CHAPTER 13

Acquiring Information Systems and

Applications

CHAPTER OUTLINE
13.1 Planning for and Justifying IT Applications
13.2 Strategies for Acquiring IT Applications
13.3 The Traditional Systems Development Life
Cycle
13.4 Alternative Methods and Tools for
Systems Development
13.5 Vendor and Software Selection

LEARNING OBJECTIVES
1. Define an IT strategic plan, identify three
objectives it must meet, and describe the four
common approaches to cost-benefit analysis.
2. Discuss the four business decisions that
companies must make when they acquire new
applications.
3. Identify the six processes involved in the
systems development life cycle, and explain the
primary tasks and importance of each process.

LEARNING OBJECTIVES (continued)

4. Describe four alternative development
methods and four tools that augment
development methods, and identify at least one
advantage and one disadvantage of each
method and tool.
5. Analyze the process of vendor and software
selection.

13.1 Planning for and Justifying IT

Applications
Organizations must analyze the need for the IT
application.
Each IT application must be justified in terms of
costs and benefits.
The application portfolio

Information Systems Planning

Information Systems Planning (continued)

Organizational
Strategic Plan

IT Architecture

IT Strategic Plan

IT Steering Committee

Image Source/Age Fotostock America, Inc.

IS Operational Plan
Contains the following elements:
Mission
IT environment
Objectives of the IT function
Constraints of the IT function
Application portfolio
Resource allocation and project management

Evaluating & Justifying IT

Investment: Benefits, Costs & Issues
Assessing the costs
Fixed costs
Total cost of ownership (TCO)

Assessing the benefits (Values)

Intangible benefits: Benefits from IT that may
be very desirable but difficult to place an
accurate monetary value on.

Comparing the two

Conducting the Cost-Benefit Analysis

Using Net Present Value (NPV)
Return on investment
Breakeven analysis
The business case approach

13.2 Strategies for Acquiring IT

Applications
Four fundamental business decisions to make
before choosing a strategy:
(1) How much computer code does the company
want to write?
(2) How will the company pay for the application?
(3) Where will the application run?
(4) Where will the application originate?

Strategies for Acquiring IT Applications

Purchase a Prewritten Application
Customize a Prewritten Application
Lease the applications
Application Service Providers and Softwareas-a-Service Vendors
Use Open-Source Software
Outsourcing
Custom Development

Operation of an
Application Service Provider (ASP)
Customer
A

Customer
B

Customer
C

Application

Application

Application

Database

Database

Database

ASP Data Center

Operation of a
Software-as-a-Service (SaaS) Vendor
Customer
A

Customer
B

Customer
C

Application

Customer
A

Customer
B

Customer
C

SaaS Vendor Data Center

13.3 Traditional Systems Development

Life Cycle
Software Development Life Cycle (SDLC)
Systems Investigation
Systems Analysis
Systems Design
Programming and Testing
Implementation
Operation and Maintenance

Six-Stage Systems Development Life

Cycle (SDLC) with Supporting Tools
Business
Need

Prototyping

Systems
Investigation

Systems
Analysis

Systems
Design

Deliverable:
Go/No Go
Decision

Deliverable:
User
Requirement

Deliverable:
Technical
Specification

Upper CASE
Tools

Joint
Application
Design (JAD)

Programming
and Testing

Implement
The
System

Lower CASE
Tools

Operation and
Maintenance

The SDLC
Major advantages
Control
Accountability
Error detection

Major drawbacks
Relatively inflexible
Time-consuming and expensive
Discourages changes once user requirements
are gathered

SDLC Systems Investigation

Begins with the business problem (or
opportunity) followed by the feasibility analysis.
Feasibility study
Deliverable: Go/No-Go Decision

Feasibility Study
Technical feasibility
Economic feasibility
Organizational feasibility
Behavioral feasibility

SDLC System Analysis

The examination of the business problem that
the organization plans to solve with an
information system.
Main purpose is to gather information
about existing system to determine
requirements for the new or improved system.
Deliverable is a set of system
requirements, also called user requirements.

SDLC Systems Design

Describes how the system will accomplish this
task.
Deliverable is the technical design that
specifies:
System outputs, inputs, user interfaces.
Hardware, software, databases,
telecommunications, personnel & procedures.
Blueprint of how these components are
integrated.

SDLC System Design (continued)

Scope creep is caused by adding functions
after the project has been initiated.

Kajano/Shutterstock

SDLC Programming & Testing

Programming involves the translation of a systems
design specification into computer code.
Testing checks to see if the computer code will
produce the expected and desired results under certain
conditions.
Testing is designed to delete errors (bugs) in the
computer code.

SDLC Systems Implementation

Implementation involves three major
conversion strategies:
Direct Conversion
Pilot Conversion
Phased Conversion
Parallel Conversion (not used much today)

SLDC Operation & Maintenance

Audits are performed to assess the systems
capabilities and to determine if it is being used
correctly.
Systems need several types of maintenance.
Debugging
Updating
Maintenance

13.4 Alternative Methods and Tools

for Systems Development
Joint application design (JAD)
Rapid application development (RAD)
Agile development
End-user development

RAD versus SDLC

Tools for Systems Development

Prototyping
Integrated computer-assisted software
engineering (ICASE)
Component-based development
Object-oriented development

13.5 Vendor & Software Selection

Step 1: Identify potential vendors.
Step 2: Determine the evaluation criteria.
Request for proposal (RFP)

Step 3: Evaluate vendors and packages.

Step 4: Choose the vendor and package
Step 5: Negotiate a contract.
Step 6: Establish a service level agreement.

Chapter Closing Case

The Problem

The Solution

The Results