Prepared by
Coby Harmon
University of California, Santa Barbara
Westmont College
Chapter
6-1
IT Governance
Chapter
Accounting Information Systems, 2nd Edition
6-2
Study Objectives
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
Chapter
6-3
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
6-4 SO 1 An overview of IT governance and its role in strategic management
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
6-5 SO 1 An overview of IT governance and its role in strategic management
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 enterprises
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
6-6 SO 1 An overview of IT governance and its role in strategic management
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 ITs performance
Chapter
6-7 SO 1 An overview of IT governance and its role in strategic management
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
6-8 SO 1 An overview of IT governance and its role in strategic management
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
6-9 SO 1 An overview of IT governance and its role in strategic management
Introduction to IT Governance
Question
IT governance includes all but which of the following
responsibilities?
a. Aligning It strategy with the business strategy.
b. Writing programming code for IT systems.
c. Insisting that an IT control framework be adopted
and implemented.
d. Measuring ITs performance.
Chapter
6-10 SO 1 An overview of IT governance and its role in strategic management
An 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
Exhibit 6-1
An Overview of the Systems
Development Life Cycle System
System Planning
Implementation
System Analysis System Design
Chapter
6-11 SO 2 An overview of the system development life cycle (SDLC)
An Overview of SDLC
Exhibit 6-2
Process Map of the System
Development Life Cycle
(SDLC)
Chapter
6-12 SO 2 An overview of the system development life cycle (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
6-13 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Exhibit 6-3
System Planning Process Map
Chapter
6-14 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Match of IT Systems to Strategic Objectives
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.
Chapter
6-15 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Feasibility Study
IT governance committee should evaluate the feasibility of
each competing proposal.
Four feasibility aspects
1. Technical
2. Operational
3. Economic
4. Schedule
Chapter
6-16 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Planning and Oversight of Proposed Changes
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.
Chapter
6-17 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Question
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?
a. Technical feasibility.
b. Operational feasibility.
c. Economic feasibility.
d. Schedule feasibility.
Chapter
6-18 SO 3 The elements of the systems planning phase of the SDLC
Systems Planning Phase of SDLC
Question
The purpose of the feasibility study is to assist in?
a. Selecting software.
b. Designing internal controls.
c. Designing reports for the IT system.
d. Prioritizing IT requested changes.
Chapter
6-19 SO 3 The elements of the systems planning phase of the SDLC
Systems Analysis Exhibit 6-4
Phase of SDLC System Analysis
Process Map
Preliminary Investigation
The purpose of the preliminary
investigation is to determine
whether the problem or deficiency
in the current system really exists.
go or no-go decision
SO 4 The elements of the
Chapter systems analysis phase of the
6-20 SDLC
Systems Analysis Phase of SDLC
System Survey
A systems survey requires collecting data about the current
system, including the following:
Inputs Data storage
Outputs Transaction volumes
Processes Errors
Controls
Chapter
6-21 SO 4 The elements of the systems analysis phase of the SDLC
Systems Analysis Phase of SDLC
Determination of User Requirements
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 SO 4 The elements of the systems analysis phase of the SDLC
Systems Analysis Phase of SDLC
Analysis of the System Survey
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
6-23 SO 4 The elements of the systems analysis phase of the SDLC
Systems Analysis Phase of SDLC
System Analysis Report
The report to inform the IT governance committee of the
results of the systems survey, user needs determination, and
BPR.
Chapter
6-24 SO 4 The elements of the systems analysis phase of the SDLC
Systems Analysis Phase of SDLC
Question
Which phase of the system development life cycle includes
determining user needs of the IT system?
a. Systems planning.
b. Systems analysis.
c. Systems design.
d. Systems implementation.
Chapter
6-25 SO 4 The elements of the systems analysis phase of the SDLC
Systems Design Phase of SDLC
Purchased
Software
Exhibit 6-5
System Design
Process Map for
Purchased
Software
Chapter
6-26 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
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
Chapter
6-27 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
In-House Exhibit 6-6
System Design Process
Map for In-House Design
Design
Chapter
6-28 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
Conceptual Design
Involves identifying the alternative conceptual design
approaches to systems that will meet the needs identified in
the system analysis phase.
Chapter
6-29 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
Evaluation and Selection
Feasibility assessments are:
1. Technical feasibility
2. Operational feasibility
3. Economic feasibility
4. Schedule feasibility
In most cases, the costbenefit analysis is the most important
of the four tests.
Chapter
6-30 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
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
outputs, data storage, and
inputs, internal controls.
Processes,
Chapter
6-31 SO 5 The elements of the systems design phase of the SDLC
Systems Design Phase of SDLC
Question
A request for proposal (RFP) is used during the?
a. Phase-in period.
b. Purchase of software.
c. Feasibility study.
d. In-house design.
Chapter
6-32 SO 5 The elements of the systems design phase of the SDLC
Systems Implementation Phase
Exhibit 6-7
Implementation and
Operation Process Map
Parallel
Direct cutover
Phase-in
Pilot
Chapter
6-33 SO 6 The elements of the systems implementation phase of the SDLC
Systems Implementation Phase
Question
Which of the following steps within the systems
implementation phase could not occur concurrently with
other steps, but would occur at the end?
a. Employee training.
b. Data conversion.
c. Software programming.
d. Post-implementation review.
Chapter
6-34 SO 6 The elements of the systems implementation phase of the SDLC
Systems Implementation Phase
Question
Each of the following are methods for implementing a new
application system except
a. Direct cutover conversion.
b. parallel conversion.
c. Pilot conversion.
d. Test method conversion.
Chapter
6-35 SO 6 The elements of the systems implementation phase of the SDLC
Operational and Maintenance Phase
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.
Chapter
6-36 SO 7 The elements of the operation and maintenance phase of the SDLC
Operational and Maintenance Phase
Question
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?
a. As a part of strategic management of the organization.
b. As part of the internal control structure of the organization.
c. As part of the audit of an IT system.
d. As partial fulfillment of managements ethical obligations.
Chapter
6-37 SO 7 The elements of the operation and maintenance phase of the SDLC
Critical Importance of IT Governance
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
Chapter
6-38 SO 8 The critical importance of IT governance in an organization
Ethical Considerations - IT Governance
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.
Chapter
6-39 SO 9 Ethical considerations related to IT governance
Ethical Considerations - IT Governance
Question
Confidentiality of information is an ethical consideration for
which of the following party or parties?
a. Management.
b. Employees.
c. Consultants.
d. All of the above.
Chapter
6-40 SO 9 Ethical considerations related to IT governance
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Chapter
6-41
