1. Chapter 11: Alternative Approach - Purchasing Systems

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

3. 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

4. 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

5. 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

6. 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

7. 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)

8. 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!)

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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