CHAPTER 13
Acquiring Information Systems and Applications
CHAPTER OUTLINE
13.1 Planning for and Justifying IT Applications
13.2 Strategies for Acquiring IT Applications
13.3 The Traditional Systems Development Life
Cycle
13.4 Alternative Methods and Tools for Systems Development
LEARNING OBJECTIVES
1. Define an IT strategic plan, identify three objectives it must meet, and describe the four common approaches to cost-benefit analysis.
2. Discuss the four business decisions that
companies must make when they acquire new applications.
3. Identify the six processes involved in the
systems development life cycle, and explain the primary tasks and importance of each process.
LEARNING OBJECTIVES
(continued)4. Describe four alternative development methods and four tools that augment
development methods, and identify at least one advantage and one disadvantage of each
method and tool.
5. Analyze the process of vendor and software
13.1
Planning for and Justifying IT
Applications
Organizations must analyze the need for the IT application.
Each IT application must be justified in terms of costs and benefits.
The application portfolio
Just like a stock portfolio, an application portfolio should balance risk and reward – know your organization’s priorities for each
Information Systems Planning
(continued)Organizational strategic plan states the firm’s overall mission, the goals
that follow from that mission, and the broad steps necessary to reach these goals.
IT architecture delineates the way an organization’s information resources
should be used to accomplish its mission.
IT strategic plan is a set of long-range goals that describe the IT
infrastructure and major IT initiatives needed to achieve the goals of the organization.
IT Steering Committee
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The IT steering committee is comprised of managers and staff representing various organizational units. This committee
establishes IT priorities and ensures that the MIS function meets the needs of the enterprise.
Needs members high enough in the organization to have (1) an organization-wide perspective and (2) ability to control resources
IS Operational Plan
Contains the following elements:
Mission – derived from the IT strategic plan
IS environment – needs for information
Objectives of the IS function – how to achieve goals
Constraints of the IS function – technology, financial, personnel, other
Application portfolio – must be prioritized
Resource allocation and project management –
members must have enough authority to accomplish objectives
Evaluating & Justifying IT Investment:
Benefits, Costs & Issues
Assessing the costs Fixed costs
Total cost of ownership (TCO) – acquire, operate, dispose
Assessing the benefits (Values)
Intangible benefits: Benefits from IT that may
be very desirable but difficult to place an accurate monetary value on.
Conducting the Cost-Benefit Analysis
Using Net Present Value (NPV) Return on investment
Breakeven analysis
The business case approach
A business case is one or more specific applications or projects. Its major emphasis is the justification for a specific required
investment, but it also provides the bridge between the initial plan and its execution.
13.2
Strategies for Acquiring IT
Applications
Four fundamental business decisions to make before choosing a strategy:
(1) How much computer code does the company
want to write?
(2) How will the company pay for the application? (3) Where will the application run?
Strategies for Acquiring IT Applications
Purchase a Prewritten Application Customize a Prewritten Application Lease the applications
Application Service Providers and Software- as-a-Service Vendors
Use Open-Source Software Outsourcing
Purchase a Prewritten Application
Software can be “tried out”
Can save time and money
A “known” product is purchased even though it may
not exactly match organization needs
May not be easily modified (possibly by contract)
Product could be discontinued by a vendor
Product controlled by another company that may not
Marin County, California
(page 352)
Deloitte consulting put in an SAP enterprise resource planning system
From 2005 to 2009 the implementation went
on but was fraught with problems
Marin county sued
The consulting bills were $29 million
Marin county spent $5 million in legal fees
Operation of an
Application Service Provider (ASP)
ASP Data Center
Customer A Application Customer B Application Customer C Application
Operation of a
Software-as-a-Service (SaaS) Vendor
SaaS Vendor Data Center
Customer A Customer B Customer C Customer A Customer B Customer C Application13.3
Traditional Systems Development
Life Cycle
Software Development Life Cycle (SDLC) Systems Investigation
Systems Analysis Systems Design
Programming and Testing Implementation
Prototyping
Six-Stage Systems Development Life
Cycle (SDLC) with Supporting Tools
Systems Investigation Deliverable: Go/No Go Decision Systems Analysis Deliverable: User Requirement Systems Design Deliverable: Technical Specification Programming
and Testing Implement The System Operation and Maintenance Business Need Joint Application Design (JAD) Upper CASE Tools Lower CASE Tools
The SDLC
Major advantages Control Accountability Error detection Major drawbacks Relatively inflexibleTime-consuming and expensive
Discourages changes once user requirements are gathered
SDLC – Systems Investigation
Begins with the business problem (or
opportunity) followed by the feasibility analysis. Feasibility study
Feasibility Study
Technical feasibility Economic feasibilityOrganizational feasibility Behavioral feasibility
Many consider these as one feasibility
SDLC – System Analysis
The examination of the business problem that the organization plans to solve with an
information system.
Main purpose is to gather information about existing system to determine
requirements for the new or improved system.
Deliverable is a set of system
SDLC – Systems Design
Describes how the system will accomplish this task.
Deliverable is the technical design that specifies:
System outputs, inputs, user interfaces. Hardware, software, databases,
telecommunications, personnel & procedures. Blueprint of how these components are
SDLC – System Design
(continued)Scope creep is caused by adding functions after the project has been initiated.
SDLC – Programming & Testing
Programming involves the translation of a system’s
design specification into computer code.
Testing checks to see if the computer code will
produce the expected and desired results under certain conditions.
Testing is designed to delete errors (bugs) in the computer code.
SDLC – Systems Implementation
Implementation involves three majorconversion strategies:
Direct Conversion Pilot Conversion
Phased Conversion
SLDC – Operation & Maintenance
Audits are performed to assess the system’s capabilities and to determine if it is being used correctly.
Systems need several types of maintenance.
Debugging Updating
13.4
Alternative Methods and Tools
for Systems Development
Joint application design (JAD) - A group –based tool for collecting user requirements and creating system designs
Rapid application development (RAD) - a development method that uses special tools and an iterative approach to rapidly produce a high-quality system
Agile development - delivers functionality in rapid iterations requiring frequent communication, development, testing, and delivery
End-user development - development method that has the actually user develop their own application(s) for use
Tools for Systems Development
Prototyping
Integrated computer-assisted software engineering (ICASE)
Component-based development Object-oriented development
13.5 Vendor & Software Selection
Step 1: Identify potential vendors.
Step 2: Determine the evaluation criteria. Request for proposal (RFP)
Step 3: Evaluate vendors and packages. Step 4: Choose the vendor and package Step 5: Negotiate a contract.
Step 6: Establish a service level agreement.
Request for proposal (RFP) is a document sent to potential vendors to submit a proposal describing their software package and explain how it would meet the company’s needs.
Service Level Agreements (SLAs) are formal agreements that specify how work is to be divided between the company and its vendors.
