CHAPTER 13

Acquiring Information Systems and Applications

CHAPTER OUTLINE

13.1 Planning for and Justifying IT Applications13.2 Strategies for Acquiring IT Applications13.3 The Traditional Systems Development Life

Cycle13.4 Alternative Methods and Tools for

Systems Development13.5 Vendor and Software Selection

LEARNING OBJECTIVES

1. Define an IT strategic plan, identify three objectives it must meet, and describe the four common approaches to cost-benefit analysis.

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

3. Identify the six processes involved in the systems development life cycle, and explain the primary tasks and importance of each process.

LEARNING OBJECTIVES (continued)

4. Describe four alternative development methods and four tools that augment development methods, and identify at least one advantage and one disadvantage of each method and tool.

5. Analyze the process of vendor and software selection.

13.1 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

Information Systems Planning

Information Systems Planning (continued)

Organizational Strategic Plan IT Architecture

IT Strategic Plan

IT Steering Committee

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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 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

13.2 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 Application

Customize a Prewritten Application

Lease the applications

Application Service Providers and Software-

as-a-Service Vendors

Use Open-Source Software

Outsourcing

Custom Development

Operation of an Application Service Provider (ASP)

ASP Data Center

CustomerA

Application

CustomerB

Application

CustomerC

Application

Database Database Database

Operation of a Software-as-a-Service (SaaS) Vendor

SaaS Vendor Data Center

CustomerA

CustomerB

CustomerC

CustomerA

CustomerB

CustomerC

Application

13.3 Traditional Systems Development Life Cycle

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

Prototyping

Six-Stage Systems Development Life Cycle (SDLC) with Supporting Tools

Systems Investigation

Deliverable: Go/No Go Decision

Systems Analysis

Deliverable: User Requirement

Systems Design

Deliverable: Technical Specification

Programming and Testing

ImplementThe

System

Operation and Maintenance

Business Need

Joint Application

Design (JAD)

Upper CASE Tools

Lower CASE Tools

The SDLC

Major advantagesControl

Accountability

Error detection

Major drawbacksRelatively inflexible

Time-consuming and expensive

Discourages changes once user requirements are gathered

SDLC – Systems Investigation

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

Feasibility study

Deliverable: 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 – 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)

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

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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.

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

13.4 Alternative Methods and Tools for Systems Development

Joint application design (JAD)

Rapid application development (RAD)

Agile development

End-user development

RAD versus SDLC

Tools for Systems Development

Prototyping

Integrated computer-assisted software engineering (ICASE)

Component-based development

Object-oriented development

13.5 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 package

Step 5: Negotiate a contract.

Step 6: Establish a service level agreement.

Chapter Closing Case

• The Problem

• The Solution

• The Results