C

HAPTER 19

AIS Development Strategies

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INTRODUCTION
Questions to be addressed in this chapter include:
How do organizations buy software, hardware, and
vendor services?
How do information systems departments develop
custom software?
How do end users develop, use and control computerbased information systems?
Why do organizations outsource their information
systems, and what are the benefits and risks of doing
so?
How are prototypes used to develop an AIS, and what
are the advantages and disadvantages?
What is computer-aided software engineering, and
how is it used in systems development?
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INTRODUCTION
Companies can experience a number of
difficulties in developing an AIS, including:
Projects are backlogged for years because of the high
demand for resources.
The newly designed system doesnt meet user needs.
The process takes so long that by the time its
complete, its obsolete.
Users cant adequately specify their needs.
Changes to the AIS are often difficult to make after
requirements have been written into the
specifications.
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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software;
Developing software in-house; or
Outsourcing.

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software
Developing software in-house; or
Outsourcing.

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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In the early days of computers,

companies were rarely able to buy
software to meet their needs.
But commercially available packages
are now outpacing custom-developed
software as old systems are replaced.

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Canned software is sold on the open
market to a broad range of users with
similar requirements.
Some companies sell hardware and software
together as a package.
These systems are called turnkey systems.
Many are written by vendors who specialize in a
particular industry.

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A major problem with canned software:
It often does not meet all of a companys
information needs.
Can be overcome by modifying the canned
software.
Usually best done by the vendor.
Unauthorized modifications may render the
program unreliable and unstable.

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Companies can also acquire software through
application service providers (ASPs).
ASPs host Web-based software and deliver it to
clients over the Internet.
Companies dont have to buy, install, or maintain
canned software; they simply rent it.
If you used an online version of a package like TurboTax to prepare your taxes, thats a consumer version
of renting software over the Internet.

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Advantages of ASPs:
Reduction of software costs and administrative
overhead.
Automated software upgrades.
Scalability as the business grows.
Global access to information.
Access to skilled IT personnel.
Ability to focus on core financial competencies
rather than IT.

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Purchasing software and the SDLC:
Companies that buy rather than develop
software still follow the SDLC process,
including:
Systems analysis
They conduct an initial investigation,
systems survey, and feasibility study, as
well as determining AIS requirements.

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Purchasing software and the SDLC:
Companies that buy rather than develop
software still follow the SDLC process,
including:
Systems analysis
Conceptual design
An important aspect is determining
whether software that meets AIS
requirements is already available.
If so, a make-or-buy decision must be
made.
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PURCHASING PREWRITTEN SOFTWARE

Purchasing software and the SDLC:
Companies that buy rather than develop
software still follow the SDLC process,
including:
Systems analysis If software is purchased,
program design and coding
Conceptual design
can be omitted.
Physical design But software modifications

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may be needed.
Companies also may design
inputs, outputs, files, and
control procedures.

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These activities must still take place,
including:

Purchasing
software
and personnel
the SDLC:
Selecting
and training

Installing and testing hardware and software

Companies
that buy rather than develop
Documenting procedures
software still
follow the SDLC process,
Converting from old to new AIS
including:

However, the software modules do not

Systems
analysis
have
to be developed and tested.
Conceptual
And design
the computer programs do not need
Physical
todesign
be documented.
Implementation and conversion

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PURCHASING PREWRITTEN SOFTWARE

Purchasing software and the SDLC:
Companies that buy rather than develop
software still follow the SDLC process,
including:

Systems analysis
Conceptual design
Physical design
Implementation and conversion
Operation and maintenance

The AIS is operated like any other software.

The vendor usually maintains the software.

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Selecting a vendor
Deciding whether to make or buy software
can be made independently of the decision to
acquire hardware, service, maintenance, and
other AIS resources.
And the preceding resources can be bought
independently of the software.
But hardware and vendor decisions may
depend on the software decisions.
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Vendors can be found by:
Looking in phone book
Obtaining referrals
Scanning computer or trade magazines
Attending conferences
Using search organizations

Beware of fly-by-night companies that can

leave your organization high and dry.
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Acquiring hardware and software
Once AIS requirements have been defined,
the organization can buy software and
hardware.
Companies needing only a PC and some
office software can usually complete their own
research and make a selection.

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When buying large or complex systems, a
request for proposal (RFP) should be
prepared:
The RFP is an invitation to bidders to propose
a system by a specific date.
Each proposal is evaluated.
Finalists are investigated in depth.

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The formal approach is important for
several reasons:
Saves time

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The same information is

provided to all bidders.

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The formal approach is important for
several reasons:
Saves time
Simplifies the decision-making process

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The bidders all respond in the

same format and based on
the same information.

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The formal approach is important for
several reasons:
Saves time
Simplifies the decision-making process
Reduces errors Less likely to look over
important factors in
evaluating proposals.

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The formal approach is important for
several reasons:
Saves time
Simplifies the decision-making process
Reduces errors
Avoids potential for disagreement

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Both parties have the same

expectations and information
in writing.

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When an RFP is solicited based on exact
hardware and software specifications:
Total costs are usually lower.
Less time is required for vendor preparation
and company evaluation.
However, the vendor cannot recommend
alternatives.

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A generalized RFP contains a problem
definition and requests a system that
meets specific performance objectives
and requirements.
Leaves technical issues to the vendor.
However, makes it more difficult to evaluate
proposals.
May produce more costly bids.

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Usually, the more information a company
provides to the vendors, the better their chances
of receiving a system that meets their
requirements.
Detailed specifications should include:

Required applications
Inputs and outputs
Files and databases
Frequency and methods of file updating and inquiry
Unique characteristics or requirements

Be sure to distinguish between mandatory and

desirable requirements.
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Evaluating proposals and selecting a system
Eliminate any proposals that:
Are missing important information.
Fail to meet minimum requirements.
Are ambiguous.

Those that pass the preliminary screening should be

compared with the proposed AIS requirements to
determine:
If they meet all mandatory requirements.
How many desirable requirements they meet.

Finalists can be invited to demo their system using

company-supplied data.
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In reviewing the proposals, you need to
evaluate:
Hardware
Software
Vendors

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In reviewing the proposals, you need to
evaluate:
Hardware
Software
Vendors

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Criteria to evaluate hardware include:
Cost
Ability to run required
software
Processing speed and
capabilities
Secondary storage
capability
Input and output speeds
Communication
capabilities
Expandability
Recency of technology
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Availability
Compatibility with existing
hardware, software, and
peripherals
Performance compared to
competitors
Cost and availability of
support and maintenance
Warrantees and guarantees
Financing arrangements
Ability to meet mandatory
requirements

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In reviewing the proposals, you need to
evaluate:
Hardware
Software
Vendors

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Criteria to evaluate software include:
Conformity with
specifications
Need for modification
Performance (speed,
accuracy, reliability)
Use by other companies
Satisfaction of other users
Documentation
Compatibility with existing
software

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User-friendliness
Ability to be demonstrated
and test-driven
Warranties
Flexibility and
maintainability
Capability for online inquiry
of files and records
Vendor upgrades

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PURCHASING PREWRITTEN SOFTWARE

In reviewing the proposals, you need to
evaluate:
Hardware
Software
Vendors

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Criteria to evaluate vendors include:
Size
Financial stability and
security
Experience
Quality of support and
warranties
Regularity of updates
Ability to provide financing
Willingness to sign
contract
Willingness to provide
references

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Reputation for reliability

and dependability
Hardware and software
support and maintenance
Implementation and
installation support
Quality and
responsiveness of
personnel
Willingness to provide
training
Responsiveness and
timeliness of support

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Approaches to comparing system
performance:
Benchmark problem
Point scoring
Requirements costing

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Approaches to comparing system
performance:
Benchmark problem
Point scoring
Requirements costing

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Benchmark problem
The new AIS performs a data processing task
with input, processing, and output jobs typical
of what would be required of the new system.
Processing times are calculated and
compared.
The AIS with the lowest time is judged most
efficient.

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PURCHASING PREWRITTEN SOFTWARE

Approaches to comparing system
performance:
Benchmark problem
Point scoring
Requirements costing

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Point scoring:
A weight is assigned to each criterion used to
evaluate the system, based on the relative
importance of that criterion.
Each criterion is rated for each product.
Each rating is multiplied times the weight
assigned to the criterion to develop a
weighted score.
The weighted scores are added for each
product.
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Example:
Zorba Co. is evaluating systems offered by three
different vendors: Able Co., Baker Co., and Cook Co.
Zorba has determined three criteria that they will use
to evaluate the different systems: cost, speed, and
vendor reliability.
They have provided the following weights to each
criteria, with vendor reliability being the most critical:
Vendor reliability9
Cost6
Speed4

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Zorba examined the packages offered by the three
vendors and rated them based on these three criteria.
Ratings were from 15 with 5 being the highest score.
Criteria

Able Co.

Baker Co.

Cook Co.

Vendor reliability (9)

Cost (6)

Speed (4)

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The weighted scores are then computed by multiplying
the rating given to each vendor on each criterion times
the weight assigned to that criterion.
Criteria
Vendor reliability (9)

Able Co.

Baker Co.

Cook Co.

Cost (6)

Speed (4)

Able Co.

Baker Co.

Cook Co.

Vendor reliability (9)

18

45

36

Cost (6)

30

18

24

Speed (4)

12

16

WEIGHTED SCORES
Criteria

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The weighted scores for each company are
summed:
Able = 60 points
Baker = 79 points
Cook = 68 points

Based on the preceding scores, the bid would

probably be awarded to Baker Co.
WEIGHTED SCORES
Criteria

Able Co.

Baker Co.

Cook Co.

Vendor reliability (9)

18

45

36

Cost (6)

30

18

24

Speed (4)

12

16

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The preceding example is a simplification.
In a real-life scenario, several factors
would be different:
There would probably be many more criteria
being considered.
Several people would be rating the criteria,
and the final scores for each vendor would
probably be a composite of those individual
scores.
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Approaches to comparing system
performance:
Benchmark problem
Point scoring
Requirements costing

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Requirements costing:
Estimates cost of purchasing or developing
features that are not included in a particular
AIS.
The total AIS cost is calculated by adding the
acquisition cost to the purchasing and
development costs.
Total cost = cost of system with all required
features.
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To verify that the AIS that looks best on
paper is actually the best in practice:
Test-drive the software.
Contact other users for references.
Evaluate vendor personnel.
Confirm details of the proposal.

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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software
Developing software in-house
Outsourcing

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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DEVELOPING SOFTWARE IN-HOUSE

Despite the availability of good canned
software, many organizations develop
their own because:
Their requirements are unique; or
The GAO reports that
Their size and complexity
a
31% ofnecessitates
federal
custom package.
government IT projects
are poorly planned or do
Developing custom software
is difficult and
not meet intended
error prone and consumes
much time and
objectives.
resources.
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The most difficult hurdles:
Lack of time.
Complexity of desired system.
Poor requirements and systems planning.
Inadequate communication and cooperation
between departments and users.
Lack of qualified staff.
Poor senior executive support.

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After end users define their requirements,
the analysts:
Work with the end users to determine the
format of paper and screen outputs.
Identify:
Data required for each input.
Data to be retained in files.

Develop detailed program specs to be

interpreted and coded by programmers.
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The process requires much discipline and
management supervision.
Accountants may help as project
supervisors, users, or development team
members.

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Custom software is usually developed and
written in-house.
Alternately, organizations may engage an
outside company to develop a package or
assemble one from their inventory of
modules.
These modules are adapted, combined, and
organized to form a customized product that
meets specific requirements.
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When contracting with an outside organization,
maintain control over development and observe
the following guidelines:
Carefully select a developer
Look for:
Experience in the industry
A good understanding of:
Business in general
How your company
conducts business

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When contracting with an outside organization,
maintain control over development and observe
the following guidelines:
Carefully select a developer
Sign a contract to clearly define responsibilities

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When contracting with an outside organization,
maintain control over development and observe
the following guidelines:
Carefully select a developer
Sign a contract to clearly define responsibilities
Plan and monitor each step
Design all aspects in detail.
Include frequent checkpoints.

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DEVELOPING SOFTWARE IN-HOUSE

When contracting with an outside organization,
maintain control over development and observe
the following guidelines:

Carefully select a developer

Sign a contract to clearly define responsibilities
Plan and monitor each step
Maintain effective and frequent communication

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When contracting with an outside organization,
maintain control over development and observe
the following guidelines:

Carefully select a developer

Sign a contract to clearly define responsibilities
Plan and monitor each step
Maintain effective and frequent communication
Control all costs
Cash outflows should be minimized until
the project is completed and accepted.

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Information systems consultants suggest that
clients develop their own software only if it
provides a significant competitive advantage.
Payroll and A/R systems are not good candidates for
in-house development.
There might be significant benefits to developing
sophisticated product manufacturing software.

If there is no significant competitive advantage,

buy software from an outside supplier.
Trend appears to be in that direction.

There is no pat answer to the make-or-buy

decision.
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Another approach to developing software
in-house is to take the lions share of the
effort out of the hands of the IS
department and place it in the laps of the
ultimate information users.

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End-user developed software
End-user computing (EUC) is the hands-on
development, use, and control of computer-based
information systems by users.
With EUC, individuals use IT to meet their own IS
needs rather than rely on systems professionals.
Why?
The demand for information systems has grown
exponentially since the introduction of the computer.
One solution to meeting these needs is to have end users
meet their own information needs.

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Technology has evolved to automate
much of the system development process.
Factors contributing to EUC are:
Increased computer literacy.
Easier-to-use programming languages.
Inexpensive PCs.
A variety of powerful and inexpensive
software packages.

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Consequently, users have begun to
develop their own systems to:
Create and store data.
Access and download company data.
Share data and computer resources in
networks.

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As end users began to meet their initial
needs, two things happened:
Users realized computers could be used to
meet more and more information needs.
Increased access to data created many new
uses and needs for information.

Result: A tremendous growth in end-user

computing that is expected to continue.

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EUC has altered the role of the IS staff:
They continue to develop and maintain transaction
processing systems and company-wide databases
from which end users draw information.
They provide users with technical advice and
operational support and make as much information
available to them as possible.
While the support work has increased for the IS staff,
this work is counter-balanced by a decreased demand
for traditional IS services.
EUC may make up 7595% of all IS processing by
2010.

Because accountants will be end users, they

need an understanding of EUC concepts.
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Appropriate end-user development and
use
End user development (EUD) happens when
information users (e.g., managers,
accountants, auditors) develop their own
applications using computer specialists as
advisors.
Inappropriate for complex systems.
Not used for large-scale processing, such as
payroll, receivables, payables, general ledger, or
inventory.
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End user development may be most
appropriate for:
Retrieving info from company databases to
produce simple reports or answer single queries.
Performing what if, sensitivity, or statistical
analyses.
Developing applications that use prewritten
software (e.g., spreadsheet or database software).
Preparing schedules (such as aging of accounts)
and lists.

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Benefits of end-user computing:
User creation, control, and implementation

Users control the development process, decide

what info needs are important, and if a system
should be developed.
Ownership helps them build better systems.

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Benefits of end-user computing:
User creation, control, and implementation
Systems that meet user needs

Because users discover flaws that systems people

would not catch.
Also, the communication problem between user
analyst programmer are avoided.

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Benefits of end-user computing:
User creation, control, and implementation
Systems that meet user needs
Timeliness
Much of the expensive and time-consuming costbenefit analysis, requirements definitions, and red
tape are reduced.

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DEVELOPING SOFTWARE IN-HOUSE

Benefits of end-user computing:
User creation, control, and implementation
Systems that meet user needs
Timeliness
Freeing up systems resources

The IS department can exert time and resources

on other information and maintenance activities.
Reduces both visible and invisible backlog of
systems development projects.

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DEVELOPING SOFTWARE IN-HOUSE

Benefits of end-user computing:
User creation, control, and implementation
Systems that meet user needs
Timeliness
Freeing up systems resources
Versatility and ease of use
Most EUC software is easy to understand and use.
With a laptop, the work can be done at home or
almost anywhere.

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors

End users are inexperienced in systems development.

Consequently, they are more likely to make errors and less
likely to recognize them.
They may:

Solve wrong problem

Poorly define systems requirements
Apply inappropriate analytical methods
Use wrong software
Use incomplete or outdated information

Errors are often caused by faulty logic, formulas, or software

commands.

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications

Users probably wont test rigorously.

They tend not to recognize the need for testing, the difficulty, or
the time involved.
Tend to have grossly inflated opinions of how error-free their
systems are.

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications
Inefficient systems
They get the job done but arent always efficient.

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications
Inefficient systems
Poorly controlled and documented
systems

Many end users dont implement controls to

protect their system.
Systems are often poorly documented because
they think its unimportant.
They fail to realize that others cannot understand
the system without documentation.

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications
Inefficient systems
Poorly controlled and documented systems
System incompatibilities
Some companies add end-user equipment without
considering the technological implications.
May end up with a diversity of hardware and
software that is difficult to support or network.
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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications
Inefficient
If systems
end users arent aware that others have similar
information needs, duplication occurs.
Poorly controlled
and documented systems
Inexperienced users may also bite off more than
System incompatibilities
they can chew, wasting time and resources.
Duplication of systems and data and
wasted resources

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DEVELOPING SOFTWARE IN-HOUSE

Risks of end-user computing:
Logic and development errors
Inadequately tested applications
Buying
PCs for multitudes of workers is costly.
Inefficient
systems
Regular updating of hardware and software is
Poorly controlled
and documented systems
also expensive.
EUC
also increases costs if it diverts users from
System
incompatibilities
their primary jobs.
Duplication
and data
and
wasted
EUC of
cansystems
increase demands
on the
company
mainframe and IS staff for support.
resources
Increased costs
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DEVELOPING SOFTWARE IN-HOUSE

To achieve proper balance between
maximizing the benefits of end user
systems and minimizing the risks:
Systems analysts can act as advisers and
require user-created systems to be reviewed
and documented prior to use.
Users can be trained in systems analysis so
they can identify and adequately meet their
needs, as well as reviewing the work of
others.
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DEVELOPING SOFTWARE IN-HOUSE

Organizations use several approaches to
managing and controlling EUC.
If you give the systems department control over EUC:
Growth of EUC is discouraged.
The organization is denied most of its benefits.
Its not in the companys best long-term interests.

However, if there are no controls over the tools that

can be purchased or how they can be used:
Chaos can result
The system can be difficult to support.

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DEVELOPING SOFTWARE IN-HOUSE

Best to provide enough guidance and
support to adequately control the system
but allow users flexibility.
A help desk can encourage, support,
coordinate, and control end-user activities.
One level of help desk employees might be
trained with scripted answers.
A higher level might handle more complicated
issues.
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DEVELOPING SOFTWARE IN-HOUSE

Help desk duties include:
Providing hotline assistance to solve problems.
Serving as a clearinghouse for information, coordination,
and assistance.
Training end users how to use specific hardware and
software, and providing technical maintenance and
support.
Evaluating new end-user hardware and software products.
Assisting with application development.
Developing and implementing standards for:
Hardware and software purchases to ensure compatibility.
Documentation and application testing.
Overseeing security issues such as fraud, software piracy,
and viruses.
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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software
Developing software in-house
Outsourcing

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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OUTSOURCE THE SYSTEM

Outsourcing is hiring an outside company
to handle all or part of an organizations
data processing activities.
In a mainframe outsourcing agreement:
The outsourcers buy the clients computers and
hire all or most of the clients employees.
Then operate and manage the entire system on the
clients site or migrate it to the outsourcers
computers.
Many of these contracts have terms of 10 or more
years and cost from hundreds of thousands to
millions of dollars a year.
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OUTSOURCE THE SYSTEM

In a client/server or a PC outsourcing
agreement the organization outsources:

A particular service (e.g., help desk services);

A segment of its business;
A particular function; or
PC support.

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OUTSOURCE THE SYSTEM

Examples of outsourced activities:
Installation
Training
Maintenance
Help desk
Technical support

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OUTSOURCE THE SYSTEM

The growth in outsourcing applications
Outsourcing was initially used for
standardized applications such as payroll,
accounting, and purchasing.
Also used by companies that were struggling
to survive and wanted a quick cash infusion
from selling their hardware.

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OUTSOURCE THE SYSTEM

Kodak and Xerox were very successful at
cutting capital expenditures and other
costs, which motivated others to outsource
their systems.
Outsourcing business
Now many Fortune 500
companies
processes
is the fastest
growing
IT trendlarge
outsource some or all
of there
IS.
and small companies are
jumping on the band
wagon.

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OUTSOURCE THE SYSTEM

Most companies that outsource use
several different companies rather than a
single source in order to:
Increase flexibility
Foster competition
Reduce costs

Most companies do not outsource:

Strategic management of their IT environment
Business process management
IT architecture
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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Allows companies to concentrate on their core
competencies.

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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Asset utilization

Companies can improve cash position and reduce

expenses by selling their computers to an
outsourcer.

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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Asset utilization
Access to greater experience and more
advanced technology
The cost and time to stay at the cutting edge of
technology is escalating rapidly.

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 OutsourcingTHE
OUTSOURCE
SYSTEM
can reduce
IS costs by 15

30% because of economies of scale and

lower costs of outsourcers.
Benefits of
outsourcing:
IBM outsources project management and
Provides aprogramming
to China where labor costs
business solution
are 1/3 of U.S. costs.

Asset utilization
Access to greater experience and more
advanced technology
Lower costs

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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Asset utilization
Access to greater experience and more
advanced technology
Lower costs
Improved development time
Experienced specialists can often develop and
implement a system faster and more efficiently.
Can also help the company cut through some of
the internal politics.
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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Asset utilization
Access to greater experience and more
advanced technology
Companies with seasonal fluctuations dont have
Lower costs
to staff an IT force or maintain hardware for peak
Improvedperiods.
development time
Elimination of peaks-and-valleys usage

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OUTSOURCE THE SYSTEM

Benefits of outsourcing:
Provides a business solution
Asset utilization
Access to greater experience and more
advanced technology
Lower costs
Companies with in-house systems that downsize
Improved
development
time
are often left with an unnecessarily large AIS
function.
Elimination
of peaks-and-valleys usage
Facilitation of downsizing
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OUTSOURCE THE SYSTEM

Risks of outsourcing
Many outsourcing contracts fail to meet
expectations for reasons including:
Inflexibility

Many outsourcing contracts are for 10 years.

If the company is dissatisfied, has problems, or
goes through extensive structural changes, the
contract is difficult and/or costly to break.

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss of control

The company may lose control of its system and data.

Also risk of confidential data being shared with others.

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss of control
Reduced competitive advantage

Companies can lose a fundamental understanding of

their IS needs and how the system can provide it with
competitive advantages.
Outsourcers are not as motivated to meet the clients
competitive challenges.
Can be mitigated significantly by outsourcing the
portion of business processes considered standard
(e.g., payroll, accounts receivable) and customizing the
portion that provides competitive advantage.

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss of control
Reduced competitive advantage
Locked in system

It is expensive and difficult to reverse outsourcing.

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss of control
Reduced competitive advantage
Locked in system
Unfulfilled goals

Many outsourcing goals and benefits are never realized.

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss
Some
companies complain of poor service from
of control
their outsourcers, particularly with respect to:
Reduced
competitive advantage
Slow or no responsiveness to changing business
Lockedconditions.
in system
Poorly planned migration to new technologies.
Unfulfilled
goals
Poor service

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OUTSOURCE THE SYSTEM

Risks of outsourcing:
Inflexibility
Loss of control
Increased
Reducedrisks
competitive
advantage
include loss
of market position,
of human
capital, and reputation
loss
Locked
in system
impairment among others.
Unfulfilled goals
Poor service
Increased risk

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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software
Developing software in-house
Outsourcing

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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BUSINESS PROCESS REENGINEERING

Business process reengineering (BPR) is
the analysis and redesign of business
processes and information systems to
achieve significant performance
improvements.
Reduces a company to its essential business
processes.
Reshapes organizational work practices and
information flows to take advantage of
technological advancements.
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BUSINESS PROCESS REENGINEERING

BPR:
Simplifies the system.
Makes it more effective.
Improves a companys quality and service.

BPR software has been developed to help

automate many BPR tasks.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
business processes:
- Organize around outcomes, not tasks.

DO AWAY WITH: Assigning different parts of a business

process to different people, with the resulting handoffs,
delays, and errors.
INSTEAD: Each persons job is designed around an
objective, outcome, or process rather than a task needed
to complete a process.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
business processes:
- Organize around outcomes, not tasks.
- Require those who use the output to perform the
process.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
business processes:
- Organize around outcomes, not tasks.
- Require those who use the output to perform the
process.
- Require those who produce information to
process it.

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BUSINESS PROCESS REENGINEERING

You centralize operations to achieve economies
of scale and eliminate redundancy.
Michael Hammer has set forth several principles
You decentralize operations to be more
that help
organizations
successfully
reengineer
responsive to customers and provide better
business
processes:
service
- Organize
around outcomes,
not tasks.
With technology,
you dont
have to choose.
- Require
those who use
the output
to perform
Corporate-wide
databases
centralize
data. the
process.
Telecommunications technology disburses it to the
organization.
- Require
those who produce information to process it.
- Centralize AND disperse data.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
business processes:
- Organize around outcomes, not tasks.
- Require
those
who use the
output
to perform
Example:
In developing
a new
product,
include the
on the
process.
development team at least one person from each involved
department,
theproduce
right hand
will know what
the left hand
- Require
those so
who
information
to process
it.
is doing and the process will be smoothly integrated.
- Centralize AND disperse data.
- Integrate parallel activities.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
In a traditional system, there is a layer of worker
business
processes:
-

bees and several layers of manager bees,

Organize
not tasks.
auditoraround
bees, outcomes,
and controller
bees.
Require
those who usesystem,
the output
perform
the do the
In a reengineered
thetopeople
who
process.
work have decision-making responsibility.
Require
those who
produceenables
information
to process it.
Information
technology
their decision
accuracy.
Centralize
AND disperse data.
Controls are built into the process itself.
Integrate
parallel activities.
Empower workers, use built-in controls, and
flatten the organization chart.

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BUSINESS PROCESS REENGINEERING

Michael Hammer has set forth several principles
that help organizations successfully reengineer
business processes:
- Organize around outcomes, not tasks.
- Require those who use the output to perform the
process.
- Require those who produce information to process it.
- Centralize
disperse
InsteadAND
of having
eachdata.
functional area running its own AIS
and entering
same data, use source data automation,
- Integrate
parallelthe
activities.
EDI, etc. to capture data electronically at the source and
- Empower
workers, use built-in controls, and flatten
disburse it to where it needs to be used.
the organization chart.
- Capture data onceat its source.
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BUSINESS PROCESS REENGINEERING

Underlying reengineering is the efficient
and effective use of the latest information
technology, e.g.:
Radio- and satellite-based communications.
Powerful handheld computers.
Image processing that lets multiple users
handle a document simultaneously.
Active documents.

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BUSINESS PROCESS REENGINEERING

Challenges faced by reengineering efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:
Tradition

Weve always done it this way!

Success requires changes in culture and beliefs.

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BUSINESS PROCESS REENGINEERING

Challenges Faced by Reengineering Efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:
Tradition
Resistance

Change is always met with resistance.

Requires continual reassurance, persuasion, and
support.

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BUSINESS PROCESS REENGINEERING

Challenges Faced by Reengineering Efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:
Tradition
Resistance
Time and cost requirements

Two or more years are required to complete BPR.

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BUSINESS PROCESS REENGINEERING

Challenges faced by reengineering efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:

Tradition
Resistance
Time and cost requirements
Lack of management support

Managers are nervous about the big hypefew

results syndrome.
Without their support, the effort will fail.

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BUSINESS PROCESS REENGINEERING

Challenges Faced by Reengineering Efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:

Tradition
Resistance
Time and cost requirements
Lack of management support
Skepticism

BPR is sometimes viewed as just the same picture

in a different frame.

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BUSINESS PROCESS REENGINEERING

Challenges Faced by Reengineering Efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:

Tradition
Resistance
Time and cost requirements
Lack of management support
Skepticism
Retraining

The necessary retraining costs time and dollars.

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BUSINESS PROCESS REENGINEERING

Challenges faced by reengineering efforts:
Many BPR efforts fail or fall short of their objectives. A
company must overcome the following obstacles:

Tradition
Resistance
Time and cost requirements
Lack of management support
Skepticism
Retraining
Controls
Cannot skip the inclusion of controls to ensure
reliability and integrity.

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INTRODUCTION
Well be discussing how to obtain a new
information system by:
Purchasing prewritten software
Developing software in-house
Outsourcing

Well also discuss how to hasten or improve the

development process through:
Business process reengineering
Prototyping
Computer-aided software engineering (CASE) tools
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PROTOTYPING
Prototyping is an approach to systems design in
which a simplified working model of a system is
developed.
The prototype (first draft) is built quickly at low cost
and provided to users for experimentation.
Playing with the prototype allows users to determine
what they do and do not like.
Developers modify the system in response to user
comments and re-present it to them.
The iterative process continues until users are
satisfied that the system meets their needs.
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PROTOTYPING
The basic premise is that its easier for
people to express what they like or dislike
than to imagine what they want in a
system.
In another words, it helps to have a straw man
to aim at.
Even a simple system that is not fully
functional demonstrates features far better
than graphics and verbiage.
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PROTOTYPING
Developers who use prototyping still go through
the systems development life cycle.
But prototyping allows them to expedite some
analysis and design.
For example, prototyping captures user needs
and helps developers and users make many
conceptual and physical design decisions.
Current practice leans heavily toward
prototyping so that projects can be completed
quickly.
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PROTOTYPING
Four steps are involved in developing a
prototype:
STEP ONE: Identify basic requirements
STEP TWO: Develop an initial prototype
STEP THREE: Repeated iterations
STEP FOUR: Use the system

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PROTOTYPING
Four steps are involved in developing a
prototype:
STEP ONE: Identify basic requirements
STEP TWO: Develop an initial prototype
STEP THREE: Repeated iterations
STEP FOUR: Use the system

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PROTOTYPING
The first step is to identify basic
requirements by meeting with users to
agree on the size and scope of the system
and decide what it should include and
exclude.
Developer and users also determine:
Decision-making and transaction processing
outputs.
Inputs and data needed to produce those outputs.

The emphasis is on what outputs should be

produced rather than how.
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PROTOTYPING
The developer must ensure:
User expectations are realistic.
Their basic information requirements are met.

The designer uses the information

requirements to develop cost, time, and
feasibility estimates for alternative AIS
solutions.

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PROTOTYPING
Four steps are involved in developing a
prototype:
STEP ONE: Identify basic requirements
STEP TWO: Develop an initial prototype
STEP THREE: Repeated iterations
STEP FOUR: Use the system

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PROTOTYPING
The second step involves developing an
initial prototype that meets the agreed-on
requirements.
Emphasize speed and low cost rather than
efficiency of operation.
The goal is to implement the prototype within
a short time period.

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PROTOTYPING
Because of time constraints, some
aspects are sacrificed. For example, at
this point, you ignore:
Non-essential functions
System controls
Exception handling
Validation of input data
Processing speed
Efficiency considerations
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PROTOTYPING
Users must see and use tentative versions of:

Data entry display screens

Menus
Input prompts
Source documents

They must also:

Respond to prompts
Query the system
Judge response times
Issue commands

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PROTOTYPING
When the prototype is finished, the
developer returns to the users and
demonstrates the system.
Users are instructed to:
Experiment.
Comment on what they do and do not like.

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PROTOTYPING
Four steps are involved in developing a
prototype:
STEP ONE: Identify basic requirements
STEP TWO: Develop an initial prototype
STEP THREE: Repeated iterations
STEP FOUR: Use the system

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PROTOTYPING
The third step involves repeated iterations
of:
Users identifying changes.
Developers making the changes.
The system being turned back to users for
next round.

This step continues until users are

satisfiedusually 4 to 6 iterations.
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Four steps are involved in developing a
prototype:
STEP ONE: Identify basic requirements
STEP TWO: Develop an initial prototype
STEP THREE: Repeated iterations
STEP FOUR: Use the system

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The final step involves using the system
approved by the users.
An approved prototype is typically used in
one of two ways.

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Half of the prototypes are turned into fully
functional systems referred to as
operational prototypes.
To make them operational, the developer
must:

Add needed controls.

Improve operational efficiency.
Provide backup and recovery.
Integrate the prototype with the systems with
which it interfaces.

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Changes may be necessary to allow the
program to:
Accept real input.
Access real data files.
Process data.
Make necessary computations and
calculations.
Produce real output.

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When its not practical to modify the
prototype to make a fully functional
system, non-operational or throwaway
prototypes can be used in several ways:
They may be discarded, and the systems
requirements identified in the process of
building them can be used to develop a new
system.
If so, the SDLC is followed to develop the system,
and the prototype is a model.
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Alternately, they may be used as the initial
prototype for an expanded system designed
to meet needs of many users.
As a final alternative, if users and developers
decide the system is unsalvageable, the
prototype can be discarded completely.

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When to use prototyping
Prototyping supports rather than replaces the SDLC.
It is appropriate when:
Users dont fully understand their needs, or the needs
change rapidly.
System requirements are difficult to define.
System inputs and outputs are not known.
The task to be performed is unstructured or semi-structured.
Designers are uncertain about what technology to use.
The system is crucial and needed quickly.
The risk of developing the wrong system is high.

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The users reactions to the new system are important
development considerations.
Many design strategies must be tested.
The design staff has little experience developing this type of
system or application.
The system will be used infrequently so that processing
efficiency is not crucial.

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Good candidates for prototyping:
Decision support systems.
Executive information systems.
Expert systems.
Information retrieval systems.
Systems that involve experimentation and
trial-and-error development.
Systems in which requirements evolve as the
system is used.
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Prototyping is usually inappropriate for:
Large or complex systems that:
Serve major organizational components; or
Cross numerous organizational boundaries.

Standard AIS components, such as:

Accounts receivable
Accounts payable
Inventory management

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Advantages of prototyping:
Better definition of user needs

Because of intensive end-user involvement.

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Advantages of prototyping:
Better definition of user needs
Higher user involvement and satisfaction

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Advantages of prototyping:
Better definition of user needs
Higher user involvement and satisfaction
Faster development time

It may take days or weeks to get a prototype up vs. a

year or more for a traditional system.

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Advantages of prototyping:
Better definition of user needs
Higher user involvement and satisfaction
Faster development time
Fewer errors

Errors are detected early because the users

experiment with each version.
Its also easy to identify and terminate an infeasible
AIS early.

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Advantages of prototyping:
Better definition of user needs
Higher user involvement and satisfaction
Faster development time
Fewer errors
More opportunity for changes

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Advantages of prototyping:
Better definition of user needs
Higher user involvement and satisfaction
Faster development time
Fewer errors
More opportunity for changes
Less costly
Some for 1020% of the cost of traditional systems.

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Disadvantages of prototyping:
Significant user time

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Disadvantages of prototyping:
Significant user time
Less efficient use of system resources
Shortcuts in developing the system may
result in:
Poor performance and reliability
High maintenance and support costs

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Disadvantages of prototyping:
Significant user time
Less efficient use of system resources
Incomplete system development

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Disadvantages of prototyping:
Significant user time
Less efficient use of system resources
Incomplete system development
Inadequately tested and documented
systems
Who wants to do that stuff?

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Disadvantages of prototyping:
Significant user time
Less efficient use of system resources
Incomplete system development
Inadequately tested and documented systems
Negative behavioral reactions

If the prototype is discarded, users may be upset

about using it and losing it.
May also be dissatisfied if all their suggestions are
not incorporated or if they have to go through too
many iterations.

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Disadvantages of prototyping:
Significant user time
Less efficient use of system resources
Incomplete system development
Inadequately tested and documented systems
Negative behavioral reactions
Never-ending development

If not managed properly, the development could get

stuck in a terminal loop.

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