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Chapter 12: Acquiring Information Systems and Applications
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Chapter 12: Acquiring Information Systems and Applications



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  • A project is a short-term effort to create a specific business-related outcome. Information system project management is a directed effort to plan, organize, and manage resources to bring about the successful achievement of specific IS goals. The triple constraints of project management are time, cost, and scope.
  • A humorous look at an information systems project gone astray.
  • Project initiation : clearly defines the problem that the project is intended to solve and the goals that the project is to achieve. Project planning : every project objective and every activity associated with that objective is identified and sequenced. Project execution : work defined in the project management plan is performed to accomplish the project’s requirements. Project monitoring and control : determines whether the project is progressing as planned. Project completion : project is completed when it is formally accepted by the organization.
  • The application portfolio is a prioritized list of both existing and potential IT applications of a company.
  • See Figure 12.1.
  • 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. 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.
  • The IT steering committee is comprised of managers and staff representing various organizational units. This committee establishes IT priorities and ensures that the MIS function meets the needs of the enterprise.
  • IS 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. 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.
  • 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.
  • The Net Present Value (NPV) method converts future values of benefits to their present-value equivalent by discounting them at the organization ’ s cost of funds. Return on investment measures the effectiveness of management in generating profits with its available assets. Breakeven analysis determines the point at which the cumulative dollar value of the benefits from a project equals the investment made in the project. 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.
  • An application service provider is an agent or a vendor who assembles the software needed by enterprises and packages the software with services such as development, operations, and maintenance. Software-as-a-Service is a method of delivering software in which a vendor hosts the applications and provides them as a service to customers over a network, typically the Internet. Outsourcing is acquiring IT applications from external contractors or organizations.
  • See Figure 12.2.
  • Figure 12.3
  • Figure 12.4
  • The feasibility study is the main task of the Systems Investigation phase. The feasibility study helps the organization choose between 3 options: (1) Do nothing and continue to use the existing system unchanged. (2) Modify or enhance the existing system. (3) Develop a new system.
  • 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. Organizational feasibility : Organization’s ability to access the proposed project. Behavioural feasibility : Assessment of the human issues involved in a proposed project, including resistance to change and skills and training needs.
  • Impl ementation or deployment is the process of converting from the old system to the new system. Four major conversion strategies: Direct conversion: Implementation process in which the old system is cut-off and the new system turned on at a certain point in time. Pilot conversion: Implementation process that introduces the new system in one part of the organization on a trial basis: when new system is working properly, 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. Parallel conversion: Implementation process in which the old system and the new system operate simultaneously for a period of time. Rarely used today if at all.
  • 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.
  • 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. Computer-Assisted Software Engineering (CASE) is a d evelopment 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. Rapid Application Development (RAD) is a development method that uses special tools and an iterative approach to rapidly produce a high-quality system. Agile Development: Development method that delivers functionality in rapid iterations requiring frequent communication, development, testing, and delivery. End-User Development is a development method that has the actually user develop their own application(s) for use. Component-Based Development: Uses standard components to build applications. Object-oriented development does not begin with the task to be performed, but with aspects of the real world that must be modeled to perform that task.
  • 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. Service Level Agreements (SLAs) are formal agreements that specify how work is to be divided between the company and its vendors.


  • 1. CHAPTER 12 Acquiring Information Systems and Applications
    • 12.1 Project Management for Information System Projects
    • 12.2 Planning for and Justifying IT Applications
    • 12.3 Strategies for Acquiring IT Applications
    • 12.4 The Traditional Systems Development Life Cycle
    • 12.5 Alternative Methods and Tools for Systems Development
    • 12.6 Vendor and Software Selection
  • 3. 12.1 Project Management for Information Systems Projects
    • Project
    • Information System Project Management
    • The Triple Constraints
  • 4. An IS Project Gone Astray
  • 5. The Project Management Process
    • Project Initiation
    • Project Planning
    • Project Execution
    • Project Monitoring and Control
    • Project Completion
  • 6. 12.2 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.
    • The application portfolio
  • 7. Information Systems Planning Process
  • 8. Information Systems Planning (continued)
    • Organizational strategic plan
    • IT architecture
    • Both are inputs in developing the IT strategic plan .
  • 9. IT Steering Committee
    • The IT Steering Committee
  • 10. IS Operational Plan
    • Contains the following elements:
      • Mission
      • IT environment
      • Objectives of the IT function
      • Constraints of the IT function
      • Application portfolio
      • Resource allocation and project management
  • 11. Evaluating & Justifying IT Investment: Benefits, Costs & Issues
    • Assessing the costs
      • Fixed costs
      • Total cost of ownership (TCO)
    • 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
  • 12. Conducting the Cost-Benefit Analysis
    • Using Net Present Value (NPV)
    • Return on investment
    • Breakeven analysis
    • The business case approach
  • 13. 12.3 Strategies for Acquiring IT Applications
    • Buy the applications (off-the-shelf approach)
    • Lease the applications
    • Software-as-a-Service
    • Use Open-Source Software
    • Outsourcing
    • Developing the applications in-house
  • 14. Operation of an Application Service Provider (ASP) ASP Data Center Customer A Application Customer B Application Customer C Application Database Database Database
  • 15. Operation of a Software-as-a-Service (SaaS) Vendor SaaS Vendor Data Center Customer A Customer B Customer C Customer A Customer B Customer C Application
  • 16. 12.4 Traditional Systems Development Life Cycle
    • Software Development Life Cycle (SDLC) is the traditional systems development method that organizations use for large-scale IT projects.
  • 17. Six-Stage Systems Development Life Cycle (SDLC) with Supporting Tools Prototyping Systems Investigation Deliverable: Go/No Go Decision Systems Analysis Deliverable: User Requirement Systems Design Deliverable: Technical Specification Programming and Testing Implement The System Operation and Maintenance Business Need Joint Application Design (JAD) Upper CASE Tools Lower CASE Tools
  • 18. Traditional SDLC Processes
    • Systems investigation
    • Systems analysis
    • Systems design
    • Programming and testing
    • Implementation
    • Operation and maintenance
  • 19. The SDLC
    • Major advantages
      • Control
      • Accountability
      • Error detection
    • Major drawbacks
      • Relatively inflexible
      • Time-consuming and expensive
      • Discourages changes once user requirements are done
  • 20. SDLC – Systems Investigation
    • Begins with the business problem (or opportunity) followed by the feasibility analysis.
    • Feasibility study
    • Deliverable : Go/No-Go Decision
  • 21. Feasibility Study
    • Technical feasibility
    • Economic feasibility
    • Organizational feasibility
    • Behavioral feasibility
  • 22. SDLC – System 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 the existing system to determine the requirements for the new or improved system.
    • Deliverable is a set of system requirements, also called user requirements.
  • 23. 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.
  • 24. SDLC – System Design (continued)
    • Scope creep is caused by adding functions after the project has been initiated.
  • 25. SDLC – Programming & Testing
    • Programming involves the translation of a system’s design specification into computer code.
    • Testing checks 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.
  • 26. SDLC – Systems Implementation
    • Implementation involves three major conversion strategies:
      • Direct Conversion
      • Pilot Conversion
      • Phased Conversion
      • Parallel Conversion (not used much today)
  • 27. SLDC – 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
      • Updating
      • Maintenance
  • 28. 12.5 Alternative Methods & Tools for Systems Development
    • Prototyping
    • Joint application design (JAD)
    • Integrated computer-assisted software engineering tools
    • Rapid application development (RAD)
    • Agile development
    • End-user development
    • Component-based development
    • Object-oriented development
  • 29. RAD versus SDLC
  • 30. 12.6 Vendor & Software Selection
    • Step 1: Identify potential vendors.
    • Step 2: Determine the evaluation criteria.
      • Request for proposal (RFP)
    • Step 3: Evaluate vendors and packages.
    • Step 4: Choose the vendor and package
    • Step 5: Negotiate a contract.
    • Step 6: Establish a service level agreement.