CHAPTER 22

SYSTEMS DESIGN, IMPLEMENTATION, AND OPERATION

Learning Objectives:
1. Discuss the conceptual systems design process and the
activities in this phase.
2. Discuss the physical systems design process and the
activities in this phase.
3. Discuss the systems implementation and conversion process
and the activities in this phase.
4. Discuss the systems operation and maintenance process and
the activities in this phase.
Questions to be addressed in this chapter include:
1. Should her team develop what it considers to be the best approach
to meeting SMs needs, or should they develop several approaches?
2. How can she ensure that system output will meet user needs? When
and how should input be captured, and who should capture it? Where
should AIS data be stored, and how should it be organized and
accessed?
3. How should SM convert from its current to its new AIS? How much
time and effort will be needed to maintain the new AIS? In what
capacity should Anns accounting staff participate?

Introduction
Accountants should help keep the project on track by evaluating and
measuring benefits, monitoring costs, and ensuring that the project
stays on schedule.
Effective systems analysis and design can ensure that developers
correctly define the business problem and design the appropriate
solution.
This chapter discusses the other four steps (see Figure 12-1) in the
systems development life cycle:
1. Conceptual systems design
2. Physical systems design
3. Systems implementation and conversion
4. Operation and maintenance

Page 1 of 11

Conceptual Systems Design

In the conceptual systems design phase, the developer creates a general
framework for implementing user requirements and solving problems
identified in the analysis phase.
As shown in Figure 22-1, there are three main steps in conceptual
design:
1. Evaluating design alternatives
2. Preparing design specifications
3. Preparing the conceptual systems design report

Evaluate Design Alternatives

There are many ways to design an AIS, so accountants and others involved
in systems design must continually make design decisions.
In addition, there are many different ways that a company can approach
the systems development process; (1) purchase software from a vendor,
(2) design the system in-house, or (3) outsource to develop and manage
the information system.
The design team should identify a variety of design alternatives and
evaluate each with respect to the following standards:
1. How well it meets organizational and system objectives
2. How well it meets user needs
3. Whether it is economically feasible
4. What its advantages and disadvantages are
Table 22-1 presents examples of conceptual and physical design
considerations and their corresponding design alternatives.

Prepare Design Specifications

Once a design alternative has been selected, the project team develops
the conceptual design specifications for the following elements:
1. Output. Because the system is designed to meet users information
needs, output specifications must be prepared first.
2. Data storage. For Shoppers Mart, decisions included

Which data needs to be stored for the sales report

Whether the data should be stored in sequential or random

order

What type of file or database to use

Page 2 of 11

Which field size is appropriate for the data items

3. Input. Design considerations for Shoppers Mart include which sales

data to enter, sale location and amount, and where, when, and how
to collect data.
4. Processing procedures and operations. Design considerations for
Shoppers Mart include how to process the input and stored data to
produce the sales report and also the sequence in which the
processes must the performed.

Prepare the Conceptual Systems Design Report

At the end of the conceptual design phase, a conceptual systems design
report is prepared to:
1. Guide physical systems design activities
2. Communicate how management and user information needs will be met
3. Help the steering committee assess system feasibility

Physical Systems Design

During the physical systems design phase, the company determines how the
conceptual AIS design is to be implemented.
As shown in Figure 22-2, physical system design phases include (1)
designing output, (2) creating files and databases, (3) designing input,
(4) writing computer programs, (5) developing procedures, and (6)
building controls into the new AIS.

Output Design
The objective of output design is to determine the nature, format,
content, and timing of printed reports, documents, and screen displays.
Some important output design considerations are summarized in Table 222.
Output usually fits into one of the following four categories:
1. Scheduled reports have a prespecified content and format and
are prepared on a regular basis.
2. Special-purpose analysis reports have no prespecified content
or format and are not prepared on a regular schedule.
3. Triggered exception reports have a prespecified content and
format but are prepared only in response to abnormal
conditions.
4. Demand reports have a prespecified content and format but are
prepared only on request.

Page 3 of 11

File and Database Design

Table 22-3 summarizes some of the more important file and database
design considerations: 1) medium, 2) processing mode and maintenance
size, and 3) activity level.

Input Design
Considerations for input design are shown in Table 22-4.
1
2
3
4
5

Medium
Source
Format
Type
Volume

6
7
8
9
10

Personnel
Frequency
Cost
Error detection & correction
General1

Note #1: General considerations include:

1.

Preprint as much data as possible.

2.

Use appropriate weight and grade of paper.

3.

Use bold type, double-thick lines, and shading to

highlight different parts of the form.

4.

Use a standard size and one that is consistent with

requirements for filing, binding, or mailing.

5.

If mailed to external parties, position the address for

placement in a window envelope.

6.

Have copies of the form printed in different colors to

facilitate accurate distribution.

7.

Include clear instructions for completing the form.

Forms Design
Table 22-5 is a useful tool for evaluating existing forms and designing
new ones:
1. General Considerations
2. Introductory Section Of Form
3. Main Body Of Form
4. Conclusion Section Of Form
Designing Computer Screens
Computer screens are most effective when these procedures are followed:
1. Organize the screen so data can be entered quickly, accurately,
and completely.

Page 4 of 11

2. Enter data in the same order as displayed on paper forms used to

capture the data.
3. Complete the screen from left to right and top to bottom. Group
together logically related data.
4. Design the screen so users can jump from one data entry location
to another or use a single key or go directly to screen locations.
5. Make it easy to correct mistakes. Clear and explicit error
messages that are consistent across all screens are essential.
6. Restrict the amount of data on a screen to avoid clutter. Limit
the number of menu options on a single screen.

Program Design
Program development is one of the most time-consuming activities in the
SDLC.
Programs subdivided into small, well-defined modules are a process
called structured programming.
To improve software quality, organizations should develop programming
standards.
Although accountants need not be computer programmers, they should
understand how software is created.
Following are eight steps for developing software:
Step 1 Determine user needs. Systems analysts consult with users
and agree on software requirements.
Step 1 is performed as a part of the systems analysis phase of the
SDLC.
Step 2 Develop a plan. A development plan is produced and
documented.
Step 2 is done during conceptual systems design and may carry over
to the beginning of physical design.
Step 3 Write program instructions (code). This is when the
computer code (or program instructions) is written.
Step 4 Test the program. Debugging is discovering and eliminating
program errors. After a program is coded, a visual and mental
review, referred to as desk checking, is conducted to discover
programming errors.
The Gartner Group estimates that bugs that are not discovered
until later in the SDLC cost 80 percent to 1,000 percent more to
fix than those discovered earlier.

Page 5 of 11

FOCUS 22-1 discusses the difficulty of testing software and the

consequences of releasing software with undetected errors.
Most of the tasks in steps 3 and 4 are done during systems design
and are completed during systems implementation.
Step 5 Document the program. Documentation explains how programs
work and is used to help correct and resolve errors.
Step 6 Train program users. Program documentation is often used to
train users.
Steps 5 and 6 are begun in systems design, but most of the work is
done during systems implementation.
Step 7 Install the system. All system components, including the
programs, are combined and the company begins to use the system.
Step 7 is completed during systems implementation and conversion.
Step 8 Use and modify the system. Factors that require existing
programs to be revised, referred to as program maintenance,
include requests for new or revised reports; changes in input,
file content, or values such as tax rates; error detection; and
conversion to new hardware.
Step 8 is part of the operation and maintenance phase.

Procedures Design
Everyone who interacts with a newly designed AIS needs procedures that
answer who, what, when, where, why, and how questions related to all AIS
activities.

Controls Design
The often-heard computer adage garbage in, garbage out emphasizes that
improperly controlled input, processing, and database functions produce
information of little value.
Controls must be built into an AIS to ensure its effectiveness,
efficiency, and accuracy.
Some of the more important control concerns that must be addressed are
summarized in Table 22-6:
1. Validity
2. Authorization
3. Accuracy
4. Security
5. Numerical control

Page 6 of 11

6. Availability
7. Maintainability
8. Integrity
9. Audit trail

Physical Systems Design Report

At the end of this phase, the team prepares a physical systems design
report that summarizes what was accomplished and serves as the basis for
managements decision whether or not to proceed to the implementation
phase.

Systems Implementation
Systems implementation is the process of installing hardware and
software and getting the AIS up and running.
The state of Virginia has been especially successful in designing and
implementing its AIS. Focus 22-2 describes the improvements the state
made to its AIS.

Implementation Planning
An implementation plan consists of implementation tasks, expected
completion dates, cost estimates, and the person or persons responsible
for each task.
One reason that Blue Cross/Blue Shields new $200 million system failed
was because there was no organizational restructuring.

Site Preparation
A large computer may require extensive changes, such as additional
electrical outlets, data communications facilities, raised floors,
humidity controls, special lighting, and air conditioning.
Space is needed for equipment, storage, and offices.

Select and Train Personnel

Employees can be hired from outside the company or transferred
internally.
Because effective training is time consuming and expensive, companies
take shortcuts. They are busy trying to maintain and upgrade their new
system.
Effective AIS training must consist of more than just hardware and
software skills.
Employees must be oriented to new policies and operations, and
training should be planned and scheduled so it occurs just before
systems testing and conversion.

Page 7 of 11

Boots the Chemists at a London-based international pharmacy developed a

new approach to training.
Store employees that were nervous about the new computer system
were invited to a party where a new POS system had been installed.
They were asked to try to harm the new POS system.
Employees quickly found out that they could not harm the system
and learned that it was easy to use.

Complete Documentation
Three types of documentation must be prepared for new systems:
1. Development documentation describes the new AIS. It includes:

A system description

copies of output, input, and file and database layouts

Program flowcharts

Test results

User acceptance forms

2. Operations documentation includes:

Operating schedules

Files and databases accessed

Equipment security

File retention requirements

3. User documentation teaches users how to operate the AIS. It

includes a procedures manual and training materials.

Test the System

Inadequate system testing was one reason for the Blue Cross/Blue Shield
system failure described previously.
Documents and reports, user input, operating and control procedures,
processing procedures, and computer programs should all be given a trial
run in realistic circumstances.
In addition, capacity limits and backup and recovery procedures should
be tested.
Following are three common forms of testing:

Page 8 of 11

1. Walk-throughs are step-by-step reviews of procedures or program

logic.
2. Processing test transactions determines if a program operates
as designed.
3. Acceptance tests use copies of real transactions and files
rather than hypothetical ones.
Chemical Bank suffered the consequences of not adequately testing an
upgrade to its ATM system.
Customers in New York who withdrew money found that there accounts
were debited twice.
Before the problem was corrected, 150,000 withdrawals with a total
value of $8 million were posted to customer accounts.
Even software purchased from an outside vendor must be tested thoroughly
before being installed.

Systems Conversion
Conversion is the process of changing from the old to the new AIS. This
includes converting hardware, software, data files, and procedures.

Conversion Approaches
Four conversion approaches are used to change from an old to a new
system:
1. Direct conversion immediately terminates the old AIS when the
new one is introduced.
FOCUS 22-3 discusses the problems at Sunbeam Corp., in part
caused by attempting a direct conversion with no backup system.
Al Dunlap, a new CEO at Sunbeam Corp., made drastic costcutting moves in which many went too far and ended up
hurting the company.
His restructuring plan called for eliminating 87 percent of
the companys products and half of the 6,000 employees.
Al terminated computer personnel who were earning $35,000 to
learn that they could be making $125,000 a year elsewhere.
He replaced the computer personnel with contract workers who
made significantly more than $35,000 a year. Some of these
contract workers were the computer personnel that he
eliminated from the company previously.
Al used the direct conversion approach to modernize its
information system. Unfortunately, the new system did not

Page 9 of 11

work. Without any backup system the entire system was down
for months.
Orders were lost and some customers did not receive their
shipments.
Sunbeam had to manually bill its customers.
The price of Sunbeams stock plummeted and in 1998 Al was
fired.
The SEC began investigating Al to find out that $62 million
of the $189 million in income for Sunbeam did not comply
with accounting rules.
Also, Arthur Andersen, Sunbeams auditors, paid out $110
million in damages to settle a shareholder class-action
suit.
In February 2003, Sunbeam filed for Chapter 11 bankruptcy
protection.
2. Parallel conversion operated the old and new systems
simultaneously for a period of time.
3. Phase-in-conversion gradually replaces elements of the old AIS
with the new one.
4. Pilot conversion implements a system in just one part of the
organization, such as a branch location.

Data Conversion
Data conversion can be time-consuming, tedious, and expensive. The
difficulty and magnitude of the task can be easily underestimated.
The first step in the data conversion process is to decide which data
files need to be converted.
Then they must be checked for completeness and any data
inaccuracies and inconsistencies removed.
Once the files and databases have been converted and tested for
accuracy, the new system is functional.

Operation and Maintenance

The final step in the SDLC is to operate and maintain the new system. A
post-implementation review should be conducted on a newly installed AIS
to ensure it meets its planned objectives.
Table 22-7 provides a list of important factors to consider and
questions to answer during the post-implementation review.
Factors include:

Page 10 of 11

1
2
3
4
5
6
7

Goals and objectives

Satisfaction
Benefits
Costs
Reliability
Accuracy
Timeliness

8
9
10
11
12
13
14

Compatibility
Controls and security
Errors
Training
Communications
Organizational changes
Documentation

When the review has been completed, a post-implementation review report

is prepared. The table of contents of this report is provided in Table
22-8.
User acceptance of the post-implementation review report is the final
activity in the systems development process.
However, work on the new system is not finished. Studies show that over
the life of a system, only 30 percent of the work takes place during
development. The remaining 70 percent is spent on maintaining the
system.

Page 11 of 11