assignment 2

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9 Developing and Acquiring Information Systems

After reading this chapter, you will be able to do the following:

1. Describe how to formulate and present the business case for technology investments. 2. Describe the systems development life cycle and its various phases. 3. Explain how organizations acquire systems via external acquisition and outsourcing.

Preview As you have read throughout this book and have experienced in your own life, information systems and technologies are of many different types, including high-speed Web servers to rapidly process customer requests, business intelligence systems to aid managerial decision making, and customer relationship management systems to provide improved customer service. Given this variety, when we refer to “systems” in this chapter, we are talking about a broad range of technologies, including hardware, software, and services. Just as there are different types of systems, there are different approaches for developing and acquiring them. If you are a business student majoring in areas such as marketing, finance, accounting, or management, you might be wondering why we have a discussion about developing and acquiring information systems. The answer is simple: No matter what area of an organization you are in, you will be involved in systems development or technology acquisition processes. In fact, research indicates that spending on systems in many organizations is controlled by the specific business functions rather than by the information systems (IS) department. What this means is that even if your career interests are in something other than information systems, it is very likely that you will be involved in the development and acquisition of systems, technologies, or services. Understanding this process is important to your future success.

Managing in the Digital World: Microsoft Is “Kinecting” Its Ecosystem

How useful would an iPhone or an Android smartphone be without the apps? How useful would a Blu-ray player be without a large selection of movies available in that format? The value of many devices or systems grows with the size of their ecosystems, including the users, application or content developers, sellers, and marketplaces. Like a tree standing still in a world without rain, birds, or flowers—a tree that would likely not be able to survive—the iPhone sans the “apps” would be much less useful, less exciting, and much less successful in the marketplace. Similarly, Google, Microsoft, and, not surprisingly, Amazon.com (http://Amazon.com) are trying to build large ecosystems around their products and services (Figure 9.1 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09#ch09fig1) ).

FIGURE 9.1 All parts of an ecosystem are interrelated.

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Source: Fotolia.

In the mobile device industry, these ecosystems are based on the products or services developed by the original creators, and are complemented by a pool of independent developers that expand the ecosystem’s capabilities in the hope of developing the next killer app. This collective expansion in capabilities generates additional marketing buzz and market demand. To create such an expanded ecosystem, a cooperative development approach is the norm, as has been common in many successful software, hardware, and, more recently, consumer electronics marketplaces. This approach is characterized by systems development activities constantly shifting back and forth between the big, well-known product developers like Apple or Microsoft and small, virtually unknown independent app developers who build creative extensions that broaden the products’ market appeal. One example of an ecosystem evolving around a device is Microsoft’s Kinect, a US$150 body motion capture device for the Xbox, first launched in 2010. After initially barring individual developers from tinkering with the Kinect, Microsoft realized the power of ecosystems and released a software development kit (SDK), allowing anyone to build Kinect-related applications.

In 2013, Microsoft launched a much improved Kinect with its next generation game console, the Xbox One. The Kinect contains a collection of cameras, microphones, and sensors that enables users to control and interact with the game console using gestures and voice commands. For example, the newest Kinect can recognize faces so you don’t have to manually log in, and can even read your lips to better understand your needs. Using these new capabilities, one group developed an easy method to create 3D scans of people and objects. Other applications are being developed to help people try on virtual clothing or help doctors manipulate images while performing surgery. Just as the iPhone and Android smartphones have gone beyond just being phones, the Kinect has become far more than a just gaming controller, thanks to the innovative ideas from the Kinect’s ecosystem.

After reading this chapter, you will be able to answer the following:

1. How can a company make a business case for/against allowing access to an SDK? 2. What are potential pitfalls if established practices (such as the systems development life cycle) are not followed when developing third-party applications? 3. How is the “open sourcing” of systems development different from traditional outsourcing?

Based on:

Anonymous. (n.d.). The Microsoft Accelerator for Kinect. Microsoft.comMicrosoft.com (http://Microsoft.com) (http://Microsoft.com) . Retrieved March 20, 2014, from http://www.microsoft.com/bizspark/kinectaccelerator (http://www.microsoft.com/bizspark/kinectaccelerator) .

Greene, J. (2012, June 28). Turns out Kinect is for fashionistas and surgeons, too. Cnet.comCnet.com (http://Cnet.com) (http://Cnet.com) . Retrieved March 20, 2014, from http://news.cnet.com/8301-10805_3-57463197- 75/turns-out-kinect-is-for-fashionistas-and-surgeons-too (http://news.cnet.com/8301-10805_3-57463197-75/turns-out-kinect-is-for-fashionistas-and-surgeons-too) .

Kinect. (2014, February 25). In Wikipedia, The Free Encyclopedia. Retrieved March 20, 2014, from http://en.wikipedia.org/w/index.php?title=Kinect&oldid=597143263 (http://en.wikipedia.org/w/index.php?title=Kinect&oldid=597143263) .

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9.1 MAKING THE BUSINESS CASE Before people are willing to spend money to acquire or develop a new system, or spend more money on an existing one, they want to be convinced that this will be a good investment. Making the business case refers to the process of identifying, quantifying, and presenting the value provided by a system.

Business Case Objectives

What does making the business case mean? Think for a moment about what defense lawyers do in court trials. They carefully build a strong, integrated set of arguments and evidence to prove that their clients are innocent to those who will pass judgment on their clients. In much the same way, a manager has to build a strong, integrated set of arguments and evidence to prove that an information system (or any type of investment) is adding value to the organization or its constituents. This is, in business lingo, “making the business case” for a system.

As a business professional, you will be called on to make the business case for systems and other capital investments, or you will have to make the case for a new system or application you may need for your work to improve certain business processes. Thus, as a finance, accounting, marketing, or management professional, you are likely to be involved in this process and will therefore need to know how to effectively make the business case for a system (or other capital expenditures) and need to understand the relevant organizational issues involved. It will be in the organization’s best interest—and in your own—to ferret out systems that are not adding value. In these cases, you will need to either improve the systems or replace them. Traditionally, business units turned to IS departments for new systems or applications. Today, business units often directly purchase applications from outside vendors, and expect these applications to function in the infrastructure provided by the IS departments. As more and more applications are purchased from external vendors, organizations have to make sure to go through a proper process in selecting the right applications.

Making the business case is as important for proposed systems as it is for the continued investment in an existing system. For a proposed system, the case will be used to determine whether the new system is a “go” or a “no-go.” For an existing system, the case will be used to determine whether the company will continue to fund the system. Whether a new system or an existing one is being considered, your goal is to make sure that the investment adds value, that it helps the firm achieve its strategy and competitive advantage over its rivals, and that money is being spent wisely.

The Productivity Paradox

Unfortunately, while it is easy to quantify the costs associated with developing an information system, it is often difficult to quantify tangible productivity gains from its use. Over the past several years, the press has given a lot of attention to the impact of IS investments on worker productivity. In many cases, IS expenditures, salaries, and the number of people on the IS staff have all been rising, but results from these investments have often been disappointing. For instance, the information and technology research firm Gartner reports that worldwide spending on systems and technologies will surpass US$3.8 trillion in 2014, and is forecasted to exceed US$4.4 trillion by 2016. American and Canadian companies are spending, on average, around 4 percent of company revenues on system-related investments. As a result, justifying the costs for IS investments has been a hot topic among senior managers at many firms. In particular, “white-collar” productivity, especially in the service sector, has not increased at the rate one might expect, given the trillions of dollars spent.

Why has it been difficult to show that these vast expenditures on technologies have led to productivity gains? Have information systems somehow failed us, promising increases in performance and productivity and then failing to deliver on that promise? Determining the answer is not easy. Information systems may have increased productivity, but other forces may have simultaneously worked to reduce it, the end results being difficult to identify. Factors such as government regulations, more complex tax codes, stricter financial reporting requirements (such as the Sarbanes–Oxley Act; see Chapter 10 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch10#ch10) , “Securing Information Systems”), and more complex products can all have major impacts on a firm’s productivity.

It is also true that information systems introduced with the best intentions may have had unintended consequences. A paramount example is giving employees access to e-mail and the Internet—now employees are spending excessive amounts of time surfing the Web to check sports scores on the ESPN Web site, read volumes of electronic junk mail received from Internet marketing companies or from personal friends, post status updates on social networking sites, or use company PCs to download and play software games (Figure 9.2 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig2) ); recently, it was reported that visits to social networking sites such as Facebook and Twitter cost U.K. firms alone approximately US$2.25 billion in lost productivity every year. In such situations, information systems can result in less efficient and less effective communication among employees and less productive uses of employee time than before the systems were implemented. Nevertheless, sound technology investments should increase organizational productivity. If this is so, why have organizations not been able to show larger productivity gains? A number of reasons have been given for the apparent productivity paradox (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_484) of technology investments (Figure 9.3 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig3) ). This issue is examined next.

FIGURE 9.2 Unintended consequences can limit the productivity gains from IS investments.

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MEASUREMENTMEASUREMENT PROBLEMS. PROBLEMS. In many cases, the benefits of information systems are difficult to pinpoint because firms may be measuring the wrong things. Often, the biggest increases in productivity result from increased effectiveness (i.e., the extent to which goals or tasks are accomplished well). Unfortunately, many business metrics focus on efficiency (i.e., the extent to which goals are accomplished faster, at lower cost, or with relatively little time and effort).

FIGURE 9.3 Factors leading to the IS productivity paradox.

A good example of measurement problems associated with a technology investment is the use of online banking. How much has online banking contributed to banking

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productivity? Traditional statistics might look at the adoption rate of the service and associated reductions in branch-based services and locations. While informative, such statistics may not work well for evaluating online banking, at least at this point in time. For instance, some older customers may not want to bank online, so a reduction in the number of traditional branches could threaten a potentially large number of very good customers while at the same time inflating the percentage of online banking users (i.e., if the number of traditional banking customers leave the bank because of a reduction of branches, the adoption rate of online customers as a percentage will be increased). So, investing in online banking may be unimportant for an important segment of customers while essential for others. Nevertheless, can you imagine a bank staying competitive without offering online services? Deploying technologies such as online banking has become a strategic necessity—something an organization must do in order to survive (see Chapter 2 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch02#ch02) , “Gaining Competitive Advantage Through Information Systems”). The value of necessary investments is often difficult to quantify.

TIMETIME LAGS. LAGS. A second explanation for why productivity is sometimes difficult to demonstrate for some technology investments is that a significant time lag may occur from when a company makes the investment until that investment is translated into improvement in the bottom line. Let us return to our online banking example. In some markets, it may take years from the first implementation of this new system before the magnitude of benefits may be felt by the organization.

REDISTRIBUTION.REDISTRIBUTION. A third possible explanation for why IS productivity figures are not always easy to define is that a new type of system may be beneficial for individual firms but not for a particular industry or the economy as a whole. Particularly in competitive situations, new innovations may be used to redistribute the pieces of the pie rather than making the whole pie bigger. The result for the industry or economy as a whole is a wash—that is, the same number of products are being sold, and the same number of dollars are being spread across all the firms.

MISMANAGEMENT.MISMANAGEMENT. A fourth explanation is that the new system has not been implemented and managed well. Some believe that people often simply build bad systems, implement them poorly, and rely on technology fixes when the organization has problems that require a joint technology/process solution. Rather than increasing outputs or profits, IS investments might merely be a temporary bandage and may serve to mask or even increase organizational inefficiency. Also, as we mentioned in Chapter 1 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch01#ch01) , “Managing in the Digital World,” an information system can be only as effective as the business model that it serves. Bad business models can’t be overcome by good information systems.

If it is so difficult to quantify the benefits of information systems for individual firms and for entire industries, why do managers continue to invest in information systems? The answer is that competitive pressures force managers to invest in information systems whether they like it or not. Also, for many organizations, information systems are an important source of competitive advantage. You might ask, then, so why waste time making the business case for a system? Why not just acquire or develop them? The answer: Given the vast number of potential systems and technologies that could be selected, a strong business case aids the decision-making process and helps direct resources in more strategic ways.

Making a Successful Business Case

People make a variety of arguments in their business cases for information systems. When managers make the business case for an information system, they typically base their arguments on faith, fear, and/or facts (Wheeler & Marakas, 1999 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib15) ). (Wheeler also adds a fourth “F” for “fiction,” and notes that, unfortunately, managers sometimes base their arguments on pure fiction, which is not only bad for their careers but also not at all healthy for their firms.) Table 9.1 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09tab1) shows examples of these three types of arguments.

Do not assume that you must base your business case on facts only. It is entirely appropriate to base the business case on faith, fear, or facts (Figure 9.4 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig4) ). Indeed, the strongest and most convincing business case will include a little of each type of argument. In the following sections, we talk about each of these types of arguments for the business case.

FIGURE 9.4 A successful business case will be based on faith, fear, and fact.

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BUSINESSBUSINESS CASE CASE ARGUMENTS ARGUMENTS BASED BASED ON ON FAITH. FAITH. In some situations, arguments based on faith (or fear) can be the most compelling and can drive the decision to invest in an information system despite the lack of any hard data on system costs, or even in the face of some data that say that the dollar cost for the system will be high. Arguments based on faith often hold that an information system must be implemented in order to achieve the organization’s strategy effectively and to gain or sustain a competitive advantage over rivals.

TABLE 9.1 Three Types of Arguments Commonly Made in the Business Case for an Information System

Type of Argument

Description Example

Faith Arguments based on beliefs about organizational strategy, competitive advantage, industry forces, customer perceptions, market share, and so on

“I know I don’t have good data to back this up, but I’m convinced that having this customer relationship management system will enable us to serve our customers significantly better than our competitors do and, as a result, we’ll beat the competition… You just have to take it on faith.”

Fear Arguments based on the notion that if the system is not implemented, the firm will lose out to the competition or, worse, go out of business

“If we don’t implement this enterprise resource planning system, we’ll get killed by our competitors because they’re all implementing these kinds of systems … We either do this or we die.”

Fact Arguments based on data, quantitative analysis, and/or indisputable factors

“This analysis shows that implementing the inventory control system will help us reduce errors by 50 percent, reduce operating costs by 15 percent a year, increase production by 5 percent a year, and pay for itself within 18 months.”

For example, a firm has set as its strategy that it will be the dominant, global force in its industry. As a result, this firm must adopt a variety of collaboration technologies, such as desktop videoconferencing and groupware tools, in order to enable employees from different parts of the globe to work together effectively and efficiently. Similarly, a firm that has set as its strategy a broad scope—producing products and services across a wide range of consumer needs—may need to adopt some form of an enterprise resource planning system to better coordinate business activities across its diverse product lines.

In short, successful business case arguments based on faith should clearly describe the firm’s mission and objectives, the strategy for achieving them, and the types of information systems that are needed in order to enact the strategy. A word of caution is warranted here. In today’s business environment, cases based solely on strategic

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arguments, with no hard numbers demonstrating the value of the information system under consideration, are not likely to be funded.

BRIEF CASE Software Patent Wars

Have you ever used the slide-to-unlock feature on a smartphone? Apple has a patent on that. If your smartphone sends and receives data over a 4G network, well, Samsung has a patent for that. In the 1970s, when key technologies that made the Internet possible were being developed, intellectual property and patent claims were not much of a big deal. The idea then was to make the technology an international standard, and open it up for public use. Come the twenty-first century, things have changed, and battles over patents are constantly being fought, especially in the mobile market where companies are trying to protect clever technologies and applications and maintain or increase market share.

An overview of the mobile patent wars looks something like this: Microsoft sued Motorola for video encoding, Motorola counter-sued Microsoft’s use of e-mail, instant messaging, and Wi-Fi; likewise, Google was sued by Oracle for its implementation of the Java programming language in its Android system. Google then acquired Motorola to gain access to its patent portfolio. Apple has made use of its patent rights to prevent Samsung Electronics from selling some products with features Apple argues violates its patents. In response, Samsung has retaliated by attempting to ban iPhone sales in some countries.

With the global smartphone market being estimated around $300 billion in 2014, the stakes are high. However, many feel that too much time, energy, and money are being wasted fighting these battles, and there is also a growing sense that the patent process itself is flawed. Considering that the U.S. patent system offers inventors a limited monopoly on their ideas for 20 years, consumers may actually find fewer choices in the market the next time they look for a new mobile handset.

Questions

1. With millions of software patents in existence, some claim that it is almost impossible to avoid infringing on someone else’s patent. How does this affect innovation and small startups?

2. Many believe that the patent wars act to destroy small players in the mobile phone marketplace who cannot afford expensive and lengthy legal battles. What other impacts do the patent wars have on this industry?

Based on:

Holbrook, T. (2014, March 16). Is the Supreme Court about to rule that software is ineligible for patent protection? Forbes. Retrieved March 20, 2014, from http://www.forbes.com/sites/realspin/2014/03/16/is-the-supreme-court-about-to-rule-that-software-is-ineligible-for-patent-protection (http://www.forbes.com/sites/realspin/2014/03/16/is- the-supreme-court-about-to-rule-that-software-is-ineligible-for-patent-protection) .

Nazer, D. (2014, March 17). Why is the patent office so bad at reviewing software patents? Electronic Frontier Foundation. Retrieved March 20, 2014, from https://www.eff.org/deeplinks/2014/03/why-patent-office-so-bad-reviewing-software-patents (http://www.eff.org/deeplinks/2014/03/why-patent-office-so-bad-reviewing-software-patents) .

Phillips, M. (2013, November 22). Apple vs. Samsung: A patent war with few winners. The New Yorker. Retrieved March 20, 2014, from http://www.newyorker.com/online/blogs/elements/2013/11/a-patent-war-with-few-winners.html (http://www.newyorker.com/online/blogs/elements/2013/11/a-patent-war-with-few-winners.html) .

Software patent debate. (2014, March 18). In Wikipedia, The Free Encyclopedia. Retrieved March 20, 2014, from http://en.wikipedia.org/w/index.php? title=Software_patent_debate&oldid=600233238 (http://en.wikipedia.org/w/index.php?title=Software_patent_debate&oldid=600233238) .

BUSINESSBUSINESS CASE CASE ARGUMENTS ARGUMENTS BASED BASED ON ON FEAR. FEAR. There are several different factors to take into account when making a business case in which you will provide arguments based on fear. These include a number of factors involving competition and other elements of the industry in which the firm operates. For example, a mature industry, such as the automotive industry, may need systems simply to maintain the current pace of operations. While having the newest systems and technologies available may be nice, they may not be needed to stay in business. However, a company in a newer, expanding industry, such as the green technology industry, may find it more important to be on the leading edge of technology in order to compete effectively in the marketplace. Likewise, some industries are more highly regulated than others. In these cases, companies can use technology investments to better control processes and ensure compliance with appropriate regulations. The argument for the business case here would be something like, “If we do not implement this system, we run the risk of being sued or, worse, being thrown in jail” (see Chapter 10 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch10#ch10) ).

Probably the most important industry factor that can affect technology investments is the nature of competition or rivalry in the industry. For example, when competition in an industry is high and use of the newest technologies is rampant, as it is in the mobile phone industry, strategic necessity, more than anything else, forces firms to adopt new systems. Given how tight profit margins are in this industry, Apple, Samsung, and other manufacturers must use inventory control systems, business intelligence systems, and a host of other systems that help them to be more effective and efficient. If they do not adopt these systems, they will likely go out of business. As introduced in Chapter 2 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch02#ch02) , a common way for assessing the level of competition within an industry is the five forces model (Porter, 1979 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib9) ). By assessing the various competitive forces, you can determine which specific technologies may be more or less useful. For instance, in a highly price-competitive market, where buyers have strong bargaining power, investments to reduce production costs might be advantageous. Business case arguments formulated this way sound something like, “If we do not implement this system, our competitors are going to beat us on price, we will lose market share, and we will go out of business.”

BUSINESSBUSINESS CASE CASE ARGUMENTS ARGUMENTS BASED BASED ON ON FACT. FACT. Many people, including most chief financial officers, want to see the business case for an information system based on a convincing, quantitative analysis that proves beyond the shadow of a doubt that the benefits of the system will outweigh the costs. The most common way to prove this is to provide a detailed cost–benefit analysis of the information system. Although this step is critical, the manager must remember that there are inherent difficulties in, and limits to, cost–benefit analyses for information systems. To illustrate how a cost–benefit analysis could be used to build a fact-based business case, let us consider the development of a Web-based order entry system for a relatively small firm.

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IdentifyingIdentifying Costs Costs One goal of a cost–benefit analysis is to accurately determine the total cost of ownership (TCO) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_639) for an investment. TCO is focused on understanding not only the total cost of acquisition but also all costs associated with ongoing use and maintenance of a system. Consequently, costs can usually be divided into two categories: non-recurring costs and recurring costs (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_505) . Non-recurring costs are one-time costs that are not expected to continue after the system is implemented. These include costs for things such as site preparation and technology purchases. These one-time costs may also include the costs of attracting and training a webmaster or renovating some office space for new personnel or for hosting the Web servers.

Recurring costs are ongoing costs that occur throughout the life of the system. Recurring costs include the salary and benefits of the webmaster and any other personnel assigned to maintain the system, electricity, upgrades and maintenance of the system components, monthly fees paid to a local Internet service provider, and the continuing costs for the space in which the webmaster works or the data center where the servers reside. Personnel costs are usually the largest recurring costs, and the Web-based system is no exception in this regard. These recurring expenses can go well beyond the webmaster to include expenses for customer support, content management, ongoing maintenance, and more.

The sample costs described thus far are tangible costs (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_628) that are relatively easy to quantify. Some intangible costs (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_319) ought to be accounted for as well, even though they will not fit neatly into the quantitative analysis. These might include the costs of reduced traditional sales, losing some customers that are not “Web ready,” or losing customers if the Web application is poorly designed or not on par with competitors’ sites. You can choose to either quantify these in some way (i.e., determine the cost of losing a customer) or simply reserve these as important costs to consider outside of—but along with—the quantitative cost–benefit analysis.

IdentifyingIdentifying Benefits Benefits Next, you determine both tangible benefits (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_627) and intangible benefits. (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_319) Some tangible benefits are relatively easy to determine. For example, you can estimate that the increased customer reach of the new Web-based system will result in at least a modest increase in sales. Based on evidence from similar projects, you might estimate, say, a 5 percent increase in sales the first year, a 10 percent increase the second year, and a 15 percent increase the third year. In addition, you might also include as tangible benefits the reduction of order entry errors because orders will now be tracked electronically and shipped automatically. You could calculate the money previously lost on faulty and lost orders, along with the salaries and wages of personnel assigned to find and fix these orders, and then consider the reduction of these costs as a quantifiable benefit of the new system. Cost avoidance is a legitimate, quantifiable benefit of many systems. Similarly, the new system may enable the company to use fewer order entry clerks or redeploy these personnel to other, more important functions within the company. You could consider these cost reductions as benefits of the new system.

A Web-based system may have intangible benefits as well. Some intangible benefits of this new system might include improvements in customer service resulting from faster turnaround on fulfilling orders. These are real benefits, but they might be hard to quantify with confidence. Perhaps an even more intangible benefit would be the overall improved perception of the firm. Customers might consider it more progressive and customer service–oriented than its rivals; in addition to attracting new customers, this might increase the value of the firm’s stock if it is a publicly traded firm. Another intangible benefit might be simply that it was a strategic necessity to offer customers Web-based ordering to keep pace with rivals. While these intangibles are difficult to quantify, they must be considered along with the more quantitative analysis of benefits. In fact, the intangible benefits of this Web-based system might be so important that they could carry the day despite an inconclusive or even negative cost–benefit analysis.

COMING ATTRACTIONS: IBM’s 5 in 5

As its catchphrase goes, IBM is focused on building a smarter planet. As part of this campaign, IBM researchers have created the 5 in 5 forecast: five innovations that will transform our lives within the next five years. At the core of this forecast is Big Data and machine learning. Machine learning is a branch of artificial intelligence that allows systems to learn by processing massive amounts of data (see Chapter 6 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch06#ch06) , “Enhancing Business Intelligence Using Information Systems”). Because Big Data and machine learning can help a company better understand customers and therefore better meet their needs, IBM believes that Big Data will help offline retail stores understand their customers as well as Amazon.com (http://Amazon.com) does, leading to a resurgence of offline retailing. Likewise, with the continued drop in costs for processing data, your doctor will rely more and more on your DNA to help keep you well.

IBM researchers also predict that a digital guardian will protect your online information from cyber criminals, by better understanding you, your friends, and your habits and activities. Similarly, the classroom will learn about students, helping students master the necessary skills by tailoring the educational experience to each individual student. Finally, cities will help you improve your day-to-day lifestyle, by suggesting events based on your prior behavior. Big Data is often viewed by many as potentially invasive and likened to Orwell’s “Big Brother.” IBM is hoping to make Big Data your big buddy.

Based on:

The 5 in 5. IBM.comIBM.com (http://IBM.com) (http://IBM.com) . Retrieved on March 28, 2014, from http://www.ibm.com/smarterplanet/us/en/ibm_predictions_for_future/ideas (http://www.ibm.com/smarterplanet/us/en/ibm_predictions_for_future/ideas) .

PerformingPerforming Cost–Benefit Cost–Benefit Analyses Analyses An example of a simplified cost–benefit analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_139) that contrasts the total expected tangible costs versus the tangible benefits is presented in Figure 9.5 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig5) . Notice the fairly large investment up front, with another significant outlay in the fifth year for a system upgrade. You could now use the net costs/benefits for each year as the basis of your conclusion about this system. Alternatively, you could perform a break-even analysis—a type of cost–benefit analysis to identify at what point (if ever) tangible benefits equal tangible costs (note that break-even occurs early in the second year of the system’s life in this example)—or a more formal net-present-value analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_409) of the relevant cash flow streams associated with the system at the organization’s discount

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rate (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_192) (i.e., the rate of return used by an organization to compute the present value of future cash flows). In any event, this cost–benefit analysis helps you make the business case for this proposed Web-based order fulfillment system. It clearly shows that the investment for this system is relatively small, and the company can fairly quickly recapture the investment. In addition, there appear to be intangible strategic benefits to deploying this system. This analysis—and the accompanying arguments and evidence—goes a long way toward convincing senior managers in the firm that this new system makes sense. For more on cost–benefit analyses, see any introductory finance or managerial accounting textbook.

FIGURE 9.5 Worksheet showing a simplified cost–benefit analysis for the Web-based order fulfillment system.

ComparingComparing Competing Competing Investments Investments One method for deciding among different IS investments or when considering alternative designs for a given system is weighted multicriteria analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_707) , as illustrated in Figure 9.6 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig6) . For example, suppose that for a given application being considered for purchase, there are three alternatives that could be pursued—A, B, or C. Let’s also suppose that early planning meetings identified three key system requirements and four key constraints that could be used to help make a decision on which alternative to pursue. In the left column of Figure 9.6 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig6) , three system requirements and four constraints are listed. Because not all requirements and constraints are of equal importance, they are weighted on the basis of their relative importance. In other words, you do not have to weight requirements and constraints equally; it is certainly possible to make requirements more or less important than constraints. Weights are arrived at in discussions among the analysis team, users, and managers. Weights tend to be fairly subjective and, for that reason, should be determined through a process of open discussion to reveal underlying assumptions, followed by an attempt to reach consensus among stakeholders. Notice that the total of the weights for both the requirements and constraints is 100 percent.

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FIGURE 9.6 Decisions about alternative projects or system design approaches can be assisted using a weighted multicriteria analysis.

Next, each requirement and constraint is rated on a scale of 1 to 5. A rating of 1 indicates that the alternative does not meet the requirement very well or that the alternative violates the constraint. A rating of 5 indicates that the alternative meets or exceeds the requirement or clearly abides by the constraint. Ratings are even more subjective than weights and should also be determined through open discussion among users, analysts, and managers. For each requirement and constraint, a score is calculated by multiplying the rating for each requirement and each constraint by its weight. The final step is to add up the weighted scores for each alternative. Notice that we have included three sets of totals: for requirements, for constraints, and for overall totals. If you look at the totals for requirements, alternative B or C is the best choice because each meets or exceeds all requirements. However, if you look only at constraints, alternative A is the best choice because it does not violate any constraints. When we combine the totals for requirements and constraints, we see that the best choice is alternative C. Whether alternative C is actually chosen for development, however, is another issue. The decision makers may choose alternative A because it has the lowest cost, knowing that it does not meet two key requirements. In short, what may appear to be the best choice for a systems development project may not always be the one that ends up being developed or acquired. By conducting a thorough analysis, organizations can greatly improve their decision- making outcomes.

TABLE 9.2 Characteristics of Different Stakeholders Involved in Making Is Investment Decisions

Stakeholder Perspective Focus/Project Characteristics

Management Representatives or managers from each of the functional areas within the firm Greater strategic focus; largest project sizes; longest project durations

Steering committee

Representatives from various interest groups within the organization (they may have their own agendas at stake when making investment decisions)

Cross-functional focus; greater organizational change; formal cost–benefit analysis; larger and riskier projects

User department

Representatives of the intended users of the system Narrow, non-strategic focus; faster development

IS executive Has overall responsibility for managing IS development, implementation, and maintenance of selected systems

Focus on integration with existing systems; fewer development delays; less concern with cost–benefit analysis

Source: Based on Hoffer, George, & Valacich (2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5) ) and McKeen, Guimaraes, & Wetherbe (1994 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib7) ).

Presenting the Business Case

Up to this point, we have discussed the key issues to consider as you prepare to make the business case for a system. We have also shown you some tools for determining the value that a system adds to an organization. Now you are actually ready to make the case—to present your arguments and evidence to the decision makers in the firm.

KNOWKNOW THE THE AUDIENCE. AUDIENCE. Depending on the firm, a number of people from various areas of the firm might be involved in the decision-making process. People from different areas of the firm typically hold very different perspectives about what investments should be made and how those investments should be managed (Table 9.2 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09tab2) ). Consequently, presenting the business case for a new system investment can be quite

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challenging. Ultimately, a number of factors come into play in making investment decisions, and numerous outcomes can occur (Figure 9.7 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig7) ). For instance, decisions and choices are driven by perceived needs, resource availability, evaluation criteria, and so on. Numerous outcomes can occur from this decision process. Of course, the project can be accepted or rejected; often, projects can be conditionally accepted or asked to be revised in order to more carefully consider resource, time, or other constraints. Understanding the audience and the issues important to them is a first step in making an effective presentation. Various ways to improve the development of a business case are examined next.

FIGURE 9.7 Investment selection decisions must consider numerous factors and can have numerous outcomes.

CONVERTCONVERT BENEFITS BENEFITS TO TO MONETARY MONETARY TERMS. TERMS. When making the case for an IS investment, it is desirable to translate all potential benefits into monetary terms. For example, if a new system saves department managers an hour per day, try to quantify that savings in terms of dollars. Figure 9.8 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig8) shows how you might convert time savings into dollar figures. While merely explaining this benefit as “saving managers’ time” makes it sound useful, managers may not consider it a significant enough inducement to warrant spending a significant amount of money. Justifying a US$50,000 system because it will “save time” may not be persuasive enough. However, an annual savings of US$90,000 is more likely to capture the attention of decision makers and is more likely to result in project approval. Senior managers can easily rationalize a US$50,000 expense for a US$90,000 savings and can easily see why they should approve such a request. They can also more easily rationalize their decision later on if something goes wrong with the system.

FIGURE 9.8 Converting time savings into dollar figures.

DEVISEDEVISE PROXY PROXY VARIABLES. VARIABLES. The situation presented in Figure 9.8 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#ch09fig8) is fairly

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straightforward. Anyone can see that a US$50,000 investment is a good idea because the return on that investment is US$90,000 the first year. Unfortunately, not all cases are this clear-cut. In cases in which it is not as easy to quantify the impact of an investment, you can come up with proxy variables (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_489) (i.e., alternative measures of outcomes) to help clarify what the impact on the firm will be. Proxy variables can be used to measure changes in terms of their perceived value to the organization. For example, if mundane administrative tasks are seen as a low value (perhaps a 1 on a 5-point scale), but direct contact with customers is seen as a high value (a rating of 5), you can use these perceptions to indicate how new systems will add value to the organization. In this example, you can show that a new system will allow personnel to have more contact with customers while at the same time reducing the administrative workload. Senior managers can quickly see that individual workload is being shifted from low-value to high-value activities.

You can communicate these differences using percentages, increases or decreases, and so on—whatever best conveys the idea that the new system is creating changes in work, in performance, and in the way people think about their work. This gives decision makers some relatively solid data on which to base their decision.

MEASUREMEASURE WHAT WHAT IS IS IMPORTANT IMPORTANT TO TO MANAGEMENT. MANAGEMENT. One of the most important things you can do to show the benefits of a system is one of the simplest: Measure what senior managers think is important. You may think this is trivial advice, but you would be surprised how often people calculate impressive-looking statistics in terms of downtime, reliability, and so on, only to find that senior managers disregard or only briefly skim over those figures. You should concentrate on the issues senior business managers care about. The “hot-button” issues with senior managers should be easy to discover, and they are not always financial reports. Hot issues with senior managers could include cycle time (how long it takes to process an order), regulatory or compliance issues, customer feedback, and employee morale. By focusing on what senior business managers believe to be important, you can make the business case for systems in a way that is more meaningful for those managers, which makes selling systems to decision makers much easier. Managers are more likely to buy in to the importance of systems if they can see the impact on areas that are important to them. Now that you understand how to make the business case for new information systems, we now examine the development process.

ETHICAL DILEMMA: Ethical App Development

In the past, systems development was in the hands of large software companies, with large development teams and legal departments that would scrutinize new functionalities for legal and ethical compliance. With the advent of the smartphone and social media came the promise of getting rich quick by developing the next Facebook, WhatsApp, Pinterest, or some other killer app. Nowadays, it’s not only large companies building those apps, but individuals with a creative idea, aided by easy-to-use development tools.

However, with the hope of developing the next killer app, ethical implications are often overlooked or outright ignored, as evidenced by examples such as Facebook or Path. Throughout its history, Facebook has changed its privacy policies, at times grossly violating its users’ privacy expectations. Similarly, in 2012 it became known that the iOS version of the social media app Path secretly sent the users’ complete address book data to Path’s servers. Not only was this not mentioned in the apps’ Terms of Use, the data was also sent in an unencrypted way, potentially subjecting the app’s users to security problems.

In addition, mobile devices offer various tempting ways of collecting user data, with many apps requesting access to functionalities such as your phone book, location, and so on. Given these vulnerabilities, a new code of conduct for app development is needed. “Just because you can collect data, should you?” Many argue that an app should only be allowed to collect and utilize information it needs, nothing more. Developers should also carefully consider the consequences of personal data being compromised. Who would be affected, and how serious might the consequences be? Given the high value of your personal data, the maxim of the app development industry should be: “Even though you can, maybe you shouldn’t!”

Based on:

Allamsetty, T. (2013, March 19). User privacy and the ethics of app data collection. [X]Cubelabs. Retrieved March 27, 2014, from http://www.xcubelabs.com/blog/user-privacy-and-the- ethics-of-app-data-collection (http://www.xcubelabs.com/blog/user-privacy-and-the-ethics-of-app-data-collection) .

Grothaus, M. (2013, December 4). Do developers need a standardized code of ethics? Co.LABS. Retrieved March 27, 2014, from http://www.fastcolabs.com/3022968/do-developers-need- a-standardized-code-of-ethics (http://www.fastcolabs.com/3022968/do-developers-need-a-standardized-code-of-ethics) .

Phillips, J. (2012, December 8). Path social media app uploads iOS address books to its servers. Wired. Retrieved March 27, 2014, from http://www.wired.com/gadgetlab/2012/02/path- social-media-app-uploads-ios-address-books-to-its-servers (http://www.wired.com/gadgetlab/2012/02/path-social-media-app-uploads-ios-address-books-to-its-servers) .

Siegel, E. (2014, February 5). Becoming an ethical app developer at Renaissance IO. Apptentive. Retrieved March 27, 2014, from http://www.apptentive.com/blog/ethical-app-developer- at-renaissance-io (http://www.apptentive.com/blog/ethical-app-developer-at-renaissance-io) .

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9.2 THE SYSTEMS DEVELOPMENT PROCESS No matter if a software company such as Microsoft is planning to build a new version of its popular Office software suite, or if a company such as Netflix is trying to build a system to improve its movie recommendations, companies follow a standardized approach. This process of designing, building, and maintaining information systems is often referred to as systems analysis and design (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_612) . Likewise, the individual who performs this task is referred to as a systems analyst (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_613) . Because few organizations can survive without effectively utilizing information and computing technology, the demand for skilled systems analysts is very strong. In 2014, U.S. News named being a systems analyst one of the top jobs; in fact, it was ranked as number 2, just behind software developer. Likewise, the U.S. Bureau of Labor Statistics ranks systems analysts near the top of all professions for job stability, income, and employment growth through 2016, with average growth exceeding 29 percent. Organizations want to hire systems analysts because they possess a unique blend of managerial and technical expertise—systems analysts are not just “techies.” Systems analysts remain in demand precisely because of this unique blend of abilities.

Custom Versus Off-the-Shelf Software

When deciding to deploy new systems to support their operations in order to gain or sustain a competitive advantage, organizations can typically choose between custom and off-the-shelf software. For example, many types of application software (such as word processors, spreadsheet, or accounting software) can be used by a variety of businesses within and across industries. These types of general-purpose systems are typically purchased off the shelf. Often, however, organizations have very specific needs that cannot be met by generic technologies. This is especially true for companies trying to capitalize on a first-mover advantage, and therefore may not be able to purchase a preexisting system to meet their specific needs. For example, pioneers in online retailing (such as Amazon.com (http://Amazon.com) ) or budget air travel (such as Southwest Airlines) needed entirely new systems and technologies to support their revolutionary business models and had to develop (or have someone else develop) custom solutions. The approaches to developing or acquiring custom and off-the-shelf software are quite different, but they also have many similarities. Before going into the details of developing or acquiring such systems, we’ll first contrast these two types of systems.

CUSTOMCUSTOM SOFTWARE. SOFTWARE. Custom software is developed to meet the specifications of an organization (it is thus also sometimes called tailor-made, or bespoke, software). Such software may be developed (or configured) in-house by the company’s own IS staff, or the development may be contracted, or outsourced, to a specialized vendor charged with developing the system to the company’s contractual specifications. Custom software has two primary advantages over general purpose commercial technologies:

1. CustomizabilityCustomizability. The software can be tailored to meet unique organizational requirements. Such requirements, for example, can reflect a desire to achieve a competitive advantage through a specific type of system (e.g., Amazon.com’s (http://Amazon.com’s) one-click ordering) or to better fit business operations, characteristics of the organizational culture, or proprietary security requirements, or to better interface with existing systems. Further, company- or industry-specific terms or acronyms can be included in a new software application, as can unique types of required reports. Such specificity is not typically possible in off-the-shelf systems that are targeted at a more general audience.

2. ProblemProblem Specificity Specificity. The company pays only for the features specifically required for its users. In contrast to software packages such as Microsoft Office, which include a wide range of individual programs (some of which may never be used), only those components that are really needed can be implemented.

Today, building a complete system from scratch is quite rare; most information systems that are developed within an organization for its internal use typically include a large number of preprogrammed, reusable modules as well as off-the-shelf hardware technologies that are purchased from development organizations or consultants.

OFF-THE-SHELFOFF-THE-SHELF SOFTWARE. SOFTWARE. Although custom software has advantages, it is not automatically the best choice for an organization. Off-the-shelf software (or packaged software) is typically used to support common business processes that do not require any specific tailoring. In general, off-the-shelf systems, whether hardware or software, are less costly, faster to procure, of higher quality, and less risky than custom systems. Table 9.3 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09tab3) summarizes examples of off-the- shelf application software.

TABLE 9.3 Examples of Off-the-shelf Application software

Category Application Description Examples

Business information systems

Payroll Automation of payroll services, from the optical reading of time sheets to generating paychecks

ZPAY Intuit Payroll

Inventory Automation of inventory tracking, order processing, billing, and shipping Intuit QuickBooks InventoryPower 5

Office automation Personal productivity

Support for a wide range of tasks from word processing to graphics to e-mail OpenOffice Corel Office Microsoft Office

Traditionally, the most common option for packaged software was so-called commercial off-the-shelf (COTS) software; this type of software is typically developed by software companies that spread the development costs over a large number of customers. An alternative to commercial off-the-shelf software is open source software.

Open Source Software

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Open source is a philosophy that promotes developers’ and users’ access to the source of a product or idea. Particularly in the area of software development, the open source movement has taken off with the advent of the Internet; people around the world are contributing their time and expertise to develop or improve software, ranging from operating systems to application software. As the programs’ source code is freely available for use and/or modification, this software is referred to as open source software (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_430) . Open source software owes its success to the inputs from a large user base, helping to fix problems or improve the software. One of the great success stories of open source software is the Android operating system. In 2014, Android’s share of the global smartphone shipment market—led by Samsung products—was over 80 percent! Android is based on another open source operating system called Linux, developed as a hobby by the Finnish university student Linus Torvalds in 1991. Linux has since become the operating system of choice for Web servers, embedded systems (such as TiVo boxes and network routers), and supercomputers alike (as of June 2014, 97 percent of the world’s 500 fastest supercomputers ran Linux operating systems [Top 500, 2014]). In addition to the Linux operating system, other open source software has been gaining increasing popularity because of its stability and low cost. For example, in 2014, 38 percent of all Web sites were powered by the Apache Web server, another open source project (Netcraft, 2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib8) ). Other popular examples of open source application software include the Firefox Web browser and the office productivity suite Apache OpenOffice.

How do large open source projects such as Firefox work? Typically, most contributors can only suggest modifications for changes; for example, they can contribute to program code or provide new designs for the system’s user interface, but only a small group of carefully selected “committers” can implement these modifications into the official releases of the software, which helps to ensure the quality and stability of the software.

While there are many benefits to open source software, vendors of proprietary software are still highlighting “hidden” costs of running open source software, such as obtaining reliable customer support. On the other hand, however, commercial open source vendors are providing customer support, installation, training, and so on to their paying customers. Men’s Wearhouse, the State of Oregon, and many other large organizations are using a CRM system offered by SugarCRM, Inc., a commercial open source vendor that offers free “community editions” as well as other, more feature-rich paid editions of its software. Similarly, the popular MySQL database, which is used by Yahoo!, Facebook, the Associated Press, and many other companies, is provided under an open source license for personal use, but the company employs its own developers and offers commercial licenses (including dedicated 24/7 technical support, consulting, and indemnification clauses) to business users. Further, many open source projects are now backed by major information technology (IT) companies such as IBM, which give money and human resources to Linux projects, or Oracle, which donated the source code of the OpenOffice productivity suite to the Apache Software Foundation.

Combining Custom, Open Source, and Off-the-Shelf Systems

It is possible to combine the advantages of custom, open source, and off-the-shelf systems. Companies can purchase off-the-shelf technologies and add custom components for their specific needs. For example, an online retailer may want to purchase an off-the-shelf inventory management system and then add tailor-made modules it needs to conduct its day-to-day business. This system could be based on the open source database MySQL; further, the online retailer could use the open source Apache Web server to power its online shopping site. In some cases, for example, with large ERP systems, companies selling off-the-shelf software make customized changes for a fee. Other vendors, however, may not allow their software to be modified (as is the case with generic, all-purpose software, such as Microsoft Office).

Commercial, off-the-shelf systems are almost always acquired from an external vendor, whereas custom systems can be either developed in-house or developed by an outside vendor (Figure 9.9 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig9) ). Regardless of the source of the new system—custom, open source, or off-the-shelf—the primary role of managers and users in the organization is to make sure that it will meet the organization’s business needs. This may be especially important in the case of end users developing systems. End users typically do not program elaborate systems, but frequently use spreadsheet or database software to create solutions for accomplishing narrow, well-defined tasks; while such applications may be useful for accomplishing certain tasks, end user development may cause problems related to the adherence to standards, lack of documentation, security concerns, or a lack of continuity if the employee who built the spreadsheet or database leaves the organization.

FIGURE 9.9 There are a variety of sources for information systems.

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IS Development in Action

The tools and techniques used to develop information systems are continually evolving with the rapid changes in IS hardware and software. As you will see, IS development is a fairly disciplined and structured process that moves from step to step. Systems analysts become adept at decomposing large, complex problems into many small, simple problems. The goal of the systems analyst is to design the final system by piecing together many small software modules and technologies into one comprehensive system (Figure 9.10 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig10) ). For example, think about using LEGO™ blocks for building a model of a space station. Each individual block is a small, simple piece that is nothing without the others. When put together, the blocks can create a large and very complex design (Google co-founder Larry Page had gained some notoriety for building a working printer out of LEGO bricks). When systems are built in this manner, they are much easier to design, build, and, most important, maintain.

FIGURE 9.10 Problem decomposition makes solving large, complex problems easier.

Although many people in organizations, such as managers and users, are responsible and participate in a systems development project, the systems analyst has primary

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responsibility. Some projects may have one or several systems analysts working together, depending on the size and complexity of the project. The primary role of the systems analyst is to study the problems and needs of an organization in order to determine how people, methods, and information technology can best be combined to bring about improvements in the organization. A systems analyst helps systems users and other business managers define their requirements for new or enhanced information systems.

A systems analyst typically also manages the development project. As the project manager (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_485) , the systems analyst needs a diverse set of management, leadership, technical, conflict management, and customer relationships skills. The project manager is the person most responsible for ensuring that a project is a success. The project manager must deal with continual change and problem solving. Successful projects require effective resource and task management as well as effective communication as the project moves through its various steps. Project management is an important aspect of the system development or acquisition process and a critical skill for successful systems analysts. The focus of project management is to ensure that projects meet customer expectations and are delivered within budget and time constraints. Clearly, a systems analyst is an agent of change and innovation in modern organizations.

The Role of Users in the Systems Development Process

Many organizations have a huge investment in transaction processing and management information systems. These systems are most often designed, constructed, and maintained by systems analysts within the organization, using a variety of methods. When building and maintaining information systems, systems analysts rely on information provided by system users, who are involved in all phases of the system’s development process. To effectively participate in the process, it is important for all members of the organization to understand what is meant by systems development and what activities occur. A close, mutually respectful working relationship between analysts and users is key to project success.

Steps in the Systems Development Process

Just as the products that a firm produces and sells follow a life cycle, so do organizational information systems. For example, a new type of tennis shoe follows a life cycle of being designed, introduced to the market, being accepted into the market, maturing, declining in popularity, and ultimately being retired. The term systems development life cycle (SDLC) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_616) describes the life of an information system from conception to retirement (Hoffer et al., 2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5) ). The SDLC has four primary phases:

1. Systems planning and selection 2. Systems analysis 3. Systems design 4. Systems implementation and operation

FIGURE 9.11 The SDLC defines the typical process for building systems.

Figure 9.11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig11) is a graphical representation of the SDLC containing four boxes connected by arrows. Within the SDLC, arrows flow from systems planning and selection, to systems analysis, to systems design, and, finally, to systems implementation and operation. Once a system is in operation, it moves into an ongoing maintenance phase that parallels the initial development process. For example, when new features are added to an existing system, analysts must first plan and select which new features to add, then analyze the possible impact of adding these features to the existing system, then design how the new features will work, and, finally, implement these new features into the existing system. While some consider maintenance another SDLC phase, it is really a repeated application of the core SDLC phases. In this way, the SDLC becomes an ongoing cycle. During ongoing

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systems maintenance, the entire SDLC is followed to implement system repairs and enhancements.

WHO’S GOING MOBILE: Creating Mobile Apps

With the rapid rise of smartphone usage, various useful and entertaining apps are rapidly being developed, greatly enhancing the phones’ capabilities. In 2013, both Google and Apple announced that they had over 1 million apps in their app stores, with many more apps appearing every day. The primary reason there are so many apps is that anyone can build and try to sell apps, from software companies focused on translating their existing products (such as Adobe Reader) onto mobile platforms, to individuals who have a clever idea for a game.

Owing to the intense competition between these apps, it is not surprising that only relatively few are highly successful. However, if you have the right idea, creating a winning app can be surprisingly easy. In fact, it is estimated that it took the maker of the widely successful game Flappy Bird a mere two to three days to create that game (alone, that is). At its peak, the game netted US$50,000 per day for the person who built the game. Given that games for popular consoles such as the PlayStation or the Xbox cost millions of dollars to develop, how did Flappy Bird’s creator manage to pull that off?

In the past few years, a number of marketplaces have sprung up where anyone can purchase game templates for as low as US$199. These templates typically include certain game mechanics, which the buyer can modify to create a functioning game. Typically, there’s not even a need to write a single line of code; all that is needed is a winning idea, coming up with a good story, game title, and key words, and the skills needed to create the graphics.

What if your idea is for an app other than a game, such as a productivity tool for students, or a better way to keep track of your passwords? There are tools to help develop these as well. Once the app is created, all that is needed is uploading the app to the various marketplaces, and watching the download count. Good luck!

Based on:

Anonymous. (2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib2) ). AppMachine. Retrieved March 27, 2014, from www.appmachine.com (http://www.appmachine.com) .

Rubens, P. (February 18, 2014). Flap happy: How you too can become a mobile games mogul. BBC. Retrieved March 27, 2014, from http://www.bbc.com/news/business-26224428 (http://www.bbc.com/news/business-26224428) .

Phase 1: Systems Planning and Selection

The first phase of the SDLC is systems planning and selection (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_620) (see Figure 9.11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig11) ). Understanding that it can work on only a limited number of projects at a given time because of limited resources, an organization must take care that only those projects that are critical to enabling the organization’s mission, goals, and objectives are undertaken. Consequently, the goal of systems planning and selection is simply to identify, plan, and select a development project from all possible projects that could be performed. Organizations differ in how they identify, plan, and select projects. Some organizations have a formal information systems planning (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_307) process whereby a senior manager, a business group, an IS manager, or a steering committee identifies and assesses all possible systems development projects that the organization could undertake. Project managers present the business case for the new system and it is accepted or rejected. Others follow a more ad hoc process for identifying potential projects. Nonetheless, after all possible projects are identified, those deemed most likely to yield significant organizational benefits, given available resources, are selected for subsequent development activities.

Just as there are often differences in the source of systems projects within organizations, there are often different evaluation criteria used within organizations when classifying and ranking potential projects, such as strategic alignment, costs and benefits, resource availability, project size and duration, or technical difficulties and risks. During project planning, the analyst works with the customers—the potential users of the system and their managers—to collect a broad range of information to gain an understanding of the project size, potential benefits and costs, and other relevant factors. After collecting and analyzing this information, the analyst builds the business case that can be reviewed and compared with other possible projects. If the organization accepts the project, systems analysis begins.

Phase 2: Systems Analysis

The second phase of the SDLC is called systems analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_611) (see Figure 9.11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig11) ). One purpose of the systems analysis phase is for designers to gain a thorough understanding of an organization’s current way of doing things in the area for which the new information system will be constructed. The process of conducting an analysis requires that many tasks, or subphases, be performed. The first subphase focuses on determining system requirements. To determine the requirements, an analyst works closely with users to determine what is needed from the proposed system. After collecting the requirements, analysts organize this information using data, process, and logic modeling tools.

COLLECTINGCOLLECTING REQUIREMENTS. REQUIREMENTS. The collection and structuring of requirements is arguably the most important activity in the systems development process because how well the IS requirements are defined influences all subsequent activities. The old saying “garbage in, garbage out” very much applies to the systems development process. Requirements collection (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_514) is the process of gathering and organizing information from users, managers, customers, business processes, and documents to understand how a proposed information system should function. Systems analysts use a variety of techniques for collecting system requirements, including the following (Hoffer et al., 2014

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(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5) ):

■ InterviewsInterviews. Analysts interview people informed about the operation and issues of the current or proposed system. ■ QuestionnairesQuestionnaires. Analysts design and administer surveys to gather opinions from people informed about the operation and issues of the current or proposed system. ■ ObservationsObservations. Analysts observe system users at selected times to see how data are handled and what information people need to do their jobs. ■ DocumentDocument Analysis Analysis. Analysts study business documents to discover issues, policies, and rules, as well as concrete examples of the use of data and information in the

organization. ■ JointJoint Application Application Design Design (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_351) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_351) . Joint application design (JAD)

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_351) is a group meeting–based process for requirements collection (Figure 9.12 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig12) ). During this meeting, the users jointly define and agree on system requirements or designs. This process can result in dramatic reductions in the length of time needed to collect requirements or specify designs.

FIGURE 9.12 A JAD room.

Source: Based on Wood & Silver (1989 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib16) ); Hoffer et al. (2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5) ).

MODELINGMODELING DATA. DATA. Data are facts that describe people, objects, or events. A lot of different facts can be used to describe a person: name, age, gender, race, and occupation, among others. To construct an information system, systems analysts must understand what data the information system needs in order to accomplish the intended tasks. To do this, they use data modeling tools to collect and describe the data to users to confirm that all needed data are known and presented to users as useful information. Figure 9.13 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig13) shows an entity-relationship diagram, a type of data model describing students, classes, majors, and classrooms at a university. Each box in the diagram is referred to as a data entity, and each entity is related to other entities. Data modeling tools enable the systems analyst to represent data in a form that is easy for users to understand and critique. For more information on databases and data modeling, see the Technology Briefing.

FIGURE 9.13 A sample entity-relationship diagram for students.

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MODELINGMODELING PROCESSES PROCESSES AND AND LOGIC. LOGIC. The next step in this phase is to model how data are being input, processed, and presented to the users. As the name implies, data flows (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_159) represent the movement of data through an organization or within an information system. For example, your registration for a class may be captured in a registration form on paper or in an interactive form on the Web. After it is filled out, this form probably flows through several processes to validate and record the class registration, shown as “Data Flows” in Figure 9.14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig14) . After all students have been registered, a repository of all registration information can be processed for developing class rosters or for generating student billing information, which is shown as “Data” in Figure 9.14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig14) . Processing logic (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_480) represents the way in which data are transformed. Processing logic is often expressed in pseudocode (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_490) , which is a representation of the program’s internal functioning, independent of the actual programming language being used. As there are no standards for pseudocode, the level of detail can vary. For example, pseudocode to calculate students’ grade-point averages at the conclusion of a term is shown in the “Processing Logic” section in Figure 9.14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig14) .

After the data, data flow, and processing logic requirements for the proposed system have been identified, analysts develop one or many possible overall approaches—sometimes called designs—for the information system. For example, one approach for the system may possess only basic functionality but has the advantage of being relatively easy and inexpensive to build. An analyst might also propose a more elaborate approach for the system, but it may be more difficult and more costly to build. Analysts evaluate alternative system design approaches with the knowledge that different solutions yield different benefits and different costs. After a system approach is selected, details of that particular system approach can be defined.

Phase 3: Systems Design

The third phase of the SDLC is systems design (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_615) (see Figure 9.11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig11) ). As its name implies, it is during this phase that the proposed system is designed; that is, the details of the chosen approach are elaborated. As with analysis, many different activities must occur during systems design. The elements that must be designed when building an information system include the following:

■ Processing and logic ■ Databases and files ■ Human–computer interface

DESIGNINGDESIGNING PROCESSING PROCESSING AND AND LOGIC. LOGIC. The processing and logic operations of an information system are the steps and procedures that transform raw data inputs into new or modified information. There are typically different ways to complete each process, with some being more efficient or effective than others. Modeling the processes thus includes not only specifying what is to be done, but also the specific algorithms, which outline the steps, or set of rules, to be followed (that is, how a certain process is accomplished). For example, when calculating your grade-point average, your school needs to perform the following steps:

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FIGURE 9.14 Four key elements to the development of a system: requirements, data, data flows, and processing logic.

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1. Obtain the prior grade-point average, credit hours earned, and list of prior courses

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2. Obtain the list of each current course, final grade, and course credit hours 3. Combine the prior and current credit hours into aggregate sums 4. Calculate the new grade-point average

The logic and steps needed to make this calculation can be represented in many ways, including structure charts, decision trees, pseudocode, programming code, and so on (see Figure 9.14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig14) ). Regardless of how the logic is represented, the process of converting pseudocode, structure charts, or decision trees into actual program code during system implementation is a relatively straightforward process.

DESIGNINGDESIGNING DATABASES DATABASES AND AND FILES. FILES. To design databases and files, a systems analyst must have a thorough understanding of an organization’s data and informational needs. For example, Figure 9.15 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig15) shows the database design to keep track of student information in a Microsoft Access database. The database design is more complete (shows each attribute of the student) and more detailed (shows how the information is formatted) than a conceptual data model built during systems analysis (as was shown in Figure 9.14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig14) ).

DESIGNINGDESIGNING THE THE HUMAN-COMPUTER HUMAN-COMPUTER INTERFACE. INTERFACE. Just as people have different ways of interacting with other people, information systems can have different ways of interacting with people. A human–computer interface (HCI) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_290) is the point of contact between a system and users. With people being used to interacting with easy-to-use systems and Web sites like Facebook, Twitter, and Amazon.com (http://Amazon.com) , their expectations in terms of ease of use are ever increasing. In addition, increasing a system’s usability (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_655) —that is, whether the system is easy to use and aesthetically pleasing—can lower error rates, increase efficiency, or increase customer satisfaction (in the case of customer-facing systems). Thus, analysts also take great care in designing data entry forms and management reports. A form is a business document containing some predefined data, often including some areas where additional data can be filled in (Figure 9.16 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig16) ). Similarly, a report is a business document containing only predefined data for online viewing or printing (Figure 9.17 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig17) ). For more on forms and reports, see Chapter 6 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch06#ch06) .

Phase 4: Systems Implementation and Operation

Many separate activities occur during systems implementation (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_617) , the fourth phase of the SDLC (see Figure 9.11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig11) ). One group of activities focuses on transforming the system design into a working information system. These activities include software programming and testing. A second group of activities focuses on preparing the organization for using the new information system. These activities include system conversion, documentation, user training, and support. This section briefly describes what occurs during systems implementation.

SOFTWARESOFTWARE PROGRAMMING PROGRAMMING AND AND TESTING. TESTING.

FIGURE 9.15 The database design for student information from an Access database.

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Source: Courtesy of Microsoft Corporation.

Programming is the process of transforming the system design into a working computer system. During this transformation, both programming and testing should occur in parallel. As you might expect, a broad range of tests is conducted before a system is complete, including developmental testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_179) , alpha testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_9) , and beta testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_40) (Table 9.4 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09tab4) ).

FIGURE 9.16 A data entry form.

FIGURE 9.17 Sales summary report.

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SYSTEMSYSTEM CONVERSION, CONVERSION, DOCUMENTATION, DOCUMENTATION, TRAINING, TRAINING, AND AND SUPPORT. SUPPORT. System conversion (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_609) is the process of decommissioning the current way of doing things (automated or manual) and installing the new system in the organization. Effective conversion of a system requires not only that the new software be installed but also that users be effectively trained and supported. System conversion can be performed in at least four ways, as shown in Figure 9.18 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig18) .

TABLE 9.4 General Testing Types, Their Focus, and Who Performs Them

Testing Type Focus Performed by

Developmental Testing the correctness of individual modules and the integration of multiple modules Programmer Alpha Testing of overall system to see whether it meets design requirements Software tester Beta Testing of the capabilities of the system in the user environment with actual data Actual system users

Many types of documentation must be produced for an information system. Programmers develop system documentation that details the inner workings of the system to ease future maintenance and to ensure reliability of the system. A second type of documentation is user-related documentation, which is typically written not by programmers or analysts but by users or professional technical writers. The range of documents can include the following:

FIGURE 9.18 Software conversion strategies.

■ User and reference guides ■ User training manuals and tutorials ■ Installation procedures and troubleshooting suggestions

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In addition to documentation, users may also need training and ongoing support to use a new system effectively. Different types of training and support require different levels of investment by the organization. Self-paced training and tutorials are the least expensive options, and one-on-one training is the most expensive. Table 9.5 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09tab5) summarizes various user training options.

Besides training, providing ongoing education and problem-solving assistance for users may also be necessary. This is commonly referred to as system support, which is often provided by a special group of people in the organization who make up an information center or help desk. Support personnel must have strong communication skills and be good problem solvers in addition to being expert users of the system. An alternative option for a system not developed internally is to outsource support activities to a vendor specializing in technical system support and training. Regardless of how support is provided, it is an ongoing issue that must be managed effectively for the company to realize the maximum benefits of a system.

Repeating the SDLC: Systems Maintenance

TABLE 9.5 User Training Options

Training Option Description

Tutorial One person taught at a time Course Several people taught at a time Computer-aided instruction One person taught at a time by the computer system Interactive training manuals Combination of tutorials and computer-aided instruction Resident expert Expert on call to assist users as needed Software help components Built-in system components designed to train users and troubleshoot problems External sources Vendors and training providers offering tutorials, courses, and other training activities

After an information system is installed, it is essentially in the systems maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_619) phase. A system does not wear out in the physical manner that cars, buildings, or other physical objects do, but it must still be systematically repaired and/or improved. The types of maintenance are summarized in Table 9.6 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09tab6) .

TABLE 9.6 Types of Systems Maintenance

Maintenance Type Description

Corrective maintenance

Making changes to an information system to repair flaws in the design, coding, or implementation

Adaptive maintenance

Making changes to an information system to evolve its functionality, to accommodate changing business needs, or to migrate it to a different operating environment

Preventive maintenance

Making changes to a system to reduce the chance of future system failure

Perfective maintenance

Making enhancements to improve processing performance or interface usability, or adding desired but not necessarily required system features (in other words, “bells and whistles”)

During systems maintenance, it is typical that one person within the systems development group is responsible for collecting maintenance requests from system users. Periodically, these requests are analyzed to evaluate how a proposed change might alter the system and what business benefits might result from such a change, and are prioritized accordingly (Figure 9.19 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig19) ). As with adaptive maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_4) , both perfective maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_458) and preventive maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_474) are typically a much lower priority than corrective maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_138) , which deals with repairing flaws in the system. Corrective maintenance is most likely to occur after initial system installation as well as over the life of a system after major system changes. This means that adaptive, perfective, and preventive maintenance activities can lead to corrective maintenance activities if they are not carefully designed and implemented.

FIGURE 9.19 Change request management is used during systems maintenance.

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As with developing or acquiring new systems, any changes to an existing system need to be carefully managed. Unmanaged change can have a variety of negative consequences, including system malfunction, system failure, increasing unreliability (as errors tend to build up over time, making the system more fragile), or opening the door for fraud or deliberate misuse (e.g., if a “backdoor” is introduced during changes to a system). If the change request is approved, a system change is designed and then implemented. As with the initial development of the system, implemented changes are formally reviewed and tested before being installed into operational systems. Thus, change request management (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_88) is a formal process that ensures that any proposed system changes are documented, reviewed for potential risks, appropriately authorized, prioritized, and carefully managed (to establish an audit trail; to be able to trace back who reviewed, authorized, implemented, or tested the changes). In other words, the systems maintenance process parallels the process used for the initial development of the information system, as shown in Figure 9.20 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig20) . Interestingly, it is often during system maintenance that the largest part of the system development effort occurs.

KEY PLAYERS: Game Development Studios

Have you ever wondered how and where tech companies generate so much money each year? For example, in 2012, some of the largest tech companies, including mainstays like IBM (US$104 billion in total revenue) and Apple (US$164 billion in total revenue), generated their massive revenues with a mix of hardware, services, and software sales. For these giants, however, software revenue was a relatively modest portion, amounting to 27.6 percent (US$29 billion) for IBM, and only 1.0 percent (US$1.6 billion) for Apple. In contrast, software giant Microsoft, with total revenue topping US$73 billion, generated about 80 percent (US$58 billion) of its revenue through software sales, making Microsoft the highest-grossing software company in the world.

A closer analysis of the sources of revenue of the largest “software companies” shows that most derive income from a variety of sources beyond software sales. Few software companies are capable of standing out solely by relying on software revenue—that is, with the exception of gaming. Top game developers such as CAPCOM (e.g., Resident Evil), and Rockstar North (Grand Theft Auto) generate nearly 100 percent of their revenue from software sales.

While all software development follows a methodology like the SDLC, game development has some unique characteristics given the high entertainment or educational goals of this type of software. In a normal SDLC, analysis and design activities are carried out by a relatively narrow group of system and business analysts, while programming and testing are carried out by programmers and software testers. Like any software project, game development begins with the establishment of a general project goal (such as to have a best-selling game or to produce a game associated with a certain sports event). From there, things change quite a bit. Designing a bestselling game more or less resembles the process of a heavily invested movie production. Like high-budget, blockbuster movies, games targeted for massive markets can be extremely expensive to create. In fact, leading games have been reported to cost more than US$100 million to develop. So, building a game that has low sales can literally bankrupt a game studio. Given the complexity, expense, and deep specialization required to develop top-selling games, it is easy to see why those companies focus their efforts solely on software sales to create the next bestseller.

Based on:

Anonymous. (n.d.). Global software top 100—edition 2013. PWC.comPWC.com (http://PWC.com) (http://PWC.com) . Retrieved March 20, 2014, from http://www.pwc.com/gx/en/technology/publications/global- software-100-leaders/compare-results.jhtml (http://www.pwc.com/gx/en/technology/publications/global-software-100-leaders/compare-results.jhtml) .

Game development life cycle. (n.d.). Retrieved March 20, 2014, from http://personanonymous.wordpress.com/2013/01/06/game-development-lifecycle

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(http://personanonymous.wordpress.com/2013/01/06/game-development-lifecycle) .

LaMothe, A. (n.d.). Designing video games. Dummies.comDummies.com (http://Dummies.com) (http://Dummies.com) . Retrieved March 20, 2014, from http://www.dummies.com/how-to/content/designing-video- games.html (http://www.dummies.com/how-to/content/designing-video-games.html) .

Today, vendors of commercial off-the-shelf software packages incorporate patch management systems (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_451) to facilitate the different forms of systems maintenance for the user; patch management systems use the Internet to check the software vendor’s Web site for available patches and/or updates. If the software vendor offers a new patch, the application will download and install the patch in order to fix the software flaw. An example of a patch management system in wide use is the Windows Update Service, which automatically connects to a Microsoft Web service to download critical operating system patches for corrective maintenance (e.g., to fix bugs in the Windows operating system) or preventive maintenance (e.g., to fix security holes that could be exploited by malicious hackers).

As you can see, there is more to systems maintenance than you might think. Lots of time, effort, and money are spent in this final phase of a system’s development, and it is important to follow prescribed, structured steps. In fact, the approach to systems development described here—from the initial phase of identifying, selecting, and planning for systems to the final phase of systems maintenance—is a very structured and systematic process. Each phase is fairly well prescribed and requires active involvement by systems people, users, and managers. It is likely that you will have numerous opportunities to participate in the acquisition or development of a new system for an organization for which you currently work or will work in the future. Now that you have an understanding of the process, you should be better equipped to make a positive contribution to the success of any systems development project.

FIGURE 9.20 Mapping of system maintenance activities to the SDLC.

Other Approaches to Designing and Building Systems

The SDLC is one approach to managing the development process, and it is a very good approach to follow when the requirements for the information system are highly structured and straightforward—for example, for a payroll or inventory system. Today, in addition to “standard” systems such as payroll and inventory systems, organizations need a broad variety of company-specific information systems, for which requirements either are very hard to specify in advance or are constantly changing. For example, an organization’s Web site is likely to evolve over time to keep pace with changing business requirements. How many Web sites have you visited in which the content or layout seemed to change almost every week? For this type of system, the SDLC might work as a development approach, but it would not be optimal.

A commonly used alternative to the SDLC is prototyping (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_488) , which uses a trial-and-error approach for discovering how a system should operate. You may think that this does not sound like a process at all; however, you probably use prototyping all the time in many of your day-to-day activities, but you just do not know it. For example, when you buy new clothes, you likely use prototyping—that is, trial and error—by trying on several shirts before making a selection.

Figure 9.21 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#ch09fig21) diagrams the prototyping process when applied to identifying/determining system requirements. To begin the process, the system designer interviews one or several users of the system, either individually or as a group, in a JAD session. After the designer gains a general understanding of what the users want, he or she develops a prototype of the new system as quickly as possible to share with the users. The users may like what they see or ask for changes. If the users request changes, the designer modifies the prototype and again shares it with them. This process of sharing and refinement continues until the users approve the functionality of the system.

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FIGURE 9.21 The prototyping process uses a trial-and-error approach to discovering how a system should operate.

Beyond the SDLC and prototyping, there are many more approaches for designing and constructing information systems (e.g., Agile Methodologies, Extreme Programming, RAD [Rapid Application Development], object-oriented analysis and design, and so on). Each alternative approach has its strengths and weaknesses, providing a skilled systems analyst with a variety of tools to best meet the needs of a situation (for more, see Hoffer et al., 2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5) ).

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9.3 ACQUIRING INFORMATION SYSTEMS We have now explained some of the general approaches that organizations follow when building systems in-house with their own IS staff. Many times, however, this is not a feasible solution. The following are four situations in which you might need to consider alternative development strategies.

■ SituationSituation 1: 1: Limited Limited IS IS Staff Staff. Often, an organization does not have the capability to build a system itself. Perhaps its development staff is small or deployed on other activities and does not have the capability to take on an in-house development project.

■ SituationSituation 2: 2: IS IS Staff Staff Has Has Limited Limited Skill Skill Set Set. In other situations, the IS staff may not have the skills needed to develop a particular kind of system. This has been especially true with the explosive growth of the Web and mobile devices; many organizations are having outside groups develop and manage their Web sites and mobile apps.

WHEN THINGS GO WRONG: Conquering Computer Contagion

Blue Security, an Israel-based Internet security company startup, thought it had the answer to spammers. For every unwanted spam message that the half million clients of the company’s e-mail service, Blue Frog, received, a message was returned to the advertiser. As a result, 6 of the top 10 spammers were inundated by the opt-out messages and were forced to eliminate Blue Frog’s clients from their mailing list. One spamming company, however, decided to fight back. According to Blue Security, PharmaMaster responded by sending so many spam messages to Blue Frog’s clients that several Internet service providers’ servers crashed. Under PharmaMaster’s threat of continuing and expanded attacks, Blue Security folded after a mere two weeks. “We cannot take the responsibility for an ever-escalating cyberwar through our continued operations,” said Eran Reshef, chief executive officer (CEO) and founder of Blue Security.

Like PharmaMaster, all authors of malware have continued to flout efforts to cleanse the Internet of their disruptive and exasperating wares. As the Internet evolves, so have the approaches taken by attackers; Table 9.7 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#ch09tab7) lists the top malware issues of 2014. Unfortunately, the battle against malware will probably rage as long as the Internet exists.

Based on:

Anonymous. (2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib2) ). Security threat report 2014: Smarter, shadier, stealthier malware. Sophos.comSophos.com (http://Sophos.com) (http://Sophos.com) . Retrieved March 20, 2014, from http://www.sophos.com/en-us/medialibrary/PDFs/other/sophos-security-threat-report-2014.pdf (http://www.sophos.com/en- us/medialibrary/PDFs/other/sophos-security-threat-report-2014.pdf) .

Lemos, R. (2006, May 17). Blue Security folds under spammer’s wrath. SecurityFocus. Retrieved March 20, 2014, from http://www.securityfocus.com/news/11392 (http://www.securityfocus.com/news/11392) .

TABLE 9.7 Top Malware Issues for 2014

Rank Issue Description

1 Botnets Grow Botnets are becoming more widespread, resilient, and camouflaged. 2 Android-Based

Malware Android malware continues to grow and evolve.

3 Linux Is Attracting Criminals

Linux is a targeted platform because it is widely used to run Web sites.

4 Mac OS X Attacks Mostly ignored in the past, a steady stream of modest, creative, and diverse attacks are being launched. 5 Web-Based Malware

Matures Dangerous, difficult-to-detect Web server attacks, leading to more drive-by attacks against vulnerable Web clients.

6 Targeting Financial Accounts

More persistent attacks aimed at compromising financial accounts.

7 Windows XP In 2014, Windows XP and Office 2003 were no longer updated, creating significant issues in specialized markets such as point-of- sale and medical equipment.

8 Spam Evolves Spammers continue to reinvent their attacks to overcome blocking.

■ SituationSituation 3: 3: IS IS Staff Staff Is Is Overworked Overworked. In some organizations, the IS staff may simply not have the time to work on all the systems that the organization requires or wants.

■ SituationSituation 4: 4: Problems Problems with with Performance Performance of of IS IS Staff Staff. Earlier in this book, we discussed how and why systems development projects could sometimes be risky. Often, the efforts of IS departments are derailed because of staff turnover, changing requirements, shifts in technology, or budget constraints. Regardless of the reason, the result is the same: another failed (or flawed) system.

When it isn’t possible or advantageous to develop a system in-house, organizations are pursuing two popular options:

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FIGURE 9.22 Taking software for a “test-drive” prior to purchase.

1. External acquisition of a prepackaged system 2. Outsourcing systems development

These options are examined next.

External Acquisition

Purchasing an existing system from an outside vendor such as IBM, HP Enterprise Services, or Accenture is referred to as external acquisition (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_245) . How does external acquisition of an information system work? Think about the process that you might use when buying a car. Do you simply walk into the first dealership you see, tell them you need a car, and see what they try to sell you? You had better not. Probably you have done some upfront analysis and know how much money you can afford to spend and what your needs are. If you have done your homework, you probably have an idea of what you want and which dealership can provide the type of car you desire.

This upfront analysis of your needs can be extremely helpful in narrowing your options and can save you a lot of time. Understanding your needs can also help you sift through the salespeople’s hype that you are likely to encounter from one dealer to the next as each tries to sell you on why his or her model is perfect for you. After getting some information, you may want to take a couple of promising models for a test-drive, actually getting behind the wheel to see how well the car fits you and your driving habits. You might even talk to other people who have owned this type of car to see how they feel about it. Ultimately, you are the one who has to evaluate all the different cars to see which one is best for you. They may all be good cars; however, one may fit your needs just a little better than the others.

The external acquisition of an information system is very similar to the purchase of a car. When you acquire a new system, you should do some analysis of your specific needs. For example, how much can you afford to spend, what basic functionality is required, and approximately how many people will use the system? Next, you can begin to “shop” for the new system by asking potential vendors to provide information about the systems that they have to offer. After you evaluate this information, it may become clear that several vendors have systems that are worth considering. You may ask those vendors to come to your organization and set up their systems so that you and your colleagues are able to “test-drive” them (Figure 9.22 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#ch09fig22) ). Seeing how people react to the systems and seeing how each system performs in the organizational environment can help you “see” exactly what you are buying. By seeing the actual system and how it performs with real users, with real or simulated data, you can get a much clearer idea of whether that system fits your needs. When you take a car for a test-drive, you learn how the car meets your needs. By seeing how the system meets your needs before you buy, you can greatly reduce the risk associated with acquiring that system.

STEPSSTEPS IN IN EXTERNAL EXTERNAL ACQUISITION. ACQUISITION. In many cases, your organization will use a competitive bid process for making an external acquisition. In the competitive bid process, vendors are given an opportunity to propose systems that meet the organization’s needs. The goal of the competitive process is to help the organization ensure that it gets the best system at the lowest possible price. Most competitive external acquisition processes have at least five general steps:

1. Systems planning and selection 2. Systems analysis 3. Development of a request for proposal 4. Proposal evaluation 5. Vendor selection

You have already learned about the first two steps because they apply when you build a system yourself as well as when you purchase a system through an external vendor. Step 3, development of a request for proposal, is where the external acquisition process differs significantly from in-house development.

DEVELOPMENTDEVELOPMENT OF OF A A REQUEST REQUEST FOR FOR PROPOSAL. PROPOSAL. A request for proposal (RFP) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_513) is simply a document that is used to tell vendors what your requirements are and to invite them to provide information about how they might be able to meet those requirements. An RFP is sent to vendors who might potentially be interested in providing hardware and/or software for the system.

Among the areas that may be covered in an RFP are the following:

■ A summary of existing systems and applications ■ Requirements for system performance and features ■ Reliability, backup, and service requirements ■ The criteria that will be used to evaluate proposals ■ Timetable and budget constraints (how much you can spend)

The RFP is then sent to prospective vendors along with an invitation to present their bids for the project. Eventually, you will likely receive a number of proposals to evaluate. If, on the other hand, you do not receive many proposals, it may be necessary to rethink the requirements—perhaps the requirements are greater than the budget limitations or the time frame is too short. In some situations, you may first need to send out a preliminary request for information simply to gather information from prospective vendors. This will help you determine whether, indeed, the desired system is feasible or even possible. If you determine that it is, you can then send out an RFP. Often, rather than trying to identify all potential vendors and sending out RFPs, companies set up a project Web site, allowing potential bidders to find out more about the organization and its current and planned information systems (Figure 9.23

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Source: Yuri Arcurs/Fotolia.

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#ch09fig23) ).

PROPOSALPROPOSAL EVALUATION. EVALUATION. The fourth step in external acquisition is to evaluate proposals received from vendors. This evaluation may include viewing system demonstrations, evaluating the performance of those systems, examining criteria important to the organization, and judging how the proposed systems “stack up” to those criteria. Demonstrations are a good way to get a feel for the different systems’ capabilities. Just as you can go to the showroom to look at a new car and get a feel for whether it meets your needs, it is also possible to screen various systems through a demonstration from the vendor. During a demonstration, a sales team from the vendor gives an oral presentation about the system, its features and cost, followed by a demonstration of the actual system. Although such demonstrations are often useful in helping you understand the features of different systems being proposed, they are rarely enough in and of themselves to warrant purchasing the system without further evaluation.

FIGURE 9.23 Sample RFP Web site for an information systems project.

One of the methods you can use to evaluate a proposed system is systems benchmarking (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_614)

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, which is the use of standardized performance tests to facilitate comparison between systems. Benchmark programs are sample programs or jobs that simulate a system’s workload. You can have benchmarks designed to test portions of the system that are most critical to your needs, based on your systems analysis. A benchmark might test how long it takes to calculate a set of numbers, how long it takes to access a set of records in a database, or how long it would take to access certain information given a certain number of concurrent users. Some common system benchmarks include the following:

■ Response time given a specified number of users ■ Time to sort records ■ Time to retrieve a set of records ■ Time to produce a given report ■ Time to read in a set of data

In addition, vendors may also supply benchmarks that you can use, although you should not rely solely on vendor information. For popular systems, you may be able to rely on system benchmarks published in computer trade journals such as PC Magazine or on industry Web sites, such as www.cnet.com (http://www.cnet.com) . However, in most cases, demos and benchmarks alone do not provide all the information you need to make a purchase. The systems analysis phase should have revealed some specific requirements for the new system. These requirements may be listed as criteria that the organization can use to further evaluate vendor proposals. Depending on what you are purchasing— hardware, software, or both—the criteria you use will change. Table 9.8 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#ch09tab8) provides examples of commonly used evaluation criteria.

VENDORVENDOR SELECTION. SELECTION. In most cases, more than one system will meet your needs, just as more than one car will usually meet your needs. However, some probably “fit” better than others. In these cases, you should have a way of prioritizing or ranking competing proposals. One way of doing this is by devising a scoring system for each of the criteria and benchmarking results as described when making the business case.

Companies may use other, less formalized approaches to evaluate vendors. Sometimes they use simple checklists; other times they use a more subjective process. Regardless of the mechanism, eventually a company completes the evaluation stage and selects a vendor, ending the external acquisition process.

TABLE 9.8 Commonly Used Evaluation Criteria

Hardware Criteria Software Criteria Other Criteria

Clock speed of CPU Memory requirements Installation Memory availability Help features Testing Secondary storage (including capacity, access time, and so on) Usability Price Learnability Video display size Number of features supported Printer speed Training and documentation Maintenance and repair

MANAGINGMANAGING SOFTWARE SOFTWARE LICENSING. LICENSING. When purchasing commercial, off-the-shelf software, companies usually have to agree to a license agreement. In general, software licenses can be classified based on their restrictiveness or the freedom they offer to use or modify the software. Software licensing has been a hot-button topic for software companies as they lose billions in piracy and mislicensed customers (see Chapter 10 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch10#ch10) ). Traditionally, software licensing is defined as the permissions and rights that are imposed on applications; the use of software without a proper license is illegal in most countries.

Most software licenses differ in terms of restrictiveness, ranging from no restrictions at all to completely restricted. Note that although freeware or shareware is freely available, the copyright owners often retain their rights and do not provide access to the program’s source code. For organizations using proprietary software, two types of licenses are of special importance. The first type includes the shrink-wrap licenses (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_550) and click-wrap licenses (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_95) that accompany the software, which are used primarily for generic, off-the-shelf application and systems software. The shrink-wrapped contract has been named as such because the contract is activated when the shrink wrap on the packaging has been removed; similarly, a click-wrap license refers to a license primarily used for downloaded software that requires computer users to click on “I accept” before installing the software. The second type of license is an enterprise license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_225) (also known as a volume license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_686) ). Enterprise licenses can vary greatly and are usually negotiated. In addition to rights and permissions, enterprise licenses usually contain limitations of liability and warranty disclaimers that protect the software vendor from being sued if its software does not operate as expected.

As shown in Table 9.9 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#ch09tab9) , there are a variety of software licenses. For different business needs, organizations often depend on a variety of software, each having different licenses, which can cause headaches for many organizations. For organizations, not knowing about the software installed can have a variety of consequences. For example, companies are not able to negotiate volume licensing options, unused licenses strain the organization’s budget, or license violations can lead to fines or public embarrassment. Software asset management (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/bm02#bm02_gloss_568) helps organizations to avoid such negative consequences. Usually, software asset management consists of a set of activities, such as performing a software inventory (either manually or using automated tools), matching the installed software with the licenses, reviewing software-related policies and procedures, and creating a software asset management plan. The results of these processes help organizations to better manage their

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software infrastructure by being able to consolidate and standardize their software titles, decide to retire unused software, or decide when to upgrade or replace software.

EXTERNALEXTERNAL ACQUISITION ACQUISITION THROUGH THROUGH THE THE CLOUD. CLOUD. Undoubtedly, managing the software infrastructure is a complex task, often resulting in high operating costs for organizations; further, many systems are not scalable in response to large increases in demand. To deal with these issues, business organizations increasingly use software as a service (SaaS)—that is, clients access applications in the cloud on an as-needed basis using standard Web-enabled interfaces (see Chapter 3 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch03#ch03) , “Managing the Information Systems Infrastructure and Services”). For organizations, using SaaS provides a variety of benefits, such as a reduced need to maintain or upgrade software, variable costs based on the actual use of the services (rather than fixed IS costs), and the ability to rely on a provider that has gained considerable expertise because of a large number of clients.

TABLE 9.9 Different Types of Software Licenses

Restrictiveness Software Types Rights Restrictions Examples

Full rights Public domain software Full rights No restrictions; owner forsakes copyright Different programs for outdated IBM mainframes

Non-protective open source (e.g., Berkeley software development [BSD] license) Protective open source (e.g., general public license [GPL])

Freedom to copy, modify, and redistribute the software; can be incorporated into a commercial product Freedom to copy, modify, and redistribute the software

Creator retains copyright Modified or redistributed software must be made available under the same license; cannot be incorporated into commercial product

Free BSD operating system; BSD components in (proprietary) Mac OS X operating system Linux operating system

Proprietary software Right to run the software (for licensed users)

Access to source code severely restricted; no rights to copy or modify software

Windows operating system

No rights Trade secret Software typically only used internally

Access to source code severely restricted; software is not distributed outside the organization

Google PageRank™ algorithm

Outsourcing Systems Development

Outsourcing systems development is a way to acquire new systems that closely resembles the process of in-house development. However, in the case of outsourcing, the responsibility for some or all of an organization’s information systems development (and potentially the day-to-day management of its operation) is turned over to an outside firm. Information systems outsourcing includes a variety of working relationships. The outside firm, or service provider, may develop your information systems applications and house them within their organization; they may run your applications on their computers; or they may develop systems to run on existing computers within your organization. Anything is fair game in an outsourcing arrangement. Today, outsourcing has become a big business and is a very popular option for many organizations (see Chapter 1 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch01#ch01) for more information on outsourcing).

WHYWHY OUTSOURCING? OUTSOURCING? A firm might outsource some (or all) of its information systems services for varied reasons. Some of these are old reasons, but some are new to today’s environment (Applegate, Austin, & Soule, 2009 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib3) ):

■ CostCost and and Quality Quality Concerns Concerns. In many cases it is possible to achieve higher-quality systems at a lower price through economies of scale, better management of hardware, lower labor costs, and better software licenses on the part of a service provider.

■ ProblemsProblems in in IS IS Performance Performance. IS departments may have problems meeting acceptable service standards because of cost overruns, delayed systems, underutilized systems, or poorly performing systems. In such cases, organizational management may attempt to increase reliability through outsourcing.

■ SupplierSupplier Pressures Pressures. Perhaps not surprisingly, some of the largest service providers are also the largest suppliers of software or computer equipment (e.g., IBM or Hewlett-Packard). In some cases, the aggressive sales forces of these suppliers are able to convince senior managers at other organizations to outsource their IS functions.

■ Simplifying,Simplifying, Downsizing, Downsizing, and and Reengineering Reengineering. Organizations under competitive pressure often attempt to focus on only their “core competencies.” In many cases, organizations simply decide that running information systems is not one of their core competencies and decide to outsource this function to companies such as IBM and HP Enterprise Services, whose primary competency is developing and maintaining information systems.

■ FinancialFinancial Factors Factors. When firms turn over their information systems to a service provider, they can sometimes strengthen their balance sheets by liquidating their IT assets. Also, if users perceive that they are actually paying for their IT services rather than simply having them provided by an in-house staff, they may use those services more wisely and perceive them to be of greater value.

■ OrganizationalOrganizational Culture Culture. Political or organizational problems are often difficult for an IS group to overcome. However, an external service provider often brings enough clout, devoid of any organizational or functional ties, to streamline IS operations as needed.

■ InternalInternal Irritants Irritants. Tensions between end users and the IS staff are sometimes difficult to eliminate. At times this tension can intrude on the daily operations of the organization, and the idea of a remote, external, relatively neutral IS group can be appealing. Whether the tensions between users and the IS staff (or service provider) are really eliminated is open to question; however, simply having the IS group external to the organization can remove a lingering thorn in management’s side.

MANAGINGMANAGING THE THE IS IS OUTSOURCING OUTSOURCING RELATIONSHIP. RELATIONSHIP.

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The ongoing management of an outsourcing alliance is the single most important aspect of the outsourcing project’s success. Some advice includes the following:

1. A strong, active chief information officer (CIO) and staff should continually manage the legal and professional relationship with the outsourcing firm. 2. Clear, realistic performance measurements of the systems and of the outsourcing arrangement, such as tangible and intangible costs and benefits, should be developed. 3. The interface between the customer and the outsourcer should have multiple levels (e.g., links to deal with policy and relationship issues and links to deal with

operational and tactical issues). Managing outsourcing alliances in this way has important implications for the success of the relationship. For example, in addition to making sure a firm has a strong CIO and staff, McFarlan and Nolan (1995 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib6) ) recommend that firms assign full-time relationship managers and coordinating groups lower in the organization to “manage” the project. The structure and nature of the internal system activities change from exclusively building and managing systems to also including managing relationships with outside firms that build and manage systems under legal contract.

NOTNOT ALL ALL OUTSOURCING OUTSOURCING RELATIONSHIPS RELATIONSHIPS ARE ARE THE THE SAME. SAME. Most organizations no longer enter into a strictly legal contract with an outsourcing vendor but rather into a mutually beneficial relationship with a strategic partner. In such a relationship, both the firm and the vendor are concerned with—and perhaps have a direct stake in—the success of the other. Yet other types of relationships exist, meaning that not all outsourcing agreements need to be structured the same way. In fact, at least three different types of outsourcing relationships can be identified:

■ Basic relationship ■ Preferred relationship ■ Strategic relationship

A basic relationship can best be thought of as a “cash-and-carry” relationship in which you buy products and services on the basis of price and convenience. Organizations should try to have a few preferred relationships in which the buyer and the supplier set preferences and prices to the benefit of each other. For example, a supplier can provide preferred pricing to customers that do a specified volume of business. Most organizations have just a few strategic relationships in which both sides share risks and rewards.

INDUSTRY ANALYSIS: Broadcasting

Only a few years ago, radio and television were among the primary sources for satisfying the desire for both entertainment and up-to-date news and information. Over the past few years, this situation has changed dramatically, with many people turning to the Internet for both information and entertainment.

For many television news companies, the Internet has opened opportunities, as news features can be easily transmitted over the Internet, allowing easier connection between the newsrooms and the “action” on the field. At the same time, viewing habits have changed, and many viewers prefer to obtain their latest news via the Internet or while on the move. As a reaction, television stations (both focusing on news and entertainment) are increasingly using the Internet as a distribution medium for their content.

These changes force TV stations to adjust their revenue models. Whereas traditionally large revenues were derived from TV advertising, advertisers are now less willing to pay high advertising fees in light of dwindling viewership. On the other hand, TV stations can potentially charge more for advertising tied to online shows, as the Internet offers benefits such as advertising targeted at the individual viewer and provides detailed tracking metrics such as click-through rates, allowing the advertiser to directly assess the success of a campaign.

For radio stations, the situation is similar. With more and more people listening to various Internet radio stations, using music services like Pandora or Spotify, or downloading music, the number of listeners to traditional radio has dwindled and along with it advertising revenues. Online advertising now surpasses radio advertising spending. Facing competition from Internet radio, satellite radio, podcasting, and a plethora of other online diversions, many radio stations will have to find innovative ways to prosper in these times of profound change.

Questions

1. What is the effect of the Internet on television and radio content quality? With less advertising revenue, how can broadcasters continue to produce high-quality content?

2. Today there are thousands of AM/FM stations competing with Internet radio stations and music downloading. Forecast their future and provide a strategy for retaining and gaining market share.

Based on:

eMarketer. (2014, February 12). Music listeners pump up the volume on digital radio. eMarketer. Retrieved April 1, 2014, from http://www.emarketer.com/Article/Music-Listeners-Pump- Up-Volume-on-Digital-Radio/1010600 (http://www.emarketer.com/Article/Music-Listeners-Pump-Up-Volume-on-Digital-Radio/1010600) .

Leggett, T. (2014, January 3). Is niche Internet television broadcasting the future? BBC.comBBC.com (http://BBC.com) (http://BBC.com) . Retrieved April 1, 2014, from http://www.bbc.com/news/business- 25457001 (http://www.bbc.com/news/business-25457001) .

Rose, A. (2013, May 1). Exploring the connected future of TV and the challenge to broadcasters. The Guardian. Retrieved April 1, 2014, from http://www.theguardian.com/media- network/2013/may/01/connected-tv-broadcasters (http://www.theguardian.com/media-network/2013/may/01/connected-tv-broadcasters) .

Venturini, F., Marshall, C., & Di Alberto, E. (2011). The future of broadcasting III: Strategy delivers. Accenture. Retrieved April 1, 2014, from http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Future-of-Broadcasting-III-Strategy-Delivers.pdf (http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture- Future-of-Broadcasting-III-Strategy-Delivers.pdf) .

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Summary and Review 1. DescribeDescribe how how to to formulate formulate and and present present the the business business case case for for technology technology investments investments. Making the business case is the process of building and presenting the

set of arguments that show that an information system investment is adding value to an organization. In order to make a convincing presentation, you should be specific about the benefits this investment will provide for the organization. Choosing the wrong measures can yield a negative decision about a beneficial system.

2. DescribeDescribe the the systems systems development development life life cycle cycle and and its its various various phases phases. The development of information systems follows a process called the systems development life cycle. The SDLC is a process that first identifies the need for a system and then defines the processes for designing, developing, and maintaining an information system. The process is very structured and formal and requires the active involvement of managers and users. The SDLC has four phases: systems planning and selection, systems analysis, systems design, and systems implementation and operation. A variety of other approaches are available to enhance the development process for different types of systems and contexts.

3. ExplainExplain how how organizations organizations acquire acquire systems systems via via external external acquisition acquisition and and outsourcing outsourcing. External acquisition is the process of purchasing an existing information system from an external organization or vendor. External acquisition is a five-step process. Steps 1 and 2 mirror the first two steps of the SDLC. Step 3 is the development of a request for proposal (RFP). Step 4 is proposal evaluation, which focuses on evaluating proposals received from vendors. Step 5 is vendor selection, which focuses on choosing the vendor to provide the system. Outsourcing refers to the turning over of partial or entire responsibility for information systems development and management to an outside organization.

Key Terms adaptive maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342)

alpha testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_340)

beta testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_340)

break-even analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_326)

change request management (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342)

click-wrap license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_349)

corrective maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342)

cost–benefit analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_326)

data flows (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_337)

developmental testing (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_340)

discount rate (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_326)

enterprise license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_349)

external acquisition (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_346)

human–computer interface (HCI) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_339)

information systems planning (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_335)

intangible benefit (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

intangible cost (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

joint application design (JAD) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_336)

making the business case (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_320)

net-present-value analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_326)

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non-recurring cost (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

open source software (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_332)

patch management system (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_343)

perfective maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342)

preventive maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342)

processing logic (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_337)

productivity paradox (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_321)

project manager (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_334)

prototyping (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_344)

proxy variable (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_329)

pseudocode (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_337)

recurring cost (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

request for proposal (RFP) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_347)

requirements collection (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_336)

shrink-wrap license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_349)

software asset management (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_349)

system conversion (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_340)

systems analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_336)

systems analysis and design (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_330)

systems analyst (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_330)

systems benchmarking (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_348)

systems design (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_337)

systems development life cycle (SDLC) (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_334)

systems implementation (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_340)

systems maintenance (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_341)

systems planning and selection (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_335)

tangible benefit (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

tangible cost (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

total cost of ownership (TCO)

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(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325)

usability (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_339)

volume license (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_349)

weighted multicriteria analysis (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_326)

Review Questions 9-1. Describe the productivity paradox. 9-2. Describe how to make a successful business case, contrasting faith-, fear-, and fact-based arguments.

9-3. Compare and contrast tangible and intangible benefits and costs. 9-4. What are the four phases of the systems development life cycle (SDLC)?

9-5. List and describe five techniques used in requirements collection. 9-6. What are the three major components/tasks of the systems design phase of the SDLC? 9-7. What are the four options for system conversion? How do they differ from each other?

9-8. Compare and contrast the four types of systems maintenance. 9-9. Define outsourcing and list three general types of outsourcing relationships.

9-10. List and describe two main types of software licenses. Self-Study Questions

9-11 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans11) . Which of the following is not one of the four phases of the systems development life cycle? A. systems analysis B. systems implementation C. systems design D. systems resource acquisition

9-12 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans12) .______________is the process of gathering and organizing information from users, managers, business processes, and documents to understand how a proposed information system should function. A. Requirements collection B. Systems collection C. Systems analysis D. Records archiving

9-13 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans13) . Which of the following is the correct order of phases in the systems development life cycle? A. analysis, planning, design, implementation B. analysis, design, planning, implementation C. planning, analysis, design, implementation D. design, analysis, planning, implementation

9-14 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans14) . In the systems design phase, the elements that must be designed when building an information system include all of the following except ______________. A. the human–computer interface B. questionnaires C. databases and files D. processing and logic

9-15 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans15) .______________maintenance involves making enhancements to improve processing performance or interface usability or adding desired (but not necessarily required) system features (in other words, “bells and whistles”). A. preventive B. perfective C. corrective D. adaptive

9-16 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans16) . Which of the following is not one of the three types of arguments commonly made in the business case for an information system? A. fear B. fact C. faith D. fun

9-17 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans17) . A ______________is a document that an organization uses to tell vendors what its requirements are and to invite them to provide information about how they might be able to meet those requirements. A. request letter B. vendor request

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C. request for proposal D. requirements specification

9-18 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans18) . Which of the following is not a type of outsourcing? A. basic B. elite C. strategic D. preferred

9-19 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans19) . Which of the following factors is a good reason to outsource? A. problems in IS performance B. supplier pressures C. financial factors D. all of the above

9-20 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#ch09ans20) . Most competitive external acquisition processes have at least five general steps. Which of the following is not one of those steps? A. vendor selection B. proposal evaluation C. development of a request for proposal D. implementation.

Answers are on page 356 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec4#page_356) .

Problems and Exercises 9-21. Match the following terms with the appropriate definitions:

i. Request for proposal ii. Systems benchmarking iii. Alpha testing iv. Systems development life cycle v. Productivity paradox vi. Prototyping vii. Pilot conversion viii. Systems analysis ix. Outsourcing x. External acquisition xi. Data flows xii. Requirements collection a. The movement of data through an organization or within an information system b. Term that describes the life of an information system from conception to retirement c. The second phase of the systems development life cycle d. The process of gathering and organizing information from users, managers, business processes, and documents to understand how a proposed information system

should function e. Testing performed by the development organization to assess whether the entire system meets the design requirements of the users f. Using a new system in one location before rolling it out to the entire organization g. A systems development methodology that uses a trial-and-error approach for discovering how a system should operate h. The practice of turning over responsibility for some or all of an organization’s information systems development and operations to an outside firm i. The observation that productivity increases at a rate that is lower than expected when new technologies are introduced j. The process of purchasing an existing system from an outside vendor k. A way to evaluate a proposed system by testing a portion of it with the system workload l. A report that is used to tell vendors what the requirements are and to invite them to provide information about how they might be able to meet those requirements

9-22. After reading this chapter, it should be fairly obvious why an IS professional should be able to make a business case for a given system. Why, however, is it just as important for non-IS professionals? How are they involved in this process? What is their role in making IS investment decisions?

9-23. Why can it be difficult to develop an accurate cost–benefit analysis? What factors may be difficult to quantify? How can this be handled? Is this something that should just be avoided altogether? What are the consequences of that approach?

9-24. Contrast the total cost of acquisition versus the total cost of ownership for the purchase of a new car. Demonstrate how the type of car, year, make, model, and so on change the values of various types of costs and benefits.

9-25. Identify and describe three different situations where fear, faith, or fact arguments would be most compelling when making an information systems investment decision.

9-26. Contrast the differing perspectives of different stakeholders involved in making information systems investment decisions. 9-27. Explain the differences between data and data flows. How might systems analysts obtain the information they need to generate the data flows of a system? How are

these data flows and the accompanying processing logic used in the system design phase of the life cycle? What happens when the data and data flows are modeled incorrectly?

9-28. When Microsoft posts a new version of Internet Explorer on its Web site and states that this is a beta version, what does it mean? Is this a final working version of the software, or is it still being tested? Who is doing the testing? Search the Web to find other companies that have beta versions of their products available to the

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public. You might try Corel (www.corel.com (http://www.corel.com) ) or Adobe (www.adobe.com (http://www.adobe.com) ). What other companies did you find? 9-29. Conduct a search on the Web for “systems development life cycle.” Check out some of the hits. Compare them with the SDLC outlined in this discussion. Do all

these life cycles follow the same general path? How many phases do the ones you found on the Web contain? Is the terminology the same or different? Prepare a 10-minute presentation to the class on your findings.

9-30. Choose an organization with which you are familiar that develops its own information systems. Does this organization follow an SDLC? If not, why not? If so, how many phases does it have? Who developed this life cycle? Was it someone within the company, or was the life cycle adopted from somewhere else?

9-31. Describe your experiences with information systems that were undergoing changes or updates. What kind of conversion procedure was being used? How did this affect your interaction with the system as a user? Who else was affected? If the system was down altogether, for how long was it down? Do you or any of your classmates have horror stories, or were the situations not that bad?

9-32. Find an organization on the Internet (e.g., at www.computerworld.com (http://www.computerworld.com) or www.infoworld.com (http://www.infoworld.com) ) or a company you may want to work for in the future that outsources work. What are the managerial challenges of outsourcing, and why is this a popular alternative to hiring additional staff?

9-33. Imagine that you have just been hired by an organization, and you have been tasked with purchasing 10 tablet computers. Compile a list of at least three criteria you will use to evaluate at least three alternatives using weighted multicriteria analysis. Make a purchase recommendation based on your analysis.

Application Exercises Note: The existing data files referenced in these exercises are available on the book’s Web site: www.pearsonhighered.com/valacich (http://media.pearsoncmg.com/ph/bp/bridgepages/bp_valacich_bridgepage/0133940454_data.zip) .

Spreadsheet Application: Outsourcing Information Systems at Campus Travel

9-34. Campus Travel wants to increase its customer focus and wants to be able to better serve its most valued customers. Many members of the frequent flier program have requested the ability to check on the status of their membership online; furthermore, the frequent fliers would welcome the opportunity to book reward flights online. As you know that there are a number of companies specializing in building such transactional systems, you have decided to outsource the development of such a system. The following weights are assigned to evaluate the different vendors’ systems: ■ Online booking capability: 20 percent ■ User friendliness: 25 percent ■ Maximum number of concurrent users: 20 percent ■ Integration with current systems: 10 percent ■ Vendor support: 10 percent ■ Price: 15 percent To evaluate the different offers, you need to calculate a weighted score for each vendor using the data provided in the Outsourcing.csv spreadsheet. To calculate the total points for each vendor, do the following:

■ Open the file Outsourcing.csv. ■ Use the SUMPRODUCT formula to multiply each vendor’s scores with the respective weights and add the weighted scores. ■ Use conditional formatting to highlight all vendors falling below a total of 60 percent and above a total of 85 percent to facilitate the vendor selection.

Database Application: Building a Special Needs Database for Campus Travel

9-35. In addition to international travel, travel reservations for people with special needs is an area of specialty of Campus Travel. However, to be able to recommend travel destinations and travel activities, you should know what facilities are available at each destination. Therefore, you have been asked to create a database of the destinations and the type of facilities that are available for people with special needs. In order to make the system as useful as possible for all, you need to design reports for the users to retrieve information about each destination. Your manager would like to have a system that contains the following information about the destinations: ■ Location ■ Availability of facilities for the physically handicapped ■ Distance to medical facilities ■ Pet friendliness Each location may have one or more handicap facility (e.g., hearing, walking, sight, and so on). A type of handicap facility can be present at multiple locations. Also, each location has to have one pet-friendly accommodation/activity and may also have accommodation for different types of pets (dogs, cats, and so on). After designing the database, please design three professionally formatted reports that (1) list the locations in alphabetical order, (2) list all locations that have the handicap facilities for those that find it difficult to walk, and (3) list all locations that have a cat-friendly policy.

Hint: In Microsoft Access, you can create queries before preparing the reports. Enter a few sample data sets and print out the reports.

Team Work Exercise Net Stats: Moore’s Law and the Laggards

The technology industry, laboring under Moore’s law, depends on technology users to regularly adopt new hardware and software. Millions of users, however, accustomed to the tried and true, would rather stick with those products they know—at least as long as possible. Sometimes the reason for not rushing to replace the old with the new is familiarity

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with and an acquired expertise in using the older version of a product or service:

■ In September 2013, 70 percent of U.S. households had broadband Internet access, but 3 percent still used dialup; that is over 2.5 million people. ■ In January 2014, 10 percent of U.S. adults had not yet purchased a mobile phone. ■ In March 2014, worldwide, hundreds of millions of people were still using Windows XP, even though Microsoft officially ended support for this product. By February

2014, Windows 7 had 47 percent of the desktop market share; Windows XP, initially released in 2001, still retained nearly 30 percent of the market share! Individual computer users are free to opt to be tortoises or hares regarding the adoption of new technology. Information technology (IT) directors, however, must usually follow company culture and management preferences when opting whether to adopt new technology. If management is comfortable with risk and likes to be on the cutting edge, for example, IT directors can probably feel safe in adopting new technology early on. A staid, risk-averse management attitude, however, would probably not appreciate an IT director who rushes to adopt new technology. In any event, whether to adopt new technology immediately as it becomes available is a decision that will always be with us.

Questions and Exercises

9-36. In 2014, 58 percent of Americans owned a smartphone; search the Web for the most up-to-date statistics on this technology. 9-37. As a team, interpret the changes in numbers (or stories). What is striking/important about these findings? 9-38. As a team, discuss what these numbers will look like in 5 years and 10 years. How are things in the U.S. market the same or different across the world? Where are

things moving faster/slower? Why? 9-39. Using your spreadsheet software of choice, create a graph/figure most effectively visualizing the finding you consider most important.

Based on:

Anonymous. (n.d.). Broadband technology fact sheet. Pew Research. Retrieved March 20, 2014, from http://www.pewinternet.org/fact-sheets/broadband-technology-fact-sheet (http://www.pewinternet.org/fact-sheets/broadband-technology-fact-sheet) .

Anonymous. (n.d.). Mobile technology fact sheet. Pew Research. Retrieved March 20, 2014, from http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet (http://www.pewinternet.org/fact-sheets/mobile-technology-fact-sheet) .

Endler, M. (2014, March 17). Windows XP holdouts: 6 top excuses. InformationInformation Week.com Week.com (http://Information%20Week.com) (http://Information%20Week.com) . Retrieved on March 20, 2014, from http://www.informationweek.com/software/operating-systems/windows-xp-holdouts-6-top-excuses/d/d-id/1127666 (http://www.informationweek.com/software/operating-systems/windows-xp-holdouts-6- top-excuses/d/d-id/1127666) .

Kooser, A (2013, August 26). 3 percent of American adults still cling to dial-up Internet. Cnet.comCnet.com (http://Cnet.com) (http://Cnet.com) . Retrieved on March 20, 2014, from http://news.cnet.com/8301-17938_105- 57600112-1/3-percent-of-american-adults-still-cling-to-dial-up-internet (http://news.cnet.com/8301-17938_105-57600112-1/3-percent-of-american-adults-still-cling-to-dial-up-internet) .

Usage share of operating systems. (2014, March 18). In Wikipedia, The Free Encyclopedia. Retrieved March 20, 2014, from http://en.wikipedia.org/w/index.php? title=Usage_share_of_operating_systems&oldid=600217105 (http://en.wikipedia.org/w/index.php?title=Usage_share_of_operating_systems&oldid=600217105) .

Answers to the Self-Study Questions 9-11. D

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_334) 9-12. A

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_336) 9-13. C

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_334) 9-14. B

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_337) 9-15. B

(http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2#page_342) 9-16. D (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_322) 9-17. C (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_347) 9-18. B (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_351) 9-19. D (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_350) 9-20. D (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#page_346)

CASE 1 Next Generation Identification: FBI, ICE Databases Expand and Join Forces As crime-solving aids, first there was fingerprinting; decades later came DNA analysis. Next is the US$1.2 billion “Next Generation Identification” (NGI) database of the Federal Bureau of Investigation (FBI), used to store biometric identification ranging from palm prints to iris patterns, photos of scars and tattoos, and distinctive facial characteristics for criminal identification. In the past, fingerprints have been the most widely used means of uniquely identifying people, with the FBI keeping over 100 million sets of fingerprints in its current database dubbed “Integrated Automated Fingerprint Identification System” (IAFIS). The next step includes storing additional biometric characteristics. Unfortunately, taken alone, many of those have been proven to be rather unreliable (facial recognition accuracy in public places can be as low as 10 to 20 percent, depending on lighting conditions), such that a real increase in identification accuracy can come only from combining the results of multiple biometrics.

Similar to the FBI’s IAFIS database, the Department of Homeland Security (DHS) maintains the massive “Automated Biometric Identification System” (IDENT) database. The Immigration and Customs Enforcement Agency (ICE), part of the DHS, uses this database in its “Secure Communities” initiative to aid in capturing criminal aliens. The Secure Communities program is a federal, state, and local government partnership that allows state and local law enforcement officials to quickly share information with ICE on captured suspects. The data forwarded to ICE are used to make immigration processing and removing more efficient if the suspect turns out to be a criminal alien. At the heart of the Secure Communities program is the automatic integration of the IAFIS and IDENT databases. When someone is arrested, local law enforcement puts the suspect’s fingerprints into the FBI’s database. However, the fingerprints are not only checked against the FBI’s IAFIS system, but also against the DHS’ IDENT database to see if the suspect is in the country legally. If the suspect isn’t legal, ICE can immediately begin the deportation process. The

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system also prioritizes removal of criminal aliens based on their risk to national security and the local community. The prioritization helps ensure that serious criminals (aliens or otherwise) are not inadvertently released and cuts down on the time criminal aliens must be held in custody before being returned to their home country. Since its deployment (2009–2013), nearly 32 million queries into the database have been made, with 1.7 million matches, leading to more 300,000 deportations. The FBI’s Next Generation Identification database will take this a step further, as it will not only be based on data from both existing databases, but will also include a host of other biometric identifiers.

Both the FBI and Secure Communities programs have been criticized by privacy advocates. Critics say that Secure Communities, for example, can lead to unnecessary or prolonged detention, make accessing a lawyer difficult, and prevent release on bail. There is also a fear that there is no complaint mechanism associated with the systems. Opponents believe that victims of system errors will have little redress if they are erroneously identified as a criminal or illegal alien. In addition, opponents to the Secure Communities program argue that the integration of databases undermines the trust between immigrant communities and local law enforcement agencies. Fearing that illegal immigrants may be dissuaded from reporting crimes or may not be willing to serve as witnesses, Washington, D.C., Mayor Vincent Gray announced in June 2012 that law enforcement officers would be prohibited from asking about people’s immigration status.

While the FBI and ICE maintain that their programs are strictly limited to criminals and those in the country illegally, privacy and civil rights activists are watching the developments to ensure that the government respects the rights of its citizens.

Questions

9-40. List a set of tangible and intangible benefits as well as tangible and intangible costs for the FBI database system. 9-41. Develop a set of faith-, fear-, and fact-based arguments to support the continued and ongoing expansion of the FBI database. Which arguments do you

think are the strongest? Why? 9-42. Some privacy advocates argue that biometric systems can become unreliable and single out innocent people, especially over time as these databases

become less accurate because of a person’s natural aging process, weight loss, weight gain, injury, or permanent disability. Discuss the problems associated with having these systems single out innocent people.

Based on:

American Immigration Council. (2011, November 29). Secure Communities: a fact sheet. Immigrationpolicy.orgImmigrationpolicy.org (http://Immigrationpolicy.org) (http://Immigrationpolicy.org) . Retrieved March 20, 2014, from http://www.immigrationpolicy.org/just-facts/secure-communities-fact-sheet (http://www.immigrationpolicy.org/just-facts/secure-communities-fact-sheet) .

Anonymous. (n.d.). Integrated Automated Fingerprint Identification System. FBI.govFBI.gov (http://FBI.gov) (http://FBI.gov) . Retrieved on March 20, 2014, from http://www.fbi.gov/about- us/cjis/fingerprints_biometrics/iafis/iafis (http://www.fbi.gov/about-us/cjis/fingerprints_biometrics/iafis/iafis) .

Howell, J. (2012, June 4). D.C. prepares to walk fine line on deportations. The Washington Times. Retrieved March 20, 2014, from http://www.washingtontimes.com/news/2012/jun/4/dc- prepares-to-walk-fine-line-on-deportations (http://www.washingtontimes.com/news/2012/jun/4/dc-prepares-to-walk-fine-line-on-deportations) .

Integrated Automated Fingerprint Identification System. (2013, October 9). In Wikipedia, The Free Encyclopedia. Retrieved March 21, 2014, from http://en.wikipedia.org/w/index.php? title=Integrated_Automated_Fingerprint_Identification_System&oldid=576514800 (http://en.wikipedia.org/w/index.php? title=Integrated_Automated_Fingerprint_Identification_System&oldid=576514800)

Lynch, J. (2011, July 8). The FBI’s Next Generation Identification: Bigger and faster but much worse for privacy. Electronic Frontier Foundation. Retrieved March 20, 2014, from https://www.eff.org/deeplinks/2011/07/fbis-next-generation-identification-database (http://www.eff.org/deeplinks/2011/07/fbis-next-generation-identification-database) .

U.S. Immigrations and Customs Enforcement. (2012, June 5). Activated jurisdictions. Retrieved June 6, 2012, from http://www.ice.gov/doclib/secure-communities/pdf/sc-activated.pdf (http://www.ice.gov/doclib/secure-communities/pdf/sc-activated.pdf) .

U.S. Immigrations and Customs Enforcement. (2013, September 30). Secure Communities IDENT/IAFIS interoperability monthly statistics through September 30, 2013. Retrieved March 20, 2014, from http://www.ice.gov/doclib/foia/sc-stats/nationwide_interop_stats-fy2013-to-date.pdf (http://www.ice.gov/doclib/foia/sc-stats/nationwide_interop_stats-fy2013-to-date.pdf) .

CASE 2 The Emergence of Open Source Software You’re probably well aware by now that some software, such as the Android mobile phone operating system and the Firefox browser, is open source. That is, creators of the programs made the source code available so that anyone could program changes to improve the software’s performance.

Founded in 1998, the Open Source Initiative (OSI) is a non-profit organization dedicated to promoting open source software. The OSI formulated an open source definition to determine whether software can be considered for an open source license. An open source license is a copyright license for software that specifies that the source code is available for redistribution and modification without programmers having to pay the original author. Specifically, the open source definition includes the following:

■ The software can be redistributed for free. ■ Source code is freely available. ■ Redistribution of modifications must be allowed. ■ No one who wants to modify the code can be locked out. ■ The use of the software cannot be restricted to certain uses. ■ License may not be restricted to a specific product.

What has started as a communal, hacker-driven approach has matured, to a point where open source software is considered to be ready for prime time. Instead of merely being free or low-cost versions of proprietary software, many open source software projects are on the cutting edge, providing solutions that are secure and scalable enough for even the largest corporations. As a result, open source software is having an ever-expanding role in all areas of business. In part, the success of popular open source projects is based on the notion of a free ecosystem, where a large pool of contributors develops modifications, add-ons, or extensions, thus enhancing the value of the original project.

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Open source, making use of the wisdom of the crowds, fuels some of the big IT megatrends, including cloud computing, mobile applications, and Big Data. For example, companies such as PayPal, Intel, and Comcast use OpenStack, an open source cloud computing platform, to host their private clouds.

Another megatrend fueled by open source is mobility; in particular, the Android operating system has made inroads into the mobile operating system market, now having the largest market share of all mobile phone operating systems. Building on the success of the Android operating system, Amazon even based Fire OS, the operating system for its popular Kindle Fire HDX tablet, on Android.

Finally, open source projects have become indispensable for Big Data initiatives ranging from storing and managing vast amounts of unstructured data to analyzing these data. Not only do open source applications provide the tools to deal with Big Data, the openness of the source code also helps instill confidence as to why and where the results come from. Today, many Big Data startups, but also established companies from Adobe to Yahoo!, use Hadoop, a framework for distributed processing of large-scale data sets. For example, recently, the oil company Chevron turned to the open source project Hadoop for storing and managing huge amounts of seismic data needed to locate oil or gas deposits on the ocean floor.

As with the Internet, servers, cloud computing, mobility, and Big Data, open source seems to have been at the forefront of many megatrends. What will be the next megatrend fueled by open source?

Questions

9-43. What are the pros and cons of depending on open source software? 9-44. For what types of applications do you think open source is better than proprietary software? When is it worse? 9-45. Find a for-profit company that is distributing open source software. What is the software? How does the company make money? Is its revenue model

sustainable? Based on:

Anonymous. (2014 (http://content.thuzelearning.com/books/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib2) ). The open source definition. Opensource.orgOpensource.org (http://Opensource.org) (http://Opensource.org) . Retrieved March 27, 2014, from http://opensource.org/osd (http://opensource.org/osd) .

Bloom, B. (2012, May 29). The open-source answer to Big Data. ITWorld.comITWorld.com (http://ITWorld.com) (http://ITWorld.com) . Retrieved March 27, 2014, from http://www.itworld.com/open- source/279090/open-source-answer-big-data (http://www.itworld.com/open-source/279090/open-source-answer-big-data) .

King, R. (2012, June 5). Chevron explores open source using Hadoop. Wall Street Journal. Retrieved March 27, 2014, from http://blogs.wsj.com/cio/2012/06/05/chevron-explores-open- source-using-hadoop (http://blogs.wsj.com/cio/2012/06/05/chevron-explores-open-source-using-hadoop) .

Rooney, P. (2012, May 22). Open source driving cloud, Big Data, mobile, survey finds. ZDNet.comZDNet.com (http://ZDNet.com) (http://ZDNet.com) . Retrieved March 27, 2014, from http://www.zdnet.com/blog/open-source/open-source-driving-cloud-big-data-mobile-survey-finds/11015 (http://www.zdnet.com/blog/open-source/open-source-driving-cloud-big-data-mobile- survey-finds/11015) .

Volpi, M. (2014, March 25). A “perfect storm” moment for multibillion-dollar open source companies. Re/code. Retrieved March 27, 2014, from http://recode.net/2014/03/25/a-perfect- storm-moment-for-multibillion-dollar-open-source-companies (http://recode.net/2014/03/25/a-perfect-storm-moment-for-multibillion-dollar-open-source-companies) .

9-46. Contrast the perspectives of different stakeholders involved in making information systems investment decisions. 9-47. What are the advantages and disadvantages of prototyping?

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