Acquisition of Information Technology

Need to acquire technology A manager must be prepared to make what are sometimes risky acquisitions to fashion systems that have a significant impact on the firm The computer industry today consists of firms that sell hardware, software and services

Problem Specifications Evaluation Custom program Dedicated package Outsource Processing Database Management system Selection Alternatives

Processing Midrange computer Intranet Extranet Client server network Internal (Mainframe, minicomputer) Outsourcing Evaluate Select Rank Selection Alternatives cont..

The Service Industry Computing power Proprietary applications Proprietary databases Communications Consultants

ServicesInsourcedOutsourced ManagementMust manage information services department Contractual arrangement; no line management responsible except for data preparation ControlControl potential is highOnly through contract, influence, withholding payment SecurityUnder own responsibility; data remain at internal location Data in hands of external organization; other customers a threat PrioritiesAssigned by own employees Determined by external management ResourcesMust accommodate peak loads; high fixed costs Variable cost, pay only for what is used; may have contractual fixed charge Comparison of internal versus external services - Hardware

ServicesInsourcedOutsourced CapacityLimited to what is neededFrequently more powerful equipment than could be justified by clients BackupLimited by internal resources Usually available because of higher capacity Comparison of internal versus external services - Hardware

ServicesInsourcedOutsources ManagementMust manage program development Contractual arrangements, specificantions on cost, time, performance StaffMay have to hire expertsExpect vendors to have expertise ImplementationProbably easier in terms of users reaction to internal staff May be more difficult for outsiders Comparison of internal versus external services - Software

Pros of outsourcing Fast Delivery of High Quality Team Scalability Access to Global Skills Cost Savings Time Efficiency Increased Revenue

Cons of outsourcing Sensitive Data Exposure Hidden Costs Management Control Loss Language and Time Zone Difference

Strategies for acquiring equipment and services Research activity by contacting the present users of the product to determine their level of satisfaction Evaluate performance of the product – response time, volume of input in a given period of time

Acquiring computers Dedicated to a single software application required for the organization Vendor has experience in knowing what kind of computer should be used Since large number of computers are available, organization should fix a standard While acquiring networks, evaluate the capacity and performance. Difficult as it is tough to find a comparable system Organizations have a policy on what kind of computer configuration to obtain and have professional IS staff who provide advice on acquisition

Dealing with Obsolescence Cost/performance curve for hardware continues to decline New versions of packages appear every six months Very few applications disappear and new ones are constantly added Users apply ongoing pressure for new computers and software upgrades Managers will be always forced for continual upgrades