Chapter 16 Acquiring and Developing Business Applications and Infrastructure Information Technology for Management Improving Performance in the Digital

Copyright 2010 John Wiley & Sons, Inc.

Chapter 16

Acquiring and Developing BusinessApplications and Infrastructure

Information Technology for ManagementImproving Performance in the Digital Economy

7th editionJohn Wiley & Sons, Inc.

Slides contributed by Dr. Sandra ReidChair, Graduate School of Business & Professor, Technology

Dallas Baptist University

Turban and

Volonino

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Chapter Outline

• 16.1 The Framework of IT Application Acquisition

• 16.2 Identifying, Justifying, and Planning IT Systems Applications (Step 1)

• 16.3 Acquiring IT Applications: Available Options (Step 3)

• 16.4 Selecting an Acquisition Approach and Other Implementation Issues

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Chapter Outline – cont’d

• 16.5 Connecting to Databases, Enterprise Systems, and Business Partners: Integration (Step 4)

• 16.6 Business Process Redesign• 16.7 Managerial Issues

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Learning Objectives

1. Describe the process of IT systems acquisition.

2. Describe IT project identification, justification, and planning.

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

4. Describe the process of vendor and software selection.

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Learning Objectives – cont’d

5. Understand some major implementation issues.

6. Understand the issue of connecting IT applications to databases, other applications, networks, and business partners.

7. Describe business process redesign and its importance to new application development.

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Copyright 2010 John Wiley & Sons, Inc. 16-6

Figure IT7eU


• Problems – 36 new releases within 1 week where 627 changes had been made. User involvement needed throughout.

• Solution – Application development 2.0 (Web 2.0) is an agile & fast development method during which designers & users interact & participate. Applications are better with direct involvement by both groups.

• Results – Bugs fixed quicker; discipline is built into design.

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http://www.flickr.com/


16.1 The Framework of IT Application Acquisition


Application Acquisition Issues

• Wide range of sizes & types.• Applications keep changing over time.• Applications may involve several business

partners.• No single way to acquire IT applications.• Diversity of IT applications requires variety of

acquisition methodologies & approaches.

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Acquisition Process of IT Application

• Step 1 – planning, identifying, & justifying IT-based systems – must be aligned with overall business plan. May require process redesign. Cost benefit analysis is critical.

• Step 2 – creating an IT architecture – plan for organizing underlying infrastructure & applications of IT project.

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Acquisition Process of IT Application – cont’d

• Step 3 – selecting an acquisition option – 1. build in-house, 2. vendor build custom-made system, 3. buy existing application & install with/without modifications, 4. lease, 5. enter partnership or alliance, or 6. use combination.

• Step 4 – testing, installing, integrating & deploying IT applications.

• Step 5 – operations, maintenance & updating. May take same effort as install. Rapid changes to technology require frequent updates.

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Figure 16.1The process of IT application acquisition.

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Figure 16.2 Triple constraints of IT project management.

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16.2 Identifying, Justifying, and Planning IT Systems Applications (Step 1)


Identifying IT Systems Applications

• Requests from user departments.• Vendors’ recommendations.• Need to comply with new governmental

regulations.• Auditors’ recommendations.• Recommendation of steering committee.• Recommendation of IS department.• Top management requests.• Search for high-payoff projects.

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IT Project Justification

• All organizations have limited resources.• Explore need for each system. How will this

application serve needs of users?• Cost justify. What is the opportunity lost cost?

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Justifying IT Projects in eBusiness for interesting article with more…


Planning IT Applications

• Understand current business processes.• Define objectives & business requirements of proposed

system, scope in terms of cost, effort, schedule & deliverables. Feasibility study may be necessary.

• Assess risk of failure.• Define milestones for benchmarking progress.• Examine issue of connectivity to databases & to

partners’ systems, relevant government regulations, needs of some employees lose their jobs as a result of implementation.

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16.3 Acquiring IT Applications: Available Options (Step 3)


Buy vs. Lease Options

• Buying can be cost-effective & time-saving strategy compared with in-house development. Consider carefully to ensure that needs are met.

• Leasing can result in substantial cost & time savings.

• Lease IT application from outsourcer & then install on company’s premises.

• Lease from an application service provider (ASP) that hosts application at its data center.

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Table 16.1

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Software-as-a-service (SaaS)

• Software that is rented.• Reduce risks involved in acquiring new software.• Influence product & service quality via an

ongoing relationship with vendors.• Changing usage commitments as business

circumstances change.• Preparing financially justifiable business cases.• Predicting ongoing expenses more accurately.

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In-House Development (Insourcing)

• May be time consuming & costly.• Applications may better fit needs of organization.• Build from scratch – consider only for specialized

IT applications for which components are not available. Expensive & slow; provides best fit for organization’s needs.

• Build from components – must integrate tightly.• Integrating applications – entire applications are

employed.

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Methods Used in In-House Development

• Systems Development Life Cycle (SDLC).• Prototyping – risk of getting into endless loop of

prototyping revisions.• Web 2.0 or Application 2.0 methodology – involves

quick, incremental updates with close user involvement.

• End-user development – developed by people outside IS department. Includes users in all functional areas at all skill levels & organizational levels.

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Other Acquisition Options

• Join e-marketplace or e-exchange.• Join third-party auction or reverse auction.• Engage in joint venture.• Join public exchange or consortium.• Hybrid approach.

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Project Manager Roles in IT Outsourcing


16.4 Selecting an Acquisition Approach and Other Implementation Issues


Table 16.2

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Table 16.3

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Figure 16.3

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16.5 Connecting to Databases, Enterprise Systems, and Business Partners: Integration (Step 4)


Connecting – Step 4

• Databases – most common.• Back-end systems – requires integration with

variety of systems such as ERP, CRM, KM, SCM, EDI, data warehouses, etc.

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WebSphere InterChange Server Support

Companies that offer EAI (enterprise application integration):

http://www-01.ibm.com/software/integration/wbiserver/ics/support/

http://tibco.com/

http://www.softwareag.com/corporate/default.asp


Connecting – cont’d

• Business partners – via EDI, EDI/Internet, XML & extranets. Security & scalability become major issues.

• Web services – applications delivered over the Internet.

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Figure 16.4

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16.6 Business Process Redesign


Drivers of Process Redesign

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Adding commercial software.

Restructuring or eliminating old processes prior to automation.Need for information integration.

Reducing cycle time.

Need for customization.

Streamlining the supply chain.

Improving customer service & implementing CRM.

Participating in private or public e-marketplaces.

Conducting e-procurement.

Enabling direct online marketing.

Transforming to e-business.


Methods for Restructuring

• BPR – may include one or more processes. Can be anything from redesign of individual process to redesign of group of processes to design of entire enterprise.

• BPM – combines workflow systems & redesign methods. Covers: people-to-people, systems-to-systems, & systems-to-people interactions. Process-centered perspective. Blends workflow, process management & applications integration.

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Role of IT in BPR

• Recognize powerful solutions that make redesign & BPR possible; then seek processes that can be helped by such solutions.

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The One-Minute Risk Assessment Tool (Tiwana & Keil, 2004).


Some Reasons for BPR Failures

• High risk.• Inappropriate change management.• Failure to plan.• Internal politics.• Lack of participation & leadership.• Insufficient stakeholder involvement.• Poor analyses of business processes.• Inflexible software.• Lack of motivation• Lack of top management support.

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Acquiring Executive Support for Infrastructure Processes

http://www.informit.com/articles/article.aspx?p=21696


BPR Successes

• Higher success rate when less than entire organization undergoes restructure.

• Published most often in trade & academic journals.

• Great potential to improve organization’s competitive position.

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16.7 Managerial Issues


Major Managerial Issues

• Global & cultural.

• Ethical & legal issues.• User involvement is critical.• Change management.• Risk management.

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A THREE-PERSPECTIVE MODEL OF CULTURE, INFORMATION SYSTEMS, AND THEIR DEVELOPMENT AND USE.



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Documents

Chapter 16 Acquiring and Developing Business Applications and Infrastructure Information Technology for Management Improving Performance in the Digital