Part B - Information Systems and Information Technology Solutions

B.4.5. Selecting an Acquisition Alternative

An objective comparison of options for the acquisition of software applications is rarely possible. Acompletely objective analysis can be done only if one assumes that absolutely equivalent systemswould be acquired and only the manner of acquisition would differ. Table 1 compares the foursoftware acquisition alternatives.

Part B - Information Systems and Information Technology Solutions

Table 1. Summary of Project Requirements and Application Software Acquisition Alternatives

Acquisition AlternativeProject

Requirement In-houseDevelopment

ContractDevelopment

PurchasedPackage

(Turn-key)

TransportedSystem

Contract Not applicable Tight control of costAnd schedules;recourse againstcontractor possible;may includewarranty andsupport

Predefined costand schedule; easeof specificperformancestatement;recourse againstvendor welldefined; shouldinclude warrantyand supportprovisions

Not normallyavailable

Development orAcquisition Cost

High High Moderate Low

Implementation Cost High to moderate High to moderate Moderate to low High to lowSystems' Reliability Moderate Moderate to high High Moderate to lowFlexibility inMeeting User'sRequirements

Excellent Excellent Moderate Minimal

Maintenance andEase of Modification

High with permanentin-house staff,difficult otherwise

High with supportcontract, low without

High if performedby vendor,probably extremelydifficult otherwise

Limited to supportavailable fromoriginal developerand quality ofdocumentation

Confidence in FinalProduct's Operation(1-4) where 1 = low

2. (assumingcompetent staff)

3. (assumingcompetentcontractor)

4. (assumingproven package)

1. (assuming nopreviouswidespreaddistribution)

Planning andAnalysisRequirement

Full conceptual planRequired; generalAnalysis completed;minimal detaildesign required

Full conceptual planrequired; generalanalysis completed;full detail designdefined; milestonesdefined; projectmanagement plancompleted

Conceptual plannecessary forpackage selection;general analysiscompleted foradaptation; nodetail designrequired

Conceptual plannecessary forpackage selection;general analysiscompleted foradaptation; nodetail designrequired

ImplementationTime/complexity(1-4) where 1 = best

3. 2. 1. 4. (generality anddocumentationproblems)

Staffing Needed Projectmanagement,administrativefunctions,systems analysis,systems design,programming

Projectmanagement,administrativefunctions,systems analysis

Administrativefunctions,minimal projectmanagementrequired

Projectmanagement,administrativefunctions,programming (ifoutside support isunavailable)

Major PotentialProblems

Technical staffing,personnelmanagement,project management,cost control, controlof system scope

RFP preparation,contracting, projectadministration,contractor reliability,staff acceptance ofsystem, long-termsupport

Packagecapabilities andadaptability, staffacceptance ofsystem,maintenance,modifications,upgrading, long-term support

System capabilitiesand adaptability,reliability,implementationsupport and cost,documentation,long-term support,maintenance,upgrading,modification,staffacceptance

Part B - Information Systems and Information Technology Solutions

Although theoretically possible, this assumption is unlikely to be the case except possibly in acomparison of in-house development and contract development. The following assumptions aboutacquisition alternatives could reflect a more realistic set of circumstances:

The in-house staff is competent, but not as experienced or technically strong overall as thestaff a good contractor could provide, and there will be turnover in the in-house staff.

The contractor has worked in the same or a closely related application area, will not be proneto miss schedules, and will not fully comprehend all aspects of the hospital's managementrequirements.

The packaged system comes close to the actual requirement but will require modification,and the package has been successfully installed beyond its original development point.

The transported system was originally developed to meet a very specific set of requirementsfor another facility and it is not well documented.

Each of the four alternatives offers inherent advantages and disadvantages. However, all the optionsshare several basic requirements:

Determination of minimum system requirements must precede any move to acquire aninformation system.

Planning for the implementation process must be carefully developed and documented well inadvance.

Policies and procedures to support the systems must be established before implementation iscomplete.

Management commitment to and support of the system must be very strong and evident.

In many situations, the best approach may well be a combination of the four options. For example, areliable system might be available from another health organization or an independent softwarevendor that appears to meet the majority of the organization's needs. In this case, a contractor couldbe employed to make modifications to the software and assist in implementation planning andconversion. In-house staff could be hired to assist in the modification process, conduct staff training,provide conversion support, and provide long-range system maintenance.