Introduction to Information Systems

1. Introduction to Information Systems HTM 304 - Management Information Systems College of Business Administration California State University @ San Marcos • Authors: Turban, Rainer and Potter • Publisher: John Wiley & Sons, Inc. Chapter 10

2. Chapter 10 Acquiring IT Applications Chapter 10

3. Chapter Outline • 10.1 Planning for and Justifying IT Applications • 10.2 Strategies for acquiring IT Applications • 10.3 Traditional Systems Development Life Cycle • 10.4 Alternative Methods and Tools for Systems Development • 10.5 Outsourcing and Application Service Providers • 10.6 Vendor and Software Selection Chapter 10

4. Learning Objectives • Understand the IT planning process. • Explain the IT justification process and methods. • Describe the SDLC and its advantages and limitations. • Describe the major alternative methods and tools for building information systems. Chapter 10

5. Learning Objectives (Continued) • List the major IT acquisition options and the criteria for option selection. • Describe the roles of ASPs. • Understand the process of vendor and software selection. Chapter 10

6. 10.1 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. • Application portfolio is a prioritized list of both existing and potential IT applications of a company. Chapter 10

7. IT Planning Chapter 10

8. IT Planning (Continued) • Organizational strategic plan states the firm’s overall mission, the goals that follow from that mission, and the broad steps necessary to reach these goals. • IT architecture delineates the way an organization’s information resources should be used to accomplish its mission. • Both are inputs in developing the IT strategic plan. Chapter 10

9. IT Strategic Plan • IT strategic plan is a set of long-range goals that describe the IT infrastructure and major IT initiatives needed to achieve the goals of the organization. • It must be aligned with the organization’s strategic plan • It must provide for an IT architecture that enables users, applications and databases to be seamlessly networked and integrated. • It must efficiently allocate IT development resources among competing projects, so that projects can be completed on time and within budget and the have the required functionality. Chapter 10

10. IT Operational Plan • Consists of a clear set of projects that the IT department and functional area managers will execute in support of the IT strategic plan; contains the following elements: • Mission – derived from IT strategy. • IT environment – summary of information needs of the functional areas and of the organization as a whole. • Objectives of the IT function – best current estimate of the goals. • Constraints of the IT function – technological, financial, personnel and other resource limitations. • Application portfolio – prioritized inventory of present applications and a detailed plan of projects to be developed or continued. • Resource allocation and project management – listing of who is going to do what, how and when. Chapter 10

11. Evaluating & Justifying IT Investment: Benefits, Costs & Issues • Assessing the costs • Fixed costs: are those costs that remain the same regardless of change in the activity level. For IT, fixed costs include infrastructure cost, cost of IT services, and IT management cost • Total cost of ownership (TCO): Formula for calculating cost of acquiring, operating and controlling an IT system. • 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 Chapter 10

12. Conducting the Cost-Benefit Analysis • Using NPV in cost-benefit Analysis. Using the NPV method, analysts convert future values of benefits to their present-value equivalent by discounting them at the organization’s cost of funds. • Return on investment. It measure the effectiveness of management in generating profits with its available assets. • The business case approach. A business case is one or more specific applications or projects. Its major emphasis is the justification for a specific required investment, but it also provides the bridge between the initial plan and its execution. Chapter 10

13. Cost-Benefit Analysis Methods Chapter 10

14. 10.2 Strategies for Acquiring IT Applications • Buy the applications (off-the-shelf approach) • Lease the applications • Developing the applications in-house (Insourcing) Chapter 10

15. 10.3 Traditional Systems Development Life Cycle • Software development life cycle is the traditional systems development method that organizations use for large-scale IT projects. • SDLC processes are systems investigation, systems analysis, systems design, programming, testing, implementation, operation and maintenance. • Waterfall approach is when tasks in one phase are completed before the work proceeds to the next stage. Chapter 10

16. Traditional Systems Development Life Cycle (SDLC) Chapter 10

17. System Development Teams • Users are employees from all functional areas and levels of the organization who interact with the system, either directly or indirectly. • System analysts are IS professionals who specializing in analyzing and designing ISs. • Programmers are IS professionals who modify existing computer programs or write new computer programs to satisfy user requirements. Chapter 10

18. System Development Teams (Continued) • Technical specialists are experts on a certain type of technology, such as databases or telecommunications. • System stakeholders are all people affected by changes in the information systems. Chapter 10

19. SDLC • Major advantages • Control • Accountability • Error detection • Major drawbacks • Relatively inflexible • Time-consuming and expensive • Discourages changes once user requirements are done Chapter 10

20. SDLC – Systems Investigation • Begins with the business problem (or opportunity) followed by the feasibility analysis. • Feasibility study • Technical • Economic • Behavioral • Organizational • Go/No-Go Decision Chapter 10

21. Feasibility Study • Technical feasibility: Assessment of whether hardware, software and communications components can be developed and /or acquired to solve a business problem. • Economic feasibility: Assessment of whether a project is an acceptable financial risk and if the organization can afford the expense and time needed to complete it Chapter 10

22. Feasibility Study (Continued) • Organizational feasibility: Organization’s ability to access the proposed project. • Behavioral feasibility: Assessment of the human issues involved in a proposed project, including resistance to change and skills and training needs. Chapter 10

23. SDLC – Systems Analysis • Is 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. Chapter 10

24. 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. Chapter 10

25. SDLC – Systems Design (Continued) • Logical system design states what the system will do, using abstract specifications. • Physical system design states how the system will perform its functions, with actual physical specifications. • Scope creep is caused by adding functions after the project has been initiated. Chapter 10

26. SDLC – Programming & Testing • Programming involves the translation of a system’s design specification into computer code. • Testingcheck 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. These errors are of two types . Syntax errors ( e.g., misspelled word or a misplaced comma) and logic errors that permit the program to run but result in incorrect output. Chapter 10

27. SDLC – Systems Implementation • Implementation or deployment is the process of converting from the old system to the new system. Organizations use four major conversion strategies ; parallel , direct , pilot and phased. • Parallel conversion. Implementation process in which the old system and the new system operate simultaneously for a period of time. • Direct conversion. Implementation process in which the old system is cut off and the new system turned on at a certain point in time. Chapter 10

28. SDLC – Systems Implementation (Continued) • Pilot conversion. Implementation process that introduces the new system in one part of the organization on a trial basis, when new system is working property, it is introduced in other parts of the organization. • Phased conversion. Implementation process that introduces components of the new system in stages, until the entire new system is operational. Chapter 10

29. SDLC – 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: A process that continues throughout the life of the system. • Updating: Updating the system to accommodate changes in business conditions. • Maintenance: That adds new functionally to the system –adding new features to the existing system without disturbing its operation. Chapter 10

30. 10.4 Alternative Methods & Tools for Systems Development • Prototyping.Approach that defines an initial list of user requirements, builds a prototype system and then improves the system in several iterations based on users’ feedback. • Joint application design (JAD).A group –based tool for collecting user requirements and creating system designs. Chapter 10

31. Integrated Computer-Assisted Software Engineering Tools • Computer-Assisted Software Engineering (CASE) is a development approach that uses specialized tools to automate many of the tasks in the SDLC; upper CASE tools in SDLC automate the early stages of the SDLC, and lower case tools automate the later stages. • Integrated Computer-Assisted Software Engineering (ICASE) Tools . CASE tools that provide links between upper CASE and lower CASE tools. Chapter 10

32. Alternative Methods (Continued) • Rapid Application Development (RAD) is a development method that uses special tools and an iterative approach to rapidly produce a high-quality system. • End-User Development is a development method that has the actually user develop their own application(s) for use. Chapter 10

33. Object-Oriented (OO) • Object-oriented (OO) Developmentbegins with aspects of the real world that must be modeled to perform that task. • Object-oriented Analysis & Design starts with identifying the objects in the new system then model the objects to meet the objectives of the new system. • Objects have properties or data values and contain operations that can be performed on their properties. Chapter 10

34. 10.5 Outsourcing & Application Service Providers • Outsourcing is when an organization acquires IT applications or services from outside contractors or external organizations. • Application service provider (ASP) is an agent or vendor who assembles the software needed by enterprises and packages the software with services such as development, operations and maintenance. • ASP manages application servers from a centrally controlled location rather than at a customer’s site. Chapter 10

35. 10.6 Vendor & Software Selection • Step 1: Identify potential vendors. • Step 2: Determine the evaluation criteria. • Request for proposal (RFP) is a document sent to potential vendors to submit a proposal describing their software package and explain how it would meet the company’s needs. • Step 3: Evaluate vendors and packages. Chapter 10

36. Vendor & Software Selection (Continued) • Step 4: Choose the vendor and package • Step 5: Negotiate a contract. • Step 6: Establish a service level agreement. • Service level agreements (SLAs) are formal agreements that specify how work is to be divided between the company and its vendors. Chapter 10