2. Chapter Objectives
Describe software trends, including the concept of software as a service
Explain software acquisition alternatives, including traditional versus Web-based software development strategies
Describe software outsourcing options, including the role of service providers
Explain advantages and disadvantages of developing software in-house versus other alternatives 3

3. Chapter Objectives
Explain cost-benefit analysis and financial analysis tools
Explain the differences between a request for proposal (RFP) and a request for quotation (RFQ)
Describe the contents of the system requirements document 3

4. Chapter Objectives
Explain the transition from systems analysis to systems design, and the difference between logical and physical design
Explain the transition to systems design and the importance of prototyping
Discuss guidelines for system design, and explain the importance of codes

5. Introduction
Chapter 5 describes the remaining activities in the systems analysis phase
The chapter also describes the transition to systems design, prototyping, design guidelines, and using codes to represent values and simplify data entry 4

6. Development Strategies Overview
Selecting the best development path is an important decision that requires companies to consider three key issues
In-house software development alternatives
Software outsourcing options
Web-based software trends

7. Web-Based Software Trends
Software as a Service
The Software and Information Industry Association (SIIA) is an industry group that focuses on the digital economy
SIIA believes that the concept of software as a service is redefining the way that companies develop and deploy their information systems
Figure 5-2
Figure 5-3

8. Web-Based Software Trends
The Changing Software Marketplace
In the traditional model, software vendors develop and sell application packages to customers
In addition to traditional vendors, the marketplace now includes many forms of outsourcing, including application service providers and firms that offer Internet business services

9. Web-Based Software Trends
The Impact of the Internet on Systems Development
Developers will focus on Web-based application development, which builds the Web into the application, rather than the other way around
IBM’s WebSphere
Microsoft’s .NET
Sun Microsystem’s J2EE

10. Web-Based Software Trends
The Impact of the Internet on Systems Development
Traditional development
System design is influenced by compatibility issues
Systems are designed to run on local and wide-area company networks
Web-based features are treated as enhancements rather than core elements of the design

11. Web-Based Software Trends
The Impact of the Internet on Systems Development
Web-based development
Systems are developed and delivered in an Internet-based framework such as .NET or WebSphere
Internet-based development treats the Web as the platform, rather than just a communication channel
Web-based software usually requires additional layers, called middleware

12. Software Outsourcing Options
Outsourcing is the transfer of information systems development, operation, or maintenance to an outside firm that provides these services, for a fee, on a temporary or long-term basis
Can refer to relatively minor programming tasks or the handling of a company’s entire IT function

13. Software Outsourcing Options
The Growth of Outsourcing
Traditionally, firms outsourced IT tasks as a way of controlling costs and dealing with rapid technological change
Today, outsourcing is a vital business issue that shapes a company’s overall IT strategy
the most important factor is the potential saving in operating costs
Figure 5-5
Figure 5-6

14. Software Outsourcing Options
The Growth of Outsourcing
A firm that offers outsourcing solutions is called a service provider
Application service providers (ASP)
Online software rental
Internet business services (IBS)
Also called managed hosting
Provide Web-based support for business transactions (order processing, billing, CRM, etc)

15. Software Outsourcing Options
Outsourcing Fees
A fixed fee model uses a set fee based on a specified level of service and user support
A subscription model has a variable fee based on the number of users or workstations that have access
A usage model or transaction model charges a variable fee based on the volume of transactions or operations

16. Software Outsourcing Options
Outsourcing Issues and Concerns
Mission-critical IT systems should be out-sourced only if the result is a cost-attractive, reliable, business solution that fits the company’s long-term business strategy
out-sourcing can also affect day-to-day company operations and can raise some concerns
A major disadvantage of outsourcing is that it raises employee concerns about job security

17. In-House Software Development Options
A company can choose to develop its own systems, or purchase, possibly customize, and implement a software package
The most important consideration is total cost of ownership (TCO)
Companies also develop user applications designed around commercial software packages

18. In-House Software Development Options
Make or Buy Decision
The choice between developing versus purchasing software often is called a make or buy, or build or buy decision
The company’s IT department makes, builds, and develops in-house software
A software package is obtained from a vendor or application service provider.

19. In-House Software Development Options
Make or Buy Decision
Companies that develop software for sale are called software vendors
Value-added reseller (VAR)
Vertical application
Horizontal application

20. In-House Software Development Options
Reasons for In-House development
Satisfy unique business requirements
Minimize changes in business procedures and policies
Meet constraints of existing systems
Meet constraints of existing technology
Develop internal resources and capabilities

21. In-House Software Development Options
Reasons for Purchasing a Software Package
Lower costs
Requires less time to implement
Proven reliability and performance benchmarks
Requires less technical development staff
Future upgrades provided by the vendor
Input from other companies

22. In-House Software Development Options
Customizing a Software Package
You can purchase a basic package that vendors will customize to suit your needs
You can negotiate directly with the software vendor to make enhancements to meet your needs by paying for the changes
You can purchase the package and make your own modifications, if this is permissible under the terms of the software license

23. In-House Software Development Options
Creating User Applications
A user application utilizes standard business software
Help desk or information center (IC)
Screen generators
Report generators
Read-only properties
Figure 5-13

24. Role of the Systems Analyst
When selecting hardware and software, systems analysts often work as an evaluation and selection team
A team approach ensures that critical factors are not overlooked and that a sound choice is made

25. Role of the Systems Analyst
The primary objective of the evaluation and selection team is to eliminate system alternatives that will not work, rank the system alternatives that will work, and present the viable alternatives to management for a final decision

26. Cost-Benefit Analysis
Now, at the end of the systems analysis phase of the SDLC, you must apply financial analysis tools and techniques to evaluate development strategies and decide how the project will move forward
Figure 5-14

27. Cost-Benefit Analysis
Financial Analysis Tools
Payback Analysis
How long will it take for IS to pay for itself
Return on investment (ROI)
Compares net benefits (return) to total cost
Net present value (NPV)
Total benefits – total cost

28. A Software Acquisition Example
Step 1: Evaluate the Information System Requirements
Identify key features
Consider network and web-related issues
Estimate volume and future growth
Specify hardware, software, or personnel constraints

29. A Software Acquisition Example
Step 1: Evaluate the Information System Requirements
Prepare a request for proposal or quotation
Request for proposal (RFP)
Document to vendors who decide whether they have a product that meets your needs
Evaluation model
Request for quotation (RFQ)
More specific than RFP

30. A Software Acquisition Example
Step 2: Identify Potential Vendors or Outsourcing Options
The Internet is a primary marketplace
newsgroups
Another approach is to work with a consulting firm

31. A Software Acquisition Example
Step 3: Evaluate the Alternatives
Existing users
Application testing
Benchmarks
Match each package against the RFP features and rank the choices

32. A Software Acquisition Example
Step 4: Perform Cost-Benefit Analysis
Identify and calculate TCO for each option you are considering
When you purchase software, what you are buying is a software license
If you purchase a software package, consider a maintenance agreement

33. A Software Acquisition Example
Step 5: Prepare a Recommendation
You should prepare a recommendation that contains your recommendation and lists the alternatives, together with the costs, benefits, advantages, and disadvantages of each option
At this point, you may be required to submit a formal system requirements document and deliver a presentation

34. A Software Acquisition Example
Step 6: Implement the Solution
Implementation tasks will depend on the solution selected
Before the new software becomes operational, you must complete all implementation steps, including loading, configuring, and testing the software; training users; and converting data files to the new system’s format

35. Completion of Systems Analysis Tasks
To complete the systems analysis phase, you must prepare the system requirements document and your presentation to management

36. Completion of Systems Analysis Tasks
Presentation to Management
Based on their decision, your next task will be one of the following
Implement an outsourcing alternative
Develop an in-house system
Purchase or customize a software package
Perform additional systems analysis work
Stop all further work

37. The Transition to System Design
If management decides to develop the system in-house, then the transition to the systems design phase begins
Preparing for Systems Design Tasks
It is essential to have an accurate and understandable system requirements document

38. The Transition to System Design
The Relationship between Logical and Physical Design
The logical design defines the functions and features of the system and the relationships among its components
The physical design of an information system is a plan for the actual implementation of the system

39. Systems Design Guidelines
The systems analyst must understand the logical design of the system before beginning the physical design of any one component
Data design
User interface
System design specification
Figure 5-24

40. Systems Design Guidelines
System Design Objectives
The goal of systems design is to build a system that is effective, reliable, and maintainable
A system is reliable if it adequately handles errors
A system is maintainable if it is well designed, flexible, and developed with future modifications in mind

41. Systems Design Guidelines
System Design Objectives
User considerations
Carefully consider any point where users receive output from, or provide input to, the system
Anticipate future needs of the users, the system, and the organization
Provide flexibility
Figure 5-25

42. Systems Design Guidelines
System Design Objectives
Data Considerations
Data should be entered into the system where and when it occurs because delays cause errors
Data should be verified when entered to catch errors immediately
Automated methods of data entry should be used whenever possible
Figure 5-26

43. Systems Design Guidelines
System Design Objectives
Data Considerations
Access for data entry should be controlled and all entries or changes to critical data values should be reported – audit trails
Every instance of entry and change to data should be logged
Data should be entered into a system only once
Data duplication should be avoided

44. Systems Design Guidelines
System Design Objectives
Architecture considerations
Use a modular design
Design modules that perform a single function are easier to understand, implement, and maintain

45. Systems Design Guidelines
Design Trade-Offs
Design goals often conflict with each other
Most design trade-off decisions that you will face come down to the basic conflict of quality versus cost
Avoid decisions that achieve short-term savings but might mean higher costs later

46. Prototyping
Prototyping produces an early, rapidly constructed working version of the proposed information system, called a prototype
Prototyping allows users to examine a model that accurately represents system outputs, inputs, interfaces, and processes
Figure 5-27

47. Prototyping Prototyping Methods System prototyping
Design /Throwaway prototyping

48. Prototyping Prototyping Tools
Systems analysts can use powerful tools to develop prototypes

49. Prototyping Other Modeling Tools Systems flowchart
American National Standards Institute (ANSI)

50. Prototyping Limitations of Prototypes
A prototype is a functioning system, but it is less efficient than a fully developed system
Systems developers can upgrade the prototype into the final information system by adding the necessary capability
Otherwise, the prototype is discarded

51. Using Codes During System Design
Overview of Codes
Code – set of letters or numbers that represent data
They save storage space and costs, reduce transmission time, and decrease data entry time
Can reduce data input errors

52. Using Codes During System Design
Types of Codes
Sequence codes
E.g. consecutive employee numbers
Block sequence codes
College course numbers
Alphabetic codes
Category codes
Identify a group of related items (e.g. dept store)
Abbreviation codes
E.g. TN (Tennessee), JFK

53. Using Codes During System Design
Types of codes
Significant digit codes
Derivation codes
Cipher codes
Action codes
Self-checking codes