1. Chapter 16 Alternative Avenues for Systems Acquisitions

2. Learning Objectives When you finish this chapter, you will
Recognize the differences among the alternatives to in-house system development.
Be able to list the business trade-offs inherent in the various methods of acquiring systems.
Understand why the alternatives to in-house development have become so popular.
Know which systems acquisition approach is appropriate for a particular set of circumstances.

3. Sources of Information
Figure 16.1 Alternatives to in-house development of ISs

4. Sources of Information
Figure 16.2 Major information systems magazines

5. Sources for Information
Outsourcing
Short-term contractual relationship with a service firm to develop a specific application
Long-term contractual relationship with a service firm to take over all or some of an organization’s IS functions
Figure 16.3 Outsourced IS services

6. Outsourcing Advantages of Outsourcing Improved financial planning
Reduced license and maintenance fees
Increased attention to core business
Shorter implementation cycles
Reduction of personal and fixed costs
Increased access to highly qualified know-how
Availability of ongoing consulting as part of standard support
Increased security

7. Outsourcing
Figure 16.4 How IS executives rank outsourcing benefits

8. Outsourcing Risks of Outsourcing Loss of control
Loss of experienced employees
Risks of losing a competitive advantage

9. Outsourcing
Figure 16.5 Risks of outsourcing are higher at higher levels of management.

10. The Information Systems Subsidiary
IS service companies that are owned by and served by one large company
Some grow large enough to service the market at large
Some corporations purchase an IS consulting firm

11. Purchased Applications
Why Purchase?
Immediate system availability
High quality
Low price
Available support

12. Purchased Applications
Figure 16.6 The process of choosing ready-made software

13. Purchased Applications
Steps in Purchasing Ready-made Software
Identifying the problem
Identifying potential vendors
Soliciting vendor information
Defining system requirements
Requesting vendor proposals

14. Purchased Applications
Reviewing proposals and screening vendors
Visiting sites
Selecting the vendor
Benchmarking
Negotiating a contract
Implementing the new system
Managing post-implementation support

15. Purchased Applications
Figure 16.7 A system should be purchased only if all or most needs are met.

16. Purchased Applications
Figure 16.8 How IS managers rank the importance of product purchase factors

17. Purchased Applications
Benchmarking
Codified comparison of performance measures between systems
Ensures adopted application satisfies the organization's minimum requirements
Learning from Experience

18. Purchased Applications
Figure 16.9 The eight commandments of effective benchmarking

19. Purchased Applications
Purchasing Risks
Loose fit between needs and features
Bankruptcy of the vendor
High turnover of vendor personnel

20. Renting Software On-site Renting Renting Through the Web
Client purchases a license to use a certain application for a specified time
Renting Through the Web
Application installed at vendor’s location; client accesses through the Web or leased line

21. Renting Software
Figure Benefits and risks of software rental through the Web

22. User Application Development
Factors Encouraging User Application Development
The programming backlog
The widespread use of PCs
The emergence of 4GLs
Increasing popularity of prototyping
Increasing popularity of client/server architecture

23. User Application Development
Figure Guidelines for end-user development of applications

24. User Application Development
Figure Graphical 4GLs, such as PowerBuilder 5.0, shown here, provide friendly tools for end users to develop their own applications.

25. User Application Development
Figure Graphical 4GLs

26. User Application Development
Managing User-developed Applications
Managing the reaction of IS professionals
Providing support – help desk
Compatibility – standard tool
Managing access – database access

27. User Application Development
Advantages of user application development
Shortened lead times
Good fit to needs
Compliance with culture
Efficient utilization of resources
Acquisition of skills
Free IS staff time – complex system development

28. User Application Development
Risks of user application development
Poorly developed applications
Islands of information
Duplication
Security problems
Poor documentation
Futz factor

29. User Application Development
Figure The costs of end-user computing

30. Ethical and Societal Issues Computer Use Policies for Employees
End-user computing encourages increased productivity, but business computers are often used for unproductive personal activities.
Most state statutes do not address unauthorized use of computers.
Employers should provide clear guidelines stating acceptable and unacceptable use of company computers.