1. Dinesh Mirchandani University of Missouri – St. Louis
Information Technology: Strategic Decision Making For Managers Henry C. Lucas Jr. John Wiley & Sons, Inc
Dinesh Mirchandani
University of Missouri – St. Louis
Copyright 2004 John Wiley & Sons, Inc.

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Copyright 2004 John Wiley & Sons, Inc.

3. Copyright 2004 John Wiley & Sons, Inc.
Chapter 8
Choosing Technology
Copyright 2004 John Wiley & Sons, Inc.

4. Technology and the Industry
Operating an IT unit within an organization can be described as a “business within a business”
Managers face a daunting array of choices for choosing the appropriate technology for their organizations
The IT Industry too has changed
Computer hardware is becoming a commodity
Firms today prefer to buy rather than build IT applications
A large service industry now exists to help organizations integrate technology
Copyright 2004 John Wiley & Sons, Inc.

5. To Buy or Not: Major Applications
Advantages of buying an application package include
The application exists already with the option to buy as many functions or modules as needed
The application has been already debugged
Shorter time to implement
Possibility to visit sites using the package for evaluation purposes
Consultants are available to help guide implementation
The application’s vendor continually improves and updates the product
Copyright 2004 John Wiley & Sons, Inc.

6. To Buy or Not: Major Applications
Disadvantages of buying an application package include
High cost and high consulting fees
The package may not perform functions exactly the way the organization wants
Implementation time can extent to over a year in some cases
Copyright 2004 John Wiley & Sons, Inc.

7. Issues in Buying Packages
Customization of the package
Modules
Parameters
Custom coding
Establishing criteria and making a final decision
Large applications such as ERP software require careful consideration due to their cost and time to implement
Availability of shareware or freeware
Copyright 2004 John Wiley & Sons, Inc.

8. Criteria in Evaluating Software Packages
Functions included
Integration with other packages; internal applications
Modifications required
Installation effort
User interface
Flexibility
Response time
Changes required in existing procedures
Vendor support
Updating from vendor
Documentation
Cost and terms
Copyright 2004 John Wiley & Sons, Inc.

9. Copyright 2004 John Wiley & Sons, Inc.
IT Services
Consulting services
Application integration
Web hosting
Application services provider (ASP)
The general purpose outsourcer
Software for rent
Copyright 2004 John Wiley & Sons, Inc.

10. Copyright 2004 John Wiley & Sons, Inc.
Outsourcing
Factors that lead a firm to outsource:
Reducing IT costs
A way to lease rather than buy technology
More professional and higher performing IT operation
IT may not be the firm’s core competency
Ability to learn from the outsourcer
Staff time is freed up to develop new applications
Copyright 2004 John Wiley & Sons, Inc.

11. Two Myths of IT Outsourcing
Outsourcing vendors are strategic partners
Outsourcing vendors are inherently more efficient that an internal IS department
Copyright 2004 John Wiley & Sons, Inc.

12. Hidden Costs of Outsourcing
Searching for and finding the right vendor and negotiating the contract
Transitioning to the vendor
Managing IT even after it has been outsourced
Cost for possible transitioning after the end of an outsourcing agreement
Copyright 2004 John Wiley & Sons, Inc.

13. A Scenario for the Future
Large hardware installations will disappear, instead companies will pay for the technology they need to use
Web services will increasingly integrate applications
Copyright 2004 John Wiley & Sons, Inc.

14. Copyright 2004 John Wiley & Sons, Inc.
Summary
Evaluating IT is an ongoing task for most organizations
Today most organizations are concerned with reducing the cost, time, and risks associated with custom applications
Outsourcing is becoming increasingly popular for developing applications or for running all or part of a firm’s technology though some control is lost
Purchasing packaged software requires great care
Copyright 2004 John Wiley & Sons, Inc.