CHAPTER 14

Acquiring Information Systems and Applications

CHAPTER OUTLINE

14.1 Planning for and Justifying IT Applications14.2 Strategies for Acquiring IT Applications14.3 The Traditional Systems Development Life Cycle14.4 Alternative Methods and Tools for Systems Development14.5 Vendor and Software Selection

LEARNING OBJECTIVES1. Discuss the different cost/benefit analyses that

companies must take into account when formulating an IT strategic plan

2. Discuss the four business decisions that companies must make when they acquire new applications

3. Enumerate the primary tasks and importance of each of the six processes involved in the systems development life cycle

4. Describe alternative development methods and tools that augment development methods

5. Analyze the process of vendor and soft ware selection

14.1 Planning for and Justifying IT Applications

Planning for and Justifying IT Applications

Organizations must analyze the need for the IT application.Each IT application must be justified in terms of costs and benefits.The application portfolio

IS Operational Plan

Contains the following elements:MissionIT environmentObjectives of the IT functionConstraints of the IT functionApplication portfolioResource allocation and project management

Evaluating & Justifying IT Investment: Benefits, Costs & Issues

Assessing the costsFixed costsTotal cost of ownership (TCO)

Assessing the benefits (Values)Intangible benefits: Benefits from IT that may be very desirable but difficult to place an accurate monetary value on.

Comparing the two

Conducting the Cost-Benefit Analysis

•Using Net Present Value (NPV)

•Return on investment

•Breakeven analysis

•The business case approach

14.2 Strategies for Acquiring IT Applications

Strategies for Acquiring IT Applications

Four fundamental business decisions to make before choosing a strategy: (1) How much computer code does the company want to write? (2) How will the company pay for the application? (3) Where will the application run? (4) Where will the application originate?

Strategies for Acquiring IT Applications

Purchase a Prewritten ApplicationCustomize a Prewritten ApplicationLease the applicationsApplication Service Providers and Software-

as-a-Service VendorsUse Open-Source SoftwareOutsourcingCustom Development

14.3 Traditional Systems Development Life Cycle

Traditional Systems Development Life Cycle

Software Development Life Cycle (SDLC) Systems InvestigationSystems AnalysisSystems DesignProgramming and TestingImplementationOperation and Maintenance

The SDLC

Major advantagesControlAccountabilityError detection

Major drawbacksRelatively inflexibleTime-consuming and expensiveDiscourages changes once user requirements are gathered

SDLC – Systems Investigation

Begins with the business problem (or opportunity) followed by the feasibility analysis.

Feasibility studyDeliverable: Go/No-Go Decision

Feasibility Study

• Technical feasibility

•Economic feasibility

•Organizational feasibility

•Behavioral feasibility

SDLC – System Analysis The examination of the business problem that the organization plans to solve with an information system.

Main purpose is to gather information about existing system to determine requirements for the new or improved system.

Deliverable is a set of system requirements, also called user requirements.

SDLC – System Analysis Describes how the system will accomplish this task.

Deliverable is the technical design that specifies:

System outputs, inputs, user interfaces.Hardware, software, databases,

telecommunications, personnel & procedures.Blueprint of how these components are

integrated.

SDLC – Programming & TestingProgramming involves the translation of a system’s design specification into computer code.

Testing checks to see if the computer code will produce the expected and desired results under certain conditions.Testing is designed to delete errors (bugs) in the computer code.

SDLC – Systems Implementation

Implementation involves three major conversion strategies:

Direct Conversion Pilot Conversion Phased Conversion Parallel Conversion (not used much today)

SLDC – Operation & Maintenance

Audits are performed to assess the system’s capabilities and to determine if it is being used correctly. Systems need several types of maintenance.

Debugging Updating Maintenance

14.4 Alternative Methods and Tools for Systems Development

Alternative Methods and Tools for Systems Development

•Joint application design (JAD)

•Rapid application development (RAD)

•Agile development

•End-user development

14.5 Vendor & Software Selection

Vendor & Software Selection

Step 1: Identify potential vendors.Step 2: Determine the evaluation criteria.

Request for proposal (RFP)

Step 3: Evaluate vendors and packages.Step 4: Choose the vendor and packageStep 5: Negotiate a contract.Step 6: Establish a service level agreement.

Closing Case #1Tweak or Trash?

• The Problem

• The Solution

• The Results

Closing Case #2 Putting IT All Together

• The Problem

• The Solution

• The Results