5/19/ Professor Lili Saghafi

Transcription

1 5/19/ Professor Lili Saghafi

2 MANAGING INFORMATION TECHNOLOGY Lecture 10 METHODOLOGIES FOR PURCHASED SOFTWARE PACKAGES By : Prof. Lili Saghafi 1-2

3 . THE MAKE-OR-BUY DECISION - In large companies today, application software is typically both custom developed and purchased. -In small businesses, software is typically purchased. Why? Make Buy Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-3

4 THE MAKE-OR-BUY DECISION Advantages and Disadvantages of Purchasing Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-4

5 PURCHASING METHODOLOGY Initiating the Purchasing process Development of a high-level cost estimate - with business manager and IS analyst input Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-5

6 PURCHASING METHODOLOGY The Purchasing Steps Steps for purchasing application packages fit into the three SDLC phases (referred to as the modified SDLC approach) Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall Fig

7 PURCHASING METHODOLOGY The Purchasing Steps, continued In comparison to an SDLC methodology, the Definition phase has additional steps, and the Construction phase is greatly reduced. In special circumstances, if the package is new, the purchaser may play a major role as an Alpha or Beta site for the vendor: - Alpha site: plays a role in determining the final functionality and user interface design for the new package - Beta site: plays a role in user acceptance testing Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-7

8 Definition Phase PURCHASING METHODOLOGY Two traditional SDLC steps: Five additional steps: Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-8

9 Feasibility Analysis DEFINITION PHASE Determine whether the proposed system is economically, technically, and operationally feasible In addition, the feasibility of purchasing rather than building the system is considered - Preliminary investigation of available packaged systems - Detailed cost-benefit analysis for budgeting and monitoring purposes Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-9

10 Requirements Definition DEFINITION PHASE As when creating custom software, Requirements Definition is a critical step in the purchase methodology But rather than create detailed requirements for in-house custom development, this step focuses on defining functional requirements needed to develop a Request for Proposal (RFP) Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-10

11 DEFINITION PHASE Create Short List of Suitable Packages Eliminate all but a few promising candidate packages Evaluate: - Available features of a package - Compatibility with current hardware and software - Vendor track record Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-11

12 DEFINITION PHASE Establish Criteria for Selection Business and IS team members work together to determine relevant criteria to select the best package Some criteria may be mandatory, while others may be desirable Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-12

13 DEFINITION PHASE Develop and Distribute RFP Request for Proposal (RFP): A formal document sent to potential vendors inviting them to submit a proposal describing their software package and how it meets the company s needs Gives vendors information about: - System s objectives and requirements - Environment in which the system will be used - General criteria used to evaluate proposals - Conditions for submitting proposals Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-13

14 DEFINITION PHASE Example of Content in RFP Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-14

15 Choose Package Collect data from: DEFINITION PHASE - Vendors responses from RFPs - Vendor demonstrations (for a few leading packages) - References from users in other companies Project team evaluates how well available packages meet company s needs Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-15

16 Negotiate Contract DEFINITION PHASE Use of an attorney for contracting with a vendor reduces likelihood of future legal problems Contract type has implications for the risk level of the purchasing company - for fixed-price contracts, the purchasing company knows the total price in advance - for cost-reimbursement contracts, the purchasing company pays the vendor s direct and indirect costs and thus assumes a much greater risk Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-16

17 PURCHASING METHODOLOGY Discrepancies between needs and package capabilities will need to be dealt with by: - Modifying the package - Changing internal procedures - Living with the differences Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-17

18 CONSTRUCTION PHASE System Design and Building steps are only necessary if modifications are to be made to the package. However, essentially all packages will require configuring the package to meet the organization s needs by making choices using pre-programmed templates by the vendor. Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-18

19 CONSTRUCTION PHASE System Design and Building: - Typically the vendor does not provide the source code for the package, so the company typically contracts with the vendor (or a certified third party firm) for modifying the package. - Changes may also be required for other existing company systems that interface with the package. System Testing: - User acceptance testing of configured package (and/or modified package) - IS specialist or vendor testing on organization s equipment Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-19

20 IMPLEMENTATION PHASE Same three steps as for Implementation phase for custom development: Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-20

21 IMPLEMENTATION PHASE Installation Installation planning, training, data cleanup, and conversion Success dependent on: - Quality of vendor support - Package size and complexity Special attention needs to be given to training, especially if there are significant changes in the way employees do their work Change management is a set of activities designed to help overcome resistance by business users to the new system Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-21

22 Operations IMPLEMENTATION PHASE Operations is the same, whether the package was built or bought Initial success highly dependent on good communication with the vendor Long-term success also dependent on how well the system has been integrated into the company s ongoing operations Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-22

23 Maintenance IMPLEMENTATION PHASE Most common = vendor handles package maintenance, as specified in the contract Advantage: - Can lead to significant cost avoidance over the life of the system Disadvantages: - Purchasing company totally dependent on vendor for future system changes - May not get specific changes that the company wants Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-23

24 Project Team PURCHASING METHODOLOGY Project manager: usually is an IS manager, but may be a business manager (or both) IS analysts and IS specialists who will operate the system Representatives of key business managers and users Software vendor personnel Sometimes a third-party implementation partner (other than vendor) For contracting: purchasing specialists and attorneys Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-24

25 ENTERPRISE SYSTEM PACKAGES Enterprise Resource Planning (ERP) systems are software packages designed to integrate all departmental and functional systems into a single integrated system Packages are more complex to implement because they can impact an entire enterprise Companies purchase to achieve business benefits and IT platform benefits, such as: - Enables access to integrated data for better decision making - Takes advantage of client/server platform Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-25

26 . ENTERPRISE SYSTEM PACKAGES Five Factors for Successful ERP implementation: Top management is engaged in the project, not just involved Project leaders are veterans, and team members are decision makers Third parties fill gaps in expertise and transfer their knowledge Change management goes hand-in-hand with project planning A satisficing mind-set prevails Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall Source: Brown and Vessey, MIS Quarterly Executive,

27 SAP SOLUTION FOR EVERY INDUSTRY Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-27

28 SOLUTION MAP FOR HEALTHCARE Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-28

29 OIL AND GAS INDUSTRY Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-29

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31 Accessing Data is POWER

32 Real Time Enterprise Management Though not particularly well defined, generally accepted goals of an RTE include: 1. Reduced response times for partners and customers 2. Increased transparency, for example sharing or reporting information across an enterprise instead of keeping it within individual departments 3. Increased automation, including communications, accounting, supply chains and reporting 4. Increased competitiveness 5. Reduced costs

33 RTE, Real Time Enterprise Management The importance of RTE in different industry like; Flight corporations Healthcare

34 What is Analytics? The science of using data to build models that lead to better decisions that add value to individuals, to companies, to institutions.

35 Applications for Data Stewards

36 Mobile

37 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-37

38 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-38

39 Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-39

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42 Why Analytic? 4.6 billion mobile phones users in the world (2011), 6.3 billion in 2012 there are more mobile phones in the world than there are toothbrushes.

43 So... more people own a mobile phone on the planet than own a toothbrush.

44 Did somebody say ubiquity?! the state or capacity of being everywhere, especially at the same time; omnipresence:

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46 Things changed More mobile device than people In the morning you Rollover to mobile than your spouse

47 Top Social Media Platforms to generate DATA and Market the brands

48 Just add Analytic to almost anything see what is happening

49 Just add Analytic

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51 Analytic Result for toothbrush

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53 Nicke s Analytic

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55 Digital medicine has the potential to track patients and improve on this number.

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58 Intelligent Airports "Improving the passenger experience" is the number one driver of IT investment by the majority (59%) of the world's airports. 10% customers have smart phone Traffic in the airport can be controlled by tracing these sensors on smartphones Placement of boots and retailers

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60 City of Boston BAR citizen Insight Boston About Results App Puts City s Performance Review in Your Hands

61 BC Hydro is saving $70 million dollars a year through the installation of new smart electricity meters, using SAP systems, and offering new services to commercial customers based on the new data possibilities with Analytic and BI power of SAP.

62 Real-time Value of R&D/Engineering with Analytic and HANA

63 Real-time Value of Sales, Service, Marketing with Analytic k?version=3&hl=en_us

64 Real-time Value of Supply Chain Management with Analytic BUSINESSES TRANSFORM SUPPLY CHAINS INTO DEMAND NETWORKS

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66 Opportunities are limitless

67 Visual Intelligence With Visual Intelligence, you can: Deliver faster time to insight in a repeatable, selfservice way Maximize business knowledge with a combination of big picture insights and granular details Accelerate decision making with immediate, factbased answers to complex business questions Increase self-service data usage without adding to your IT department's workload Visualize any amount of data in real time, using in memory processing

68 Analytics on a World of 7 Billion

69 OPEN SOURCE SOFTWARE Open Source Software Free to acquire, so lower upfront costs Ability to access and modify the source code Third parties also provide fee-based products: - Advanced features for the product - Maintenance and training - Documentation and manuals Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-69

70 OPEN SOURCE SOFTWARE Open Source Software Licensing There are many different licenses for open source software All allow for the modification and redistribution of source code, but some have conditions or restrictions It is important for managers to be aware of the specific terms of a license so that they are not violated Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall Open Source Licenses 10-70

71 OPEN SOURCE SOFTWARE Advantages Open Source Applications - Large pool of volunteer testers and developers - Ability to modify source code - Not dependent on a single vendor - Acquisition cost is the same for one copy or thousands - May use the software for any purpose - May be easier to interface open source packages with each other Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall Open Source in the Enterprise

72 OPEN SOURCE SOFTWARE Disadvantages - No complete documentation without paying for it - May not be viable for software that is not common to many organizations - Different adopters may duplicate efforts in development - Must be careful in choosing a licensing agreement that fits the company s needs Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-72

73 APPLICATION SERVICE PROVIDERS (ASPs) Application Service Providers (ASPs) Purchaser elects to use a hosted application rather than to purchase the software application and operate it in-house Company pays ASP vendor for delivering the software functionality over the Internet to company employees (and sometimes business partners) ASP vendor = an ongoing service provider Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-73

74 APPLICATION SERVICE PROVIDERS (ASPs) ASP Advantages - Cost savings and faster speed of implementation - Usually involves monthly fees rather than large infrastructure investment ASP Disadvantages - Dependence on an external vendor for both software and ongoing operations - Contract based on initial estimates of required service levels Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall Customization by ASPs by

75 APPLICATION SERVICE PROVIDERS (ASPs) Service Level Agreement (SLA) specifies performance expectations for the ASP, including: - System uptime - Recovery time - Wait time on calls to the help desk - Notifications about software upgrades - Other factors important to the customer This agreement should be a key part of the ASP contract Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall 10-75

76 Thank you Any Question? 5/19/ Professor Lili Saghafi

77 5/19/2014 Professor Lili Saghafi