Chapter 11: Alternative Approach - Purchasing Systems

Systems Development Approaches 4 Systems Development Life Cycle, or SDLC 4 Prototyping 4 Purchased software 4 Outsourcing (systems integrator) 4 End user development

The Purchasing Process 4 Definition Phase Feasibility Analysis Requirements Definition Short List of Packages Establish Evaluation Criteria Develop and Distribute RFP Choose Package Negotiate Contract

The Purchasing Process (cont.) 4 Construction Phase System Design (for package changes) System Building (for package changes) System Testing 4 Implementation Phase Installation Operations Maintenance

RFP -- Request for Proposal 4 A document that is sent to potential vendors inviting them to submit a proposal to furnish a system 4 Provides detailed information about the desired system, its environment, material required from the vendor, and general criteria used to evaluate proposals

What if Package Capabilities Don’t Match Company Needs? 4 Modify the package (“bend the package”) 4 Change the company (“bend the business”) 4 Live with the problems 4 Don’t buy the package

Matching Capabilities & Needs Needs of the Company Capabilities of the Package Identify discrepancies Choose alternatives Modify the package Live with problems Change company (Figure 11.6)

Roles in Purchasing an Application Package (I) 4 User sponsor - high level executive who helps justify system, arranges for funding, ensures that appropriate users participate in selection process 4 User champion - user who pushes the project forward, is enthusiastic - responsible for implementing new system in organization (may be big job!)

Roles in Purchasing an Application Package (II) 4 Project manager - manages process, responsible for the success of the project, may be user but IS expertise required 4 Vendor 4 Purchasing specialist - help prepare RPF, assist in entire process 4 Contract specialists - provide technical and legal advice

Advantages of Purchasing Packaged Software 4 Cost savings -- although often much less than at first glance 4 Shorter lead time 4 Quality of the software usually quite high 4 Infusion of external expertise 4 Frees up scarce internal development resources

Problems with Purchasing Packaged Software 4 Differences between the needs of the organization and capabilities of available software packages 4 Dependence upon vendor 4 Risks involved in modification 4 May be harder to install and integrate into an organization’s operations than custom- developed software

Outsourcing 4 The elimination of part of the internal information systems organization (or not adding people) by hiring an outside organization to perform these functions 4 Outsourcing has often involved data center operations, but may include application systems development, programming, and communications network management

Systems Integrator 4 A firm that will take overall responsibility for managing the development or integration of large, complex systems involving the use of components from a number of different vendors

Reasons for Outsourcing Systems Development 4 Organizations lack the internal capacity to satisfy their needs for new systems 4 Desire to maintain a lean internal information systems staff 4 Organization lacks the technical or managerial skills needed 4 Only alternative for a small firm when a package is not available

Problems with Outsourcing Systems Development 4 Neither party understands the requirements of the new system before the contract is signed 4 Contract must be well thought out and appropriate 4 Ownership of the software may be in question 4 Management must devote at least as much effort as with SDLC