Chapter 16 Alternative Avenues for Systems Acquisitions Learning

  • Slides: 30
Download presentation
Chapter 16 Alternative Avenues for Systems Acquisitions

Chapter 16 Alternative Avenues for Systems Acquisitions

Learning Objectives ü When you finish this chapter, you will w Recognize the differences

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. 1 Alternatives to in-house development of ISs 3

Sources of Information Figure 16. 2 Major information systems magazines 4

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

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

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 Figure 16. 4 How IS executives rank outsourcing benefits 7

Outsourcing ü Risks of Outsourcing w Loss of control w Loss of experienced employees

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.

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

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

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 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

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

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

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

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

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 Figure 16. 9 The eight commandments of effective benchmarking 18

Purchased Applications ü Purchasing Risks w Loose fit between needs and features w Bankruptcy

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

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

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

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. 11 Guidelines for end-user development of applications 23

User Application Development Figure 16. 12 Graphical 4 GLs, such as Power. Builder 5.

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 Figure 16. 13 Graphical 4 GLs 25

User Application Development ü Managing User-developed Applications w Managing the reaction of IS professionals

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

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

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

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

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