CHAPTER 11 Acquiring Information Systems and Applications 1 Copyright John Wiley & Sons Canada.

CHAPTER 11Acquiring Information

Systems and Applications

1Copyright John Wiley & Sons Canada

Copyright John Wiley & Sons Canada 2

11.1 Planning for and Justifying IT Applications

11.2 Strategies for Acquiring IT Applications

11.3 The Traditional Systems Development

Life Cycle

11.4 Alternative Methods and Tools for

Systems Development

11.5 Vendor and Software Selection

CHAPTER 11

ACQUIRING INFORMATION SYSTEMS AND APPLICATIONS

LEARNING OBJECTIVES

1. Define an IT strategic plan. Identify three objectives it must meet. 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. 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. Identify at least one advantage and one disadvantage of each method and tool.

5. Analyze the process of vendor and software selection.


Case 11.1 GE HEALTHCARE SWITCHES FROM SYSTEMS DEVELOPMENT LIFE CYCLE TO AGILE DEVELOPMENT

The Business Problem– GE Healthcare uses products developed by the company’s

Imaging Solutions, one unit was experiencing several SDLC difficulties:

– traditional systems development life cycle was too long, taking from 18 to 24 months.

– SDLC approach followed a long and regimented process. – many communication barriers existed among the various

business functions, especially marketing and engineering.



The Solution– To address these problems, Imaging Solutions replaced the

SDLC process with an approach to software and product development called agile development. Agile is based on iterations—frequent and incremental changes made through collaboration at all stages—that usually result in shorter product cycles. Imaging Solutions implemented a scrum initiative based on agile development.



The Results– The pilot project was delivered successfully with the correct

features and functionality. Imaging Solutions learned important lessons from the pilot project. The products it makes are highly regulated, meaning that engineers need to identify, plan for, and meet many additional quality and regulatory steps.



What We Learned From This Case– The GE Healthcare case highlights several problems with

systems development that employs the traditional systems development life cycle.

– The case also emphasizes the importance of early, frequent user input into the systems development process, which the agile development methodology encourages.


11.1 PLANNING FOR AND JUSTIFYING IT APPLICATIONS

• The need for information systems is usually related to organizational planning and to the analysis of the organization’s performance vis-à-vis its competitors.

• The cost-benefit justification must determine whether investing in a specific IT application is preferable to spending the funds on alternative projects.


11.1 IT’S ABOUT BUSINESS

• ShopMyClothes: High Fashion Sales– ShopMyClothes.com is a website so that people can post

clothes for sale without haggling. To ensure quality control over the thousands of clothing items that are posted, each item is individually checked before posting. The company had high website development and maintenance costs, due to the complexity of the platform it used, Microsoft’s .net framework. They dealt with the high costs by moving from having totally local programming to outsourcing much of its programming to India and having local programming available on a standby basis. To get a functioning website after many delays, the company had to fire its previous contract programmer.


http://www.microsoft.com/net

FIGURE 11.1 THE INFORMATION SYSTEMS PLANNING PROCESS


IT STRATEGIC PLAN

• The IT strategic plan must meet three objectives:1. aligned with the organization’s strategic plan.

2. provide for an IT architecture that seamlessly networks users, applications, and databases

3. efficiently allocate IS development resources among competing projects so that the projects can be completed on time and within budget and still have the required functionality.


IT STEERING COMMITTEE

• One critical component in developing and implementing the IT strategic plan is the [KT]IT steering committee.


IS OPERATIONAL PLAN

• A typical IS operational plan contains the following elements:– Mission– IT environment– Objectives of the IT function– Constraints of the IT function– Application portfolio– Resource allocation and project management


EVALUATING & JUSTIFYING IT INVESTMENT: BENEFITS, COSTS & ISSUES

• Justifying IT investment involves:• Assessing the costs

– Fixed costs– Future costs

• Assessing the benefits– Intangible benefits

• Comparing the two


CONDUCTING THE COST-BENEFIT ANALYSIS

• Four common approaches organizations use: 1. Net Present Value (NPV)

2. Return on Investment (ROI)

3. Breakeven Analysis

4. Business Case Approach


11.2 STRATEGIES FOR ACQUIRING IT APPLICATIONS

• Companies must make a series of fundamental business decisions:– How much computer code does the company want to write?– How will the company pay for the application?– Where will the application run?– 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• Open-Source Software• Outsourcing• Custom Development


ADVANTAGES AND LIMITATIONS OF THE “BUY” OPTION

• Advantages:– Many choices– Test software– Save time– Familiar product– Many users– Eliminate need to hire

specialized personnel

1. Disadvantages:– May not meet needs– Difficult to modify– No control over content– Difficult to integrate– May be discontinued– Controlled by another

company


FIGURE 11.2 OPERATION OF AN APPLICATION SERVICE PROVIDER (ASP)


FIGURE 11.3 OPERATION OF A SOFTWARE-AS-A-SERVICE (SAAS) VENDOR


11.3 Traditional Systems Development Life Cycle (SDLC)

• The SDLC is a structured framework that consists of sequential processes:– Systems Investigation– Systems Analysis– Systems Design– Programming and Testing– Implementation– Operation and Maintenance


SIX-STAGE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) WITH SUPPORTING TOOLS


FIGURE 11.5 COMPARISON OF USER AND DEVELOPER INVOLVEMENT OVER THE SDLC


SDLC – Systems Investigation

• The feasibility study is 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.


FEASIBILITY STUDY

• The Feasibility Study provides a rough assessment of the project’s:– Technical feasibility– Economic feasibility– Behavioral feasibility


Copyright John Wiley & Sons Canada 27

SDLC – SYSTEM ANALYSIS

• 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.

• User requirements identify the specific requirements that the system must satisfy.

SDLC – SYSTEMS DESIGN

• The deliverable is a set of technical system specifications, which specifies the following:– System outputs, inputs, calculations or processing, and user

interfaces– Hardware, software, databases, telecommunications, personnel,

and procedures– A blueprint of how these components are integrated


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


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– Adding new functions


11.4 ALTERNATIVE METHODS AND TOOLS FOR SYSTEMS DEVELOPMENT

• Joint application design (JAD)• Rapid application development (RAD)• Agile development• End-user development


RAD VERSUS SDLC

• The development process in RAD is iterative, similar to prototyping; that is, requirements, designs, and the system itself are developed and then undergo a series, or sequence, of improvements. RAD uses ICASE tools to quickly structure requirements and develop prototypes. As the prototypes are developed and refined, users review them in additional JAD sessions. RAD produces the functional components of a final system, rather than prototypes.


AGILE DEVELOPMENT

• The scrum approach contains sets of practices and predefined roles. The primary roles are:– The Scrum Master: maintains the processes (typically replaces a

project manager)– The Product Owner: represents the business users and any

other stakeholders in the project– The Team: a cross-functional group of about seven people who

perform the actual analysis, design, coding, implementation, testing, etc.


TOOLS FOR SYSTEMS DEVELOPMENT

• Prototyping• Integrated Computer-Assisted Software Engineering

Tools (ICASE)• Component-Based Development• Object-oriented Development


VENDOR AND SOFTWARE SELECTION

• Steps in selecting a software vendor and an application package:– identify potential vendors– determine evaluation criteria– evaluate vendors and packages– choose the vendor and package– negotiate a contract– establish service-level agreements


13.5 VENDOR & SOFTWARE SELECTION

• Step 1: Identify potential vendors.• Step 2: Determine the evaluation criteria.• 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

1. There are three objectives an IT strategic plan must meet. There are four common approaches to cost-benefit analysis.

2. There are four business decisions that companies must make when they acquire new applications.

3. There are six processes involved in the systems development life cycle: systems investigation, systems analysis, systems design, programming and testing, implementation, operation and maintenance.

4. There are four alternative development methods and four tools that augment development methods.


CHAPTER CLOSING (CONTINUED)

5. The process of vendor and software selection is composed of six steps: identify potential vendors, determine evaluation criteria, evaluate vendors and packages, choose the vendor and package, negotiate a contract, and establish service-level agreements.


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CHAPTER 11 Acquiring Information Systems and Applications 1 Copyright John Wiley & Sons Canada.

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