Acquiring Information Systems and Applications CHAPTER 14 Acquiring Information Systems and Applications

CHAPTER OUTLINE 14.1 Planning for and Justifying IT Applications 14.2 Strategies for Acquiring IT Applications 14.3 The Traditional Systems Development Life Cycle 14.4 Alternative Methods and Tools for Systems Development 14.5 Vendor and Software Selection

LEARNING OBJECTIVES Discuss the different cost/benefit analyses that companies must take into account when formulating an IT strategic plan Discuss the four business decisions that companies must make when they acquire new applications Enumerate the primary tasks and importance of each of the six processes involved in the systems development life cycle Describe alternative development methods and tools that augment development methods Analyze the process of vendor and soft ware selection

14.1 Planning for and Justifying IT Applications

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

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

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

Conducting the Cost-Benefit Analysis Using Net Present Value (NPV) Return on investment Breakeven analysis The business case approach

14.2 Strategies for Acquiring IT Applications

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 Software- as-a-Service Vendors Use Open-Source Software Outsourcing Custom Development

14.3 Traditional Systems Development Life Cycle

Traditional Systems Development Life Cycle Software Development Life Cycle (SDLC) Systems Investigation Systems Analysis Systems Design Programming and Testing Implementation Operation and Maintenance

The SDLC Major advantages Major drawbacks 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

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 – System Analysis 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 – 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

14.4 Alternative Methods and Tools for Systems Development

Alternative Methods and Tools for Systems Development Joint application design (JAD) Rapid application development (RAD) Agile development End-user development

14.5 Vendor & Software Selection

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.

Closing Case #1 Tweak or Trash? The Problem The Solution The Results

Closing Case #2 Putting IT All Together The Problem The Solution The Results