Chapter 11: Alternative Approach -

Purchasing Systems

Systems Development Approaches Systems Development Life Cycle, or SDLC Prototyping Purchased software Outsourcing (systems integrator) End user development

The Purchasing Process

Definition Phase Feasibility Analysis Requirements Definition Short List of Packages Establish Evaluation Criteria Develop and Distribute RFP Choose Package Negotiate Contract

The Purchasing Process (cont.)

Construction Phase System Design (for package changes) System Building (for package changes) System Testing

Implementation Phase Installation Operations Maintenance

RFP -- Request for Proposal A document that is sent to potential vendors

inviting them to submit a proposal to furnish a system

Provides detailed information about the desired system, its environment, material required from the vendor, and general criteria used to evaluate proposals

What if Package Capabilities Don’t Match Company Needs?

Modify the package (“bend the package”)

Change the company (“bend the business”)

Live with the problems

Don’t buy the package

Matching Capabilities & NeedsNeeds of

the CompanyCapabilities ofthe Package

Identify discrepancies

Choose alternatives

Modify thepackage

Live withproblems

Change company

(Figure 11.6)

Roles in Purchasing an Application Package (I) User sponsor - high level executive who

helps justify system, arranges for funding, ensures that appropriate users participate in selection process

User champion - user who pushes the project forward , is enthusiastic - responsible for implementing new system in organization (may be big job!)

Roles in Purchasing an Application Package (II) Project manager - manages process,

responsible for the success of the project, may be user but IS expertise required

Vendor Purchasing specialist - help prepare RPF,

assist in entire process Contract specialists - provide technical and

legal advice

Advantages of Purchasing Packaged Software Cost savings -- although often much less

than at first glance Shorter lead time Quality of the software usually quite high Infusion of external expertise Frees up scarce internal development

resources

Problems with Purchasing Packaged Software Differences between the needs of the

organization and capabilities of available software packages

Dependence upon vendor Risks involved in modification May be harder to install and integrate into an

organization’s operations than custom-developed software

Outsourcing The elimination of part of the internal

information systems organization (or not adding people) by hiring an outside organization to perform these functions

Outsourcing has often involved data center operations, but may include application systems development, programming, and communications network management

Systems Integrator A firm that will take

overall responsibility for managing the development or integration of large, complex systems involving the use of components from a number of different vendors

Reasons for Outsourcing Systems Development Organizations lack the internal capacity to

satisfy their needs for new systems Desire to maintain a lean internal

information systems staff Organization lacks the technical or

managerial skills needed Only alternative for a small firm when a

package is not available

Problems with Outsourcing Systems Development Neither party understands the requirements of

the new system before the contract is signed Contract must be well thought out and

appropriate Ownership of the software may be in question Management must devote at least as much

effort as with SDLC