CHAPTER 10 Acquiring Information Systems and Applications
Chapter Outline • 10.1 Planning for and Justifying IT Applications • 10.2 Strategies for acquiring IT Applications • 10.3 Traditional Systems Development Life Cycle • 10.4 Alternative Methods and Tools for Systems Development • 10.5 Outsourcing and Application Service Providers • 10.6 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. • 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.
10.1 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 • 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 must be aligned with the organization’s strategic plan. • It must provide for an IT architecture that enables users, applications and databases to be seamlessly networked and integrated. • It must efficiently allocate IT development resources among competing projects, so that projects can be completed on time and within budget and the have the required functionality.
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 : derived from IT strategy. • IT environment : summary of information needs of the functional areas and of the organization as a whole. • Objectives of the IT function : best current estimate of the goals. • Constraints of the IT function : technological, financial, personnel and other resource limitations. • Application portfolio : prioritized inventory of present applications and a detailed plan of projects to be developed or continued. • Resource allocation and project management : listing of who is going to do what, how and when.
Evaluating & Justifying IT Investment: Benefits, Costs & Issues • Assessing the costs • Fixed costs: are those costs that remain the same regardless of change in the activity level. For IT, fixed costs include infrastructure cost, cost of IT services, and IT management cost • Total cost of ownership (TCO): Formula for calculating cost of acquiring, operating and controlling an IT system. • Assessing the benefits (Values) • Intangible benefits: Benefits from IT that may be very desirable but difficult to place an accurate monetary value on. • Compare and identify issues
10.2 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
Software-as-a-service • A method of delivering software, in which a vendor hosts the applications, and customers access these applications over the Internet. • Cloud Computing • e.g., Google Maps
10.3 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.
The Systems Development Life Cycle (SDLC) • Major advantages • Control • Accountability • Error detection • Major drawbacks • Relatively inflexible • Time-consuming and expensive • Discourages changes once user requirements are done
SDLC – 1) Systems Investigation • Begins with the business problem (or opportunity) followed by the feasibility analysis. • Feasibility study • The main task of the Systems Investigation phase. • The feasibility study helps the organization choose between 3 options: • (1) Do nothing and continue to use the existing system unchanged. • (2) Modify or enhance the existing system. • (3) Develop a new system. • Go/No-Go Decision
SDLC – 2) System Analysis • Is the examination of the business problem that the organization plans to solve with an information system. • Users prefer information systems that are oriented toward facilitating organizational tasks and solving business problems • 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 – 3) 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. • 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 – 4) Programming & 5) 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 – 6) Systems Implementation • Implementation or deployment is the process of converting from the old system to the new system. • There are four major conversion strategies. • Direct Conversion. Implementation process in which the old system is cut-off and the new system turned on at a certain point in time. • Pilot Conversion. Implementation process that introduces the new system in one part of the organization on a trial basis, when new system is working property, it is introduced in other parts of the organization. • Phased Conversion. Implementation process that introduces components of the new system in stages, until the entire new system is operational. • Parallel Conversion. Implementation process in which the old system and the new system operate simultaneously for a period of time. Rarely used today if at all.
SLDC – 7) Operation & 8) 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: A process that continues throughout the life of the system. • Updating: Updating the system to accommodate changes in business conditions (a.k.a., minor requirement changes) • New Functionally to the system: Adding new features to the existing system without disturbing its operation.
10.4 Alternative Methods & Tools for Systems Development • Prototyping • Approach that defines an initial list of user requirements, builds a prototype system and then improves the system in several iterations based on users’ feedback. • Joint application design (JAD) • A group–based tool for collecting user requirements and creating system designs. • Computer-Assisted Software Engineering (CASE) • Development approach that uses specialized tools to automate many of the tasks in the SDLC; upper CASE tools in SDLC automate the early stages of the SDLC, and lower case tools automate the later stages. • Integrated Computer-Assisted Software Engineering (ICASE) Tools • CASE tools that provide links between upper CASE and lower CASE tools. • Rapid Application Development (RAD) • Development method that uses special tools and an iterative approach to rapidly produce a high-quality system. • Agile Development • Development method that delivers functionality in rapid iterations requiring frequent communication, development, testing, and delivery. • End-User Development • Development method that has the actual user develop their own application(s) for use. • Component-Based Development • Uses standard components to build applications.
Prototyping • Helps clarify user requirements, promotes genuine user participation, and may produce part of the final system? • But, it may encourage inadequate problem analysis, is not practical with large numbers of users, and may result in a system with lower quality. • Order of steps to follow in the project • Identify user requirements; • develop the prototype; • use the prototype; revise and • enhance the prototype
10.5 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.
10.6 Vendor & Software Selection • Step 1: Identify potential vendors. • Step 2: Determine the evaluation criteria. • This is the most difficult and crucial task . • 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.