1. Hardware & Software Selection
Management Information Systems (MIS)
K.S. School of Business Management
Samit Tibrewala

2. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

3. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

4. 1. Determining Size and Capacity Requirements
Starting point in an equipment decision process
Various models and configurations to select
Key factors
Internal memory size
Cycle speed of system for processing
# of channels for input, output and communication
Characteristics of display and communication components
Types and numbers of auxiliary storage units that can be attached
Systems support and utility software provided or available
Minimum Configuration? Limits?
Source of information?

5. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

6. 2. Computer Evaluation and Measurement
Basis: Actual performance data
Tech specs vs. Performance Data
Benchmarking
Design of Synthetic Programs
Comparison of Benchmarks

7. 2.1 Benchmarking
Application of synthetic programs to emulate actual processing work
Based on projected work load
Limitations – Early in acquisition process
Any type of system environment (e.g. batch, online streams)
Common benchmarks:
Speed of central processor
Multiple jobs
Multiprogramming environment
Interrupt Handling
Peripheral Channel Speed
Communication Speed

8. 2.1 Benchmarking Actual benchmarks OR System simulators
How many I/O operation there are
How many instructions are utilized in one computation
Order of execution

9. 2.2 Design of Synthetic Programs
Synthetic job = “program written to exercise a computer’s resources in a way that allows the analyst to imitate the expected job stream and determine results”

10. 2.3 Comparison of Benchmarks
Some comparison is better than no comparison!
Limitations of Benchmarks:
Comparisons made purely on quantitative grounds
“Learning time needed to become accustomed to the system” is never accounted for
No assurances
False vendor claims – No direct verifications possible

11. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

12. 3. Plug Compatible Equipment
Equipment for a particular make of computer that is not manufactured by the computer vendor.
CPU does not care / know about the different make!
Advantage: Lower cost
Specialization game – Volumes!
Lower R&D Costs => Lower end product costs
Things to take care of:
Quality levels
Performance (better than original equipments)
Doesn’t affect warranties and service agreements on the rest of the system

13. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

14. 4. Financial Factors Rental Lease Purchase
No one option is better than the other!

15. 4. Financial Factors Rental FEATURES / ADVANTAGES DISADVANTAGES
Short term commitment (usually 1-12 months)
High flexibility (Cancellations, delayed purchase decisions)
No major cash requirement upfront
DISADVANTAGES
Most expensive
Higher monthly payments
No major tax / ownership benefits
Not enough security (notice period short)
Little / no control on equipment change
Not all vendors will rent

16. 4. Financial Factors Lease FEATURES / ADVANTAGES DISADVANTAGES
Commitment for a specified time (generally 3-7 years)
Predetermined payments throughout the lease duration
No major cash required upfront
Usually better service from vendors than the RENTAL option
Less expensive than RENTAL
System upgrade option
DISADVANTAGES
More expensive than PURCHASE
May have limitations on hours / equipment use

17. 4. Financial Factors Purchase FEATURES / ADVANTAGES DISADVANTAGES
Lowest cost in the long run
Preferred option with the rise in lease costs; also the most preferred
Tax advantages
Monthly maintenance deductible as business expense
Interest on any loan to finance the purchase deductible as business expense
Local state, federal taxes paid on purchase deductible
A business investment
Full control over equipment use
DISADVANTAGES
Risk of obsolescence
Permanent commitment
Once in, no real way out
Complete responsibility for all problems
Cash requirements high

18. 4. Financial Factors Comparing costs RENTAL LEASE PURCHASE
Basic System
$ 189,678
Monthly Payment
$ 6,807
$ 4,846
$ 4,817
Monthly Maintenance
$ 1,225 -
Annual Cost
$ 98,631
$ 58,152
$ 72,504
Cost over 5 years
$ 493,155
$ 290,760
$ 362, 520
+ Tax Savings
+ Own the system

19. Hardware Selection Determining Size and Capacity Requirements
Computer Evaluation and Measurement
Plug-Compatible Equipment
Financial Factors
Maintenance and Support

20. 5. Maintenance and Support
Post installation factor
Includes:
Maintenance Source
Terms
Service and Response
Options to In-house systems

21. 5.1 Maintenance Source
Warranty Period (usually 90 days) – Sales Unit responsible
Post warranty, maintenance source is anybody’s guess!
Most common source – The firm from where it was purchased
Specialized service providers (3rd party maintenance)

22. 5.2 Terms Terms are as important as the cost! Contract covers:
Both labor and parts (Most common… for large systems)
Labor + allowance for parts
Labor only (parts charged extra)
Decision for the organization: What kind of contract?
Expenditures the org is willing to make, versus
How frequently it estimates services will be required
Other factors:
How maintenance costs will change over time?
Protection opportunities?

23. 5.3 Service and Response Concerns in maintenance:
Response time when service is requested
Hours of service
Response time SLAs should be part of the contract / agreement (e.g. 2 hours, same day, next morning, 3 business days etc.)
Online vs. Batch Processing
Onsite vs. Carry-in service (in case of laptops / desktops)
Repair is fine, but what if we prevent problems in the first place?
Preventive maintenance
Cleaning / adjusting equipments
Stocking of sufficient spare parts (for quick problem resolution)

24. 5.4 Options to In-house systems
Service bureaus / Facilities Management Companies
Service Bureaus:
User submits data for processing -> performed at service bureaus
Monthly cost + charge depending on the time taken for processing
Additional fees for storing data, mounting on tapes etc.
Custom programming
Service bureaus common in accounting / payroll apps (Firms want automated services, but do not want to purchase equipment / hire specialists)
Facilities Management companies:
For companies who wish to develop Information Management s/w, but do not want to hire analysts / programmers etc.
Purchase computer systems -> Hire facilities management services to operate
Fac Man develop s/w or acquire software as per client demands
Advantage for clients: Obtain professional information processing / service without investing time + resources in managing systems staff, while still receiving the benefits of owning a computer system!

25. Software Selection
Many of the same concerns addressed in the selection of hardware and software.
Primarily:
Evaluation of Software
Software contracts

26. Software Selection
Evaluation of Software
Software contracts

27. 1. Evaluation of Software
Application Requirements Questions
Flexibility
Audit and Reliability Provisions
Capacity
Vendor Support

28. 1.1 Application Requirements Questions
Representative requirement considerations:
What transactions and what data about each transaction must be handled?
What reports, documents and other output must the system produce?
What files and databases drive the system?
What is the volume of data to be stored? What volume of transactions will be processed?
Are there any unique features about this application that require special consideration when selecting software?
What future enhancements are possible, and which will be supported?
What hardware and communication features does the software require?
What are the limitations of the software?
These questions, plus cost / expenditure limitations should help the analyst software options that do not meet requirements

29. 1.2 Flexibility
Ability to meet changing requirements and varying user needs.
Flexible softwares are more expensive!
However, defining a limit for flexibility is the key
Areas where flexibility makes sense:
Data Storage
Reporting
Definition of parameters
Data Input

30. 1.2 Flexibility Output flexibility is equally important.
Example # 1: Mailing labels
In different formats, based on various country-specific requirements
Along with reports, sorted alphabetically & by zip-code
Other extended reports (including telephone numbers, employee classifications), which is parameterized
Size adjustments for mailing labels, number of labels to be printed per page
Number of lines for user addresses

31. 1.3 Audit and Reliability Provisions
Users often have a tendency to trust systems more than they should
Auditors must have the ability to validate reports and output and to test the authenticity and accuracy of data and information
Audit and control procedures include:
Trace a transaction through each processing step by having the capability to examine intermediate data values during processing
Print selected records / transactional information
Maintain constant balance in the system, especially when financial matters are involved
Track the effect of transactions on account balances, prepare journals
Data / Information should be accurate, timely, reliable and secure.
Password levels

32. 1.4 Capacity
Number of files that can be stored; amount each file will hold.
Other associated restrictions: files / databases / kind of processing
Capacity is also determined by:
Max size of each record (# of bytes)
Max size of file (# of bytes)
Max size of file (# of fields per record)
# of files that can be active at one time
# of files that can be registered in a file directory
Example:
System 1: 2 files active at one time; records per file; 64 fields per record; 1000 characters per field
System 2: 8 files active at one time; records per file; 128 fields per record; 1000 characters per field

33. 1.5 Vendor Support Evaluate the services provided
As with hardware, it is not enough to know that the quality of the item purchased is adequate.
Terms of software maintenance should be detailed:
How frequently will software maintenance be performed? New versions? Charge for updates?
Monthly maintenance fee? What does it cover?
Custom programming? At what cost?
Agreements for controlling increase in maintenance fees?
Resolution of disagreements – How?
Hours of support available? Mode of communication?
The analyst is responsible for asking the questions and getting the answers!

34. Software Selection
Evaluation of Software
Software contracts

35. 2. Software Contracts
Contract negotiation is a legal process – should involve experts
Two types of software contracts:
Outlining the terms of leasing a software package. If an organization acquires software, they only receive the right to use it for a fee. A paid license allows it to be used indefinitely. However, the purchaser does not own it, and cannot sell the package or distribute copies.
Outlining the terms of a custom programming assignment, wherein the organization contracts with and independent agency to produce software. Fixed vs. T&M
Key aspects:
Ownership & Maintenance
Pricing / Split pricing (phased)
Protection against changing business environments (eg. What is a company is acquired and changes names – what happens to the contract then? Bankruptcy?)

36. Decision Matrix Allows decision makers to structure
… then solve their problems by:
Specifying and prioritizing their needs with a list criteria
Evaluating, rating and comparing different solutions
Selecting the best matching solution
Is usually a part of a Decision Support System (DSS)
Also helps determine the winning bid / proposal amid all those sent in response to an invitation

37. C – Criteria O – Options S – Scores W – Weights Decision Matrix
COWS Method
C – Criteria
Develop a hierarchy of decision criteria (decision model)
W – Weights
Assign a weight to each criterion based on its importance in the final decision
O – Options
Identify options
(solutions / alternatives)
S – Scores
Rate each option on a ratio scale by assigning it a score

38. C – Criteria W – Weights O – Options Decision Matrix Example
C1, C2, C3
W – Weights
C1 – 1, C2 – 2, C3 - 3
O – Options
Provider A, B, C
Measurements?
Ratio Scale (0-10, 0-50, 0-100)
Point Scale (max speed, temperatures)
High values => Bias

39. Total Score = SUM(Scores)
Decision Matrix - COWS
2-dimensional, L-shaped matrix
Compute scores
Score = Rating x Weight
and then
Total Score = SUM(Scores)

40. Decision Matrix - COWS
Scenario # 1

41. Decision Matrix - COWS Better interpretation - Histograms
Data Source – Ratings and Scores of evaluated solutions

42. Decision Matrix - COWS Solution Ratings
In terms of ratings, both B and C are equivalent, and outperform A
B is better than C for criterion C3, but weaker on C2
C is more evenly distributed across all three criteria
Therefore,
Option B is usually called a best-of-breed solution
Option C is a typical suite or integrated solution

43. Decision Matrix - COWS Solution Scores
B – Higher weight applied to its strength and lesser to weakness, resulting in first place.
We have here an interesting example of a battle opposing 2 alternatives at first sight equivalent, but one showing an explicit differentiated strength against another solution that spreads its strengths more evenly.
This battle is called:
The One versus The Best
All-in-one versus Best-of-Breed
Suite versus Best-of-Breed
Best-of-Breed versus Integrated

44. Decision Matrix - COWS Solution Scores Solution: No real answer
“It depends”
Depends on?
Contextual needs (Could lead to choosing one solution over another)
Whatever the path chosen, the decision matrix won’t be of any help in this matter, but raising the concern.
You will have to decide what’s best for the enterprise
…. Let’s look at what would happen should your priorities change …

45. Decision Matrix - COWS Importance of weight in the final decision
Relative importance / effectiveness of weights coupled with ratings
Let’s use the same example, and play with weights, given the ratings stay the same….
In scenario # 1, weights were distributed as 1, 2 and 3 for C1, C2, C3 respectively.
Let’s increase the second weight from 2 to 3…

46. Decision Matrix - COWS
Scenario # 2

47. Decision Matrix - COWS
Scenario # 2

48. Decision Matrix - COWS Solution Ratings
Ratings don’t change since solution capabilities remain the same.
Solution Scores
B and C – Globally equivalent in their ratings, and now have equal weights, therefore they’re pretty much equi-level.
However, as you may notice, their internal differences remain

49. Decision Matrix - COWS
Now, let’s keep the 2nd weight as 3, and decrease the 3rd weight from 3 to 2
Scenario # 3

50. Decision Matrix - COWS
Scenario # 3

51. Decision Matrix - COWS Solution Ratings
Ratings still don’t change since solution features and benefits stay the same.
Solution Scores
B and C were at the same effective levels earlier, but the new weights inhibit what appeared to be a strength for B in criterion C3 earlier.
Indeed, a lesser weight was applied to its strength, and a higher weight to its weakness, resulting in losing the first place to Option C.
In this particular context, the more integrated the solution, the better it is.

52. Decision Matrix - COWS Conclusion
Recap of the 3 scenarios with the respective weights…
Be careful in your interpretation of the result you get using a decision matrix.
Indeed, you have to question the validity of the path you took to reach the conclusion you found.
To challenge each step of your decision cycle:
Sensitivity Analysis
Robustness Analysis