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Development Strategies. Dr. Yan Xiong College of Business CSU Sacramento 10/12/03. Agenda. Software Packages In-house Development Outsourcing Business Process Reengineering (BPR) Prototyping. Purchase Software.

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Development strategies l.jpg

Development Strategies

Dr. Yan Xiong

College of Business

CSU Sacramento

10/12/03


Agenda l.jpg
Agenda

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


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Purchase Software

  • Canned software:written by computer manufacturers or software development companies

  • Sold on open market to broad range of users with similar requirements

  • Turnkey systems: combination of software and hardware sold as a package


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Purchasing Software

  • Companies that buy rather than develop AIS software still go through systems development life cycle (SDLC)

  • Implementation phase is reduced:

    • less coding

    • less testing

  • This is most costly


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Purchasing Software

  • Companies that buy rather than develop AIS software still go through systems development life cycle (SDLC)

  • Implementation phase is reduced:

    • less coding

    • less testing

  • This is most costly SDLC phase


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Can package

be modified?

Will package

meet needs?

Systems Acquisition Process

Investigate

software

packages

Develop

software

internally

No

No

Yes

Yes

Send RFP for

software and

hardware

Send RFP for

hardware,

if necessary

Select best

combination

Evaluate

proposal


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Alternative Screening Matrix

  • Use for screening, not selection

  • Beware of implying too much accuracy


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Alternative Screening Matrix

  • Example:

    • Vendor A score 4.35

    • Vendor B score 4.25

    • Vendor C score 3.25

  • Vendor C out; Vendors A and B too close to call


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Alternative Screening Matrix

M Evaluation Criteria

N Alternatives

Alternatives to be Compared

Evaluation

Criteria

Crit.

Weight

. . . .

A1

A2

An

C1

Wc1

C2

Wc2

.

.

.

.

.

.

Cm

Wcm

. . . .

Total

1.00

T1

T2

Tn


Determining weights l.jpg
Determining Weights

  • Rank factors in importance with most important receiving highest number

  • Total the ranks

  • Divide each factor weight by the total

  • Make individual weight adjustments if necessary


Weighting example l.jpg

Most important criterion gets highest rank

Weighting Example

TOTAL 1.00

TOTAL 15


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Agenda

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


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In-house Development

  • In the past, most organizations had information system departments develop custom software, because canned software fitting specific needs not available

  • Developing custom software difficult and error-prone

  • Also consumes a great deal of time and resources


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In-house Development

  • Custom software usually developed and written in house

  • Alternatively, can engage outside company to develop package or assemble it from their inventory of program modules (objects)

    • called “outsourcing”

  • When contracting with outside organization, must maintain control over the development process


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In-house Development

  • Outsourcing management:

    • carefully select developer

      • Vendor Screening Matrix

    • sign contract

    • plan and monitor each step

    • maintain effective communication

    • control all costs


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Agenda

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


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Outsourcing

  • Hiring outside company to handle all or part of an organization’s IT activities

  • In mainframe outsourcingagreement, outsourcers buy client’s computers and hire all or most of client’s employees

    • Electronic Data Services (EDS)


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Outsourcing

  • In client/server (PC) outsourcing agreement, firm contracts for:

    • particular service

    • segment of its business

    • particular function

    • PC support


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Outsourcing Types

  • Professional services (consulting)

  • Services (training / data entry)

  • Temporary employees

    • contract programmers

  • Transactions (credit reports)

  • Systems integrators


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Benefits of Outsourcing

A business solution Asset utilization Access to greater expertise and more advanced technology Lower costs Improved development time Elimination of peaks and valleys usage Facilitation of downsizing

Outsourcing


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Risks of Outsourcing Inflexibility Loss of control Reduced competitive advantage Locked-in system

Not tied to corporate goals

Outsourcing


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When to Outsource Loss of control Reduced competitive advantage Locked-in system

  • Activity not strategic

  • Save at least 15%

  • Need technology specialists

  • Increase financial flexibility

    • capital to operating expenses

  • Free personnel for development

  • Acquire new technologies quicker


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Outsource Failures Loss of control Reduced competitive advantage Locked-in system

  • DT Study, 1997

  • Vendor expertise and sophistication

  • Improved delivery quality

  • Cost reduction

  • Increased focus on core competencies

  • Transition to new technologies


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Raleys Loss of control Reduced competitive advantage Locked-in system

  • Prefer to acquire talented, retail-oriented staff

  • Augments IT projects with consultants, contractors

  • Outsource professional services such as training and data entry


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Agenda Loss of control Reduced competitive advantage Locked-in system

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


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Reengineering Loss of control Reduced competitive advantage Locked-in system

Hammer / Champy

“ . . . fundamental rethinking

andradical redesign of business processes

to achieve dramatic improvements . . .”


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BPR Loss of control Reduced competitive advantage Locked-in system

  • Reduces company to essential processes

  • Focuses on whythey are done rather than on the details of how they are done

  • Completely reshapes organizational work practices and information flows to take advantage of technological advancements


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Business Process Loss of control Reduced competitive advantage Locked-in system

“…set of tasks that directly support the achievement of business objectives by providing a product or service for a customer who is outside the organization or in a different organizational unit”

American Management Systems


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Core Processes Loss of control Reduced competitive advantage Locked-in system

  • 4 or 5 in any organization

  • Can be broken down into sub-processes

  • Critical to organization’s success

  • Focus redesign on these processes


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Financial Core Processes Loss of control Reduced competitive advantage Locked-in system

Product New loan, savings Development checking plan

Sales and New accounts, Marketing acquisitions

Order Deposits, loans, Fulfillment withdrawals

Customer Financial planning, Service inquiries


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Pharmaceuticals Core Processes Loss of control Reduced competitive advantage Locked-in system

Product R & D testing Development

Sales and Market segmenta- Marketing tion, contracts

Order Contract manage- Fulfillment ment, shipping

Customer Claims analysis Service


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BPR Examples Loss of control Reduced competitive advantage Locked-in system

  • From Martin, Analysis and Design of Business Information Systems, (Prentice Hall, 1995)

  • All focused on Data Flow Diagrams (DFDs)


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Delivery Loss of control Reduced competitive advantage Locked-in system Vendor

Produce

Deliver

ConrailDelivery

Produce

Outsourcing

A. GM Process Flows Before

B. Outsourcing Delivery to Contrail


Customer focus l.jpg

Cust. Loss of control Reduced competitive advantage Locked-in system

P1

P2

P3

Cust.

P1

P2

P3

Cust.

Cust.

Case Mgr.

Customer Focus

Before:

After:


Buffering l.jpg

Before: Loss of control Reduced competitive advantage Locked-in system

3.5

EditOrder

After:

PendingOrder File

3.5

EditOrder

3.6

ShipProduct

Buffering

3.6

ShipProduct

Order


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3.1 Loss of control Reduced competitive advantage Locked-in system

Order (Copy 1)

Verify

Order

Customer

3.2

Order (Copy 2)

Credit

Check

Parallel Processing

Before:

3.1

3.2

Order

Order

Customer

Verify

Order

Credit

Check

After:


Geographic balancing l.jpg

1 Loss of control Reduced competitive advantage Locked-in system

2

3

Geographic Balancing

Building A

Building B

Before:


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Geographic Balancing Loss of control Reduced competitive advantage Locked-in system

Building A

Building B

After:

1

3

2


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BPR Challenges Loss of control Reduced competitive advantage Locked-in system

  • Tradition

  • Resistance

    • e.g., seniority

  • Time requirements

  • Lack of management support

  • Risk

    • most crucial processes

    • on-going organization


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BPR Challenges Loss of control Reduced competitive advantage Locked-in system

  • Controls

    • often sacrificed for sake of efficiency

    • e.g., eliminating verification process

  • Accountants must ensure that what is gained by BPR is not lost through fraud, errors, etc.


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Controls Example Loss of control Reduced competitive advantage Locked-in system

  • BPR expert recommends that you consolidate two sequential processes

    • reduce personnel

    • reduce handoffs (errors)

    • increase job satisfaction

  • But you will lose separation of duties


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Controls Example Loss of control Reduced competitive advantage Locked-in system

  • Calculate BPR consolidation savings

  • Calculate probable fraud costs

    • Likelihood of threat (risk) times exposure $

  • Compare


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“Best- Loss of control Reduced competitive advantage Locked-in system of-Breed”

Quality

NeedsImprove-ment

Non - Critical

Critical

Importance

State of California Guidelines

Consolidate,Transfer Internally

Improve,Leverage

Redesign(Reengineer)

Outsource


Agenda44 l.jpg
Agenda Loss of control Reduced competitive advantage Locked-in system

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


Prototyping l.jpg
Prototyping Loss of control Reduced competitive advantage Locked-in system

  • Approach to systems development in which simplified working model of system developed

  • Prototype (“first draft”) quickly and inexpensively built

  • Provided to users for testing and training


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Why Prototyping Loss of control Reduced competitive advantage Locked-in system

“When you’re working with new system ideas with your users, you don’t want to go through the cost of developing a gigantic system which might take years; you’ll build a mock-up of it, which might take weeks.”

Brian Kilcourse, CIO

Longs Drug Stores


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Why Prototyping Loss of control Reduced competitive advantage Locked-in system

  • Experience at AT&T, TRW, and IBM

    • 30% of system requirements will change BEFORE initial system delivery

  • Production error correction model


Error correction l.jpg

$ Loss of control Reduced competitive advantage Locked-in system

Prototyping

T i m e t o D e t e c t

Error Correction


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Develop Prototype Loss of control Reduced competitive advantage Locked-in system

Operationalize Prototype

Refine Prototype

Complete System

Prototype Life Cycle

Analyze problem


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Prototype Types Loss of control Reduced competitive advantage Locked-in system

  • Iterative: Make series of changes until prototype becomes the final system

    • e.g., writing a poem

  • Throw-away: Once user approves, then abandon for construction purposes

    • e.g., architect’s drawing of new house


Slide51 l.jpg

Prototype Loss of control Reduced competitive advantage Locked-in system Language

OperationsLanguage

4 GL

4 GL

3 GL

3 GL

SDLC Stage

A

D

Iterative

Throwaway

Iterative

Prototype Models


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Prototyping Loss of control Reduced competitive advantage Locked-in system

Advantages of Prototyping

Better definition of user needs Higher user involvement and satisfaction Faster development time Fewer errors More opportunity for changes Less costly

Better user/analyst communication


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Prototyping Loss of control Reduced competitive advantage Locked-in system

Disadvantages of Prototyping Significant user time Bypass Analysis Phase

Incomplete systems development Inadequately tested and documented systems Negative behavioral reactions Unending development


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Topics Covered Loss of control Reduced competitive advantage Locked-in system

  • Software Packages

  • In-house Development

  • Outsourcing

  • Business Process Reengineering (BPR)

  • Prototyping


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