Acquiring Information Systems and Applications

CHAPTER OUTLINE

Planning for and Justifying IT Applications Strategies for acquiring IT Applications Traditional Systems Development Life Cycle Alternative Methods and Tools for Systems

Development Outsourcing and Application Service

Providers Vendor and Software Selection

LEARNING OBJECTIVES

Describe the IT planning process. Describe the IT justification process and

methods. Describe the SDLC and its advantages and

limitations. Describe the major alternative methods and

tools for building information systems.

LEARNING OBJECTIVES (continued)

List the major IT acquisition options and the criteria for option selection.

Describe the roles of hosting vendors. Describe the process of vendor and software

selection.

Chapter Opening Case

11.1 Planning of 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 a prioritized list

of both existing and potential IT applications of a company.

Information Systems Planning Process

Information Systems Planning (continued)

Organizational strategic plan states the firm’s overall mission, the goals that follow from that mission, and the broad steps necessary to reach these goals.

IT architecture delineates the way an organization’s information resources should be used to accomplish its mission.

Both are inputs in developing the IT strategic plan.

IT Strategic Plan

IT strategic plan is a set of long-range goals that describe the IT infrastructure and major IT initiatives needed to achieve the goals of the organization.

IT Steering Committee

The IT Steering Committee, comprised of managers and staff representing various organizational units, establishes IT priorities and ensures that the MIS function meets the needs of the enterprise.

IT Operational Plan

Consists of a clear set of projects that the IT department and functional area managers will execute in support of the IT strategic plan

Contains the following elements: Mission IT environment Objectives of the IT function Constraints of the IT function Application portfolio Resource allocation and project management

Evaluating & Justifying IT Investment: Benefits, Costs & Issues Assessing the costs

Fixed costs Total 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

11.2 Strategies for Acquiring IT Applications Buy the applications (off-the-shelf approach) Lease the applications Use Open-Source Software Software-as-a-service Developing the applications in-house

11.3 Traditional Systems Development Life Cycle

Software Development Life Cycle (SDLC) is the traditional systems development method that organizations use for large-scale IT projects.

SDLC processes are systems investigation, systems analysis, systems design, programming, testing, implementation, operation and maintenance.

Waterfall approach is when tasks in one phase are completed before the work proceeds to the next stage.

Traditional Systems Development Life Cycle (SDLC)

The SDLC

Major advantages Control Accountability Error detection

Major drawbacks Relatively inflexible Time-consuming and expensive Discourages changes once user requirements

are done

SDLC – Systems Investigation

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

Feasibility study Go/No-Go Decision

Feasibility Study

Technical feasibility Economic feasibility Organizational feasibility Behavioral feasibility

SDLC – System Analysis

Is 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.

SDLC – Systems Design

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 – System Design (continued)

Logical system design states what the system will do, using abstract specifications.

Physical system design states how the system will perform its functions, with actual physical specifications.

Scope creep is caused by adding functions after the project has been initiated.

SDLC – Programming & Testing

Programming 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. These errors are of two types: Syntax errors ( e.g., misspelled word or a misplaced

comma) Logic errors that permit the program to run but result

in incorrect output.

SDLC – Systems Implementation

Implementation or deployment is the process of converting from the old system to the new system. Four major conversion strategies ; Direct Conversion Pilot Conversion Phased Conversion Parallel Conversion

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

11.4 Alternative Methods & Tools for Systems Development

Prototyping Joint application design (JAD) Integrated computer-assisted software

engineering tools Rapid application development (RAD) Agile development End-user development Component-based development

RAD versus SDLC

11.5 Outsourcing & Application Service Providers Outsourcing is when an organization

acquires IT applications or services from outside contractors or external organizations.

Application Service Provider (ASP) is an agent or vendor who assembles the software needed by enterprises and packages the software with services such as development, operations and maintenance.

11.6 Vendor & Software Selection

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

Request for proposal (RFP) is a document sent to potential vendors to submit a proposal describing their software package and explain how it would meet the company’s needs.

Step 3: Evaluate vendors and packages.

Vendor & Software Selection (continued) Step 4: Choose the vendor and package Step 5: Negotiate a contract. Step 6: Establish a service level agreement.

Service Level Agreements (SLAs) are formal agreements that specify how work is to be divided between the company and its vendors.

Chapter Closing Case

London Southern

Eastern

Northeast

Northwest