Chapter 16 Alternative Avenues for Systems Acquisitions Learning
- Slides: 30
Chapter 16 Alternative Avenues for Systems Acquisitions
Learning Objectives ü When you finish this chapter, you will w Recognize the differences among the alternatives to in-house system development. w Be able to list the business trade-offs inherent in the various methods of acquiring systems. w Understand why the alternatives to in-house development have become so popular. w Know which systems acquisition approach is appropriate for a particular set of circumstances. 2
Sources of Information Figure 16. 1 Alternatives to in-house development of ISs 3
Sources of Information Figure 16. 2 Major information systems magazines 4
Sources for Information ü Outsourcing w Short-term contractual relationship with a service firm to develop a specific application w Long-term contractual relationship with a service firm to take over all or some of an organization’s IS functions Figure 16. 3 Outsourced IS services 5
Outsourcing ü Advantages of Outsourcing w w w Improved financial planning Reduced license and maintenance fees Increased attention to core business Shorter implementation cycles Reduction of personal and fixed costs Increased access to highly qualified knowhow w Availability of ongoing consulting as part of standard support w Increased security 6
Outsourcing Figure 16. 4 How IS executives rank outsourcing benefits 7
Outsourcing ü Risks of Outsourcing w Loss of control w Loss of experienced employees w Risks of losing a competitive advantage 8
Outsourcing Figure 16. 5 Risks of outsourcing are higher at higher levels of management. 9
The Information Systems Subsidiary ü IS service companies that are owned by and served by one large company ü Some grow large enough to service the market at large ü Some corporations purchase an IS consulting firm 10
Purchased Applications ü Why Purchase? w Immediate system availability w High quality w Low price w Available support 11
Purchased Applications Figure 16. 6 The process of choosing ready-made software 12
Purchased Applications ü Steps in Purchasing Ready-made Software w Identifying the problem w Identifying potential vendors w Soliciting vendor information w Defining system requirements w Requesting vendor proposals 13
Purchased Applications w Reviewing proposals and screening vendors w Visiting sites w Selecting the vendor w Benchmarking w Negotiating a contract w Implementing the new system w Managing post-implementation support 14
Purchased Applications Figure 16. 7 A system should be purchased only if all or most needs are met. 15
Purchased Applications Figure 16. 8 How IS managers rank the importance of product purchase factors 16
Purchased Applications ü Benchmarking w Codified comparison of performance measures between systems w Ensures adopted application satisfies the organization's minimum requirements ü Learning from Experience 17
Purchased Applications Figure 16. 9 The eight commandments of effective benchmarking 18
Purchased Applications ü Purchasing Risks w Loose fit between needs and features w Bankruptcy of the vendor w High turnover of vendor personnel 19
Renting Software ü On-site Renting w Client purchases a license to use a certain application for a specified time ü Renting Through the Web w Application installed at vendor’s location; client accesses through the Web or leased line 20
Renting Software Figure 16. 10 Benefits and risks of software rental through the Web 21
User Application Development ü Factors Encouraging User Application Development w The programming backlog w The widespread use of PCs w The emergence of 4 GLs w Increasing popularity of prototyping w Increasing popularity of client/server architecture 22
User Application Development Figure 16. 11 Guidelines for end-user development of applications 23
User Application Development Figure 16. 12 Graphical 4 GLs, such as Power. Builder 5. 0, shown here, provide friendly tools for end users to develop their own applications. 24
User Application Development Figure 16. 13 Graphical 4 GLs 25
User Application Development ü Managing User-developed Applications w Managing the reaction of IS professionals w Providing support – help desk w Compatibility – standard tool w Managing access – database access 26
User Application Development ü Advantages of user application development w Shortened lead times w Good fit to needs w Compliance with culture w Efficient utilization of resources w Acquisition of skills w Free IS staff time – complex system development 27
User Application Development ü Risks of user application development w Poorly developed applications w Islands of information w Duplication w Security problems w Poor documentation w Futz factor 28
User Application Development Figure 16. 14 The costs of end-user computing 29
Ethical and Societal Issues Computer Use Policies for Employees ü End-user computing encourages increased productivity, but business computers are often used for unproductive personal activities. ü Most state statutes do not address unauthorized use of computers. ü Employers should provide clear guidelines stating acceptable and unacceptable use of company computers. 30
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