CHAPTER 14
Acquiring Information Systems and
Applications
CHAPTER OUTLINE
14.1 Planning for and Justifying IT Applications
14.2 Strategies for Acquiring IT Applications
14.3 The Traditional Systems Development Life
Cycle
14.4 Alternative Methods and Tools for
Systems
Development
14.5 Vendor and Software Selection
LEARNING OBJECTIVES
1. Discuss the different cost/benefit analyses that
companies must take into account when formulating an
IT strategic plan
2. Discuss the four business decisions that companies
must make when they acquire new applications
3. Enumerate the primary tasks and importance of each
of the six processes involved in the systems
development life cycle
4. Describe alternative development methods and tools
that augment development methods
5. Analyze the process of vendor and soft ware selection
14.1 Planning for and Justifying
IT Applications
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
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
Assessing the costs
Fixed 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
14.2 Strategies for Acquiring IT
Applications
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 Softwareas-a-Service Vendors
Use Open-Source Software
Outsourcing
Custom Development
14.3 Traditional Systems
Development Life Cycle
Traditional Systems Development
Life Cycle
Software Development Life Cycle (SDLC)
Systems Investigation
Systems Analysis
Systems Design
Programming and Testing
Implementation
Operation and Maintenance
The SDLC
Major advantages
Control
Accountability
Error detection
Major drawbacks
Relatively 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 – System Analysis
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 – 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
14.4 Alternative Methods and Tools
for Systems Development
Alternative Methods and Tools
for Systems Development
•Joint application design (JAD)
•Rapid application development (RAD)
•Agile development
•End-user development
14.5 Vendor & Software Selection
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.
Closing Case #1
Tweak or Trash?
• The Problem
• The Solution
• The Results
Closing Case #2
Putting IT All Together
• The Problem
• The Solution
• The Results