Software and Operating Systems
Foundations
Software and Operating Systems
Syllabus tag: KASNEB CPA | Foundation Level | CA16 Information Communication Technology | Topic 2 Software and Operating Systems
Lesson objectives
By the end of this topic, you will be able to:
- Distinguish system software from application software
- State the functions of an operating system
- Compare bespoke, off-the-shelf and customised software
- Explain software licensing and the risks of non-compliance
- Describe utility programs and their purpose
Why this matters
Software is usually the largest line in an IT budget and the one an accountant is asked to justify. Understanding what is being bought — and what the licence actually permits — is part of the job.
System and application software
System software runs the machine: operating systems, utilities, device drivers, and the translators that convert program code into machine instructions.
Application software does the user's work: accounting packages, spreadsheets, word processors, databases, browsers.
The distinction is what the software serves. System software serves the computer; application software serves the user.
Functions of an operating system
- Process management — scheduling which program runs when
- Memory management — allocating RAM and reclaiming it
- File management — organising storage into files and directories
- Device management — communicating with printers, disks and peripherals
- User interface — graphical or command line
- Security — user accounts, passwords and permissions
The security function is the one that matters here. Operating system access control is what stands between a user and data they should not see. Application-level permissions built on top of an operating system anyone can log into are decoration — which is the general controls point from the security topic seen from another angle.
Bespoke, off-the-shelf and customised
| Off-the-shelf | Bespoke | |
|---|---|---|
| Cost | Lower — development shared across many buyers | High |
| Availability | Immediate | Long lead time |
| Fit to requirements | Approximate | Exact |
| Testing | Proven by many users | Only by this buyer |
| Support and updates | Continuing from the supplier | Depends on the developer |
| Competitive advantage | None — competitors use the same | Possible |
Customised software sits between them: a standard package modified to fit. It carries a specific risk — each modification must be re-applied or re-tested at every upgrade, and heavily customised systems eventually stop being upgraded at all. That is the same trap the ERP topic identifies.
The general rule: buy off-the-shelf unless the process is a genuine source of competitive advantage. Payroll is not; a proprietary pricing engine may be.
Licensing
A licence grants the right to use software; it does not transfer ownership.
| Type | Terms |
|---|---|
| Proprietary | Paid, closed source, restricted use |
| Open source | Source code available; free to use and modify, subject to licence terms |
| Freeware | Free to use, source not available |
| Shareware | Free to try, payment required for continued use |
| Site licence | Covers a stated number of users or one location |
| Subscription (SaaS) | Periodic fee, usually cloud-hosted |
Using unlicensed software is a breach of copyright, exposing the company to civil claims and its directors to liability. It also removes access to updates, including security patches — so the saving is illusory twice over.
Open source is not the same as free of obligation. Some licences require that modifications be published, which can matter where the software has been adapted for internal use.
A software asset register, recording what is installed and what is licensed, is the control. Without one, a company cannot demonstrate compliance if challenged.
:::checkpoint A manager installs one purchased copy of a spreadsheet package on eleven machines to save money. Set out the exposures this creates for the company. :::
Utility programs
Small programs that maintain the system: antivirus, backup, disk defragmentation, compression, file recovery, and diagnostic tools.
Antivirus software is only as current as its definitions. An out-of-date antivirus gives the appearance of protection while offering little — which makes automatic updating a control rather than a convenience.
Software as a service
Software accessed over the internet on subscription rather than installed and owned.
Advantages: no capital outlay, automatic updating, access anywhere, scales with the number of users.
Disadvantages: continuing cost that never ends, dependence on the connection and the supplier, and data held by a third party.
The accounting distinction is worth noting: purchased software is capitalised and depreciated, while a subscription is an operating expense. The choice therefore affects reported assets and profit as well as cash.
:::checkpoint A company is choosing between purchasing an accounting package outright and subscribing to a cloud equivalent. Identify one financial and one operational consideration that should influence the decision. :::