Ch2

Chapter 2: The Origins of Software

Introduction

  • Software development previously predominantly done in-house and from ground-up.

  • Current trend emphasizes various sources of software components to build applications.

Learning Objectives

  • 2.1 Explain Outsourcing

  • 2.2 Describe Six Different Sources of Software

  • 2.3 Discuss How to Evaluate Off-the-Shelf Software

Outsourcing

  • Definition: Outsourcing refers to transferring responsibilities for certain or all information systems applications and operations to external firms.

  • Reasons for Outsourcing:

    • Freeing up internal resources.

    • Increasing the organization's revenue potential.

    • Reducing time to market.

    • Enhancing process efficiencies.

    • Outsourcing noncore activities.

Sources of Software

  • Categorization: Six major groups of software sources:

    • IT Services Firms

    • Packaged Software Providers

    • Enterprise Software

    • Cloud Computing

    • Open-Source Software

    • In-House Development

IT Services Firms

  • Help organizations develop custom information systems for internal use.

  • Employ skilled IT professionals.

  • Examples: Leading firms include Accenture, Deloitte, IBM, HP Enterprise.

Packaged Software Producers

  • Serve various market segments, ranging from general productivity tools to niche software (e.g., daycare management).

  • Examples: Quicken, QuickBooks, Microsoft Word, TurboTax.

  • Limitations: Off-the-shelf software may only meet 70% of organizational needs; some cannot be modified.

Enterprise Solutions Software

  • Definition: ERP systems integrate individual business functions into modules, allowing seamless operation through a single information system.

  • Benefits:

    • Consistent and accurate data management.

    • Easily added modules.

  • Example Vendor: SAP AG is a recognized leader in ERP solutions.

Cloud Computing

  • Definition: Provides computing resources and applications over the internet; users avoid upfront costs for hardware.

  • Business Model: Payment is based on usage or licensing.

  • Market Estimation: Cloud computing market valued at $490.3 billion, projected to grow to $591.8 billion by 2023.

Examples and Benefits

  • Examples: Google Docs, Salesforce.com.

  • Benefits:

    • Access to corporate-quality applications at lower costs.

    • Frees internal staff for other tasks.

  • Concerns: Security and reliability issues.

Open-Source Software

  • Definition: Freely available software, including source code. Developed by a collaboration of community members.

  • Examples: Linux, mySQL, Firefox.

  • Monetization Strategies: Providing maintenance services, offering premium paid versions.

In-House Development

  • Definition: Involves utilizing internal staff to develop systems tailored to specific organizational needs.

  • Challenges: In-house development can lead to increased maintenance requirements.

  • Hybrid Approach: Organizations often use a combination of in-house and commercial components.

Comparison of Software Sources

  • When to Source from Different Providers:

    • IT Services Firms: Custom solutions needed.

    • Packaged Software Producers: Generic tasks.

    • Enterprise-Wide Solutions Vendors: Comprehensive systems.

    • Cloud Computing: Instant access for generic tasks.

    • Open-Source Software: Cost-effective solutions.

    • In-House Developers: For custom-built solutions.

Choosing Off-the-Shelf Software

  • Criteria for Evaluation:

    • Cost: Comparing in-house development vs. purchasing.

    • Functionality: Assessing task performance and feature necessitation.

    • Vendor Support: Availability and quality of vendor assistance.

    • Flexibility: Customization capabilities.

    • Documentation: Clarity and recency of user manuals.

Validating Purchased Software Information

  • Request for Proposal (RFP): Document soliciting vendor proposals that meet new system requirements.

  • Validation Steps:

    • Test the software against selection criteria.

    • Gather feedback from existing users.

    • Create scoring metrics for each vendor if soliciting multiple RFPs.

Summary

  • Key learning points from this chapter include outsourcing, various sources of software, and criteria for evaluating off-the-shelf software.