KnowledgeLeader Blog

What is Design Risk and the Risks Associated with System Design?

Posted by Protiviti KnowledgeLeader on Fri, Nov 02, 2012 @ 07:00 AM

""To “design” is to create, fashion, execute, or construct according to plan. The term design as used here refers to the entire scope of a project. A business system design is a collection of design documents and supporting materials, which define the system functionality that supports one or more business processes and in the process, creates, retrieves, updates, and deletes data.

In successful systems design, three main components must be considered and managed effectively. These are quality, timeliness, and cost-effectiveness. In the diagram below, each of these components represents an angle of the triangle that may be increased or decreased as part of the design process, but only at the expense of the other components. For example, an increase in quality would mean a corresponding decrease in cost-effectiveness, timeliness, or a combination thereof. An increase in quality would necessarily result in an increase in the duration of development time, or total project cost.

This triangular approach aides both development teams, who become more aware of management’s priorities, and project managers, who are forced to take a more realistic view of the system design process in terms of quality, cost and meaningful deadlines.

System Design

A project can implement one or more system designs. The purpose of defining each system in this way is to provide a precise, manageable explanation of the work to be done during construction and testing. For example, a completed design for a website may include drawings of sample screenshots, flowcharts showing linking connections, or a Flash demo.

Another consideration for business system design is the linking of Enterprise Resource Planning (ERP) systems or other inter-company systems, through a Business-to-Business (B2B) application. Designing a B2B application which allows various ERP systems to share information is crucial in many businesses today. This has become so common that ERP vendors are designing the B2B applications into their products. Products such as XYZ offer a B2B marketplace that is already designed to link businesses together allowing, among other functions, to receive payments or make payments, and check inventory status.

Business Risks Related to System Design

Failure to manage design risk can have the following impact:

  • Loss of or failure to attain consumer and customer interest (externally facing systems)
  • Under utilization of business system due to lack of interest
  • Ineffective fraud awareness and management controls
  • Ineffective representation of brand, possibly damaging the businesses reputation
  • Inability to offset costs incurred from development of business system
  • Inability to offset costs from maintaining business system

 

Related content on KnowledgeLeader:

System Design Risk Key Performance Indicators (KPIs)

Add a Comment:

Subscribe to Our Blog

About KnowledgeLeader

KnowledgeLeader, provided by Protiviti, is the premier resource for internal audit and risk management professionals.

With over 1,400 customizable tools and 1,300 articles by industry experts, we offer the most comprehensive service on the market.

For more information:

 Tour the Site

Recent Posts

Posts by Topic

see all