Lecture- 4

Information systems Planning & Acquisition

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A. Frameworks for Analyzing Information Systems

B. IS Planning

C.Software Acquisition Options

D.Project Management

E. People Aspects of Systems Development

F. Beyond the Basics

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Computers are cheaper and more efficient than people when it comes to performing common, well defined tasks such as deciding when stock items should be reordered or generating customer statements. And as the productivity gap widens with each new advance in computer technology, new and innovative ways are being found to reduce costs through automation.

The question is “how does an organization recognize the need for a new computer system?”

Forces that highlight the need for change could come from the business environment (such as increased competition or new government regulations) or from within the business itself. Increasingly opportunities to automate arise through the introduction of new and innovative technology which can provide major cost reductions, improved management information and better service to customers.

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Once the need for a new system has been identified, plans must be developed to ensure that the new system can be successfully integrated with existing business processes, and that it will provide an acceptable return on investment for the organization.

Finally, effective project management is essential if systems are to be produced that correctly fulfill the requirements of their users without exceeding the constraints of time and budget.

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A) Frameworks for Analyzing Information Systems

There are many frameworks for analyzing and studying information systems. Many of the commercially inspired frameworks are tied to a specific system methodology: they are very specific, often proprietary, approaches to analyzing information needs, designing and developing information systems that address these needs.

e.g. strategic planning, comparative analysis, historical analysis, etc.

To give you an idea of these frameworks, we give you three examples.

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1- Value chain analysis

In value chain analysis, the organization is seen as a large input-output system, in which the inputs are the raw materials or services brought into the organization, which are processed in some way, marketed and sold as outputs.

Each point of this chain is analyzed to uncover opportunities where value can be added or costs reduced.

Although the complete model of the value chain usually includes both primary and support activities, the greatest level of return can be expected through the implementation of IS within the primary activities.

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Inbound logistics include the receiving, warehousing, and inventory control of input materials.

Operations are the value-creating activities that transform the inputs into the final product.

Outbound logistics are the activities required to get the finished product to the customer, including warehousing, order fulfillment, etc.

Marketing & Sales are those activities associated with getting buyers to purchase the product, including channel selection, advertising, pricing, etc.

Service activities are those that maintain and enhance the product's value including customer support, repair services, etc.

Primary activities within the value chain

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2- The Zachman Framework

Zachman developed a framework aimed at a more systematic delivery of information systems, modeled loosely on the way buildings are constructed from an architectural point of view. According to Zachman, information systems need to be considered from six different perspectives.

Data: which data entities do you want to capture and what are the relationships between these entities?

Function: which (business) functions need to be addressed and which arguments does each function have?

Network: which nodes need to be supported and what links exist between them?

People: who are your agents and what are their tasks or work? Time. when do things happen and to which cycles do they conform? Motivation: what are the ends or goals and by what means will you get there?

Each of these dimensions is then examined at a number of different levels, to identify the system requirements and how they can best be implemented.

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3- Strategic Importance Grid

The strategic importance grid looks at the entire information systems portfolio of an organization i.e. all the systems currently in operation as well as the future systems currently under development or being planned.

The critical focus of this framework is the assessment of whether a significant portion of an organization's systems is of a strategic nature and classifies the organization accordingly into one of four possible categories on the IS strategic importance grid.

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The main use of this table is to assess the importance of the IS strategic planning in the overall strategic business plan. It can also be of use when doing strategic competitor analysis or when assessing significant shifts in IT budgets.

Strategic importance grid

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B)IS Planning

The various components of an organization's information systems (hardware, software, databases, networks, and people) need to be successfully integrated in order to provide the right information at the right place and time.

An IS architecture is needed to define the IS resources that will be used to support the business strategy, and the standards that should be adhered to in order to ensure compatibility within the system.

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The starting point for IS planning should be the clear identification of the application needs of the business, based on the information that is required by management.

The activities that are managed by the IS department, such as the prioritizing and scheduling of system development projects, must be in line with overall business goals. Alternative software products and acquisition options need to be evaluated before a decision can be made about the hardware and operating system that would be most appropriate.

Computer hardware should then be assessed on the basis of its compatibility with existing and future systems, its expandability and reliability. Other important issues include the availability of technical support, estimation of operating costs, and the financing method that is to be used.

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Cost-benefit analysis

Cost-benefit analysis can be used to assess and priorities new system development projects, by measuring the financial impact of proposed systems. Tangible benefits could include reduced inventory and administration costs, higher processing volumes, reduction of bad debts and improved cash flow.

Intangible benefits such as improved customer satisfaction and better decision-making are more difficult to measure, but could be of significant value.

Typical costs that have to be considered in evaluating projects are Development costs, including staff training and conversion from

the previous system Equipment costs, including space and air-conditioning

requirements Operating costs such as staffing, insurance and power.

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The reason for undertaking a cost-benefit analysis is to ensure that over the lifetime of the system, its benefits will exceed its costs, even though costs are likely to exceed benefits during the initial stages.

The calculation must take into account the time-value of money (net present value) when determining the break-even point for the system, since interest would be earned (or saved) on the capital that will be invested in the project.

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Funding of IS

The are three basic options available for the funding of an organization's information systems:

unallocated cost centre cost centreprofit centre

The traditional model of an unallocated cost centre means that IS regarded as an organizational cost, for which an annual budget is allocated in order to meet the costs of system development and maintenance.

Other departments are likely to have little influence over the spending of the IS budget, the prioritizing of projects and the standard of service that is delivered.

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When the IS department operates as an allocated cost centre, then internal accounting is used to allocate IS costs to the departments using them. This makes it easier to identify areas of demand within the organization, and may reduce the number of requests for (unnecessary) projects.

A profit centre approach means that the IS department must compete with outside vendors in providing IS services to the organization. This often results in increased efficiency of the IS department, but may reduce the time spent on less profitable developmental work, reducing the ability to provide innovative and potentially strategic IS capabilities.

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C) Software Acquisition Options In-house development

Most large organizations have their own IS department, which is responsible for the development and support of the computer systems used to support the company’s strategic goals.

The methods commonly used during in-house development are covered in detail in the next chapter.

However, this approach depends on highly skilled employees, and because of the time and cost involved, it often results in a backlog of projects awaiting development. If IS staff do not have the necessary technical expertise, or are too busy to attend to low priority projects, then alternative system development methods may need to be considered.

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Commercial packages

The acquisition of off-the-shelf software packages provides a low-cost alternative to in-house development, since the cost of development has been spread over a number of users.

The software can be examined and tested prior to purchase, minimizing the risk involved, and user training and support are often commercially available.

Even if some customization is required, a package can be installed in a very much shorter time frame than if an equivalent system is developed from scratch.

In general, if a suitable package is available, then this is the best option for acquisition of software.

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Outsourcing

Outsourcing involves the purchasing of a service, in this case software development, from another company.

With rapid changes in technology and high turnover rates for IS staff, it becomes increasingly difficult to maintain high levels of expertise in-house.

Outsourcing allows an organization to focus on its core competencies, while benefiting from the expertise and economies of scale that can be provided by the outsourcing company.

Contracts and service level agreements need to be clearly defined, and in many cases organizations will outsource only their more general systems, while retaining control over strategic projects.

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A recent trend is towards the use of application service providers (ASPs), who maintain a range of software programs on their own computers. These are made available to customers via a web interface, and are a cost-effective solution for the provision of software that is used infrequently or from varying locations.

The principle underlying this approach is that just as a company would not consider producing electricity privately to meet its own needs, but finds it easier to pay a supplier based on usage, so the company can pay for the use of applications which have been developed, installed and maintained by an ASP.

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End-user computing

With the growth of computer literacy in the workplace, plus decreased costs of computer hardware and user-friendly development tools, end-user computing has become an important factor in system development. Faced with frustrating backlogs in the IS department, or inspired by the opportunities presented by new technologies, an increasing number of users are attempting to develop their own systems.

The majority of user-developed applications tend to be personal or departmental in function, and often do not adhere to organizational standards.

Data validation and security may be poor, backup and recovery procedures are often missing, and lack of documentation means that if the developer leaves the organization, then the system is likely to fall into disuse. In response to these concerns, user support centers may be established to provide training and assistance for users.

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D) Project Management

Project management differs from general business management in that a project has a beginning and an end, between which a definable set of activities must occur.

Most projects are once-off efforts, so previous experience is likely to be limited, and the high degree of interaction between participants and tasks adds to project complexity.

In order to meet these challenges, special project management tools have been developed to assist with project planning, resource allocation, scheduling and review.

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Example of a Gantt chart

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The first task of the project manager is to define the scope of the project, the tasks to be accomplished and the order in which they should be done.

This information can be represented using a Gantt chart, which also reflects the start and end dates of major tasks and the staff involved. Dependencies between tasks then need to be identified, since any hold-up at a critical point might affect the completion time of the project as a whole.

A network diagram or Pert chart shows the minimum and maximum time that might be needed for each task, as well as which tasks must be completed in sequence and which can be addressed in parallel, so that the impact of delays can be accurately assessed.

Risk assessment techniques can be used to identify risk factors and implement strategies for minimizing the potential problems associated with systems involving complex technology or where user requirements are not clearly defined.

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The progress of a project must be monitored throughout its lifespan, usually on the basis of deliverables submitted at the end of each phase. Comparisons with the budgeted time and cost are made at frequent intervals, so that problems can be identified and corrected as early as possible.

Another important element in project management is the acquisition and training of staff and the development of relationships both within the team and with the future users of the system. This can be supported through the organization's intranet together with the effective use of groupware applications such as email and electronic meeting support.

It should be apparent from these examples that more than one software tool is required to provide the different perspectives needed for effective project management. Many of the same tools can also be used to improve general business efficiency, for example in the periodic scheduling of jobs and employees by operations managers.

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E) People Aspects of Systems DevelopmentThe systems development process will involve IS professionals,

management, end users and outside vendors.

Management. Decisions as to which computer systems are to be developed and the allocation of IS resources to current projects must be made by general management with advice from the IS department.

One way this can be achieved is to form a computer steering committee with representatives from top management, managers of the various business functions and the IS manager.

The chief information officer will manage IS resources (including staff), liaise with top management and advise on strategic opportunities.

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IS professionals. The systems analyst plays the part of an intermediary in the development process, providing the link between users and the programmers and technicians who will build the system.

The analyst’s role is to develop the user requirement and detailed design specifications and to provide continuity and management support throughout the project. He or she must therefore have a strong understanding of the business together with the required technical skills.

In addition the analyst must possess the management and behavioral skills to supervise and communicate with people.

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In many organizations the analyst’s role has been split into that of the business analyst, normally an individual with a strong commercial background who will perform the analysis function, and the systems designer, a technical analyst who will develop the detailed specifications of the system.

Programmers work from the detailed program specifications developed by the analyst, and code and test the required program modules.

In large organizations there are individuals in technical roles who will provide support for development projects in the design and implementation stages.

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End-users. These are the people who will ultimately use the new system. In the past they were largely ignored once the analyst felt their requirements were known. Modern practice dictates that users be involved in every stage of the development project.

This involvement has two main objectives.

Firstly the user can define what he wants and give details of the user interface. In addition user involvement breaks down resistance to change. Making the user part of the development team ensures a commitment to the successful implementation of the application.

In many cases, end-users are also assuming a role as system developers, although the responsibility for network, database and hardware management is likely to remain under the control of a centralized IS department.

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Outside vendors. Outside organizations may be providing hardware, software or their consulting expertise.

Many organizations use outside contractors as analysts or programmers to help in development projects. Contractors are useful when an organization lacks technical skills in an area or has a shortage of staff.

The problem with contract staff is that the knowledge and skills developed during the project can disappear when the contractor leaves. Adequate documentation and training of in-house personnel are the obvious solutions.

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F ) Beyond the Basics

There are various issues to be considered when planning for e-commerce applications.

Rather than the traditional cost-benefit approach, web initiatives may be seen as a strategic investment to be used as a platform for future business activities.

As part of the overall information architecture of the organization, a top-level decision must be made as to whether the entire site will be developed and maintained as a single project (either in-house or outsourced), or whether only core functions will be initially planned and developed, allowing departments to extend it later as required.

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An extended group of users needs to be considered in planning a web-based system: surfers who are browsing the Web, customers who wish to make online purchases, suppliers and recipients. Many of these are not usually regarded as direct users of traditional IS applications. Accessibility issues are also raised, to allow for the possibility of external users who are physically or mentally handicapped.

Even though the benefits resulting from a website are difficult to quantify, the effectiveness of the site in fulfilling its purpose must be evaluated in the same way as any other IT investment, to ensure that business requirements are being met and problems are identified.

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Thank you for listening

• Any Questions??

• Please Read Section IV: IS Management of Book(1) Discovering Information systems, Page No. from 120 to 133 for further reading.

DONE!!!