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
18
Q
Considering Outsourcing IT Services
A
- Research
- Review outsourcing contracts from other business organizations
- Contractual requirements and scope of services
- Scope is the single most important facet of executing a project or contract
- Commitment and engagement in change
- Ensure the service provider can document its ability to complete the services
- Monitoring and conflict resolution
- Monitor and track the progress with measureable performance measures for both parties
- Achieve timely resolutions
- Both parties must “come to the table”
- Refrain from outsourcing the world
- The more expensive the contract or the more services that are being provided, the greater the risk of contract failure
-
19
Q
Considering Outsourcing IT Services
SHORT VERSION
A
- Research
- Contractual requirements and scope of services
- Commitment and engagement in charge
- monitoring and conflict resolution
- refrain from outsourcing world
20
Q
Licensing Applications
A
- Purchasing software usually means purchasing a license to use the software
- There is a large selection of high-quality packaged software available
- Groups of ready-made software
- Relatively inexpensive software that helps in the workplace, such as office suites
- Large, costly applications that support entire organizational functions, such as HR or financial management
21
Q
Software Licensing Benefits
A
Licensing benefits
- Immediate system availability
- High quality
- Low price (license fee)
- Available support
- Beta version: a prerelease version of software to be tested by companies who want to use it
- After-the-sale support often includes a period of up to one year of free service
- Large applications require installation specialists
22
Q
Beta version
A
a prerelease version of software to be tested by companies who want to use it
23
Q
Software Licensing Risks
A
- Loose fit between needs and features
- Must determine if the software will comply with company needs and organizational culture
- Difficulties in undertaking custom modifications
- Dissolution of the vendor
- May be left without support and maintenance
- High turnover of vendor personnel
- Turnover among IS professionals is high
- May result in lowered support expertise from vendor
- Custom modifications vs. vendor updates
- Any new updates may require tedious “weaving” into the current system with the local modifications
24
Q
Custom modifications vs. vendor updates
A
Any new updates may require tedious “weaving” into the current system with the local modifications
25
Q
Steps in Licensing Ready-Made Software
A
- Selecting software involves a large money investment and a long-term commitment
26
Q
Request for information (RFI)
A
request for informal information about a vendor’s product
27
Q
Steps in Licensing Ready-Made Software
Project management team responsibilities
A
- Identify problem or opportunity
- Define functional requirements
- Identify potential vendors
- Solicit vendor information
- Request for information (RFI): request for informal information about a vendor’s product
- Define system requirements
- Request vendor proposals
- Request for proposal (RFP): a document that specifies all requirements and solicits a proposal
- Review proposals and screen vendors
- Visit sites where the application is in use
- Select a vendor
- Benchmark the application by comparing actual performance against specific quantifiable criteria
- Negotiate a contract
- Should define performance expectations and penalties for failure to meet expectations
- Implement the new system
- Manage post-implementation support
28
Q
Application service provider (ASP)
A
an organization that offers software through a network (the Internet or private network)
- may rent the software they offer
29
Q
Software as a service (SaaS)
A
applications available through a network
- No software is installed on a client’s computers
- Files may be stored on local storage device
30
Q
Software as a Service
Benefits of renting software
A
- No need to learn how to maintain the software
- No large start-up fee
- Storage hardware is unnecessary
- Software is usually available sooner
- A good option for small companies
- Considered a “software on demand” approach
- low financial risk
- no need to purchase or maintain hardware for installation
31
Q
Software as a Service
Risks of renting software
A
- Lack of control may be an issue, as the client’s data is managed by the vendor
- Vendor is unlikely to make many customized changes to the software
- Response time is impacted by traffic levels
- May be security risks through a public network
- Many clients used leased lines instead of the Internet to limit security risks
32
Q
Possible areas of disappointment with ASP
A
- Scope of services provided
- Level of reliability
33
Q
Manager guidelines when selecting an ASP
A
- Research the ASP’s history: get references
- Validate the ASP’s financial strength
- Ensure you understand the price scheme
- Get a list of the provider’s infrastructure
- Craft the service contract carefully
- Uptime
34
Q
Uptime
A
proportion of time that the ASP’s systems and communications links are up
- No ASP has 100% uptime
- 99.9 percent uptime = up to 500 minutes/year of downtime
- 99.999 percent uptime = less than 5 minutes/year of downtime
- Recommended for critical applications
35
Q
Categories of typical ASP services users
A
- Rapidly growing companies that rely on software for deployment of their operations
- Small companies without cash to pay up-front costs for software
- Medium-sized companies that need expensive software
- Organizational units at remote locations
36
Q
Storage service provider (SSP)
A
rents storage space for remote storage of client files
37
Q
User Application Development
A
nonprogrammer users write their own business applications
38
Q
User Application Development
Characteristics of user-developed software
A
- Simple and limited in scope
- Small applications developed for immediate or brief needs
- Maintained by end users
39
Q
End Users should develope if….
A
- have necessary skills
- application is small
- application needed immediately
- can be maintained by users
- can be used briefly & discarded
40
Q
End Users should not develope if…
A
- application is large
- application interfaces with other systems
- application is vital for the organizations survival
- application will survive the user-developer tenure
41
Q
Challenges of user-developed applications
A
- Managing the reaction of IT professionals
- Providing support
- Compatibility
- Managing access
42
Q
Advantages of user development of applications
A
- Shortened lead times
- Good fit to needs
- Compliance with culture
- Efficient utilization of resources
- Acquisition of skills
- Freeing up IS staff time
43
Q
Disadvantages of user-developed applications
A
- Poorly developed applications
- Islands of information
- Duplication
- Security problems
- Poor or no documentation
44
Q
Summary
A
- Several alternatives to having applications developed in-house include outsourcing, licensing ready-made software, using software as a service, and allowing users to develop their own software
- Outsourcing can mean commissioning development or assigning services to vendor
- Outsourcing custom-designed applications might afford the organization a good fit of software to need
- Outsourcing IT services offers possible benefits, such as reduced cost and shortened time implementing new technologies
- Outsourcing IT services has potential risks, such as loss of control, loss of experienced employees, and loss of competitive advantage
- Licensing software advantages include software being immediately available and low-priced
- Disadvantage of licensing software is often a loose fit to the organization’s needs
- Software as a service, from an ASP, is a popular method of obtaining software for a monthly fee
- User application development has advantages, e.g., short lead time, good fit, and freeing IT staff
- User application development disadvantages include poor quality, islands of information, security problems, and poor documentation
- Policies must be established to prevent computer abuse by employees
- Employees should not use their computers for anything but work
