1. Acquiring Information Systems and Applications
CHAPTER 12
Acquiring Information Systems and Applications

2. CHAPTER OUTLINE
12.1 Project Management for Information System Projects
12.2 Planning for and Justifying IT Applications
12.3 Strategies for Acquiring IT Applications
12.4 The Traditional Systems Development Life Cycle
12.5 Alternative Methods and Tools for Systems Development
12.6 Vendor and Software Selection

3. LEARNING OBJECTIVES
Define project management and explain the triple constraints of project management.
Explain how the IT planning process works.
Discuss the IT justification process and methods.
Describe the SDLC, and discuss its advantages and limitations.

4. LEARNING OBJECTIVES (continued)
Identify the major alternative methods and tools for building information systems.
List the major IT acquisition options and the criteria for option selection.
Discuss the process of vendor and software selection.

5. Chapter Opening Case
Clicking on the Leukemia & Lymphoma Society and Team in Training logos above will take you to their respective homepages.

6. 12.1 Project Management for Information Systems Projects
Information System Project Management
The Triple Constraints
A project is a short-term effort to create a specific business-related outcome.
Information system project management is a directed effort to plan, organize, and manage resources
to bring about the successful achievement of specific IS goals.
The triple constraints of project management are time, cost, and scope.

7. An IS Project Gone Astray
A humorous look at an information systems project gone astray.

8. The Project Management Process
Project Initiation
Project Planning
Project Execution
Project Monitoring and Control
Project Completion
Project initiation: clearly defines the problem that the project is intended to solve and the goals that
the project is to achieve.
Project planning: every project objective and every activity associated with that objective is identified
and sequenced.
Project execution: work defined in the project management plan is performed to accomplish the
project’s requirements.
Project monitoring and control: determines whether the project is progressing as planned.
Project completion: project is completed when it is formally accepted by the organization.

9. 12.2 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
The application portfolio is a prioritized list of both existing and potential IT applications of a company.

10. Information Systems Planning Process
See Figure 12.1.

11. Information Systems Planning (continued)
Organizational strategic plan
IT architecture
Both are inputs in developing the IT strategic plan.
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.

12. IT Steering Committee The 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.

13. IS Operational Plan Contains the following elements: Mission
IT environment
Objectives of the IT function
Constraints of the IT function
Application portfolio
Resource allocation and project management
IS operational plan: consists of a clear set of projects that the IT department and functional
area 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.

14. Evaluating & Justifying IT Investment: Benefits, Costs & Issues
Assessing the costs
Fixed costs
Total 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 two
Fixed 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 cost.
Total cost of ownership (TCO): Formula for calculating cost of acquiring, operating and controlling an IT system.

15. Conducting the Cost-Benefit Analysis
Using Net Present Value (NPV)
Return on investment
Breakeven analysis
The business case approach
The Net Present Value (NPV) method converts future values of benefits to their present-value
equivalent by discounting them at the organization’s cost of funds.
Return on investment measures the effectiveness of management in generating profits with
its available assets.
Breakeven analysis determines the point at which the cumulative dollar value of the benefits
from 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 provides
the bridge between the initial plan and its execution.

16. 12.3 Strategies for Acquiring IT Applications
Buy the applications (off-the-shelf approach)
Lease the applications
Software-as-a-Service
Use Open-Source Software
Outsourcing
Developing the applications in-house
An application service provider is an agent or a vendor who assembles the software needed by
enterprises 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 applications
and provides them as a service to customers over a network, typically the Internet.
Outsourcing is acquiring IT applications from external contractors or organizations.

17. Operation of an Application Service Provider (ASP)
Customer A
Customer B
Customer C
Application
Application
Application
See Figure 12.2.
Database
Database
Database
ASP Data Center

18. Operation of a Software-as-a-Service (SaaS) Vendor
Customer A
Customer B
Customer C
Application
Figure 12.3
Customer A
Customer B
Customer C
SaaS Vendor Data Center

19. 12.4 Traditional Systems Development Life Cycle
Software Development Life Cycle (SDLC) is the traditional systems development method that organizations use for large-scale IT projects.

20. Six-Stage Systems Development Life Cycle (SDLC) with Supporting Tools
Prototyping
Business Need
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
Figure 12.4
Upper CASE Tools
Joint Application Design (JAD)
Lower CASE Tools

21. Traditional SDLC Processes
Systems investigation
Systems analysis
Systems design
Programming and testing
Implementation
Operation and maintenance

22. The SDLC Major advantages Major drawbacks Control Accountability
Error detection
Major drawbacks
Relatively inflexible
Time-consuming and expensive
Discourages changes once user requirements are done

23. SDLC – Systems Investigation
Begins with the business problem (or opportunity) followed by the feasibility analysis.
Feasibility study
Deliverable: Go/No-Go Decision
The 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.

24. Feasibility Study Technical feasibility Economic feasibility
Organizational feasibility
Behavioral feasibility
Technical 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 it.
Organizational 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.

25. SDLC – System Analysis
Is the examination of the business problem that the organization plans to solve with an information system.
Main purpose is to gather information about the existing system to determine the requirements for the new or improved system.
Deliverable is a set of system requirements, also called user requirements.

26. 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.

27. SDLC – System Design (continued)
Scope creep is caused by adding functions after the project has been initiated.

28. 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.

29. SDLC – Systems Implementation
Implementation involves three major conversion strategies:
Direct Conversion
Pilot Conversion
Phased Conversion
Parallel 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 properly, 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.

30. 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
Debugging: 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.

31. 12.5 Alternative Methods & Tools for Systems Development
Prototyping
Joint application design (JAD)
Integrated computer-assisted software engineering tools
Rapid application development (RAD)
Agile development
End-user development
Component-based development
Object-oriented development
Prototyping: Approach that defines an initial list of user requirements, builds
a prototype system and then improves the system in several iterations based
on users’ feedback.
Joint application design (JAD): A group–based tool for collecting user
requirements and creating system designs.
Computer-Assisted Software Engineering (CASE) is a development
approach that uses specialized tools to automate many of the tasks in the
SDLC; 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 uses
special tools and an iterative approach to rapidly produce a high-quality system.
Agile Development: Development method that delivers functionality in rapid
iterations requiring frequent communication, development, testing, and delivery.
End-User Development is a development method that has the actually user
develop 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 the
real world that must be modeled to perform that task.

32. RAD versus SDLC

33. 12.6 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.

34. Chapter Closing Case
Lincoln, Nebraska