Presentation on theme: "Acquiring Information Systems and Applications"— Presentation transcript:
1 Acquiring Information Systems and Applications CHAPTER 13Acquiring Information Systems and Applications
2 CHAPTER OUTLINE 13.1 Planning for and Justifying IT Applications 13.2 Strategies for Acquiring IT Applications13.3 The Traditional Systems Development Life Cycle13.4 Alternative Methods and Tools for Systems Development13.5 Vendor and Software Selection
3 LEARNING OBJECTIVES1. 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.
4 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.
5 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 portfolioThe application portfolio is a prioritized list of both existing and potential IT applications of a company.
7 Information Systems Planning (continued) Organizational Strategic PlanIT ArchitectureIT Strategic PlanOrganizational 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.
9 IS Operational Plan Contains the following elements: Mission IT environmentObjectives of the IT functionConstraints of the IT functionApplication portfolioResource allocation and project managementIS operational plan: consists of a clear set of projects that the IT department and functionalarea managers will execute in support of the IT strategic plan.Mission – derived from IT strategy.IT environment – summary of information needs of the functional areas and of the organization as a whole.Objectives of the IT function – best current estimate of the goals.Constraints of the IT function – technological, financial, personnel and other resource limitations.Application portfolio – prioritized inventory of present applications and a detailed plan of projects to be developed or continued.Resource allocation and project management – listing of who is going to do what, how and when.
10 Evaluating & Justifying IT Investment: Benefits, Costs & Issues Assessing the costsFixed costsTotal cost of ownership (TCO)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 twoFixed costs: are those costs that remain the same regardless of change in the activity level. For IT, fixed costs include infrastructure cost, cost of IT services, and IT management costTotal cost of ownership (TCO): Formula for calculating cost of acquiring, operating and controlling an IT system.
11 Conducting the Cost-Benefit Analysis Using Net Present Value (NPV)Return on investmentBreakeven analysisThe business case approachThe Net Present Value (NPV) method converts future values of benefits to their present-valueequivalent by discounting them at the organization’s cost of funds.Return on investment measures the effectiveness of management in generating profits withits available assets.Breakeven analysis determines the point at which the cumulative dollar value of the benefitsfrom a project equals the investment made in the project.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 providesthe bridge between the initial plan and its execution.
12 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?
13 Strategies for Acquiring IT Applications Purchase a Prewritten ApplicationCustomize a Prewritten ApplicationLease the applicationsApplication Service Providers and Software-as-a-Service VendorsUse Open-Source SoftwareOutsourcingCustom DevelopmentAn application service provider is an agent or a vendor who assembles the software needed byenterprises and packages the software with services such as development, operations, and maintenance.Software-as-a-Service is a method of delivering software in which a vendor hosts the applicationsand provides them as a service to customers over a network, typically the Internet.Outsourcing is acquiring IT applications from external contractors or organizations.
14 Operation of an Application Service Provider (ASP) CustomerACustomerBCustomerCApplicationApplicationApplicationSee Figure 12.2.DatabaseDatabaseDatabaseASP Data Center
15 Operation of a Software-as-a-Service (SaaS) Vendor CustomerACustomerBCustomerCApplicationFigure 12.3CustomerACustomerBCustomerCSaaS Vendor Data Center
16 13.3 Traditional Systems Development Life Cycle Software Development Life Cycle (SDLC)Systems InvestigationSystems AnalysisSystems DesignProgramming and TestingImplementationOperation and MaintenanceThe systems development life cycle (SDLC) is the traditional systems development methodthat organizations use for large-scale IT projects.
17 Six-Stage Systems Development Life Cycle (SDLC) with Supporting Tools PrototypingBusiness NeedSystems InvestigationDeliverable: Go/No Go DecisionSystems AnalysisDeliverable: User RequirementSystems DesignDeliverable: Technical SpecificationProgramming and TestingImplementTheSystemOperation andMaintenanceFigure 12.4Upper CASE ToolsJoint Application Design (JAD)Lower CASE Tools
18 The SDLC Major advantages Major drawbacks Control Accountability Error detectionMajor drawbacksRelatively inflexibleTime-consuming and expensiveDiscourages changes once user requirements are gathered
19 SDLC – Systems Investigation Begins with the business problem (or opportunity) followed by the feasibility analysis.Feasibility studyDeliverable: Go/No-Go DecisionThe feasibility study is the main task of the Systems Investigation phase.The feasibility study helps the organization choose between 3 options:(1) Do nothing and continue to use the existing system unchanged.(2) Modify or enhance the existing system.(3) Develop a new system.
20 Feasibility Study Technical feasibility Economic feasibility Organizational feasibilityBehavioral feasibilityTechnical feasibility: Assessment of whether hardware, software and communications components can be developed and /or acquired to solve a business problem.Economic feasibility: Assessment of whether a project is an acceptable financial risk and if the organization can afford the expense and time needed to complete itOrganizational feasibility: Organization’s ability to access the proposed project.Behavioural feasibility: Assessment of the human issues involved in a proposed project, including resistance to change and skills and training needs.
21 SDLC – System AnalysisThe 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.
22 SDLC – Systems DesignDescribes 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.
23 SDLC – System Design (continued) Scope creep is caused by adding functions after the project has been initiated.Kajano/Shutterstock
24 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.
25 SDLC – Systems Implementation Implementation involves three major conversion strategies:Direct ConversionPilot ConversionPhased ConversionParallel Conversion (not used much today)Implementation or deployment is the process of converting from the old system to the new system. Four major conversion strategies:Direct conversion. Implementation process in which the old system is cut-off and the new system turned on at a certain point in time.Pilot conversion. Implementation process that introduces the new system in one part of the organization on a trial basis, when new system is working property, it is introduced in other parts of the organization.Phased conversion. Implementation process that introduces components of the new system in stages, until the entire new system is operational.Parallel conversion. Implementation process in which the old system and the new system operate simultaneously for a period of time. Rarely used today if at all.
26 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.DebuggingUpdatingMaintenanceDebugging: A process that continues throughout the life of the system.Updating: Updating the system to accommodate changes in business conditions.Maintenance: That adds new functionally to the system –adding new features to the existing system without disturbing its operation.
27 13.4 Alternative Methods and Tools for Systems Development Joint application design (JAD)Rapid application development (RAD)Agile developmentEnd-user developmentJoint application design (JAD). A group –based tool for collecting userrequirements and creating system designs.Computer-Assisted Software Engineering (CASE) is a developmentapproach that uses specialized tools to automate many of the tasks in theSDLC; upper CASE tools in SDLC automate the early stages of the SDLC,and lower case tools automate the later stages.Integrated Computer-Assisted Software Engineering (ICASE) Tools .CASE tools that provide links between upper CASE and lower CASE tools.Rapid Application Development (RAD) is a development method that usesspecial tools and an iterative approach to rapidly produce a high-quality system.Agile Development: Development method that delivers functionality in rapiditerations requiring frequent communication, development, testing, and delivery.End-User Development is a development method that has the actually userdevelop their own application(s) for use.Component-Based Development: Uses standard components to build applications.Object-oriented development does not begin with the task to be performed, but with aspects of thereal world that must be modeled to perform that task.
29 Tools for Systems Development Prototyping Integrated computer-assisted software engineering (ICASE) Component-based development Object-oriented developmentPrototyping. Approach that defines an initial list of user requirements, buildsa prototype system and then improves the system in several iterations basedon users’ feedback.Computer-Assisted Software Engineering (CASE) is a developmentapproach that uses specialized tools to automate many of the tasks in theSDLC; upper CASE tools in SDLC automate the early stages of the SDLC,and lower case tools automate the later stages.Integrated Computer-Assisted Software Engineering (ICASE) Tools .CASE tools that provide links between upper CASE and lower CASE tools.Component-Based Development: Uses standard components to build applications.Object-oriented development does not begin with the task to be performed, but with aspects of thereal world that must be modeled to perform that task.
30 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 packageStep 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.