Chapter Objectives Describe software trends, including the concept of software as a service Explain software acquisition alternatives, including traditional versus Web-based software development strategies Describe software outsourcing options, including the role of service providers Explain advantages and disadvantages of developing software in-house versus other alternatives 3

Chapter Objectives Explain cost-benefit analysis and financial analysis tools Explain the differences between a request for proposal (RFP) and a request for quotation (RFQ) Describe the contents of the system requirements document 3

Chapter Objectives Explain the transition from systems analysis to systems design, and the difference between logical and physical design Explain the transition to systems design and the importance of prototyping Discuss guidelines for system design, and explain the importance of codes

Introduction Chapter 5 describes the remaining activities in the systems analysis phase The chapter also describes the transition to systems design, prototyping, design guidelines, and using codes to represent values and simplify data entry 4

Development Strategies Overview Selecting the best development path is an important decision that requires companies to consider three key issues In-house software development alternatives Software outsourcing options Web-based software trends

Web-Based Software Trends Software as a Service The Software and Information Industry Association (SIIA) is an industry group that focuses on the digital economy SIIA believes that the concept of software as a service is redefining the way that companies develop and deploy their information systems Figure 5-2 Figure 5-3

Web-Based Software Trends The Changing Software Marketplace In the traditional model, software vendors develop and sell application packages to customers In addition to traditional vendors, the marketplace now includes many forms of outsourcing, including application service providers and firms that offer Internet business services

Web-Based Software Trends The Impact of the Internet on Systems Development Developers will focus on Web-based application development, which builds the Web into the application, rather than the other way around IBM’s WebSphere Microsoft’s .NET Sun Microsystem’s J2EE

Web-Based Software Trends The Impact of the Internet on Systems Development Traditional development System design is influenced by compatibility issues Systems are designed to run on local and wide-area company networks Web-based features are treated as enhancements rather than core elements of the design

Web-Based Software Trends The Impact of the Internet on Systems Development Web-based development Systems are developed and delivered in an Internet-based framework such as .NET or WebSphere Internet-based development treats the Web as the platform, rather than just a communication channel Web-based software usually requires additional layers, called middleware

Software Outsourcing Options Outsourcing is the transfer of information systems development, operation, or maintenance to an outside firm that provides these services, for a fee, on a temporary or long-term basis Can refer to relatively minor programming tasks or the handling of a company’s entire IT function

Software Outsourcing Options The Growth of Outsourcing Traditionally, firms outsourced IT tasks as a way of controlling costs and dealing with rapid technological change Today, outsourcing is a vital business issue that shapes a company’s overall IT strategy the most important factor is the potential saving in operating costs Figure 5-5 Figure 5-6

Software Outsourcing Options The Growth of Outsourcing A firm that offers outsourcing solutions is called a service provider Application service providers (ASP) Online software rental Internet business services (IBS) Also called managed hosting Provide Web-based support for business transactions (order processing, billing, CRM, etc)

Software Outsourcing Options Outsourcing Fees A fixed fee model uses a set fee based on a specified level of service and user support A subscription model has a variable fee based on the number of users or workstations that have access A usage model or transaction model charges a variable fee based on the volume of transactions or operations

Software Outsourcing Options Outsourcing Issues and Concerns Mission-critical IT systems should be out-sourced only if the result is a cost-attractive, reliable, business solution that fits the company’s long-term business strategy out-sourcing can also affect day-to-day company operations and can raise some concerns A major disadvantage of outsourcing is that it raises employee concerns about job security

In-House Software Development Options A company can choose to develop its own systems, or purchase, possibly customize, and implement a software package The most important consideration is total cost of ownership (TCO) Companies also develop user applications designed around commercial software packages

In-House Software Development Options Make or Buy Decision The choice between developing versus purchasing software often is called a make or buy, or build or buy decision The company’s IT department makes, builds, and develops in-house software A software package is obtained from a vendor or application service provider.

In-House Software Development Options Make or Buy Decision Companies that develop software for sale are called software vendors Value-added reseller (VAR) Vertical application Horizontal application

In-House Software Development Options Reasons for In-House development Satisfy unique business requirements Minimize changes in business procedures and policies Meet constraints of existing systems Meet constraints of existing technology Develop internal resources and capabilities

In-House Software Development Options Reasons for Purchasing a Software Package Lower costs Requires less time to implement Proven reliability and performance benchmarks Requires less technical development staff Future upgrades provided by the vendor Input from other companies

In-House Software Development Options Customizing a Software Package You can purchase a basic package that vendors will customize to suit your needs You can negotiate directly with the software vendor to make enhancements to meet your needs by paying for the changes You can purchase the package and make your own modifications, if this is permissible under the terms of the software license

In-House Software Development Options Creating User Applications A user application utilizes standard business software Help desk or information center (IC) Screen generators Report generators Read-only properties Figure 5-13

Role of the Systems Analyst When selecting hardware and software, systems analysts often work as an evaluation and selection team A team approach ensures that critical factors are not overlooked and that a sound choice is made

Role of the Systems Analyst The primary objective of the evaluation and selection team is to eliminate system alternatives that will not work, rank the system alternatives that will work, and present the viable alternatives to management for a final decision

Cost-Benefit Analysis Now, at the end of the systems analysis phase of the SDLC, you must apply financial analysis tools and techniques to evaluate development strategies and decide how the project will move forward Figure 5-14

Cost-Benefit Analysis Financial Analysis Tools Payback Analysis How long will it take for IS to pay for itself Return on investment (ROI) Compares net benefits (return) to total cost Net present value (NPV) Total benefits – total cost

A Software Acquisition Example Step 1: Evaluate the Information System Requirements Identify key features Consider network and web-related issues Estimate volume and future growth Specify hardware, software, or personnel constraints

A Software Acquisition Example Step 1: Evaluate the Information System Requirements Prepare a request for proposal or quotation Request for proposal (RFP) Document to vendors who decide whether they have a product that meets your needs Evaluation model Request for quotation (RFQ) More specific than RFP

A Software Acquisition Example Step 2: Identify Potential Vendors or Outsourcing Options The Internet is a primary marketplace newsgroups Another approach is to work with a consulting firm

A Software Acquisition Example Step 3: Evaluate the Alternatives Existing users Application testing Benchmarks Match each package against the RFP features and rank the choices

A Software Acquisition Example Step 4: Perform Cost-Benefit Analysis Identify and calculate TCO for each option you are considering When you purchase software, what you are buying is a software license If you purchase a software package, consider a maintenance agreement

A Software Acquisition Example Step 5: Prepare a Recommendation You should prepare a recommendation that contains your recommendation and lists the alternatives, together with the costs, benefits, advantages, and disadvantages of each option At this point, you may be required to submit a formal system requirements document and deliver a presentation

A Software Acquisition Example Step 6: Implement the Solution Implementation tasks will depend on the solution selected Before the new software becomes operational, you must complete all implementation steps, including loading, configuring, and testing the software; training users; and converting data files to the new system’s format

Completion of Systems Analysis Tasks To complete the systems analysis phase, you must prepare the system requirements document and your presentation to management

Completion of Systems Analysis Tasks Presentation to Management Based on their decision, your next task will be one of the following Implement an outsourcing alternative Develop an in-house system Purchase or customize a software package Perform additional systems analysis work Stop all further work

The Transition to System Design If management decides to develop the system in-house, then the transition to the systems design phase begins Preparing for Systems Design Tasks It is essential to have an accurate and understandable system requirements document

The Transition to System Design The Relationship between Logical and Physical Design The logical design defines the functions and features of the system and the relationships among its components The physical design of an information system is a plan for the actual implementation of the system

Systems Design Guidelines The systems analyst must understand the logical design of the system before beginning the physical design of any one component Data design User interface System design specification Figure 5-24

Systems Design Guidelines System Design Objectives The goal of systems design is to build a system that is effective, reliable, and maintainable A system is reliable if it adequately handles errors A system is maintainable if it is well designed, flexible, and developed with future modifications in mind

Systems Design Guidelines System Design Objectives User considerations Carefully consider any point where users receive output from, or provide input to, the system Anticipate future needs of the users, the system, and the organization Provide flexibility Figure 5-25

Systems Design Guidelines System Design Objectives Data Considerations Data should be entered into the system where and when it occurs because delays cause errors Data should be verified when entered to catch errors immediately Automated methods of data entry should be used whenever possible Figure 5-26

Systems Design Guidelines System Design Objectives Data Considerations Access for data entry should be controlled and all entries or changes to critical data values should be reported – audit trails Every instance of entry and change to data should be logged Data should be entered into a system only once Data duplication should be avoided

Systems Design Guidelines System Design Objectives Architecture considerations Use a modular design Design modules that perform a single function are easier to understand, implement, and maintain

Systems Design Guidelines Design Trade-Offs Design goals often conflict with each other Most design trade-off decisions that you will face come down to the basic conflict of quality versus cost Avoid decisions that achieve short-term savings but might mean higher costs later

Prototyping Prototyping produces an early, rapidly constructed working version of the proposed information system, called a prototype Prototyping allows users to examine a model that accurately represents system outputs, inputs, interfaces, and processes Figure 5-27

Prototyping Prototyping Methods System prototyping Design /Throwaway prototyping

Prototyping Prototyping Tools Systems analysts can use powerful tools to develop prototypes

Prototyping Other Modeling Tools Systems flowchart American National Standards Institute (ANSI)

Prototyping Limitations of Prototypes A prototype is a functioning system, but it is less efficient than a fully developed system Systems developers can upgrade the prototype into the final information system by adding the necessary capability Otherwise, the prototype is discarded

Using Codes During System Design Overview of Codes Code – set of letters or numbers that represent data They save storage space and costs, reduce transmission time, and decrease data entry time Can reduce data input errors

Using Codes During System Design Types of Codes Sequence codes E.g. consecutive employee numbers Block sequence codes College course numbers Alphabetic codes Category codes Identify a group of related items (e.g. dept store) Abbreviation codes E.g. TN (Tennessee), JFK

Using Codes During System Design Types of codes Significant digit codes Derivation codes Cipher codes Action codes Self-checking codes