2Overview Today we will cover: (1) Three ways to obtain a new IS: Purchase Software, Develop in-house, Outsource(2) Three ways to improve the developmentprocess:Business process reengineering (BPR), Prototyping, Computer-aided software engr. (CASE) tools
3INTRODUCTIONCompanies can experience a number of difficulties in developing an AIS internally, including:Projects are backlogged for years because of the high demand for resources.The newly designed system doesn’t meet user needs.The process takes so long that by the time it’s complete, it’s obsolete.Users can’t adequately specify their needs.Changes to the AIS are often difficult to make after requirements have been written into the specifications.
4Alternatives to in-house Purchase softwareHire outside company to develop & maintain system
5Purchase SoftwareCanned software sold on the open market to users with similar requirementsGeneral purpose software AIS (SAP, Oracle, Great Plains, Peachtree, Quick Books).Software also developed to meet the needs of particular businesses.Difficulties of canned software:3rd party software rarely meets all needs.Need to upgrade to new versions.Loss of control.
6Purchase--Turnkey Systems The vendor installs the entire system (both hardware and software) and sells as package.Many vendors specialize in particular industries (e.g., video rental)
7Application Service Providers (ASPs) Web-based software delivered over the Internet. “Rent” rather than buy the software. Can reduce costs, and allow companies to focus on core competencies, not software. E.g., Internet version of TurboTax
8Purchasing Software and the SDLC SDLC still followed.Systems analysis: companies should conduct an initial investigation, survey, and feasibility analysis to determine requirements.Conceptual systems design: determining if software that meets requirements is already available.
9Purchasing Software and the SDLC (continued) Physical design: if software is purchased, some of the physical design phase (coding) can be omitted. It may be necessary to modify the purchased software to meet company needs, and controls and reports still need to be defined.Implementation and conversion: still need to convert systems, install and test hardware and software, select and train personnel, and document the new system. Do NOT develop & test software or document computer program.Operation and maintenance: still necessary. Vendor typically maintains.
10Selecting a VendorIs the software applicable to your business? How long will it meet your needs? Will the vendor be around?Finding a vendor: Look in phone book, Obtain referrals, Scan computer or trade magazines, Attend conferences, Use search organizations
11Acquiring hardware and software Once AIS requirements have been defined, the organization can buy software and hardware.Companies needing only a PC and some office software can usually complete their own research and make a selection.When buying large or complex systems, a request for proposal (RFP) should be prepared.
12Request for proposal (RFP) The RFP is an invitation to bidders to propose a system by a specific date.The more information a company provides to a vendor, the better the company’s chances of receiving a system that meets its requirements. Be sure to distinguish between mandatory and desirable requirements. (General RFPs)Each proposal is evaluated.Finalists are investigated in depth.
13Evaluating proposals and selecting a system Eliminate any proposals that:Are missing important information.Fail to meet minimum requirements.Are ambiguous.Those that pass the preliminary screening should be compared with the proposed AIS requirements to determine:If they meet all mandatory requirements.How many desirable requirements they meet.Finalists can be invited to demo their system using company-supplied data.
14Evaluating proposals (contin.) In reviewing the proposals, you need to evaluate:HardwareSoftwareVendors
15Hardware Evaluation Criteria to evaluate hardware include: AvailabilityCompatibility with existing hardware, software, and peripheralsPerformance compared to competitorsCost and availability of support and maintenanceWarrantees and guaranteesFinancing arrangementsAbility to meet mandatory requirementsCostAbility to run required softwareProcessing speed and capabilitiesSecondary storage capabilityInput and output speedsCommunication capabilitiesExpandabilityRecency of technology
16Software Evaluation Criteria to evaluate software include: Conformity with specificationsNeed for modificationPerformance (speed, accuracy, reliability)Use by other companiesSatisfaction of other usersDocumentationCompatibility with existing softwareUser-friendlinessAbility to be demonstrated and test-drivenWarrantiesFlexibility and maintainabilityCapability for online inquiry of files and recordsVendor upgrades
17Vendor Evaluation Criteria to evaluate vendors include: Size Financial stability and securityExperienceQuality of support and warrantiesRegularity of updatesAbility to provide financingWillingness to sign contractWillingness to provide referencesReputation for reliability and dependabilityHardware and software support and maintenanceImplementation and installation supportQuality and responsiveness of personnelWillingness to provide trainingResponsiveness and timeliness of support
18System Performance Approaches to comparing system performance: Benchmark problemPoint scoringRequirements costing
19Benchmarking Benchmark problem The new AIS performs a data processing task with input, processing, and output jobs typical of what would be required of the new system.Processing times are calculated and compared.The AIS with the lowest time is judged most efficient.
20Point ScoringA weight is assigned to each criterion used to evaluate the system, based on the relative importance of that criterion.Each criterion is rated for each product.Each rating is multiplied times the weight assigned to the criterion to develop a weighted score.The weighted scores are added for each product.
21Point Scoring -- Example O’Neil Co. is evaluating systems offered by three different vendors: Able Co., Baker Co., and Cook Co.O’Neil has determined three criteria that they will use to evaluate the different systems: cost, speed, and vendor reliability.They have provided the following weights to each criteria, with vendor reliability being the most critical:Vendor reliability—9Cost—6Speed—4
22Point Scoring -- Example O’Neil examined the packages offered by the three vendors and rated them based on these three criteria. Ratings were from 1–5 with 5 being the highest score.CriteriaAble Co.Baker Co.Cook Co.Vendor reliability (9)254Cost (6)3Speed (4)WEIGHTED SCORESCriteriaAble Co.Baker Co.Cook Co.Vendor reliability (9)184536Cost (6)3024Speed (4)12168
23Point Scoring -- Example The weighted scores for each company are summed:Able = 60 pointsBaker = 79 pointsCook = 68 pointsBased on the preceding scores, the bid would probably be awarded to Baker Co.
24Point Scoring -- Example The preceding example is a simplification. In a real-life scenario, several factors would be different:There would probably be many more criteria being considered.Several people would be rating the criteria, and the final scores for each vendor would probably be a composite of those individual scores.
25Requirements costingEstimates cost of purchasing or developing features that are not included in a particular AIS.The total AIS cost is calculated by adding the acquisition cost to the purchasing and development costs.Total cost = cost of system with all required features.Focus is on having lowest cost while meeting requirements (efficiency).
26Test-driveVerify that the AIS that looks best on paper is actually the best in practice:Test-drive the software.Contact other users for references.Evaluate vendor personnel.Confirm details of the proposal.
27In-houseDeveloping custom software is difficult, but some companies prefer this approach—particularly if the company is large, has unique needs, and believes their systems provide a competitive advantage. (1) software developed by IS staff. (2) software developed by End users. Accountants help contribute by being project supervisors, users, or development team members.
28End-user-Developed Software One approach to developing software in-house is to take the lion’s share of the effort out of the hands of the IS department and place it in the laps of the ultimate information users.
29End-user-developed software End-user computing (EUC) is the hands-on development, use, and control of computer-based information systems by users.With EUC, individuals use IT to meet their own IS needs rather than rely on systems professionals.Why?The demand for information systems has grown exponentially since the introduction of the computer.One solution to meeting these needs is to have end users meet their own information needs.
30End-user developmentTechnology has evolved to automate much of the system development process. Factors contributing to EUC are:Increased computer literacy.Easier-to-use programming languages.Inexpensive PCs.A variety of powerful and inexpensive software packages.
31End-user ComputingAs end users began to meet their initial needs, two things happened:Users realized computers could be used to meet more and more information needs.Increased access to data created many new uses and needs for information.Result: A tremendous growth in end-user computing that is expected to continue.
32End-user DevelopmentEnd User Development occurs when information users, such as managers, accountants, and internal auditors, develop their own applications using computer specialists as advisors. Inappropriate for very complex systems. May be appropriate for simpler projects.
33EUC -- Benefits Benefits of end-user computing: User creation, control, and implementationSystems that meet user needsTimelinessFreeing up systems resourcesVersatility and ease of use
34EUC -- Risks Risks of end-user computing: Logic and development errors Inadequately tested applicationsInefficient systemsPoorly controlled and documented systemsSystem incompatibilitiesDuplication of systems and data and wasted resourcesIncreased costs
35Managing and controlling EUC Provide help-desksTrain users in how risks and benefits of EUCEvaluate new hardware and software productsSet standards for developing and implementing softwareControl corporate data
36Outsourcing the system Outsourcing: hiring an outside company to handle all or part of an organization’s data processing activities. Rapidly growing business.Sometimes entire IT organizations are transferred to another company.
37Outsourcing Examples of outsourced activities: Installation Training MaintenanceHelp deskTechnical support
38OutsourcingMost companies that outsource use several different companies rather than a single source in order to:Increase flexibilityFoster competitionReduce costsMost companies do not outsource:Strategic management of their IT environmentBusiness process managementIT architecture
39Outsourcing -- Benefits Provides a business solutionAsset utilizationAccess to greater experience and more advanced technologyLower costsImproved development timeElimination of peaks-and-valleys usageFacilitation of downsizing
40Outsourcing -- Risks Inflexibility (long-term contracts) Loss of control (system, confidential data)Reduced competitive advantageLocked in system (have to rebuild expertise)Unfulfilled goals (benefits unrealized)Poor service (slow response)Increased risk (business risk)
41Business Process Reengineering Business process reengineering (BPR) is the analysis and redesign of business processes and information systems to achieve significant performance improvements.Reduces a company to its essential business processes.Reshapes organizational work practices and information flows to take advantage of technological advancements.
42Business Process Reengineering BPR:Simplifies the system.Makes it more effective.Improves a company’s quality and service.Business Process Management (BPM) software has been developed to help automate many BPR tasks.
43Business Process Reengineering Michael Hammer has set forth several principles that help organizations successfully reengineer business processes:Organize around outcomes, not tasks.Require those who use the output to perform the process.Require those who produce information to process it.Centralize AND disperse data.Integrate parallel activities.Empower workers, use built-in controls, and flatten the organization chart.Capture data once—at its source.
44Challenges faced by reengineering efforts Many BPR efforts fail or fall short of their objectives. A company must overcome the following obstacles:Tradition (change culture & beliefs)ResistanceTime and cost requirements (BPR costly, takes time)Lack of management supportSkepticism (same thing, different box)Retraining (costly)Controls (keep important controls)
45PrototypingPrototyping is an approach to systems design in which a simplified working model of a system is developed.The prototype (first draft) is built quickly at low cost and provided to users for experimentation.Playing with the prototype allows users to determine what they do and do not like.Developers modify the system in response to user comments and re-present it to them.The iterative process continues until users are satisfied that the system meets their needs.
46Prototyping Four steps are involved in developing a prototype: (1) Identify basic requirements(2) Develop an initial prototype(3) Repeated iterations(4) Use the system
47When to use prototyping Users don’t fully understand their needs, or the needs change rapidly.System requirements are difficult to define.System inputs and outputs are not known.The task to be performed is unstructured or semi-structured.Designers are uncertain about what technology to use.The system is crucial and needed quickly.The risk of developing the wrong system is high.The users’ reactions to the new system are important development considerations.Many design strategies must be tested.The design staff has little experience developing this type of system or application.The system will be used infrequently so that processing efficiency is not crucial.
48Prototyping Good candidates for prototyping: Decision support systems. Executive information systems.Expert systems.Information retrieval systems.Systems that involve experimentation and trial-and-error development.Systems in which requirements evolve as the system is used.
49Prototyping Prototyping is usually inappropriate for: Large or complex systems that:Serve major organizational components; orCross numerous organizational boundaries.Standard AIS components, such as:Accounts receivableAccounts payableInventory management
50Prototyping -- Advantages Better definition of user needsHigher user involvement and satisfactionFaster development timeFewer errorsMore opportunity for changesLess costly
51Prototyping -- Disadvantages Significant user timeLess efficient use of system resourcesIncomplete system developmentInadequately tested and documented systemsNegative behavioral reactionsNever-ending development
52Computer-aided software (or systems) engineering Computer-aided software (or systems) engineering (CASE) tools are an integrated package of computer-based tools that automate important aspects of the software development process.Used to plan, analyze, design, program, and maintain an information system.Also used to enhance efforts of managers, users, and programmers in understanding information needs.
53CASE softwareCASE tools do not replace skilled designers, but provide developers with effective support for all SDLC phases.CASE software typically includes tools for:Strategic planningProject and system managementDatabase designScreen and report layoutAutomatic code generation
54CASE -- Advantages Increased productivity (over 600%) Improved program quality (maintain consistency)Cost savings (80-90%)Improved control proceduresSimplified documentation (automatic)
55CASE -- Disadvantages Problems with CASE technology: Incompatibility with other systemsCost (expensive up to $350,000 for tools)Unmet expectations (fewer than 50% believe expected benefits were obtained)