Transcript 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.

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
13.5 Vendor and Software Selection
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
selection.
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
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
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.
© Image Source/Age Fotostock America, Inc.
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.
Comparing the two
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?
(4) Where will the application originate?
Strategies for Acquiring IT Applications
Purchase a Prewritten Application
Customize a Prewritten Application
Lease the applications
Application Service Providers and Softwareas-a-Service Vendors
Use Open-Source Software
Outsourcing
Custom Development
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
have goals in sync with your organization
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
Deloitte settled paying $4 million
Operation of an
Application Service Provider (ASP)
Customer
A
Customer
B
Customer
C
Application
Application
Application
Database
Database
Database
ASP Data Center
Operation of a
Software-as-a-Service (SaaS) Vendor
Customer
A
Customer
B
Customer
C
Application
Customer
A
Customer
B
Customer
C
SaaS Vendor Data Center
13.3 Traditional Systems Development
Life Cycle
Software Development Life Cycle (SDLC)
Systems Investigation
Systems Analysis
Systems Design
Programming and Testing
Implementation
Operation and Maintenance
Six-Stage Systems Development Life
Cycle (SDLC) with Supporting Tools
Business
Need
Prototyping
Systems
Investigation
Systems
Analysis
Systems
Design
Deliverable:
Go/No Go
Decision
Deliverable:
User
Requirement
Deliverable:
Technical
Specification
Upper CASE
Tools
Joint
Application
Design (JAD)
Programming
and Testing
Implement
The
System
Lower CASE
Tools
Operation and
Maintenance
The SDLC
Major advantages
Control
Accountability
Error detection
Major drawbacks
Relatively inflexible
Time-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
Deliverable: Go/No-Go Decision
Feasibility Study
Technical feasibility
Economic feasibility
Organizational 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
requirements, also called user requirements.
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
integrated.
SDLC – System Design (continued)
Scope creep is caused by adding functions
after the project has been initiated.
Kajano/Shutterstock
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 major
conversion strategies:
Direct Conversion
Pilot Conversion
Phased Conversion
Parallel Conversion (not used much today)
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
Maintenance
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
RAD versus SDLC
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.
Chapter Closing Case
• The Problem
• The Solution
• The Results