HAPTER 19

1. HAPTER 19 AIS Development Strategies

2. INTRODUCTION • Questions to be addressed in this chapter include: • How do organizations buy software, hardware, and vendor services? • How do information systems departments develop custom software? • How do end users develop, use and control computer-based information systems? • Why do organizations outsource their information systems, and what are the benefits and risks of doing so? • How are prototypes used to develop an AIS, and what are the advantages and disadvantages? • What is computer-aided software engineering, and how is it used in systems development?

3. INTRODUCTION • Companies can experience a number of difficulties in developing an AIS, 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.

4. INTRODUCTION • We’ll be discussing how to obtain a new information system by: • Purchasing prewritten software; • Developing software in-house; or • Outsourcing. • We’ll also discuss how to hasten or improve the development process through: • Business process reengineering • Prototyping • Computer-aided software engineering (CASE) tools

5. INTRODUCTION • We’ll be discussing how to obtain a new information system by: • Purchasing prewritten software • Developing software in-house; or • Outsourcing. • We’ll also discuss how to hasten or improve the development process through: • Business process reengineering • Prototyping • Computer-aided software engineering (CASE) tools

6. PURCHASING PREWRITTEN SOFTWARE • In the early days of computers, companies were rarely able to buy software to meet their needs. • But commercially available packages are now outpacing custom-developed software as old systems are replaced.

7. PURCHASING PREWRITTEN SOFTWARE • Canned software is sold on the open market to a broad range of users with similar requirements. • Some companies sell hardware and software together as a package. • These systems are called turnkeysystems. • Many are written by vendors who specialize in a particular industry.

8. PURCHASING PREWRITTEN SOFTWARE • A major problem with canned software: • It often does not meet all of a company’s information needs. • Can be overcome by modifying the canned software. • Usually best done by the vendor. • Unauthorized modifications may render the program unreliable and unstable.

9. PURCHASING PREWRITTEN SOFTWARE • Companies can also acquire software through application service providers (ASPs). • ASPs host Web-based software and deliver it to clients over the Internet. • Companies don’t have to buy, install, or maintain canned software; they simply “rent” it. • If you used an online version of a package like Turbo-Tax to prepare your taxes, that’s a consumer version of renting software over the Internet.

10. PURCHASING PREWRITTEN SOFTWARE • Advantages of ASPs: • Reduction of software costs and administrative overhead. • Automated software upgrades. • Scalability as the business grows. • Global access to information. • Access to skilled IT personnel. • Ability to focus on core financial competencies rather than IT.

11. PURCHASING PREWRITTEN SOFTWARE • Purchasing software and the SDLC: • Companies that buy rather than develop software still follow the SDLC process, including: • Systems analysis • They conduct an initial investigation, systems survey, and feasibility study, as well as determining AIS requirements.

12. PURCHASING PREWRITTEN SOFTWARE • Purchasing software and the SDLC: • Companies that buy rather than develop software still follow the SDLC process, including: • Systems analysis • Conceptual design • An important aspect is determining whether software that meets AIS requirements is already available. • If so, a make-or-buy decision must be made.

13. PURCHASING PREWRITTEN SOFTWARE • Purchasing software and the SDLC: • Companies that buy rather than develop software still follow the SDLC process, including: • Systems analysis • Conceptual design • Physical design • If software is purchased, program design and coding can be omitted. • But software modifications may be needed. • Companies also may design inputs, outputs, files, and control procedures.

14. PURCHASING PREWRITTEN SOFTWARE • These activities must still take place, including: • Selecting and training personnel • Installing and testing hardware and software • Documenting procedures • Converting from old to new AIS • However, the software modules do not have to be developed and tested. • And the computer programs do not need to be documented. • Purchasing software and the SDLC: • Companies that buy rather than develop software still follow the SDLC process, including: • Systems analysis • Conceptual design • Physical design • Implementation and conversion

15. PURCHASING PREWRITTEN SOFTWARE • Purchasing software and the SDLC: • Companies that buy rather than develop software still follow the SDLC process, including: • Systems analysis • Conceptual design • Physical design • Implementation and conversion • Operation and maintenance • The AIS is operated like any other software. • The vendor usually maintains the software.

16. PURCHASING PREWRITTEN SOFTWARE • Selecting a vendor • Deciding whether to make or buy software can be made independently of the decision to acquire hardware, service, maintenance, and other AIS resources. • And the preceding resources can be bought independently of the software. • But hardware and vendor decisions may depend on the software decisions.

17. PURCHASING PREWRITTEN SOFTWARE • Vendors can be found by: • Looking in phone book • Obtaining referrals • Scanning computer or trade magazines • Attending conferences • Using search organizations • Beware of fly-by-night companies that can leave your organization high and dry.

18. PURCHASING PREWRITTEN SOFTWARE • 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.

19. PURCHASING PREWRITTEN SOFTWARE • When buying large or complex systems, a request for proposal (RFP) should be prepared: • The RFP is an invitation to bidders to propose a system by a specific date. • Each proposal is evaluated. • Finalists are investigated in depth.

20. PURCHASING PREWRITTEN SOFTWARE • The formal approach is important for several reasons: • Saves time • The same information is provided to all bidders.

21. PURCHASING PREWRITTEN SOFTWARE • The formal approach is important for several reasons: • Saves time • Simplifies the decision-making process • The bidders all respond in the same format and based on the same information.

22. PURCHASING PREWRITTEN SOFTWARE • The formal approach is important for several reasons: • Saves time • Simplifies the decision-making process • Reduces errors • Less likely to look over important factors in evaluating proposals.

23. PURCHASING PREWRITTEN SOFTWARE • The formal approach is important for several reasons: • Saves time • Simplifies the decision-making process • Reduces errors • Avoids potential for disagreement • Both parties have the same expectations and information in writing.

24. PURCHASING PREWRITTEN SOFTWARE • When an RFP is solicited based on exact hardware and software specifications: • Total costs are usually lower. • Less time is required for vendor preparation and company evaluation. • However, the vendor cannot recommend alternatives.

25. PURCHASING PREWRITTEN SOFTWARE • A generalized RFP contains a problem definition and requests a system that meets specific performance objectives and requirements. • Leaves technical issues to the vendor. • However, makes it more difficult to evaluate proposals. • May produce more costly bids.

26. PURCHASING PREWRITTEN SOFTWARE • Usually, the more information a company provides to the vendors, the better their chances of receiving a system that meets their requirements. • Detailed specifications should include: • Required applications • Inputs and outputs • Files and databases • Frequency and methods of file updating and inquiry • Unique characteristics or requirements • Be sure to distinguish between mandatory and desirable requirements.

27. PURCHASING PREWRITTEN SOFTWARE • 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.

28. PURCHASING PREWRITTEN SOFTWARE • In reviewing the proposals, you need to evaluate: • Hardware • Software • Vendors

29. PURCHASING PREWRITTEN SOFTWARE • In reviewing the proposals, you need to evaluate: • Hardware • Software • Vendors

30. PURCHASING PREWRITTEN SOFTWARE • 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

31. PURCHASING PREWRITTEN SOFTWARE • In reviewing the proposals, you need to evaluate: • Hardware • Software • Vendors

32. PURCHASING PREWRITTEN SOFTWARE • 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

33. PURCHASING PREWRITTEN SOFTWARE • In reviewing the proposals, you need to evaluate: • Hardware • Software • Vendors

34. PURCHASING PREWRITTEN SOFTWARE • 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

35. PURCHASING PREWRITTEN SOFTWARE • Approaches to comparing system performance: • Benchmark problem • Point scoring • Requirements costing

36. PURCHASING PREWRITTEN SOFTWARE • Approaches to comparing system performance: • Benchmark problem • Point scoring • Requirements costing

37. PURCHASING PREWRITTEN SOFTWARE • 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.

38. PURCHASING PREWRITTEN SOFTWARE • Approaches to comparing system performance: • Benchmark problem • Point scoring • Requirements costing

39. PURCHASING PREWRITTEN SOFTWARE • 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.

40. PURCHASING PREWRITTEN SOFTWARE • Example: • Zorba Co. is evaluating systems offered by three different vendors: Able Co., Baker Co., and Cook Co. • Zorba 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

41. PURCHASING PREWRITTEN SOFTWARE • Zorba 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.

42. PURCHASING PREWRITTEN SOFTWARE • The weighted scores are then computed by multiplying the rating given to each vendor on each criterion times the weight assigned to that criterion. X =

43. PURCHASING PREWRITTEN SOFTWARE • 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.

44. PURCHASING PREWRITTEN SOFTWARE • 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.

45. PURCHASING PREWRITTEN SOFTWARE • Approaches to comparing system performance: • Benchmark problem • Point scoring • Requirements costing

46. PURCHASING PREWRITTEN SOFTWARE • 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.

47. PURCHASING PREWRITTEN SOFTWARE • To 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.

48. INTRODUCTION • We’ll be discussing how to obtain a new information system by: • Purchasing prewritten software • Developing software in-house • Outsourcing • We’ll also discuss how to hasten or improve the development process through: • Business process reengineering • Prototyping • Computer-aided software engineering (CASE) tools

49. DEVELOPING SOFTWARE IN-HOUSE • Despite the availability of good canned software, many organizations develop their own because: • Their requirements are unique; or • Their size and complexity necessitates a custom package. • Developing custom software is difficult and error prone and consumes much time and resources. • The GAO reports that 31% of federal government IT projects are poorly planned or do not meet intended objectives.

50. DEVELOPING SOFTWARE IN-HOUSE • The most difficult hurdles: • Lack of time. • Complexity of desired system. • Poor requirements and systems planning. • Inadequate communication and cooperation between departments and users. • Lack of qualified staff. • Poor senior executive support.