Mgmt 2006 Module 4

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MGMT 2006 Management Information

Systems I

Module 4

Developing and Acquiring New Systems

Simon Fraser

[email protected]

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Objectives

By the end of this module you should be able to:

� explain how the organization can develop information systems

that fit its business plan.

� identify the core activities in the systems development

process.

� evaluate alternatives for building systems.

� discuss systems acquisition strategies.

� describe the risks of outsourcing

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Readings

� Oz, Management Information Systems, Sixth Edition, Chapters

12 and 13 or

� Laudon and Laudon, Management Information Systems, Ninth

Edition, Chapter 14 (Pages 495 to 511) and Chapter 15 (Pages

548 to 562) or

� Laudon and Laudon, Management Information Systems, Tenth

Edition, Chapter 14 (Pages 553 to 564 and 572 to 583) and

Chapter 13 (Pages 524 to 529 and 534 to 542) or

� Laudon and Laudon, Management Information Systems,

Eleventh Edition, Chapter 13

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Assignent

• Pablo is a huge success!! He has grown from one

truck to over 100 but his IS is groaning under the

stain.

• Pablos™ now needs to upgrade to a new system

but he is getting a lot of conflicting advice.

• So he has turned to you, a recognized IS expert to

tell him what to do!

• Will you help Pablo get to 1,000 trucks or will you

drive him out of business!!!

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Major Themes

� Development and/or Acquisition of information systems represent a major investment for any organization.

� Some systems cost tens to hundreds of millions and failure can bean existential threat.

� It is critical that organizations align their Information Systems and Business Strategies. Failure to do so is a major cause of systems failure.

� Organizations have several choices as to how to go about implementing new systems. These include� Internal Development

� Licensing of pre-developed systems

� Outsourcing� Software as a Service (SaaS)

� Each of these choices comes with its own strengths and weaknesses

� Each choice is not an “either or” proposition.

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Linking IS Plans to Business Plans

• Business and IT professionals need to work

closely to ensure that the business and IT

plans are properly aligned

• Failure to do so could lead to unproductive

investments and eventually to loss of

competitive advantage.

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Define Corporate Vision and

Mission

Develop Corporate Objectives

Corporate

Strategies Programmes

Budgets

IT Vision and Mission

IT Objectives

IT Strategies Programmes and Budgets


• Mission: A short statement about what the

organization is here to achieve.

“At Microsoft, our mission and values are to help

people and businesses throughout the world to

realize their full potential.”

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• Vision: A short statement about how the

organization sees the ideal future.

“The Boeing Vision is: People working together as a

global enterprise for aerospace leadership.”

• Objectives: A specific, measurable, future

state of affairs.

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• Strategy: An long term plan for how an

organization will achieve its vision, mission

and key objectives. You can watch Michael

Porter discuss Strategy @

http://youtu.be/ibrxIP0H84M

• Tactics: Specific programmes that will be used

to implement the strategy.

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• Corporate Mission: Help People Everywhere

• Corporate Vision: By 2050 everyone will be helped

• Corporate Objectives: By 2050, help will reach 100% of the population

• Corporate Strategy: Leverage key competencies in Information Systems

• Corporate Tactics: Increase IS Budget by 50%, outsource non core functions, hire the best graduates.

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• IS Mission: Develop Capabilities to help Helpachieve corporate mission, vision and objectives

• IS Vision: IS will be a key determinant in Help’s success

• IS Objectives: System will scale to handle 1 million transactions per day by 2020

• IS Strategy: Invest in… Develop…

• IS Tactics: Develop Help.NET

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Define Corporate Vision and

Mission

Develop Corporate Objectives

Corporate

Strategies Programmes

Budgets

IT Vision and Mission

IT Objectives

IT Strategies Programmes and Budgets

Developing and/or Acquiring New

Systems

• Basically organizations have

two choices

–Developing in house (Make) or

–Buy (license, outsource, Saas)

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Developing and/or Acquiring New

Systems

• The choice it makes is a function of

– Resources and capabilities

– Corporate strategy

– Time pressure

– Prices

– Culture and politics

– The business environment

– Is the moon Blue?

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Developing In-house (Make)

• If the organization decides to develop its own

systems in-house it can

– use Traditional development methodologies

(SDLC)

– use Agile Development Methodologies

(Prototyping, RAD, Extreme programming etc.

– Encourage End User Development

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• The Systems Development Lifecycle (SDLC) is a phased approach to developing new systems.

• It has been around since the 1960s and is well understood.

• It has, however, been criticized as being too slow and costly.

• The SDLC is based on a step by step approach.

• Each step must be completed before moving on to the next.

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Identify Problem/

Opportunity

Conduct Investigation

Create Conceptual

Design

DevelopmentTesting

Implementation

Maintenance

SDLC

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• Problem/Opportunity: Average Registration

time is 3 days. Opportunity to reduce to 5

minutes.

• Investigation: Why is registration taking so

long? What are the steps? Where are the

bottlenecks?

• Create Conceptual Design: Design of workflow,

databases, input screens, reports.

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• Development: Start writing the programs,

developing screen layouts, databases and

reports.

• Testing: Test individual components. Test the

system as a whole? Get rid of bugs and

bottlenecks. Does it work?

• Implementation: Out with the old, in with the

new!!

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• Maintenance: Student ID being expanded

from 12 to 20 characters.

• New rule. GATE will only pay for first attempt

at a course!!?

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• University getting out of the education

“business”.

• Core competency in entertainment and

recreation.

• Year long summer camp? All degrees,

courses and lecturers to be phased out.

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Entirely New Set of

Systems Needed!!

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Identify Problem/

Opportunity

Conduct Investigation

Create Conceptual

Design

DevelopmentTesting

Implementation

Maintenance

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• Agile Methods have been proposed as

solutions to the length of time it takes to use

the SDLC.

• The major focus of Agile methods is speed not

perfection.

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Agile Methods


• Agile methods envisions small teams of users

and developers collaborating though an

iterative process.

• Prototyping and Extreme programming are

two of the most common forms of Agile

methods.

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What do you need?

Is this it?

Kinda but

What about this?

Better but..

How about now?

Sweet but..

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• While Agile methods might be faster many

fear that teams may overlook critical issues

(security, scalability) in a rush to get

something up and running.

• For this reason, some organizations feel more

comfortable using the SDLC for critical systems

and Agile methods for non core systems.

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• End user development is a process whereby

end users are provided with user friendly

development tools and encouraged to develop

their own systems.

• End user development has been used to

reduce the bottleneck of projects that the IT

department can handle at any one time.

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• Tools like Microsoft Excel and Access can be used to create simple databases and models.

• Crystal Reports and Focus are flexible report writers that can allow end users to extract valuable information from corporate databases.

• Dreamweaver and Microsoft Expressions can be used to develop simple Intranets and Extranets.

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• However, as with Agile methods, many worry

that end user development is best suited for

small, not critical systems.

• Major systems with strategic implications are

left to the professionals in the IT department.

• The pros will continue to use a combination of

the SDLC and Agile Methods.

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Acquiring Systems (Buy)

• If an organization decided not to attempt to

develop systems internally it can opt to

acquire a system.

• Here there are a few choices

– Licensing

– Outsourcing

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• If an organization decides to buy a system it can opt to acquire a license for pre-developed “off the shelf” software.

• For example, rather than developing an ERP system “in house” a company can license a system from SAP.

• Note that licensing a system does not mean that you own the system. You have just been granted a right to use it.

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• One advantage of this method is that it is considerably faster than developing the system in house.

• Another is that it is often much less costly as the cost of development has been amortized over many customers.

• A disadvantage is that the system may not be an “exact” match for the organizations requirements.

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• When an organization licenses a system it

often chooses to run the system on its own

hardware.

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• Another choice for organizations is to outsource systems all together.

• For example, UWI could decide that Registration was a non critical function and “outsource” it to IBM.

• IBM would then, from the background, run all UWI’s registration systems and processes.

• Without sourcing the outsourced department often ends up working for the vendor.

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• A relatively new form of outsourcing is called

Software as a Service (Saas)

• The use of SaaS is predicated on the

availability of a high speed network to link the

service provider and the customer.

• Today, most organizations use the Internet to

provide this link.

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• Today, anyone wanting to implement a CRM

system could choose to develop it in house,

license a package from Oracle or use a SaaS

service provided by Salesforce.com

• With SaaS, the entire application will run on

the Salesforce.com’s servers and the customer

will connect to their account though a web

browser.

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• SaaS removes a lot of the burden of funding,

running and maintaining an IS from the client

organization.

• The client does not have to buy servers, hire IT

staff, maintain systems, etc.

• All it does is pay the SaaS provider a monthly

fee for use.

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Make or Buy?

• What kind of discussions do you think a

company would need to have when trying to

decide if to develop its own system, license it

or outsource it completely?

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Systems Implementation

• No matter what approach is decided upon,

organizations will have to implement their

new systems.

• Basically, they will be replacing existing

systems with new ones.

• At best this is a stressful time, at worse it

could be a disaster in the making.

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• There are generally four conversion strategies.

– Parallel

– Phased

– Direct Cut Over

– Pilot

• The most appropriate strategy will depend on

the company and on the system being

converted.

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• Parallel: Running both systems, the old and the new, side by side.

• Phased: A modular approach, implementing the system one or two modules at a time.

• Direct Cut Over. Turn off old system on Friday and turn on new system over the weekend but in time for Monday.

• Pilot. Depending on the organization, it may be posibble to test the new system in a few departments/offices/branches before rolling it out to the rest of the organization.

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Objectives

By the end of this module you should be able to:

� explain how the organization can develop information systems

that fit its business plan.

� identify the core activities in the systems development

process.

� evaluate alternatives for building systems.

� discuss systems acquisition strategies.

� describe the risks of outsourcing

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Documents

Mgmt 2006 Module 4