Foundations of Information Systems - Acquiring Information Systems and Applications

Chapter 13: Acquiring Information Systems and Applications

13.1 Planning for and Justifying IT Applications

  • Organizations must conduct a cost-benefit analysis to justify new IT purchases.
  • Establish an application portfolio by prioritizing existing and potential IT applications based on organizational needs.
  • The planning process begins by analyzing the organizational strategic plan, which informs the Information Systems (IS) strategic plan.

Key Components of IT Planning

  • Organizational Strategic Plan: Guides the development of the IS strategic plan.
  • IS Strategic Plan: Outlines long-range IT goals and initiatives necessary to meet organizational objectives.

Evaluating and Justifying IT Investment

  • Companies must evaluate limited resources and justify IT investments through a cost-benefit analysis.
  • Assessing Costs:
    • Fixed costs: One-time costs that do not change over time.
    • Ongoing costs: Recurring costs involved with system operation.
  • Assessing Benefits:
    • May include both tangible (quantifiable) and intangible (difficult to quantify) benefits.

Cost-Benefit Analysis Methods

  • Net Present Value (NPV): Compares the present value of cash inflows and outflows.
  • Return on Investment (ROI): Measures profitability by comparing the gain from an investment relative to its cost.
  • Break-even Analysis: Determines when a project will start to generate profit.
  • Business Case Approach: A structured proposal for business improvements.

13.2 Strategies for Acquiring IT Applications

  • Following a justification for IT investment, businesses must decide on acquisition strategies.
Key Decision Factors
  • Amount of custom coding desired.
  • Method of payment for applications.
  • Preferred environment for application operation.
  • Origin of the application (custom, purchased, etc.).

Acquisition Methods

  1. Purchase a Prewritten Application:
    • Advantages: Quick deployment, known software capabilities, potential cost savings.
    • Disadvantages: May not fit exact needs, limited control over modifications.
  2. Customize a Prewritten Application:
    • Allows for tailoring software but can be complex and challenging.
  3. Lease the Application:
    • Options to lease for local installation or through Software as a Service (SaaS).
  4. Open-source Software: Access to modify software base as needed based on expertise.
  5. Outsourcing and Custom Development: Hiring external vendors for custom builds based on organizational requirements.

13.3 Traditional Systems Development Life Cycle (SDLC)

  • Stages of SDLC:
    1. Systems Investigation
    2. Systems Analysis
    3. Systems Design
    4. Programming and Testing
    5. Implementation
    6. Operation and Maintenance
Systems Investigation
  • Explore three basic solutions to business problems:
    1. Maintain the status quo.
    2. Modify the existing system.
    3. Develop a new system.
  • Conduct a feasibility study on potential solutions, analyzing technical, economic, and behavioral factors.
Systems Analysis
  • Analyze the business problem with a focus on user requirements.
  • Methods for finding requirements include surveys, interviews, and observation.
Systems Design
  • Create technical system specifications detailing system components and integration methods.
Programming and Testing
  • Transform design specifications into executable code and validate through rigorous testing procedures.
Implementation
  • Transition from old to new systems using various conversion strategies:
    • Direct conversion
    • Pilot conversion
    • Phased conversion
    • Parallel conversion
  • Proper management of the switch is critical for success.
Operations and Maintenance
  • Ongoing maintenance activities include debugging, updating, and adding functions as required.

Tools for Systems Development

  • Computer-Aided Software Engineering (CASE) tools streamline the SDLC:
    • Upper CASE Tools: Assist in the early stages (investigation, analysis, design).
    • Lower CASE Tools: Aid in later stages (programming, testing, maintenance).
    • Integrated CASE (ICASE) Tools: Bridge upper and lower CASE tool functionalities.

13.4 Alternative Methods for Systems Development - Agile Development

  • Agile development emphasizes flexibility and iterative progress through short cycles known as iterations.
  • Teams collaborate to adjust to changes easily and produce working software continuously.
  • Successful implementation requires strong communication and regular development feedback.