fter studying this study unit, you should be able to:
• define a system
• explain an open and closed system
• describe system performance measurement
• explain why an information system needs to be replaced or improved
• describe system development
• explain system development life cycles
• discuss the role of accountants and auditors in system development
• define an information system
• explain information systems and its role in an organisation
• explain the stages of a computerised information process
• explain organising the IS department
Study Unit 1: FUNDAMENTALS OF SYSTEMS AND INFORMATION SYSTEMS (IS)
Completion requirements
Done
1 INTRODUCTION
In the overview we looked at the information used in most organisations. Organisations use
information systems to manage their information, reduce uncertainties and costs and
increase revenues and service delivery.
Organisations make decisions daily and need planning to implement such decisions. In
order to plan, knowledge of resources, time scales for implementation and possible
outcomes are needed. This knowledge comes from the information provided by
information systems.
Systems form part of our daily lives. The school system, which you have moved through, is
possibly the most important system you have experienced. A world with no systems would
be a disorganised place. In this study unit, you will learn more about information systems,
and the role played by information systems and computerised information systems.
,This study unit (study unit 1) deals with the development of an information system and
different development life cycles. The advantages and disadvantages of the different
development approaches are discussed in detail.
2 WHAT IS A SYSTEM?
A system is a set of two or more components that serve a common purpose and interact to
achieve a common goal. A system consists of subsystems or elements that perform
specific functions supporting the larger system (Booyse et al 2017).
The components of a system and the relationship among them can be explained as
follows:
FIGURE 1.1: The components of a system
Source: (Booyse et al 2017)
3 OPEN OR CLOSED SYSTEMS
Input Processing Output
Although systems operate within their environment, some systems have no effect on their
environment and do not affect the environment within which they operate.
A system that is isolated from its environment is called a closed system. An example
would be an automatic washing machine, where the dirty clothes and washing powder are
the input, while the processing stage of the washing cycle would be the selection of a
suitable programme and the operating of the machine. The clean clothes are the output.
An open system interacts with its environment. The environment affects it and it, in
turn, affects its environment.
Most business systems are open systems, for example, a purchasing system, where the
purchase order requests comprise the input. The processing stage consists of identifying
the items and the quantities that should be ordered and the output comprises placing the
order with preferred suppliers. Feedback includes the communication of order dates,
quantities and delivery dates to the department that placed the order.
Observable activities explain how the job should be done. The performance standards
document explains the results that are expected for satisfactory performance of the
system.
,A system variable is the quantity or item that can be controlled by the decision-maker.
The price a company charges for its products is a system variable because it can be
controlled by the company, and they can decide to change the price.
A system parameter is a value or quantity that cannot be internally controlled, meaning
it cannot be changed by a decision-maker in the company. An example is the cost of raw
material, as the supplier determines this cost.
This system is an open system and the external environment affects the system, for
instance, suppliers’ prices, the transportation of items and the availability of items to an
organisation.
4 SYSTEM PERFORMANCE MEASUREMENT
A system needs to be properly managed and controlled, like any other function in the
organisation. To ensure that the information system adds value and supports the
organisation, the quality must be monitored.
System performance measurement is the monitoring of the working of the system to
ensure it is effective, fulfils its responsibility and makes the contribution it is supposed to
make.
5 REASONS WHY AN INFORMATION SYSTEM NEEDS TO BE REPLACED OR IMPROVED
We have already stated that all business systems should be open systems, and these are
constantly influenced by changes in the environment.
Typical changes include the following:
• Changes in technology: New technology can lead to new production processes or
communication methods by using new and better equipment, which will affect the
information system.
• Changes in decision-making policies: For example, decisions to centralise decision-
making and information systems, or to decentralise decision-making and information
systems, will lead to a need to replace, change, or improve the existing information
systems.
• Changes in the needs and demands of users and stakeholders: To improve decision-
making, the needs of the different users of information change continually.
• Changes in the business environment: Organisations need to stay competitive in an
environment where the impact of an increasingly global market is enormous.
, • Changes in the nature of the organisation: Changes in the activities of the organisation;
for example, more production lines or changes in production lines. This may also occur
when two organisations merge.
• Changes to maintain a competitive advantage: A constant flow of new ideas and changes
is necessary to stay ahead of the competition.
• Changes to improve performance and productivity: Redesign of business processes and
the information system to improve the performance and productivity of the organisation.
• Depending on the impact of the change on the current system, a total redesign might be
required (this will be covered in study units 14–16), or modifications may be made as part
of system maintenance (covered in study unit 7).
6 SYSTEM DEVELOPMENT
System development initiatives arise from all levels of an organisation and are both
planned and unplanned. Managers and employees are all users of information systems
and are therefore part of the development process. Solid planning and managerial
involvement help to ensure that system development initiatives support the broader
organisational goals. This means even an information system that used state-of-the-art
technology ten years ago would now most likely be regarded as outdated.
Thus, information system development is the process of creating a new information system
or modifying a current information system. By employing information technology to
develop a system, problems or opportunities are transformed into solutions. Many reasons
can be given for this, but the most important is probably the rapidly changing technological
environment and the changing output needs of information systems (Booyse et al 2017).
7 SYSTEM DEVELOPMENT LIFE CYCLE
The development of an information system and meeting the needs of the business
are complex, difficult and expensive endeavours. The system development life cycle is a
practical framework, which provides a broad context for the development stages of
an information system (Boczko 2007:830). Various approaches exist, that all have
advantages and disadvantages for the development of a new information system. Using the
SDLC approach has some advantages and disadvantages for an organisation that need to
be considered and kept in mind when developing the system. They are as follows:
7.1 Traditional system development life cycle (SDLC)
• define a system
• explain an open and closed system
• describe system performance measurement
• explain why an information system needs to be replaced or improved
• describe system development
• explain system development life cycles
• discuss the role of accountants and auditors in system development
• define an information system
• explain information systems and its role in an organisation
• explain the stages of a computerised information process
• explain organising the IS department
Study Unit 1: FUNDAMENTALS OF SYSTEMS AND INFORMATION SYSTEMS (IS)
Completion requirements
Done
1 INTRODUCTION
In the overview we looked at the information used in most organisations. Organisations use
information systems to manage their information, reduce uncertainties and costs and
increase revenues and service delivery.
Organisations make decisions daily and need planning to implement such decisions. In
order to plan, knowledge of resources, time scales for implementation and possible
outcomes are needed. This knowledge comes from the information provided by
information systems.
Systems form part of our daily lives. The school system, which you have moved through, is
possibly the most important system you have experienced. A world with no systems would
be a disorganised place. In this study unit, you will learn more about information systems,
and the role played by information systems and computerised information systems.
,This study unit (study unit 1) deals with the development of an information system and
different development life cycles. The advantages and disadvantages of the different
development approaches are discussed in detail.
2 WHAT IS A SYSTEM?
A system is a set of two or more components that serve a common purpose and interact to
achieve a common goal. A system consists of subsystems or elements that perform
specific functions supporting the larger system (Booyse et al 2017).
The components of a system and the relationship among them can be explained as
follows:
FIGURE 1.1: The components of a system
Source: (Booyse et al 2017)
3 OPEN OR CLOSED SYSTEMS
Input Processing Output
Although systems operate within their environment, some systems have no effect on their
environment and do not affect the environment within which they operate.
A system that is isolated from its environment is called a closed system. An example
would be an automatic washing machine, where the dirty clothes and washing powder are
the input, while the processing stage of the washing cycle would be the selection of a
suitable programme and the operating of the machine. The clean clothes are the output.
An open system interacts with its environment. The environment affects it and it, in
turn, affects its environment.
Most business systems are open systems, for example, a purchasing system, where the
purchase order requests comprise the input. The processing stage consists of identifying
the items and the quantities that should be ordered and the output comprises placing the
order with preferred suppliers. Feedback includes the communication of order dates,
quantities and delivery dates to the department that placed the order.
Observable activities explain how the job should be done. The performance standards
document explains the results that are expected for satisfactory performance of the
system.
,A system variable is the quantity or item that can be controlled by the decision-maker.
The price a company charges for its products is a system variable because it can be
controlled by the company, and they can decide to change the price.
A system parameter is a value or quantity that cannot be internally controlled, meaning
it cannot be changed by a decision-maker in the company. An example is the cost of raw
material, as the supplier determines this cost.
This system is an open system and the external environment affects the system, for
instance, suppliers’ prices, the transportation of items and the availability of items to an
organisation.
4 SYSTEM PERFORMANCE MEASUREMENT
A system needs to be properly managed and controlled, like any other function in the
organisation. To ensure that the information system adds value and supports the
organisation, the quality must be monitored.
System performance measurement is the monitoring of the working of the system to
ensure it is effective, fulfils its responsibility and makes the contribution it is supposed to
make.
5 REASONS WHY AN INFORMATION SYSTEM NEEDS TO BE REPLACED OR IMPROVED
We have already stated that all business systems should be open systems, and these are
constantly influenced by changes in the environment.
Typical changes include the following:
• Changes in technology: New technology can lead to new production processes or
communication methods by using new and better equipment, which will affect the
information system.
• Changes in decision-making policies: For example, decisions to centralise decision-
making and information systems, or to decentralise decision-making and information
systems, will lead to a need to replace, change, or improve the existing information
systems.
• Changes in the needs and demands of users and stakeholders: To improve decision-
making, the needs of the different users of information change continually.
• Changes in the business environment: Organisations need to stay competitive in an
environment where the impact of an increasingly global market is enormous.
, • Changes in the nature of the organisation: Changes in the activities of the organisation;
for example, more production lines or changes in production lines. This may also occur
when two organisations merge.
• Changes to maintain a competitive advantage: A constant flow of new ideas and changes
is necessary to stay ahead of the competition.
• Changes to improve performance and productivity: Redesign of business processes and
the information system to improve the performance and productivity of the organisation.
• Depending on the impact of the change on the current system, a total redesign might be
required (this will be covered in study units 14–16), or modifications may be made as part
of system maintenance (covered in study unit 7).
6 SYSTEM DEVELOPMENT
System development initiatives arise from all levels of an organisation and are both
planned and unplanned. Managers and employees are all users of information systems
and are therefore part of the development process. Solid planning and managerial
involvement help to ensure that system development initiatives support the broader
organisational goals. This means even an information system that used state-of-the-art
technology ten years ago would now most likely be regarded as outdated.
Thus, information system development is the process of creating a new information system
or modifying a current information system. By employing information technology to
develop a system, problems or opportunities are transformed into solutions. Many reasons
can be given for this, but the most important is probably the rapidly changing technological
environment and the changing output needs of information systems (Booyse et al 2017).
7 SYSTEM DEVELOPMENT LIFE CYCLE
The development of an information system and meeting the needs of the business
are complex, difficult and expensive endeavours. The system development life cycle is a
practical framework, which provides a broad context for the development stages of
an information system (Boczko 2007:830). Various approaches exist, that all have
advantages and disadvantages for the development of a new information system. Using the
SDLC approach has some advantages and disadvantages for an organisation that need to
be considered and kept in mind when developing the system. They are as follows:
7.1 Traditional system development life cycle (SDLC)
