Managing Information Technology

362 Part III • Acquiring Information Systems

applications is referred to as the systems development
life cycle (SDLC).
The SDLC approach also provides a baseline for
understanding what is involved in developing an applica-
tion system, whether by IS professionals employed by
your organization, by IS professionals employed by a
software development firm or consultancy, or by some
combination of internal and external IS specialists or end
users. The processes for purchasing a software package
(described in Chapter 10) will also be better understood
after becoming familiar with the traditional SDLC
approach. At the end of this section, we review the advan-
tages and disadvantages of the SDLC methodology.

The SDLC Steps

The generic SDLC methodology includes three phases and
eight steps. This template is shown in Figure 9.1. The specif-
ic steps in this figure can vary across organizations. For ex-
ample, an organization could have developed its own version
of an SDLC methodology that includes a total of 5 steps or
even 10 steps. Nevertheless, an organization’s internally de-
veloped SDLC methodology should also essentially corre-
spond to the steps for each of the three phases in Figure 9.1.
The overall thrusts of the three phases of the SDLC
are quite straightforward. The Definition phase is critical:
It justifies the systems development work and defines pre-
cisely what the system must do in sufficient detail for IS
specialists to build the right system. In the Construction
phase, the IS specialists produce a working system accord-
ing to the specifications set forth in the earlier phase.
These include many of the structured techniques—data
flow diagrams, E-R models, and structure charts—and IS
control concerns discussed in Chapter 8.

A key characteristic of the SDLC approach is exten-

sive formal reviews by project team members and business

management at the end of each major step. The purpose of

these reviews is to verify that the needs of all parties who

will be impacted by the system are being met, that common

issues are being addressed, and that the effects of the sys-

tem being developed on other existing systems are being

considered (an über-systems perspective). Without formal

approvals, the project team cannot begin the next step of

the methodology. The completion of each phase therefore

represents a milestone in the development of the system.

In the Implementation phase, the new system is in-

stalled, becomes operational within the organization, and is

maintained (modified) as needed so that it continues to re-

flect the changing needs of the organization. These last two

steps—Operations and Maintenance—are included in the life

cycle as a way to formally recognize that large custom appli-

cations are major capital investments for an organization that

will have ongoing operational and maintenance costs.

In large organizations in the 1980s, it was not un-

common to find many custom software applications that

were more than a decade old. These systems had often

been modified multiple times—the Maintenance step—in

response to the organization’s changing requirements. As

we will learn later in this chapter, it often took a major ex-

ternal crisis, such as potential system failures due to the

program’s handling of the year 2000, for the organization

to invest in a replacement system after having made signif-

icant dollar investments in these systems over many years.

In Figure 9.2, a typical breakdown of IS costs is pre-

sented for these three phases for a medium-sized project

with a total development cost of $1 million. This breakdown

does not include costs that a business unit might bear for

training or replacing a business manager who is working on

Definition

Feasibility Analysis

Requirements Definition

Implementation

Installation

Operations

Maintenance

Construction

System Design

System Building

System Testing

FIGURE 9.1 Phases and Steps of Systems Development Life Cycle