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PHOENIX FINE ELECTRONICS COTS SYSTEM 2

Developing Versus Purchasing a COTS System for PFE

Patrick Carrasquillo

University of Phoenix

CMGT/583

Bruce Voris

7/18/2022

Developing or Buying a COTS System for PFE

Phoenix Fine Electronics (PFE) is in a quandary to create or buy a COTS system. The PFE management is concerned because they want to know whether or not the company should create or purchase a system. This article, therefore, aims to help the PFE administration pick and implement a suitable COTS system for its organization. As a result, the essay begins with a SWOT comparison of buying versus building an in-house COTS system for the company and ends with management recommendations based on the organization. The administration hopes this will help them decide whether the option is best for their company, adopting in-house systems or outsourcing. The company is contemplating expanding into new markets, and in order to do so successfully, it will require a strategic plan that will allow it to expand while also ensuring that it can continue its current operations after the expansion is complete. The SWOT analysis provides considerations for the purchase against build options for the company's chosen system.

The SWOT Analysis for Buying and Building PFE's COTS System

Strengths

The strengths of PFE's buying versus building a COTS system include increasing staff motivation. Other strengths are developing a long-lasting reputation for the organization, high reliability for the application, and better agility.

Weaknesses

Buying and building a COTS system for PFE has several weaknesses, including insufficient expertise and skills regarding the new application. Other weaknesses are the presence of obsolete information technological infrastructure, increased competition due to high meager costs posed by competitors, and low brand power.

Opportunities

Several opportunities are associated with buying or developing an in-house COTS system for PFE. The opportunities include venturing into developing new market zones for the organization, creating new service areas, facilitating increased connectivity in all organization's stores, and possibilities for information technology LANs.

Threats

The threats associated with buying versus developing a COTS system for PFE include unstable prices for new applications and products, stiff competition from other retailers, and the use of outdated information technology in the organization.

A Guide for PFE's Management

The Steps Required to Purchase or Develop a System in-house for PFE

Several steps are crucial regarding the purchase of development of a system in-house for PFE. Performing a SWOT analysis for buying or developing PFE's COTS system was essential for the decision-making process regarding the software solution that the organization should adopt. The SWOT analysis helps PFE recognize its strengths and weaknesses and enables the organization to optimize the utilization of the available opportunities to curb potential threats. This makes the SWOT analysis consequently vital to the company's decision-making process. In this scenario, the debate is whether or not to outsource or maintain an in-house software solution for the corporation. There are various reasons why PFE should consider outsourcing or generating its software internally. The main reason for choosing to outsource over other options is the unavailability of competent information technology and a software development department within the corporation (Ismail et al., 2019). PFE management must make an effective judgment on the type of software solution that the organization should use in light of its SWOT analysis. If Phoenix Fine Electronics decides to outsource or design a system, they may need to conduct a quantitative assessment to evaluate the most cost-effective option. According to the company's sales revenue and profit margins, quantitative analysis can also be used to evaluate the company's position in the market.

PFE's Considerations for Budget and Staffing

In order to develop an effective COTS system, the company will need to have the necessary experience or people, both of which it does not have. PFE, as a result, does not have the staff to construct or develop the software required. The company is forced to spend much money hiring skilled employees or using the services of a third party to provide the necessary building services. The organization must discuss each option's financial and benefit implications before moving forward with system development. This will necessitate a thorough analysis of the pros and cons of each alternative, considering aspects such as cost, personnel, practicality, organizational considerations, and available time (Su et al., 2018). Outsourcing is a need for the corporation in this case because it does not have the requisite skilled personnel to develop its new required application in-house.

PFE's Considerations for Time

The availability of resources drives the backbone of each successful project plan. Realizing the time it will take to finish and execute the COTS software solutions is vital; that being said, the organization's final goal should be kept in mind by PFE leadership and the software vendor, who should work closely to establish if the goals are achievable. PFE executives hope their operations will fully swing within five years. This indicates that the company will be unable to construct the new COTS system in the allotted timeframe and will have to consider outsourcing to another company that can provide high-quality services while meeting the deadlines.

Risks involved in Buying or Developing a COTS System for PFE

Project execution and implementation come with a slew of dangers. The risks involved include poor communication among the parties involved. Outsourcing a project's common problems should begin with communication because it is the root of many other dangers. Time zone variations, linguistic difficulties, and even subtle cultural differences can all lead to misunderstandings that can have serious consequences. Other possible risks include settling for the lowest outsourcing bids. A low bid may be enticing if affordability is the primary consideration in the decisions made regarding the COTS system.  However, a proposal's stated cost is not always an accurate reflection of what the organization will pay in the long run. The PFE managers must consider how a supplier who has not previously executed similar engagements and is too large or too small for PFE may affect the company's ability to get the attention and dedication it needs. It is not uncommon for newbies to a software service to bid too cheap since they do not fully comprehend what they are getting themselves into.

Unclear software delivery expectations also pose risks to the organization. Following a clear definition of the project's goals, this stage should ensure that all parties are on the same page regarding the deliverables. Increased expenditures, longer lead times, and damaged relationships can all result from unclear communication and subsequent delays and changes. Outsourcing is an excellent choice for companies compared to developing an in-house software solution because it will help them eliminate numerous risks that would be faced if the company were to develop its system. Furthermore, outsourcing will provide a suitable marketing plan, help develop a streamlined communication network, and help in good marketing simultaneously. These things will help the business grow, which is a major objective.

PFE's Maintenance Plan

A marketing vendor will have to be hired to supply maintenance services because the company lacks qualified staff capable of creating its own COTS solution, which implies that the organization will have no choice but to acquire a promotional vendor. As a result, the business will have to spend money on upkeep. An outstanding application will help the firm grow and accomplish its expansion goals if presented appropriately (Lin, 2018). The software will aid the company's growth by offering easy communication, precise location data, and a marketing component. There should be a single contact between PFE's administration and its outsourced software provider so that all parties involved can communicate effectively. When it comes to the success of outsourcing software, ongoing discussions instead of depending just on reports are vital. A local office with retail and IT managers adept at problem-solving and teamwork is essential when outsourcing to a major corporation like PFE.

To avoid miscommunications, PFE should be aware of the circumstances in which this is most likely to occur and devise a clear communication strategy in these situations. If problems arise, it is preferable to talk excessively at the start of the software implementation process and reduce the volume as everyone engaged becomes more comfortable with each other. As with any new player in the project, PFE's outsourcing partners need the greatest attention as they get to know the business and its processes. A deadline is important, but so are crucial milestones and benchmarks throughout the COTS outsourcing process. PFE should be clear about its expectations for delivery and be reasonable. In any outsourced engagement, PFE and its management team must play a role; thus, it is important to be realistic about their potential impact on the timely completion of deliverables. Ensuring the organization's requirements for quality are communicated to potential partners and that they are capable of satisfying them is an important aspect of the process.

References

Ismail, F. F., Razali, R., & Mansor, Z. (2019). Considerations for cost estimation of software testing outsourcing projects. Int. J. Adv. Sci. Eng. Inf. Technol, 9, 142-152. https://core.ac.uk/download/pdf/296918842.pdf

Lin, B. (2018, May). Crowdsourced software development and maintenance. In 2018 IEEE/ACM 40th International Conference on Software Engineering: Companion (ICSE-Companion) (pp. 492-495). IEEE. https://ieeexplore.ieee.org/abstract/document/8449635/

Su, C. J., & Chen, Y. A. (2018). Risk assessment for global supplier selection using text mining. Computers & Electrical Engineering, 68, 140-155. https://www.sciencedirect.com/science/article/pii/S0045790617328483

Strengths

Increased staff motivation.

Long-lasting reputation.

Better application reliability.

Increased agility.

Weaknesses

Inadequate skills and expertise.

Presence of obsolete IT applications.

Intense competition due to low costs.

Low brand power.

Opportunities

Potention development of new markets.

Creation of new service regions.

Connectivity of organization's stores.

Posibilies for IT LANs.

Threats

Unstable prices for applications.

High competition from rivals.

Outdated technology.