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Alternative Avenues for Systems Acquisitions

Sources of Information


1) Outsourcing

Short-term contractual relationship with a service firm to develop a specific application Long-term contractual relationship with a service firm to take over all or some of an organizations IS functions

Outsourced IS Services

Advantages of Outsourcing o Improved financial planning o Reduced license and maintenance fees o Increased attention to core business o Shorter implementation cycles o Reduction of personal and fixed costs

o Increased access to highly qualified know-how o Availability of ongoing consulting as part of standard support o Increased security

2) The Information Systems Subsidiary IS service companies that are owned by and served by one large company Some grow large enough to service the market at large Some corporations purchase an IS consulting firm

3) Purchased Applications Why Purchase? Immediate system availability High quality Low price Available support

Steps in Purchasing Ready-made Software Identifying the problem Identifying potential vendors Soliciting vendor information Defining system requirements Requesting vendor proposals

Purchased Applications Reviewing proposals and screening vendors Visiting sites Selecting the vendor Benchmarking Negotiating a contract Implementing the new system Managing post-implementation support

A system should be purchased only if all or most needs are met.

Benchmarking Codified comparison of performance measures between systems Ensures adopted application satisfies the organization's minimum requirements Learning from Experience Purchasing Risks Loose fit between needs and features Bankruptcy of the vendor High turnover of vendor personnel

4) Renting Software On-site Renting - Client purchases a license to use a certain application for a specified time

Renting Through the Web - Application installed at vendors location; client accesses through the Web or leased line

5) User Application Development Factors Encouraging User Application Development The programming backlog The widespread use of PCs The emergence of 4GLs Increasing popularity of prototyping Increasing popularity of client/server architecture

Managing User-developed Applications Managing the reaction of IS professionals Providing support Compatibility Managing access Advantages of user application development Shortened lead times Good fit to needs Compliance with culture Efficient utilization of resources Acquisition of skills Free IS staff time Risks of user application development Poorly developed applications Islands of information Duplication Security problems Poor documentation Futz factor