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Systems Analysis and Design: Development Strategies

Selecting the best development path is an important decision that requires companies to consider three
key topics:
 The impact of the Internet
 Software outsourcing options
 In-house software development alternatives.

The Impact of the Internet

Software as a Service (SaaS) - a model of software deployment where an application is hosted as a service
provided to customers over the Internet. It reduces the customer’s need for software maintenance,
operation, and support.

Traditional vs. Web-Based Systems Development:

Two major web based development environment:

1. Microsoft’s .NET-platform-independent software environment.
2. IBM’s WebSphere-a set of products specifically designed to support e-business applications
across multiple computing platforms

Traditional development
 System design is influenced by compatibility issues.
 Systems are designed to run on local and wide-area company networks.
 Systems often utilize Internet links and resources.
 Follows one of three main paths: in-house development, purchase of a software package with
possible modification, or use of outside consultants.
 Scalability can be affected by network limitations and constraints.
 Many applications require substantial desktop computing power and resources.
 Security issues usually are less complex than with Web-based systems.
Web-based development
 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.
 Are easily scalable, and can run on multiple hardware environments.
 Large firms tend to deploy this as enterprise-wide software solutions for applications such as
customer relationship management, order processing, and materials management.
 Web-based software treats the software application as a service that is less dependent on desktop
computing power and resources.
 When companies acquire this as a service rather than a product they purchase, they can limit in-
house involvement to a minimum and have the vendor install, configure, and maintain the system
by paying agreed-upon fees.
 Usually requires additional layers, called middleware, to communicate with existing software
and legacy systems.
 Although there is a major trend toward Web-based architecture, many firms rely on traditional

Looking to the Future: Web 2.0 and Cloud Computing

 Web 2.0 platform will enhance interactive experiences including wikis and blogs, and social
networking applications
 Cloud computing could bring enormous computing power to business and personal Internet

o 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.
o can refer to relatively minor programming tasks, the rental of software from a service
provider, the outsourcing of a basic business process (often called business process
outsourcing, or BPO), or the
handling of a company’s entire IT function.

The Growth of Outsourcing

A firm that offers outsourcing solutions is called a service provider.

Two popular outsourcing options:

 Application service providers (ASP) - a firm that delivers a software application, or access to an
application, by charging a usage or subscription fee.
 Internet business services (IBS)- provide powerful Web-based support for transactions such as
order processing, billing, and customer relationship management. Also called, managed hosting,
because system operations are managed.

Outsourcing Fees:
 Fixed fee model-uses a set fee based on a specified level of service and user support.
 Subscription model -has a variable fee based on the number of users or workstations that
have access to the application.
 Usage model or transaction model- charges a variable fee based on the volume of
transactions or operations performed by the application.

Outsourcing Issues and Concerns:

 Mission-critical IT systems should be outsourced only if the result is a cost- attractive, reliable,
business solution that fits the company’s long-term business strategy.
 Mergers and acquisitions also can affect outsourcing clients.
 Outsourcing also can affect day-to-day company operations and can raise some concerns.
 Outsourcing can be especially attractive to a company whose volume fluctuates widely, such as a
defense contractor.
 A major disadvantage of outsourcing is that it raises employee concerns about job security.

Offshore Outsourcing
o refers to the practice of shifting IT development, support, and operations to other countries.
o many firms are sending IT work overseas at an increasing rate.
o the main reason for offshore outsourcing is the same as domestic outsourcing: lower bottom-line
o offshore outsourcing, however, involves some unique risks and concerns.

In-House Software Development Options

Make or Buy Decision

o The choice between developing versus purchasing software often is called a make or buy, or
build or buy decision.
o The company’s IT department makes, builds, and develops in-house software.
o Software package- obtained from a vendor or application service provider.
o Software vendors- companies that develop software for sale.
o Value-added reseller (VAR)- firm that enhances a commercial package by adding custom
features and configuring it for a particular industry.
o Horizontal application- a software package that can be used by many different types of
organizations. Ex: Accounting Package.
o Vertical application- a software package developed to handle information requirements for a
specific type of business. Ex. organizations with special system requirements e.g : colleges,
banks, hospitals, and airline.

Developing Software In-House

 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

Purchasing a Software Package

 Lower costs
 Requires less time to implement
 Proven reliability and performance benchmarks
 Requires less technical development staff
 Future upgrades provided by the vendor
 Input from other companies

Customizing 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

Creating User Applications

o User application utilizes standard business software, such as Microsoft Word or Microsoft
Excel, which has been configured in a specific manner to enhance user productivity.
o IT staff can create a user interface, which includes screens, commands, controls, and features
that enable users to interact more effectively with the application.
o In some situations, user applications offer a simple, low-cost solution. At the same time,
application software is more powerful, flexible, and user-friendly than ever.
o Many companies empower lower-level employees by providing more access to data
and more powerful data management tools. The main objective is to allow lower-level
employees more access to the data they require to perform their jobs, with no intervention from
the IT department.
o In most large and medium-sized companies, a help desk, or information center (IC),
within the IT department is responsible for providing user support.
o Some user applications have powerful screen generators and report generators that allow users
to design their own data entry forms and reports.

Role of the Systems Analyst

o When selecting hardware and software, systems analysts often work as an evaluation and
selection team.
o The primary objective of the evaluation and selection team is to eliminate system alternatives
that will not meet requirements, rank the system alternatives that are feasible, and present the
viable alternatives to management for a final decision.

Analyzing Cost and Benefits

o At this stage, you will identify specific systems development strategies and choose a
course of action.

Financial Analysis Tools

 Payback Analysis-determines how long it takes an information system to pay for itself through
reduced costs and increased benefits.
 Return on investment (ROI) - is a percentage rate that compares the total net benefits (the
return) received from a project to the total costs (the investment) of the project.
 Net present value (NPV)- 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.

Cost-Benefit Analysis Checklist

 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.
 Analyze various software licensing options, including fixed fees and formulas based on the
number of users or transactions.
 Apply the financial analysis tools to each alternative.
 Study the results and prepare a report to management.

The Software Acquisition Process

Step 1: Evaluate the Information System Requirements

 Identify key features-
 Consider network and web-related issues
 Estimate volume and future growth
 Specify hardware, software, or personnel constraints
 Prepare a request for proposal or quotation:
 Request for proposal (RFP) is a document that describes your company, lists
the IT services or products you need, and specifies the features you require.
 Evaluation model is a technique that uses a common yardstick to measure and
compare vendor ratings.
 Request for quotation (RFQ) is more specific than an RFP. When you use an
RFQ,you already know the specific product or service you want and you need to
obtain price quotations or bids.

Step 2: Identify Potential Vendors or Outsourcing Options

 The Internet is a primary marketplace
 Another approach is to work with a consulting firm.
 Another valuable resource is the Internet bulletin board system that contains thousands of forums,
called newsgroups.

Step 3: Evaluate the Alternatives

 Existing users -You can contact existing users to obtain feedback and learn about their
 Application testing-If a software package is one of the options, find out if it is possible for users
in your organization to try the product.
 Benchmarking- To determine whether a package can handle a certain transaction
volume efficiently, you can perform a benchmark test.
 Benchmark measures the time a package takes to process a certain number of

Step 4: Perform Cost-Benefit Analysis

 Identify and calculate TCO for each option you are considering.
 When you purchase software, what you are buying is a software license.
 If you purchase a software package, consider a supplemental maintenance agreement.

Step 5: Prepare a Recommendation

 You should prepare a recommendation that evaluates and describes the alternatives, together with
the costs, benefits, advantages, and disadvantages of each option
 At this point, you may be required to submit a formal system requirements document and deliver
a presentation.

Step 6: Implement the Solution

 Implementation tasks will depend on the solution selected
 Before the new software becomes operational, you must complete all implementation steps,
including loading, configuring, and testing the software; training users; and converting data files
to the new system’s format
Completion of Systems Analysis Tasks
System Requirements Document

 The system requirements document, or software requirements specification, contains the

requirements for the new system, describes the alternatives that were considered, and makes a
specific recommendation to management.
 Like a contract, Format and organize it so it is easy to read and use
Presentation to Management
 Summarize the primary viable alternatives
 Explain why the evaluation and selection team chose the recommended alternative
 Allow time for discussion and for questions and answers
 Obtain a final decision from management or agree on a timetable for the next step in the process.

Depending on their decision, your next task as a systems analyst will be one of the following:

1. Implement an outsourcing alternative.

2. Develop an in-house system.
3. Purchase or customize a software package.
4. Perform additional systems analysis work.
5. Stop all further work.

The Transition to Systems Design

Preparing for Systems Design Tasks

o It is essential to have an accurate and understandable system requirements document.

Logical and Physical Design

o The logical design defines the functions and features of the system and the relationships among
its components.
o The physical design of an information system is a plan for the actual implementation of the