CHAPTER 4

DEVELOPMENT
STRATEGY
2
Chapter Objectives
Describe software trends, including the concept of
software as a service
Explain software acquisition alternatives, including
traditional versus Web-based software development
strategies
Describe software outsourcing options, including the
role of service providers
Explain advantages and disadvantages of developing
software in-house versus other alternatives
3
Chapter Objectives
Explain cost-benefit analysis and financial analysis
tools
Explain the differences between a request for proposal
(RFP) and a request for quotation (RFQ)
Describe the contents of the system requirements
document

4
Chapter Objectives
Explain the transition from systems analysis to systems
design, and the difference between logical and physical
design
Explain the transition to systems design and the
importance of prototyping
Discuss guidelines for system design, and explain the
importance of codes
5
Introduction
Chapter 4 describes the remaining activities in the systems
analysis phase
The chapter also describes the transition to systems design,
prototyping, design guidelines, and using codes to
represent values and simplify data entry
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Development Strategies Overview
Back few year ago, company either developed software
itself, purchased a package, hired consultant or outside
resource to perform work
Today, many choices company has
Selecting the best development path is an important
decision that requires companies to consider three key
issues
The impact of the internet
Software outsourcing options
In-house software development alternatives
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The Impact of the Internet
The Internet has triggered enormous changes in business
methods and operations, and software acquisition is no
exception
This section examines a trend that views software as a
service, the changing market-place for software, and how
Web-based development compares to traditional methods
8
Software as a Service
In traditional model, software vendor develop and sell
application packages to customer
Customer purchases licenses, give them right to use sware
A new model called Software as a Sevice (SaaS) is
changing the picture dramatically
The Software and Information Industry Association (SIIA) is
an industry group that focuses on the digital economy
SIIA believes that the concept of software as a service is
redefining the way that companies develop and deploy their
information systems
9
Traditional vs. Web-Based Systems Development
As system analyst, you must consider whether dev take place in a
Web-centric framework or in a traditional environment
Developers will focus on Web-based application development,
which builds the Web into the application, rather than the other
way around
2 major Web-based development environment:
IBMs WebSphere
Microsofts .NET
Although major trend toward Web based systems, many firms
rely on traditional system because they are legacy application
that not easily to replace
Building application in a Web based environment offer great
benefits, and greater risks

10
Traditional development
In a traditional system development environment:
System design is influenced by compatibility issues
including existing hware and software platform
Systems are designed to run on local and wide-area
company networks
Web-based features are treated as enhancements rather
than core elements of the design
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Web-based development
In a Web based system development environment:
Systems are developed and delivered in an Internet-
based framework such as .NET or WebSphere
Internet-based development treats the Web as the
platform, rather than just a communication channel
Web-based software usually requires additional
layers, called middleware to communicate with the
existing software and legacy systems
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Outsourcing
Outsourcing is the transfer of information systems
development, operation, or maintenance to an outside
firm that provides these services, for a fee, on a
temporary or long-term basis
Can refer to relatively minor programming tasks or the
handling of a companys entire IT function
13
The Growth of Outsourcing
Traditionally, firms outsourced IT tasks as a way of
controlling costs and dealing with rapid technological
change
Today, outsourcing is a vital business issue that shapes a
companys overall IT strategy
the most important factor is the potential saving in
operating costs
A firm that offers outsourcing solutions is called a
service provider

14
The Growth of Outsourcing
Two popular outsourcing options involve:
Application service providers (ASP)
A firm that deliver a software application or access to
an application by charging usage or subscription fees
Internet business services (IBS)
Provide powerful Web-based support for transaction
such as order processing, billing, crm
Another term for IBS is managed hosting because
the operation is managed by the outside firm or host
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Outsourcing Fees
A fixed fee model uses a set fee based on a specified
level of service and user support
A subscription model has a variable fee based on
the number of users or workstations that have access
A usage model or transaction model charges a
variable fee based on the volume of transactions or
operations
When company consider outsourcing, it should
estimate usage characteristic to determine which fee
structure most desirable

16
Outsourcing Issues and Concerns
When a company decide to outsource IT funct, it takes
important step that affect firms resources, operation and
profitability
Mission-critical IT systems should be out-sourced only if
the result is a cost-attractive, reliable, business solution
that fits the companys long-term business strategy
out-sourcing can also affect day-to-day company
operations and can raise some concerns
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Outsourcing Issues and Concerns
A company must plan outsourcing carefully to avoid lost
revenue, added expenses, and potential litigation
The solution can be only as good as the outsourcing firm
that provides the service
Outsourcing can be especially attractive to a company
whose volume fluctuates widely
A major disadvantage of outsourcing is that it raises
employee concerns about job security talented IT
people prefer position where the firm committed to in-
house development
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In-House Software Development Options
A company can choose to develop its own systems, or
purchase, possibly customize, and implement a software
package
Although many factor influence this decision, the most
important consideration is total cost of ownership (TCO)
Companies also develop user applications designed around
commercial software packages eg Microsoft Office to
improve user productivity and efficeincy
19
In-House Software Development Options
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Make or Buy Decision
The choice between developing versus purchasing software
often is called a make or buy, or build or buy decision
The companys IT department makes, builds, and develops
in-house software
A software package is obtained from a vendor or
application service provider.
The package might be standard commercial program or a
customized package design specifically for the purchaser
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Make or Buy Decision
Companies that develop software for sale are called
software vendors
Value-added reseller (VAR) a firm that enhances a
commercial package features and configuring it for a
particular industry
Horizontal application a software package that can
be used by many different types organization. Eg
accounting package
Vertical application in contrast, it is a software
package develop to handled information requirements for
a specific type of business

22
Developing Software In-House
Why would a firm choose to develop its own software?
Satisfy unique business requirements
Minimize changes in business procedures and policies
Meet constraints of existing systems
Meet constraints of existing technology
Develop internal resources and capabilities
23
Purchasing a Software Package
If a company decide not to outsource, a commercially
available software package might be attractive alternative
Advantages purchase a sw package over developing in-
house include:
Lower costs
Requires less time to implement
Proven reliability and performance benchmarks
Requires less technical development staff
Future upgrades provided by the vendor
Ability to obtain input from other companies who have
implemented the software
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Customizing a Software Package
If the standard version of a software product does not
satisfy a firms requirement, they can consider
adapting the package to meet its need
3 way to customize a software package:
1. You can purchase a basic package that vendors will
customize to suit your needs
2. You can negotiate directly with the software vendor
to make enhancements to meet your needs by paying
for the changes
3. You can purchase the package and make your own
modifications, if this is permissible under the terms
of the software license
ROLE OF THE SYSTEMS
ANALYST
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Role of the Systems Analyst
Decision to outsource, in-house etc need involvement
system analyst
The evaluation and selection of alternatives is not a simple
process
When selecting hardware and software, systems analysts
often work as an evaluation and selection team
A team approach ensures that critical factors are not
overlooked and that a sound choice is made
27
Role of the Systems Analyst
The primary objective of the evaluation and selection team
is to eliminate system alternatives that will not work, rank
the system alternatives that will work, and present the
viable alternatives to management for a final decision
28
Analyzing Cost and Benefits
At the end of system analysis phase, you must apply
financial analysis tools and technique to evaluate dev
strategies and decide how the project will move forward
There are 3 popular tools which are
Payback Analysis
Return on investment (ROI)
Net present value (NPV)
Research show that nearly 80 percent of total IT costs occur
after the purchase and nearly half of these lie outside the IT
dept budget


29
Financial Analysis Tools
Payback Analysis
determine how long it takes an IS to pay for itself through
reduced costs and increased benefit
Return on investment (ROI)
is a percentage rate that compare the total net benefits
(the return) received from a project to the total costs of
the project
Net present value (NPV)
is the total value of the benefits minus the total value of
the costs, with both costs and benefits adjusted to reflect
the point in time at which they occur
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Cost-Benefit Analysis Checklist
Company uses all 3 financial analysis tools to evaluate
various development strategies
Best way to apply the tools is to develop a cost benefit
checklist with the following steps:-
List each development strategy being considered
Identify all costs and benefits for each alternative. Be
sure to indicate when costs will be incurred and benefits
realized
Consider future growth and the need for scalability
Include support costs for hardware and software
THE TRANSITION TO
SYSTEM DESIGN
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The Transition to System Design
If management decides to develop the system in-house,
then the transition to the systems design phase begins
Next we discussed preparation for system design and
relationship between analysis and design tasks
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Preparing for Systems Design Tasks
When system design begin, it is essential to have an
accurate and understandable system requirements
document
The document contain the design for the new system
In design phase, u must certain that u performed a
thorough and accurate system analysis and communicated
the results in your system req document


34
The Relationship between Logical and
Physical Design
You develop the logical design of an IS during system
analysis phase
The logical design defines the functions and features of
the system and the relationships among its components
Include output that system must produced, input needed by system,
processes performed by system regardless how it will accomplished
physically
The physical design of an information system is a plan
for the actual implementation of the system
It is built on the systems logical design, much like a
working blueprint
35
The Relationship between Logical and
Physical Design
Because logical and physical design are so related, good
system design is impossible without careful, accurate
system analysis
In fact, the design phase cannot begin until the analysis
work is complete
Even some overlap is possible, its better to complete the
analysis phase
36
Systems Design Guidelines
The systems analyst must understand the logical design of
the system before beginning the physical design of any one
component
First step is to review the system req document
Then ready to start the actual design process
Best place is to start with
Data design, then move to
User interface
System design specification (specific input, output
design)
38
System Design Objectives
The goal of systems design is to build a system that is
effective, reliable, and maintainable
A system is reliable if it adequately handles errors
A system is maintainable if it is well designed, flexible, and
developed with future modifications in mind
Design consideration involve
Users
Data
Architecture
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System Design Objectives
User considerations
Carefully consider any point where users receive output
from, or provide input to, the system
Anticipate future needs of the users, the system, and
the organization
Provide flexibility
Parameter, default
Data Considerations
Data should be entered into the system where and
when it occurs because delays cause errors
Data should be verified when entered to catch errors
immediately
41
Design Trade-Offs
Design goals often conflict with each other
Making a system more flexible might increase maintenance
requirements
Most design trade-off decisions that you will face come
down to the basic conflict of quality versus cost
Although every project has budget constraint, avoid
decisions that achieve short-term savings but might mean
higher costs later
42
Prototyping
Prototyping produces an early, rapidly constructed
working version of the proposed information system, called
a prototype
Prototyping allows users to examine a model that
accurately represents system outputs, inputs, interfaces,
and processes
Users can test-drive the model in a risk free environment
and either approve it or request changes
In some case, the prototype evolves into the final version of
the IS
In other case, it intended to validate user requirements and
discarded afterwards
44
Prototyping Methods
Some analyst use 2 different prototyping methods
System prototyping
Design prototyping / Throwaway prototyping
Is important in RAD
System analyst use prototyping to verify user requirements,
then it is discarded
The approach called design prototyping or throwaway
prototyping
Design prototyping make it possible to capture user input
and approval
46
Prototyping Methods
Prototyping offers many benefits
Users and systems developers can avoid
misunderstandings
Managers can evaluate a working model more effectively
than a paper specification
Also consider potential problems
The rapid pace of development can create quality
problems
In very complex systems, the prototype becomes
unwieldy and difficult to manage
47
Prototyping Tools
Systems analysts can use powerful tools to develop
prototypes
Most prototyping is done using:-
CASE tools
Application generators
Report generators
Screen generators
Fourth-generation languages (4GLs)
48
Limitations of Prototypes
A prototype is a functioning system, but it is less efficient
than a fully developed system
Systems developers can upgrade the prototype into the
final information system by adding the necessary
capability
Otherwise, the prototype is discarded
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Chapter Summary
This chapter describes system development strategies,
the preparation and presentation of the system
requirements document, and the transition to the
systems design phase of the SDLC
An important trend that views software as a service,
rather than a product, has created new software
acquisition options
Systems analysts must consider Web-based
development environments
50
Chapter Summary
The systems analysts role in the software development
process depends on the specific development strategy
The most important factor in choosing a development
strategy is total cost of ownership (TCO)
The process of acquiring software involves a series of
steps