1. © Prentice Hall 2002 10.1 CHAPTER 10 Alternative Approach: Purchasing Systems

2. © Prentice Hall 2002 10.2 SYSTEMS DEVELOPMENT APPROACHES SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) PROTOTYPING PROTOTYPING PURCHASED SOFTWARE PURCHASED SOFTWARE OUTSOURCING (SYSTEMS INTEGRATOR) OUTSOURCING (SYSTEMS INTEGRATOR) END USER DEVELOPMENT END USER DEVELOPMENT*

3. © Prentice Hall 2002 10.3 MAKE-OR -BUY DECISION ASSESS RISKS & BENEFITS ASSESS RISKS & BENEFITS MAKE: Use SDLC, prototyping, RAD if organization has IS skills. Can save cost, speed implementation MAKE: Use SDLC, prototyping, RAD if organization has IS skills. Can save cost, speed implementation BUY: If vendor offers acceptable product and required support at lower cost, faster time than in-house development could provide. Usually system must be modified to meet organization’s needs BUY: If vendor offers acceptable product and required support at lower cost, faster time than in-house development could provide. Usually system must be modified to meet organization’s needs*

4. © Prentice Hall 2002 10.4 THE PURCHASING PROCESS DEFINITION PHASE: FEASIBILITY ANALYSIS FEASIBILITY ANALYSIS REQUIREMENTS DEFINITION REQUIREMENTS DEFINITION SHORT LIST OF PACKAGES SHORT LIST OF PACKAGES ESTABLISH EVALUATION CRITERIA ESTABLISH EVALUATION CRITERIA DEVELOP AND DISTRIBUTE RFP DEVELOP AND DISTRIBUTE RFP CHOOSE PACKAGE CHOOSE PACKAGE NEGOTIATE CONTRACT NEGOTIATE CONTRACT*

5. © Prentice Hall 2002 10.5 THE PURCHASING PROCESS CONSTRUCTION PHASE: SYSTEM DESIGN: Package modification SYSTEM DESIGN: Package modification SYSTEM BUILDING: Package modification SYSTEM BUILDING: Package modification SYSTEM TESTING SYSTEM TESTING IMPLEMENTATION PHASE: INSTALLATION INSTALLATION OPERATIONS OPERATIONS MAINTENANCE MAINTENANCE*

6. © Prentice Hall 2002 10.6 REQUEST FOR PROPOSAL (RFP) DOCUMENT SENT TO POTENTIAL VENDORS INVITING THEM TO SUBMIT A PROPOSAL TO FURNISH A SYSTEM DOCUMENT SENT TO POTENTIAL VENDORS INVITING THEM TO SUBMIT A PROPOSAL TO FURNISH A SYSTEM PROVIDES DETAILED INFORMATION ABOUT THE DESIRED SYSTEM, ITS ENVIRONMENT, MATERIAL REQUIRED FROM VENDOR, AND GENERAL CRITERIA USED TO EVALUATE PROPOSALS PROVIDES DETAILED INFORMATION ABOUT THE DESIRED SYSTEM, ITS ENVIRONMENT, MATERIAL REQUIRED FROM VENDOR, AND GENERAL CRITERIA USED TO EVALUATE PROPOSALS*

7. © Prentice Hall 2002 10.7 SAMPLE CONTENTS OF RFP 1. INTRODUCTION: A. STRUCTURE & SCOPE B.OBJECTIVE C.COMPANY BACKGROUND, PHILOSOPHY D.HARDWARE/SOFTWARE ENVIRONMENT E.CURRENT BUSINESS ENVIRONMENT *

8. © Prentice Hall 2002 10.8 SAMPLE CONTENTS OF RFP II. GUIDELINES FOR RESPONSE: A.GUIDELINES B.VENDOR’S RESPONSE C.GENERAL EVALUATION PROCESS D.HARDWARE/SOFTWARE ENVIRONMENT E.CURRENT BUSINESS ENVIRONMENT *

9. © Prentice Hall 2002 10.9 SAMPLE CONTENTS OF RFP III. REQUIREMENTS: A.VENDOR INFORMATION B. VENDOR SUPPORT/TRAINING C.DOCUMENTATION D.PACKAGE HARDWARE & SYSTEM SOFTWARE ENVIRONMENT E.APPLICATION & DATABASE ARCHITECTURE F.TUNING & MEASUREMENT G.FUNCTIONAL REQUIREMENTS *

10. © Prentice Hall 2002 10.10 SAMPLE CONTENTS OF RFP IV. COSTS: A.SUMMARY B.NON-RECURRING C.RECURRING D.PRICE GUARANTEE E.MAINTENANCE AGREEMENT F.NEW RELEASES V. SIGNATURE PAGE *

11. © Prentice Hall 2002 10.11 MATCHING COMPANY NEEDS WITH PACKAGE CAPABILITIES PACKAGE CAPABILITIES COMPANY NEEDS IDENTIFY DISCREPANCIES CHOOSE ALTERNATIVES MODIFY PACKAGE CHANGE COMPANY LIVE WITH PROBLEMS

12. © Prentice Hall 2002 10.12 ROLES FOR PURCHASING PACKAGED APPLICATIONS PROJECT MANAGER: Manages process, responsible for the success of the project, may be user but IS expertise required PROJECT MANAGER: Manages process, responsible for the success of the project, may be user but IS expertise required VENDOR: Must be responsive to customer’s needs VENDOR: Must be responsive to customer’s needs PURCHASING SPECIALIST: Helps prepare RFP, assist in entire process PURCHASING SPECIALIST: Helps prepare RFP, assist in entire process ATTORNEYS: Oversee writing, approval of contract ATTORNEYS: Oversee writing, approval of contract*

13. © Prentice Hall 2002 10.13 PURCHASING SOFTWARE ADVANTAGES: REDUCED TIME TO IMPLEMENT REDUCED TIME TO IMPLEMENT LOWER OVERALL ACQUISITION COSTS LOWER OVERALL ACQUISITION COSTS APPLICATION QUALITY APPLICATION QUALITY REDUCED NEED FOR INTERNAL IS RESOURCES REDUCED NEED FOR INTERNAL IS RESOURCES INFUSION OF EXTERNAL EXPERTISE INFUSION OF EXTERNAL EXPERTISE*

14. © Prentice Hall 2002 10.14 PURCHASING SOFTWARE DISADVANTAGES: RISKS DUE TO LACK OF PACKAGE KNOWLEDGE RISKS DUE TO LACK OF PACKAGE KNOWLEDGE RISKS DUE TO EXTENT OF ORGANIZATIONAL CHANGES REQUIRED RISKS DUE TO EXTENT OF ORGANIZATIONAL CHANGES REQUIRED INITIAL & ONGOING DEPENDENCE ON VENDOR INITIAL & ONGOING DEPENDENCE ON VENDOR*

15. © Prentice Hall 2002 10.15 SPECIAL CASE: ENTERPRISE RESOURCE PLANNING (ERP) INTERFACES CROSS SEPARATE FUNCTIONAL SYSTEMS INTERFACES CROSS SEPARATE FUNCTIONAL SYSTEMS MUST SUPPORT CROSS-FUNCTIONAL BUSINESS PROCESSES MUST SUPPORT CROSS-FUNCTIONAL BUSINESS PROCESSES COMPLEX SYSTEMS TAKE YEARS TO COMPLETE COMPLEX SYSTEMS TAKE YEARS TO COMPLETE REQUIRES EXTENSIVE TRAINING REQUIRES EXTENSIVE TRAINING HEAVY RELIANCE ON CONSULTANTS HEAVY RELIANCE ON CONSULTANTS*

16. © Prentice Hall 2002 10.16 CHAPTER 10 Alternative Approach: Purchasing Systems