Turning over responsibility of some or all of an organization’s information systems applications and operations to an outside firm

Chapter 2
The Origins of Software
Modern Systems Analysis
and Design
Seventh Edition
Jeffrey A. Hoffer
Joey F. George
Joseph S. Valacich

2
Chapter 2
Learning Objectives
 Explain outsourcing.
 Describe six different sources of
software.
 Discuss how to evaluate off-the-shelf
software.
 Explain reuse and its role in software
development.

3
Chapter 2
Introduction
 There are various sources of software for
organizations.
 Most of a corporation’s application software is
created by external sources.
 Much in-house coding involves making
components work together.
 There are criteria to evaluate software from
different sources.

4
Chapter 2
Systems Acquisition: Outsourcing
 Outsourcing: Turning over
responsibility of some or all of an
organization’s information systems
applications and operations to an
outside firm

5
Chapter 2
Systems Acquisition: Outsourcing
(Cont.)
 Outsourcing Example
Shell Oil outsource spending: $3.2
billion (2008)
Shell’s outsourcing vendors (2008-
2011): EDS, T-Systems, AT&T, IBM,
Logica, Wipro, Accenture

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Chapter 2
Outsourcing (Cont.)
Reasons to outsource
 Cost-effectiveness
 Take advantage of economies of scale
 Make up for lack of in-house knowledge
 Free up internal resources
 Reduce time to market
 Increase process efficiencies
 System development is a non-core activity for the
organization

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Chapter 2
Sources of Software
 Information technology services firm
 Packaged software producers
 Enterprise-wide solutions
 Enterprise Resource Planning (ERP)
 Cloud computing
 Open source software
 In-house developers

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Chapter 2
Sources of Software (Cont.)
FIGURE 2-1
Sources of Application Software

9
Chapter 2
Sources of Software (Cont.)

10
Chapter 2
Information Technology (IT)
Services Firms
 Help companies develop custom
information systems for internal use
 Develop, host, and run applications for
customers
 Provide other services

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Chapter 2
Packaged Software Producers
 Serve many market segments
 Provide software ranging from broad-
based packages (i.e. general ledger)
to niche packages (i.e. day care
management)
 Pre-packaged, off-the-shelf software

12
Chapter 2
Packaged Software Producers
(Cont.)
 Software runs on all size computers, from
microcomputers to large mainframes.
 Prepackaged software is off-the-shelf,
turnkey software (i.e. not customizable).
 Off-the-shelf software, at best, meets 70% of
organizations’ needs.

13
Chapter 2
Prepackaged Software
Figure 2-2 Microsoft Project (Source: Microsoft Corporation.)

14
Chapter 2
Enterprise Solutions Software
 Enterprise Resource Planning (ERP) systems
integrate individual traditional business functions
into modules enabling a single seamless
transaction to cut across functional boundaries.
 SAP AG is the leading vendor of ERP systems.

15
Chapter 2
Enterprise Solutions Software (Cont.)
Figure 2-3 SAP’s Business ByDesign, a product designed for medium sized companies.
(Source: www.sap.com/usa/solutions/Sme/ Businessbydesign/Flash/bsm/A1S.html.
© Copyright SAP AG. All rights reserved.)

16
Chapter 2
Cloud Computing
 The provision of computing
resources, including applications,
over the Internet, so customers do not
have to invest in the computing
infrastructure needed to run and
maintain the resources

Cloud Computing (Cont.)
 Examples:
Google Drive – users store what they want on
servers
Salesforce.com – online customer relationship
management (CRM) software
Microsoft Azure platform
Amazon.com cloud infrastructure and services
17
Chapter 2

Cloud Computing (Cont.)
 Heavy growth predicted
 Benefits:
Free internal IT staff
Faster access to application than via internal development
Lower cost than internal development
 Concerns
Security
Reliability
Regulation compliance
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Chapter 2

19
Chapter 2
Open Source Software
 Freely available including source code
 Developed by a community of interested
people
 Performs the same functions as
commercial software
 Examples: Linux, mySQL, Firefox
 How to make money?
Provide maintenance/services
Sell a more featured version of the free
software

20
Chapter 2
In-House Development
 If sufficient system development expertise with
the chosen platform exists in-house, then some
or all of the system can be developed by the
organization’s own staff.
 Hybrid solutions involving some purchased and
some in-house components are common.

Sources of Software Components
21
Chapter 2

22
Chapter 2
Selecting Off-the-Shelf Software
 Cost: comparing the cost of
developing the same system in-house
with the cost of purchasing or
licensing the software package

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Chapter 2
 Functionality: the tasks that the
software can perform and the
mandatory, essential, and desired
system features
(Cont.)

24
Chapter 2
(Cont.)
Vendor support: whether and
how much support the vendor can
provide and at what cost

25
Chapter 2
Viability of vendor: can vendor
continue to adapt/update software
to changes in systems software
and hardware
(Cont.)

26
Chapter 2
(Cont.)
 Flexibility: the ease with which
software is customized
 Documentation: understandable and
up-to-date user’s manual and
technical documentation

27
Chapter 2
(Cont.)
 Response time: how long it takes the
software package to respond to the
user’s requests in an interactive
session
 Ease of installation: a measure of
the difficulty of loading the software
and making it operational

28
Chapter 2
Validating Purchased Software
Information
 Use a variety of information sources:
Collect information from vendor
Software documentation
Technical marketing literature

29
Chapter 2
Request For Proposal (RFP)
 A request for proposal (RFP) is a
document provided to vendors to ask
them to propose hardware and
system software that will meet the
requirements of a new system.

30
Chapter 2
Request For Proposal (RFP)
(Cont.)
 Sometimes called a Request For
Quote (RFQ)
 Analyst selects best candidates
based on:
 vendor bids
 a variety of information sources

31
Chapter 2
Information Sources For RFP
 Vendor’s proposal
 Running software through a series of tests
 Feedback from other users of the vendor’s
product
 Independent software testing services
 Articles in trade publications

32
Chapter 2
Reuse
 The use of previously written software
resources, especially objects and
components, in new applications
 Commonly applied to two different
development technologies:
Object-oriented development
Component-based development

33
Chapter 2
Reuse (Cont.)
 Object-oriented development
Object class encapsulates data and behavior
of common organizational entities (e.g.
employees)
 Component-based development
Components can be as small as objects or as
large as pieces of software that handle single
business functions

34
Chapter 2
Reuse (Cont.)
Object-oriented development
reuse is the use of object classes
in more than one application (e.g.
Employee).

35
Chapter 2
Reuse (Cont.)
Component-based development
reuse is the assembly of an
application from many different
components at many different
levels of complexity and size (e.g.
Currency conversion).

36
Chapter 2
Costs and Benefits of Reuse
FIGURE 2-5
Investments necessary to achieve reusable components
(Source: Royce, Walker, Software Project Management: A Unified Framework, 1st ed.,
©1998. Reprinted and Electronically reproduced by permission of Pearson Education, Inc.
Upper Saddle River, New Jersey.)

37
Chapter 2
Approaches to Reuse
 Ad-hoc: individuals are free to find or
develop reusable assets on their own
 Facilitated: developers are encouraged to
practice reuse

38
Chapter 2
Approaches to Reuse (Cont.)
 Managed: the development, sharing, and
adoption of reusable assets is mandated
 Designed: assets mandated for reuse as
they are being designed for specific
applications

Approaches to Reuse (Cont.)
39
Chapter 2

40
Chapter 2
Summary
 In this chapter you learned how to:
 Explain outsourcing.
 Describe six different sources of software.
 Discuss how to evaluate off-the-shelf
software.
 Explain reuse and its role in software
development.

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