CHAPTER 13
Acquiring Information Systems and
Applications
CHAPTER OUTLINE
13.1 Planning for and Justifying IT Applications
13.2 Strategies for Acquiring IT Applications
13.3 The Traditional Systems Development Life
Cycle
13.4 Alternative Methods and Tools for
Systems Development
13.5 Vendor and Software Selection
LEARNING OBJECTIVES
1. Define an IT strategic plan, identify three
objectives it must meet, and 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, and 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, and identify at least one
advantage and one disadvantage of each
method and tool.
5. Analyze the process of vendor and software
selection.
13.1 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
Information Systems Planning
Information Systems Planning (continued)
Organizational
Strategic Plan
IT Architecture
IT Strategic Plan
IT Steering Committee
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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
13.2 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
Operation of an
Application Service Provider (ASP)
Customer
A
Customer
B
Customer
C
Application
Application
Application
Database
Database
Database
ASP Data Center
Operation of a
Software-as-a-Service (SaaS) Vendor
Customer
A
Customer
B
Customer
C
Application
Customer
A
Customer
B
Customer
C
SaaS Vendor Data Center
13.3 Traditional Systems Development
Life Cycle
Software Development Life Cycle (SDLC)
Systems Investigation
Systems Analysis
Systems Design
Programming and Testing
Implementation
Operation and Maintenance
Six-Stage Systems Development Life
Cycle (SDLC) with Supporting Tools
Business
Need
Prototyping
Systems
Investigation
Systems
Analysis
Systems
Design
Deliverable:
Go/No Go
Decision
Deliverable:
User
Requirement
Deliverable:
Technical
Specification
Upper CASE
Tools
Joint
Application
Design (JAD)
Programming
and Testing
Implement
The
System
Lower CASE
Tools
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 – 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.
SDLC – System Design (continued)
Scope creep is caused by adding functions
after the project has been initiated.
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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
13.4 Alternative Methods and Tools
for Systems Development
Joint application design (JAD)
Rapid application development (RAD)
Agile development
End-user development
RAD versus SDLC
Tools for Systems Development
Prototyping
Integrated computer-assisted software
engineering (ICASE)
Component-based development
Object-oriented development
13.5 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.
Chapter Closing Case
• The Problem
• The Solution
• The Results