Chapter 13 Choices in Systems Acquisition Flashcards
1
Q
Alternatives to in-house development
A
- Outsourcing
- Licensing
- Using software as a service (SaaS)
- Having users develop the system
2
Q
When licensing is not available
A
- Application service provider (ASP) is the next best choice
- System is immediately available for a small start-up fee
- Third best choice is to allow users to develop their system
- Last choice is to outsource if non-IT employees cannot develop IS
3
Q
Options and Priorities
A
- The deciding factor is usually cost when the desired application is available from multiple sources
- Licensing is preferred due to low cost and immediate availability
- Many factors must be considered in addition to cost and quality
- Alternatives are not fully comparable, and often cannot be simply prioritized
4
Q
Outsourcing meanings in the IT arena
A
- To commission the development of an application to another organization
- To hire the services of another company to manage all or parts of the services usually rendered by an IT unit in the organization
- May not include development of new applications
5
Q
Outsourcing Custom-Designed Applications
ADVANTAGES
A
- Good fit to need
- Good fit to culture
- Dedicated maintenance
- Smooth interface
- Specialized security
- Potential for strategic advantage
6
Q
Outsourcing Custom-Designed Applications
(Custom-designed (tailored) software)
ADVANTAGES
A
- High cost
- The organization must fund all development costs
- Staff may be diverted from other projects
- Software is less likely to be compatible with other organizations’ systems
7
Q
Outsourcing Custom-Designed Applications
(Custom-designed (tailored) software)
DISADVANTAGES
A
- High cost
- The organization must fund all development costs
- Staff may be diverted from other projects
- Software is less likely to be compatible with other organizations’ systems
8
Q
Outsourcing Custom-Designed Applications
A
- Must deal with an inherent conflict when outsourcing software development:
- Client wants a firm contract and set of requirements
- Specific requirements may mean that no deviation is allowed if changes are needed later as development progresses
- Changes may involve hefty additional charges
- Offshoring: outsourcing to other countries such as Costa Rica, Indonesia, Columbia, etc.
9
Q
Offshoring
A
outsourcing to other countries such as Costa Rica, Indonesia,
10
Q
Outsourcing IT Services
A
- Many businesses turn to IT companies for long-term services for:
- Purchasing and maintaining hardware
- Developing, licensing, and maintaining software
- Installing communications networks
- Maintaining and operating websites
- Staffing help desks
- Running IT daily operations
- Business process outsourcing: outsourcing routine processes, such as order entry or HR
- Some companies realize IT is not their core competency
- IT should not be a focus of their efforts
- Pace of development in IT requires a high level of expertise
- A growing portion of IS budgets are being allocated for outsourced services
- IT outsourcing contracts are typically long-term contractual relationships, usually for seven to 10 years
- Clients sometimes find themselves bound by obsolete contracts, and must renegotiate
11
Q
Business process outsourcing:
A
outsourcing routine processes, such as order entry or HR
12
Q
Popular IT service providers
A
IBM Fujitsu Accenture Computer Sciences Corp. (CSC) Northrop Grumman Hitachi, Capgemini Perot Systems NEC Hewlett-Packard
13
Q
Outsourcing companies are known as ?
A
VENDORS
14
Q
Tips for businesses to ensure receiving solid offshore IT services
A
- Conduct a process design review
- Reevaluate the possibility of near-shore alternatives
- Review the firm’s infrastructure
- Revisit the price if the IT service provider is moving onsite roles overseas
15
Q
Advantages of Outsourcing IT Services
A
- Improved financial planning
- Client knows the exact cost of IS functions
- Reduced license and maintenance fees
- IS professional firms pay discounted prices for tools and can pass on the savings to their clients
- Increased attention to core business
- Executives can concentrate on their company’s core business
- Shorter implementation cycles
- IT vendors can complete new applications faster
- Reduction of personnel and fixed costs
- Increased access to highly qualified know-how
- Availability of ongoing consulting as part of standard support
16
Q
Risks of Outsourcing IT Services
A
- Loss of control
- High risk in a quickly changing industry
- Loss of experienced employees
- Usually involves transferring employees to vendor
- Risks of losing a competitive advantage
- May disclose trade secrets
- High price
- Can be more expensive than keeping the tasks in-house
- Important to clearly define contract terms
- The client must develop the service level and metrics list, not the vendor
- Service-level agreement
- The most important element of an outsourcing agreement
- Lists all services expected of the vendor
- Defines the metrics to be used to measure vendor performance
17
Q
most important element of an outsourcing agreement
A
Service-level agreement
- Lists all services expected of the vendor
- Defines the metrics to be used to measure vendor performance
