1. Copyright © 2014 Pearson Education, Inc. 1 Managers from across organizations are involved in developing and acquiring information systems Chapter 9 - Developing and Acquiring Information Systems

2. Copyright © 2014 Pearson Education, Inc. 2 Administrivia The syllabus has been updated – We will cover Chapter 9 today – We will cover Chapter 10 on Thursday – I have not changed the due dates to avoid confusion Project 2 – Due Today Project 3 – Due 12/2

3. Copyright © 2014 Pearson Education, Inc. 3 Agenda Developing a business case for software The make v buy decision – There is a broader theme in this decision which is usually referred to as the boundary of the firm We will further discuss the decision of COTS v customized software

4. Copyright © 2014 Pearson Education, Inc. 4 Combining Customized and Packaged software There are a variety of sources for information systems.

5. Copyright © 2014 Pearson Education, Inc. 5 Chapter 9 Learning Objectives Making the Business Case Describe how to formulate and present the business case for technology investments. The Systems Development Process Describe the systems development life cycle and its various phases. Acquiring Information Systems Explain how organizations acquire systems via external acquisition and outsourcing.

6. Copyright © 2014 Pearson Education, Inc. 6 Making the Business Case Describe how to formulate and present the business case for technology investments. Cyberwar and Cyberterrorism Describe and explain the differences between cyberwar and cyberterrorism. Acquiring Information Systems Explain how organizations acquire systems via external acquisition and outsourcing.

7. Copyright © 2014 Pearson Education, Inc. 7 Making the business case What do we mean when we say the business case? What are the questions we must ask? – Will it decrease cost? – Will it increase revenue? – Will the change in profit outweigh the costs of development? With what certainty can we say that? – Will productivity be increase? How will we measure that?

8. Copyright © 2014 Pearson Education, Inc. 8 The Productivity Paradox Recall, no correlation between IT investment and productivity has ever been found Also recall Carr, how might we ensure that this does not happen to our firm? – Actual Use – Align the IT around the firm’s strategic advantage – Minimize unintended use

9. Copyright © 2014 Pearson Education, Inc. 9 Managing the paradox

10. Copyright © 2014 Pearson Education, Inc. 10 Managing the paradox

11. Copyright © 2014 Pearson Education, Inc. 11 Managing the paradox

12. Copyright © 2014 Pearson Education, Inc. 12 Managing the paradox

13. Copyright © 2014 Pearson Education, Inc. 13 Productivity Business Case – Cost v Productivity Employees20,000 Average Salary$42,523 Total Salary$850,460,000 10% Productivity Increase$85,046,000 Cost of Project$4,000,000 Employees75 Average Salary$37,520 Total Salary$2,814,000 10% Headcount Reduction$281,400 Cost of Project$400,000

14. Copyright © 2014 Pearson Education, Inc. 14 Making a Successful Business Case

15. Copyright © 2014 Pearson Education, Inc. 15 Arguments Based on Faith Do you need a cost benefits analysis for an argument based on faith?

16. Copyright © 2014 Pearson Education, Inc. 16 Arguments Based on Fear Do you need a cost benefits analysis for an argument based on fear? Come on, how do you instill “fear” in an organization?

17. Copyright © 2014 Pearson Education, Inc. 17 Arguments Based on Fact Do you need a cost benefits analysis for an argument based on fact?

18. Copyright © 2014 Pearson Education, Inc. 18 A moment of disagreement I disagree rather strongly with the book here Faith and Fear arguments are powerful – They can make you a lot of money Ultimately you will be more successful twinning these arguments with fact – Example: Katrina and disaster recovery Speculation remains the hallmark of a bankrupt intellect. Don’t sell your customers snake oil

19. Copyright © 2014 Pearson Education, Inc. 19 The Systems Development Process Making the Business Case Describe how to formulate and present the business case for technology investments. The Systems Development Process Describe the systems development life cycle and its various phases. Acquiring Information Systems Explain how organizations acquire systems via external acquisition and outsourcing.

20. Copyright © 2014 Pearson Education, Inc. 20 Steps in the Systems Development Process Building my deck vs. a new sales system for Chuck’s Bikes

21. Copyright © 2014 Pearson Education, Inc. 21 21 Phase 1: Systems Identification, Selection and Planning

22. Copyright © 2014 Pearson Education, Inc. 22 22 Phase 2: Systems Analysis

23. Copyright © 2014 Pearson Education, Inc. 23 Critical Success Factors

24. Copyright © 2014 Pearson Education, Inc. 24 System Analysis

25. Copyright © 2014 Pearson Education, Inc. 25 25 Phase 3: System Design

26. Copyright © 2014 Pearson Education, Inc. 26 System Design Forms Reports Interfaces Databases

27. Copyright © 2014 Pearson Education, Inc. 27 Phase 4: System Implementation

28. Copyright © 2014 Pearson Education, Inc. 28 Testing

29. Copyright © 2014 Pearson Education, Inc. 29 Training 29

30. Copyright © 2014 Pearson Education, Inc. 30 System Conversion and Installation

31. Copyright © 2014 Pearson Education, Inc. 31 System Maintenance

32. Copyright © 2014 Pearson Education, Inc. 32

33. Copyright © 2014 Pearson Education, Inc. 33 Acquiring Information Systems Making the Business Case Describe how to formulate and present the business case for technology investments. The Systems Development Process Describe the systems development life cycle and its various phases. Acquiring Information Systems Explain how organizations acquire systems via external acquisition and outsourcing.

34. Copyright © 2014 Pearson Education, Inc. 34 We might not want to build the system ourselves Why? – If this is not our core competency, why would we? – Someone in the market can do it better for less!

35. Copyright © 2014 Pearson Education, Inc. 35 Steps in External Acquisition Competitive bid process—find the best system for lowest possible price. 1.Systems planning and selection 2.Systems analysis 3.Development of a request for proposal 4.Proposal evaluation 5.Vendor selection The first two steps are similar to SDLC.

36. Copyright © 2014 Pearson Education, Inc. 36 Development of a Request for Proposal (RFP) Areas covered in an RFP

37. Copyright © 2014 Pearson Education, Inc. 37 Proposal Evaluation Proposal evaluation—An assessment of proposals received from vendors. – May include system demonstrations – System benchmarking Standardized tests to compare different proposed systems Common system benchmarks – Response time given a specified number of users – Time to sort records – Time to retrieve a set of records – Time to produce a given record – Time to read in a set of data

38. Copyright © 2014 Pearson Education, Inc. 38 Vendor Selection Usually more than one system will meet the criteria. Determine the best fit Need to prioritize/rank the proposed systems – Best ranking system is chosen. – Formal approach—devise a scoring system for the criteria – Less formal approaches: Checklists Subjective processes

39. Copyright © 2014 Pearson Education, Inc. 39 Multi-criteria Analysis Example Alternative projects and system design decisions can be assisted using weighted multi-criteria analysis.

40. Copyright © 2014 Pearson Education, Inc. 40 Ok, we have a vendor, what kind of system do we want? Three real ways to go – SAAS Usually from an ASP – COTS Solution – Customized implementation

41. Copyright © 2014 Pearson Education, Inc. 41 Application Service Providers (ASP) Problems we might be facing  Managing the software infrastructure is a complex task.  High operating costs  Scalability issues ASPs provide software as a service (SaaS)  Reduced need to maintain or upgrade software  Variable fee based on actual use of services  Ability to rely on a provider’s expertise

42. Copyright © 2014 Pearson Education, Inc. 42 Outsourcing Systems Development Outsourcing systems development—Turning over responsibility for some or all of an organization’s IS development and operations to an outside firm. – Your IS solutions may be housed in their organization. – Your applications may be run on their computers. – They may develop systems to run on your existing computers (within your organization).

43. Copyright © 2014 Pearson Education, Inc. 43 Why Outsourcing? Cost and quality concerns— higher quality or lower cost systems may be available through outsourcing. Problems in IS performance— IS departments might have problems meeting acceptable standards. Supplier pressure —aggressive sales force convinces senior management to outsource IS functions. Simplifying, downsizing, and reengineering— focusing on core competencies.

44. Copyright © 2014 Pearson Education, Inc. 44 Why Outsourcing? (cont’d) Financial factors— liquidation of IT assets. Organizational culture— external IS groups are devoid of political ties. Internal irritants— external IS group may be better accepted by other organizational users.

45. Copyright © 2014 Pearson Education, Inc. 45 Managing the IS Outsourcing Relationship Ongoing management of an outsourcing alliance is needed. 1.Strong, active CIO and staff 2.Clear, realistic performance measurements of the system 3.Multiple levels of interface between customer and outsourcer Full-time relationship managers should be assigned.

46. Copyright © 2014 Pearson Education, Inc. 46 Not All Outsourcing Relationships Are the Same Outsourcing relationships – No longer just a legal contract – Strategic, mutually beneficial partnership – Different types of outsourcing relationships Basic relationship—“Cash & Carry” Preferred relationship—Set preferential pricing Strategic relationship—Share risks/rewards

47. Copyright © 2014 Pearson Education, Inc. 47 Recap Today we talked about information systems development – Development of the business case – System analysis and design – Vendor procurement

48. Copyright © 2014 Pearson Education, Inc. 48 Project 2 Hand them in!