1. Chapter 16 Acquiring and Developing Business Applications and Infrastructure Information Technology for Management Improving Performance in the Digital Economy 7 th edition John Wiley & Sons, Inc. Slides contributed by Dr. Sandra Reid Chair, Graduate School of Business & Professor, Technology Dallas Baptist University Turban and Volonino 16-1Copyright 2010 John Wiley & Sons, Inc.

2. Chapter Outline 16.1 The Framework of IT Application Acquisition 16.2 Identifying, Justifying, and Planning IT Systems Applications (Step 1) 16.3 Acquiring IT Applications: Available Options (Step 3) 16.4 Selecting an Acquisition Approach and Other Implementation Issues 16-2Copyright 2010 John Wiley & Sons, Inc.

3. Chapter Outline – cont’d 16.5 Connecting to Databases, Enterprise Systems, and Business Partners: Integration (Step 4) 16.6 Business Process Redesign 16.7 Managerial Issues Copyright 2010 John Wiley & Sons, Inc.16-3

4. Learning Objectives 1.Describe the process of IT systems acquisition. 2.Describe IT project identification, justification, and planning. 3.List the major IT acquisition options and criteria for option selection. 4.Describe the process of vendor and software selection. 16-4Copyright 2010 John Wiley & Sons, Inc.

5. Learning Objectives – cont’d 5. Understand some major implementation issues. 6.Understand the issue of connecting IT applications to databases, other applications, networks, and business partners. 7.Describe business process redesign and its importance to new application development. Copyright 2010 John Wiley & Sons, Inc.16-5

6. Copyright 2010 John Wiley & Sons, Inc.16-6 Figure IT7eU

7. Problems – 36 new releases within 1 week where 627 changes had been made. User involvement needed throughout. Solution – Application development 2.0 (Web 2.0) is an agile & fast development method during which designers & users interact & participate. Applications are better with direct involvement by both groups. Results – Bugs fixed quicker; discipline is built into design. Copyright 2010 John Wiley & Sons, Inc.16-7

8. Copyright 2010 John Wiley & Sons, Inc.16-8 16.1 The Framework of IT Application Acquisition

9. Application Acquisition Issues Wide range of sizes & types. Applications keep changing over time. Applications may involve several business partners. No single way to acquire IT applications. Diversity of IT applications requires variety of acquisition methodologies & approaches. Copyright 2010 John Wiley & Sons, Inc.16-9

10. Acquisition Process of IT Application Step 1 – planning, identifying, & justifying IT- based systems – must be aligned with overall business plan. May require process redesign. Cost benefit analysis is critical. Step 2 – creating an IT architecture – plan for organizing underlying infrastructure & applications of IT project. Copyright 2010 John Wiley & Sons, Inc.16-10

11. Acquisition Process of IT Application – cont’d Step 3 – selecting an acquisition option – 1. build in-house, 2. vendor build custom-made system, 3. buy existing application & install with/without modifications, 4. lease, 5. enter partnership or alliance, or 6. use combination. Step 4 – testing, installing, integrating & deploying IT applications. Step 5 – operations, maintenance & updating. May take same effort as install. Rapid changes to technology require frequent updates. Copyright 2010 John Wiley & Sons, Inc.16-11

12. Figure 16.1 The process of IT application acquisition. Copyright 2010 John Wiley & Sons, Inc.16-12

13. Figure 16.2 Triple constraints of IT project management. Copyright 2010 John Wiley & Sons, Inc.16-13

14. Copyright 2010 John Wiley & Sons, Inc.16-14 16.2 Identifying, Justifying, and Planning IT Systems Applications (Step 1)

15. Identifying IT Systems Applications Requests from user departments. Vendors’ recommendations. Need to comply with new governmental regulations. Auditors’ recommendations. Recommendation of steering committee. Recommendation of IS department. Top management requests. Search for high-payoff projects. Copyright 2010 John Wiley & Sons, Inc.16-15

16. IT Project Justification All organizations have limited resources. Explore need for each system. How will this application serve needs of users? Cost justify. What is the opportunity lost cost? Copyright 2010 John Wiley & Sons, Inc.16-16 Justifying IT Projects in eBusinessJustifying IT Projects in eBusiness for interesting article with more…

17. Planning IT Applications Understand current business processes. Define objectives & business requirements of proposed system, scope in terms of cost, effort, schedule & deliverables. Feasibility study may be necessary. Assess risk of failure. Define milestones for benchmarking progress. Examine issue of connectivity to databases & to partners’ systems, relevant government regulations, needs of some employees lose their jobs as a result of implementation. Copyright 2010 John Wiley & Sons, Inc.16-17

18. Copyright 2010 John Wiley & Sons, Inc.16-18 16.3 Acquiring IT Applications: Available Options (Step 3)

19. Buy vs. Lease Options Buying can be cost-effective & time-saving strategy compared with in-house development. Consider carefully to ensure that needs are met. Leasing can result in substantial cost & time savings. Lease IT application from outsourcer & then install on company’s premises. Lease from an application service provider (ASP) that hosts application at its data center. Copyright 2010 John Wiley & Sons, Inc.16-19

20. Table 16.1 Copyright 2010 John Wiley & Sons, Inc.16-20

21. Software-as-a-service (SaaS) Software that is rented. Reduce risks involved in acquiring new software. Influence product & service quality via an ongoing relationship with vendors. Changing usage commitments as business circumstances change. Preparing financially justifiable business cases. Predicting ongoing expenses more accurately. Copyright 2010 John Wiley & Sons, Inc.16-21

22. In-House Development (Insourcing) May be time consuming & costly. Applications may better fit needs of organization. Build from scratch – consider only for specialized IT applications for which components are not available. Expensive & slow; provides best fit for organization’s needs. Build from components – must integrate tightly. Integrating applications – entire applications are employed. Copyright 2010 John Wiley & Sons, Inc.16-22

23. Methods Used in In-House Development Systems Development Life Cycle (SDLC). Prototyping – risk of getting into endless loop of prototyping revisions. Web 2.0 or Application 2.0 methodology – involves quick, incremental updates with close user involvement. End-user development – developed by people outside IS department. Includes users in all functional areas at all skill levels & organizational levels. Copyright 2010 John Wiley & Sons, Inc.16-23

24. Other Acquisition Options Join e-marketplace or e-exchange. Join third-party auction or reverse auction. Engage in joint venture. Join public exchange or consortium. Hybrid approach. Copyright 2010 John Wiley & Sons, Inc.16-24 Project Manager Roles in IT Outsourcing

25. Copyright 2010 John Wiley & Sons, Inc.16-25 16.4 Selecting an Acquisition Approach and Other Implementation Issues

26. Table 16.2 Copyright 2010 John Wiley & Sons, Inc.16-26

27. Table 16.3 Copyright 2010 John Wiley & Sons, Inc.16-27

28. Figure 16.3 Copyright 2010 John Wiley & Sons, Inc.16-28

29. Copyright 2010 John Wiley & Sons, Inc.16-29 16.5 Connecting to Databases, Enterprise Systems, and Business Partners: Integration (Step 4)

30. Connecting – Step 4 Databases – most common. Back-end systems – requires integration with variety of systems such as ERP, CRM, KM, SCM, EDI, data warehouses, etc. Copyright 2010 John Wiley & Sons, Inc.16-30 WebSphere InterChange Server Support Companies that offer EAI (enterprise application integration):

31. Connecting – cont’d Business partners – via EDI, EDI/Internet, XML & extranets. Security & scalability become major issues. Web services – applications delivered over the Internet. Copyright 2010 John Wiley & Sons, Inc.16-31

32. Figure 16.4 Copyright 2010 John Wiley & Sons, Inc.16-32

33. Copyright 2010 John Wiley & Sons, Inc.16-33 16.6 Business Process Redesign

34. Drivers of Process Redesign Copyright 2010 John Wiley & Sons, Inc.16-34 Adding commercial software. Restructuring or eliminating old processes prior to automation. Need for information integration. Reducing cycle time. Need for customization. Streamlining the supply chain. Improving customer service & implementing CRM. Participating in private or public e-marketplaces. Conducting e-procurement. Enabling direct online marketing. Transforming to e-business.

35. Methods for Restructuring BPR – may include one or more processes. Can be anything from redesign of individual process to redesign of group of processes to design of entire enterprise. BPM – combines workflow systems & redesign methods. Covers: people-to-people, systems-to- systems, & systems-to-people interactions. Process-centered perspective. Blends workflow, process management & applications integration. Copyright 2010 John Wiley & Sons, Inc.16-35

36. Role of IT in BPR Recognize powerful solutions that make redesign & BPR possible; then seek processes that can be helped by such solutions. Copyright 2010 John Wiley & Sons, Inc.16-36 The One-Minute Risk Assessment ToolThe One-Minute Risk Assessment Tool (Tiwana & Keil, 2004).

37. Some Reasons for BPR Failures High risk. Inappropriate change management. Failure to plan. Internal politics. Lack of participation & leadership. Insufficient stakeholder involvement. Poor analyses of business processes. Inflexible software. Lack of motivation Lack of top management support. Copyright 2010 John Wiley & Sons, Inc.16-37 Acquiring Executive Support for Infrastructure Processes

38. BPR Successes Higher success rate when less than entire organization undergoes restructure. Published most often in trade & academic journals. Great potential to improve organization’s competitive position. Copyright 2010 John Wiley & Sons, Inc.16-38

39. Copyright 2010 John Wiley & Sons, Inc.16-39 16.7 Managerial Issues

40. Major Managerial Issues Global & cultural. Ethical & legal issues. User involvement is critical. Change management. Risk management. Copyright 2010 John Wiley & Sons, Inc.16-40 A THREE-PERSPECTIVE MODEL OF CULTURE, INFORMATION SYSTEMS, AND THEIR DEVELOPMENT AND USE.

41. Copyright 2010 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the Information herein. Copyright 2010 John Wiley & Sons, Inc.16-41