AIS Development Strategies
Chapter 19
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Overview
Today we will cover:
(1) Three ways to obtain a new IS:
Purchase Software, Develop in-house, Outsource
(2) Three ways to improve the development
process:
Business process reengineering (BPR),
Prototyping, Computer-aided software engr. (CASE) tools
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INTRODUCTION
• Companies can experience a number of difficulties
in developing an AIS internally, including:
– Projects are backlogged for years because of the high
demand for resources.
– The newly designed system doesn’t meet user needs.
– The process takes so long that by the time it’s complete,
it’s obsolete.
– Users can’t adequately specify their needs.
– Changes to the AIS are often difficult to make after
requirements have been written into the specifications.
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Alternatives to in-house
• Purchase software
• Hire outside company to develop &
maintain system
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Purchase Software
• Canned software sold on the open market to users with
similar requirements
– General purpose software AIS (SAP, Oracle, Great
Plains, Peachtree, Quick Books).
– Software also developed to meet the needs of particular
businesses.
• Difficulties of canned software:
– 3rd party software rarely meets all needs.
– Need to upgrade to new versions.
– Loss of control.
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Purchase--Turnkey Systems
• The vendor installs the entire system (both
hardware and software) and sells as
package.
• Many vendors specialize in particular
industries (e.g., video rental)
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Application Service Providers
(ASPs)
Web-based software delivered over the
Internet. “Rent” rather than buy the
software. Can reduce costs, and allow
companies to focus on core competencies,
not software.
E.g., Internet version of TurboTax
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Purchasing Software and the
SDLC
• SDLC still followed.
• Systems analysis: companies should conduct an initial
investigation, survey, and feasibility analysis to determine
requirements.
• Conceptual systems design: determining if software that
meets requirements is already available.
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Purchasing Software and the
SDLC (continued)
• Physical design: if software is purchased, some of the
physical design phase (coding) can be omitted. It may be
necessary to modify the purchased software to meet
company needs, and controls and reports still need to be
defined.
• Implementation and conversion: still need to convert
systems, install and test hardware and software, select and
train personnel, and document the new system. Do NOT
develop & test software or document computer program.
• Operation and maintenance: still necessary. Vendor
typically maintains.
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Selecting a Vendor
• Is the software applicable to your business?
How long will it meet your needs? Will the
vendor be around?
• Finding a vendor: Look in phone book, Obtain
referrals, Scan computer or trade magazines, Attend
conferences, Use search organizations
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Acquiring hardware and
software
Once AIS requirements have been defined, the
organization can buy software and hardware.
Companies needing only a PC and some office
software can usually complete their own
research and make a selection.
When buying large or complex systems, a request
for proposal (RFP) should be prepared.
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Request for proposal (RFP)
The RFP is an invitation to bidders to propose a
system by a specific date.
The more information a company provides to a
vendor, the better the company’s chances of
receiving a system that meets its requirements.
Be sure to distinguish between mandatory and
desirable requirements. (General RFPs)
Each proposal is evaluated.
Finalists are investigated in depth.
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Evaluating proposals and
selecting a system
– Eliminate any proposals that:
• Are missing important information.
• Fail to meet minimum requirements.
• Are ambiguous.
– Those that pass the preliminary screening should be
compared with the proposed AIS requirements to
determine:
• If they meet all mandatory requirements.
• How many desirable requirements they meet.
– Finalists can be invited to demo their system using
company-supplied data.
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Evaluating proposals (contin.)
• In reviewing the proposals, you need to
evaluate:
– Hardware
– Software
– Vendors
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Hardware Evaluation
• Criteria to evaluate hardware include:
• Cost
• Ability to run required software
• Processing speed and
capabilities
• Secondary storage capability
• Input and output speeds
• Communication capabilities
• Expandability
• Recency of technology
• Availability
• Compatibility with existing
hardware, software, and
peripherals
• Performance compared to
competitors
• Cost and availability of support
and maintenance
• Warrantees and guarantees
• Financing arrangements
• Ability to meet mandatory
requirements
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Software Evaluation
• Criteria to evaluate software include:
• Conformity with specifications
• Need for modification
• Performance (speed, accuracy,
reliability)
• Use by other companies
• Satisfaction of other users
• Documentation
• Compatibility with existing
software
• User-friendliness
• Ability to be demonstrated and
test-driven
• Warranties
• Flexibility and maintainability
• Capability for online inquiry of
files and records
• Vendor upgrades
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Vendor Evaluation
• Criteria to evaluate vendors include:
•
•
•
•
•
•
•
•
Size
Financial stability and security
Experience
Quality of support and
warranties
Regularity of updates
Ability to provide financing
Willingness to sign contract
Willingness to provide
references
• Reputation for reliability and
dependability
• Hardware and software support
and maintenance
• Implementation and installation
support
• Quality and responsiveness of
personnel
• Willingness to provide training
• Responsiveness and timeliness
of support
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System Performance
Approaches to comparing system
performance:
– Benchmark problem
– Point scoring
– Requirements costing
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Benchmarking
Benchmark problem
– The new AIS performs a data processing task
with input, processing, and output jobs typical
of what would be required of the new system.
– Processing times are calculated and compared.
– The AIS with the lowest time is judged most
efficient.
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2010 Foster Business School
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Point Scoring
– A weight is assigned to each criterion used to
evaluate the system, based on the relative
importance of that criterion.
– Each criterion is rated for each product.
– Each rating is multiplied times the weight
assigned to the criterion to develop a weighted
score.
– The weighted scores are added for each
product.
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Point Scoring -- Example
– O’Neil Co. is evaluating systems offered by three
different vendors: Able Co., Baker Co., and Cook Co.
– O’Neil has determined three criteria that they will use
to evaluate the different systems: cost, speed, and
vendor reliability.
– They have provided the following weights to each
criteria, with vendor reliability being the most critical:
• Vendor reliability—9
• Cost—6
• Speed—4
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Point Scoring -- Example
O’Neil examined the packages offered by the three vendors
and rated them based on these three criteria. Ratings were
from 1–5 with 5 being the highest score.
Criteria
Able Co.
Baker Co.
Cook Co.
Vendor reliability (9)
2
5
4
Cost (6)
5
3
4
Speed (4)
3
4
2
WEIGHTED SCORES
Criteria
Able Co.
Baker Co.
Cook Co.
Vendor reliability (9)
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Cost (6)
30
18
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Speed
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Point Scoring -- Example
The weighted scores for each company are summed:
– Able = 60 points
– Baker = 79 points
– Cook = 68 points
Based on the preceding scores, the bid would
probably be awarded to Baker Co.
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2010 Foster Business School
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Point Scoring -- Example
The preceding example is a simplification. In
a real-life scenario, several factors would be
different:
– There would probably be many more criteria
being considered.
– Several people would be rating the criteria, and
the final scores for each vendor would probably
be a composite of those individual scores.
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2010 Foster Business School
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Requirements costing
Estimates cost of purchasing or developing features that
are not included in a particular AIS.
The total AIS cost is calculated by adding the
acquisition cost to the purchasing and development
costs.
Total cost = cost of system with all required features.
Focus is on having lowest cost while meeting
requirements (efficiency).
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2010 Foster Business School
Acctg. 320 AIS
L.DuCharme
Test-drive
Verify that the AIS that looks best on paper is
actually the best in practice:




Test-drive the software.
Contact other users for references.
Evaluate vendor personnel.
Confirm details of the proposal.
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2010 Foster Business School
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In-house
Developing custom software is difficult, but some
companies prefer this approach—particularly if
the company is large, has unique needs, and
believes their systems provide a competitive
advantage.
(1) software developed by IS staff.
(2) software developed by End users.
Accountants help contribute by being project
supervisors, users, or development team members.
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2010 Foster Business School
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End-user-Developed Software
• One approach to developing software inhouse is to take the lion’s share of the effort
out of the hands of the IS department and
place it in the laps of the ultimate
information users.
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2010 Foster Business School
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End-user-developed software
– End-user computing (EUC) is the hands-on
development, use, and control of computer-based
information systems by users.
– With EUC, individuals use IT to meet their own IS
needs rather than rely on systems professionals.
– Why?
• The demand for information systems has grown exponentially
since the introduction of the computer.
• One solution to meeting these needs is to have end users meet
their own information needs.
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End-user development
• Technology has evolved to automate much
of the system development process. Factors
contributing to EUC are:
–
–
–
–
Increased computer literacy.
Easier-to-use programming languages.
Inexpensive PCs.
A variety of powerful and inexpensive software
packages.
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2010 Foster Business School
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End-user Computing
• As end users began to meet their initial
needs, two things happened:
– Users realized computers could be used to meet
more and more information needs.
– Increased access to data created many new uses
and needs for information.
• Result: A tremendous growth in end-user
computing that is expected to continue.
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2010 Foster Business School
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End-user Development
End User Development occurs when
information users, such as managers,
accountants, and internal auditors, develop
their own applications using computer
specialists as advisors. Inappropriate for
very complex systems. May be appropriate
for simpler projects.
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2010 Foster Business School
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EUC -- Benefits
• Benefits of end-user computing:
–
–
–
–
–
User creation, control, and implementation
Systems that meet user needs
Timeliness
Freeing up systems resources
Versatility and ease of use
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EUC -- Risks
• Risks of end-user computing:
–
–
–
–
–
–
–
Logic and development errors
Inadequately tested applications
Inefficient systems
Poorly controlled and documented systems
System incompatibilities
Duplication of systems and data and wasted resources
Increased costs
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2010 Foster Business School
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Managing and controlling EUC
 Provide help-desks
 Train users in how risks and benefits of EUC
 Evaluate new hardware and software products
 Set standards for developing and implementing
software
 Control corporate data
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2010 Foster Business School
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Outsourcing the system
Outsourcing: hiring an outside company to
handle all or part of an organization’s data
processing activities. Rapidly growing
business.
Sometimes entire IT organizations are
transferred to another company.
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Outsourcing
Examples of outsourced activities:
–
–
–
–
–
Installation
Training
Maintenance
Help desk
Technical support
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2010 Foster Business School
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Outsourcing
• Most companies that outsource use several
different companies rather than a single source in
order to:
– Increase flexibility
– Foster competition
– Reduce costs
• Most companies do not outsource:
– Strategic management of their IT environment
– Business process management
– IT architecture
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2010 Foster Business School
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Outsourcing -- Benefits
– Provides a business solution
– Asset utilization
– Access to greater experience and more
advanced technology
– Lower costs
– Improved development time
– Elimination of peaks-and-valleys usage
– Facilitation of downsizing
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2010 Foster Business School
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Outsourcing -- Risks
–
–
–
–
–
–
–
Inflexibility (long-term contracts)
Loss of control (system, confidential data)
Reduced competitive advantage
Locked in system (have to rebuild expertise)
Unfulfilled goals (benefits unrealized)
Poor service (slow response)
Increased risk (business risk)
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2010 Foster Business School
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Business Process Reengineering
• Business process reengineering (BPR) is the
analysis and redesign of business processes
and information systems to achieve
significant performance improvements.
– Reduces a company to its essential business
processes.
– Reshapes organizational work practices and
information flows to take advantage of
technological advancements.
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2010 Foster Business School
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Business Process Reengineering
• BPR:
– Simplifies the system.
– Makes it more effective.
– Improves a company’s quality and service.
• Business Process Management (BPM)
software has been developed to help
automate many BPR tasks.
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Business Process Reengineering
Michael Hammer has set forth several principles that help
organizations successfully reengineer business processes:
- Organize around outcomes, not tasks.
- Require those who use the output to perform the
process.
- Require those who produce information to process it.
- Centralize AND disperse data.
- Integrate parallel activities.
- Empower workers, use built-in controls, and flatten the
organization chart.
- Capture data once—at its source.
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Challenges faced by
reengineering efforts
Many BPR efforts fail or fall short of their
objectives. A company must overcome the
following obstacles:
•
•
•
•
•
•
•
Tradition (change culture & beliefs)
Resistance
Time and cost requirements (BPR costly, takes time)
Lack of management support
Skepticism (same thing, different box)
Retraining (costly)
Controls (keep important controls)
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Prototyping
Prototyping is an approach to systems design in which a
simplified working model of a system is developed.
– The prototype (first draft) is built quickly at low cost
and provided to users for experimentation.
– Playing with the prototype allows users to determine
what they do and do not like.
– Developers modify the system in response to user
comments and re-present it to them.
– The iterative process continues until users are satisfied
that the system meets their needs.
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2010 Foster Business School
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Prototyping
• Four steps are involved in developing a
prototype:
–
–
–
–
(1) Identify basic requirements
(2) Develop an initial prototype
(3) Repeated iterations
(4) Use the system
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When to use prototyping
•
•
•
•
•
•
•
•
Users don’t fully understand their needs, or the needs change rapidly.
System requirements are difficult to define.
System inputs and outputs are not known.
The task to be performed is unstructured or semi-structured.
Designers are uncertain about what technology to use.
The system is crucial and needed quickly.
The risk of developing the wrong system is high.
The users’ reactions to the new system are important development
considerations.
• Many design strategies must be tested.
• The design staff has little experience developing this type of system
or application.
• The system will be used infrequently so that processing efficiency is
not crucial.
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2010 Foster Business School
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Prototyping
Good candidates for prototyping:
–
–
–
–
–
Decision support systems.
Executive information systems.
Expert systems.
Information retrieval systems.
Systems that involve experimentation and trial-anderror development.
– Systems in which requirements evolve as the system is
used.
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2010 Foster Business School
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Prototyping
Prototyping is usually inappropriate for:
– Large or complex systems that:
• Serve major organizational components; or
• Cross numerous organizational boundaries.
– Standard AIS components, such as:
• Accounts receivable
• Accounts payable
• Inventory management
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2010 Foster Business School
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Prototyping -- Advantages
–
–
–
–
–
–
Better definition of user needs
Higher user involvement and satisfaction
Faster development time
Fewer errors
More opportunity for changes
Less costly
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2010 Foster Business School
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Prototyping -- Disadvantages
–
–
–
–
–
–
Significant user time
Less efficient use of system resources
Incomplete system development
Inadequately tested and documented systems
Negative behavioral reactions
Never-ending development
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2010 Foster Business School
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Computer-aided software (or
systems) engineering
• Computer-aided software (or systems)
engineering (CASE) tools are an integrated
package of computer-based tools that automate
important aspects of the software development
process.
– Used to plan, analyze, design, program, and maintain
an information system.
– Also used to enhance efforts of managers, users, and
programmers in understanding information needs.
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2010 Foster Business School
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CASE software
• CASE tools do not replace skilled designers, but
provide developers with effective support for all
SDLC phases.
• CASE software typically includes tools for:
–
–
–
–
–
Strategic planning
Project and system management
Database design
Screen and report layout
Automatic code generation
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2010 Foster Business School
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CASE -- Advantages
– Increased productivity (over 600%)
– Improved program quality (maintain
consistency)
– Cost savings (80-90%)
– Improved control procedures
– Simplified documentation (automatic)
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2010 Foster Business School
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CASE -- Disadvantages
• Problems with CASE technology:
– Incompatibility with other systems
– Cost (expensive up to $350,000 for tools)
– Unmet expectations (fewer than 50% believe
expected benefits were obtained)
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2010 Foster Business School
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