In-House Design

Chapter

6-29

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 SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

Chapter

6-30

Evaluation and Selection

Feasibility 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 SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

In most cases, the cost–benefit analysis is the most important

of the four tests

Chapter

6-31

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 SDLC

Systems Design Phase of SDLC

Systems Design Phase of SDLC

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

Systems Design Phase of SDLC

Systems Design Phase of SDLC

Question

Chapter

6-33 SO 6 The elements of the systems implementation phase of the SDLC

Systems Implementation Phase

Systems Implementation Phase

Parallel Direct cutover

Phase-in Pilot

Exhibit 6-7

Implementation and Operation Process Map

Chapter

6-34

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?

c Software programming

d Post-implementation review

a Employee training.

Systems Implementation Phase

Systems Implementation Phase

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

Question

Chapter

6-35

b parallel conversion.

Each of the following are methods for implementing a new

application system except

c Pilot conversion.

d Test method conversion.

a Direct cutover conversion.

Systems Implementation Phase

Systems Implementation Phase

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

Question

Chapter

6-36

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 the SDLC

Operational and Maintenance Phase

Operational and Maintenance Phase

Chapter

6-37

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?

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 the SDLC

Question

Operational and Maintenance Phase

Operational and Maintenance Phase

Chapter

6-38

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 organization

Critical Importance of IT Governance

Critical Importance of IT Governance

Chapter

6-39

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 governance

Ethical Considerations - IT Governance

Ethical Considerations - IT Governance

Chapter

6-40

b Employees.

Confidentiality of information is an ethical consideration for

which of the following party or parties?

Ethical Considerations - IT Governance

Ethical Considerations - IT Governance

Chapter

6-41

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