A Project Report

On

Acquiring IT Applications

Session 2016-2020

Submitted To: Submitted By:

Mam Khadija Ayesha Farooq (061631006)

Azaima Zahid (061631009)
Farah Ashraf (061631010)
Iqra Nasir (061631017)
Mehak Tariq (061631027)
Momena Majeed (061631029)
Mubashra Zulfiqar (061631030)
Rubab Tanveer (061631034)
Saman Atif (061631036)
Simran Shehzadi (061631041)
PLANNING FOR AND JUSTIFYING IT APPLICATIONS

When a company check and performance requirements, it will produce a list of priority of the
application of information technology is already running and applications of information
technology that has the potential to be acquired, the list of which is known as the application
portfolio.

Information technology planning:

The planning process for the application of new information technology, starting with analyzing
the organization's strategic planning. Identify organizational strategic planning overall corporate
mission, goals and the steps needed to achieve proficiency level. Along with the organization's
strategic planning of information technology architecture that is running, providing input for the
development of information technology strategic planning. Strategic planning of information
technology is long-term goals that contain identifying information technology infrastructure and
information technology initiatives required to achieve organizational goals. After that, the
operational planning information system is developed. This plan consists of projects to be executed
by the department of information systems as well as managers in functional areas to support the
strategic planning of information technology. Operational planning information system consists
of the following elements:

• Mission
• IT environment
• Objective of the IT Function
• Application Portfolio
• Resource allocation and project management
 • Mission: Derived from IT strategy.
• IT Environment: Summary of information needs of the functional areas and of the
organization as a whole.
• Objectives of IT functions: Best current estimate of the goals.
• Application Portfolio: Prioritized inventory of present application and a detailed plan of
projects to be developed or continued.
• Resource allocation and project management: Listing of who is going to do what, how
and when.

Evaluating & Justifying IT Investment

Justifying IT investments, relating to the calculation of costs, calculate benefits (value), and
compare the two. Comparison of the two, known as cost-benefit analysis. Here are some
approaches to conduct a cost-benefit analysis:

Conducting the Cost-Benefit Analysis:

• Using net present value

• Return on investment
• Breakeven analysis
• The business case approach

1. Net Present Value (NPV): difference between expenditure and income have been
discounted using the social opportunity cost of capital as the discount factor, or in other
words the cash flows expected in the future that didiskonkan when calculating NPV ..TO
necessary data about the estimated cost of the investment, operating costs, and maintenance
as well as the estimated benefit / benefits of the proposed project.
2. Return on investment (ROI): the ratio of money gained or lost on an investment relative
to the amount of money invested. The amount of money gained or lost may be called
interest or profit / loss.
3. Breakeven analysis: is a method or a technique used by an officer or manager of the
company to determine the volume (amount) of sales and production volume of what the
company concerned did not suffer a loss nor gain profits.
4. The business case approach: A business case is one or more specific applications or
projects. Its major emphasis is the justification for a specific required investment, but it
also provides the bridge between the initial plan and its execution.

STRATEGIES FOR ACQUIRING IT APPLICATIONS

1. Buy the application (off-the-shelf approach)
2. Lease the application
3. Developing the application in-house (insourcing)

1. Buy the application (off-the-shelf approach)

Compared with the buy option and the option to develop applications in-house, the “lease”
option can save a company both time and money. Of course, leased packages (like purchased
packages) may not exactly fit the company’s application requirements. However, vendor
software generally includes the features that are most commonly needed by organizations in a
given industry. Again, the company will decide which features are necessary. It is common for
interested companies to apply the 80/20 rule when evaluating vendor software. Put simply, if
the software meets 80 percent of the company’s needs, then the company should seriously
consider changing its business processes so it can utilize the remaining 20 percent. Many times,
this is a better long-term solution than modifying the vendor software. Otherwise, the company
will have to customize the software every time the vendor releases an updated version.

Advantages and Limitation of the “buy” option

Advantages of the buy option Disadvantages of the buy option

 Many different types of off-the-shelf  Software may not exactly meet the
software are available. company’s need.
 Much time can be saved by buying  Software may be difficult or
rather than building. impossible to modify, or it may require
 The company can know what it is huge business process changes to
getting before it invests in the software. implement.
 The company is not the first and only  The company will not have control
user. over software improvements and new
 Purchased software may avoid the need versions.
to hire personnel specifically dedicated  Purchased software can be difficult to
to a project. integrate with existing system.
 The vendor updates the software  Vendors may drop a product or go out
frequently. of business.
 The price is usually much lower for a
buy option

2. Lease the application

Types of leasing vendors

 Outsourcer
 Application system provider (ASP)
Outsourcer:
The first way is to lease the application from an outsourcer and install it on the company’s
premises. The vendor can help with the installation and frequently will offer to also contract
for the operation and maintenance of the system. Many conventional applications are leased
this way.
Application system provider:
Lease the IT application from an application service provider (ASP)that hosts the application
at its data center. An ASP is an agent or vendor who assembles the software needed by
enterprises and packages them usually with outsourced development, operations, maintenance,
and other services. Major ASPs for enterprise IT systems are Oracle, Microsoft and IBM.A
concept related to the lease option is software-as-a service.
Software-as-a-service (SaaS) refers to software that is rented. Rather than purchase a software
product and pay for occasional upgrades, a company may subscribe to a SaaS, and all updates
are provided during the term of the subscription. When the subscription period expires, the
software is no longer valid. Web-based applications lend themselves to the SaaS model because
they can be easily controlled at the server level. SaaS usually costs less than store-bought
software and requires users to install and boot up nothing more than a browser

3. Developing the application in-house (insourcing)

A third development strategy is to build applications in-house. Although this approach is

usually more time-consuming and more costly than buying or leasing, it often results in a better
fit with the organization’s specific requirements. In-house development can make use of
various methodologies. The basic, backbone methodology is the systems development life
cycle (SDLC).
There are two major approaches to in-house development:

 Building from starch

 Building from components
Build from starch:
This option should be considered only for specialized applications for which components are
not available. It is an expensive and slow process, but it will provide the best fit.
Build from components:
Companies with experienced IT staff can use standard components (e.g. a secure web server),
some software languages (e.g. java), and third-party subroutines to create and maintain their
application on their own. From a software standpoint using components offers the greatest
flexibility and can be lease expensive option in the long run. However, it can also result in a
number of false starts and wasted experimentations. For this reason, even those companies
with experienced staff are frequently better off modifying and customizing one of the packaged
solutions as part of the “buy” option.

TRADITIONAL SYSTEMS DEVELOPMENT LIFE CYCLE

The SDLC methodology is also referred to as "conventional systems analysis", "traditional

systems analysis", "the systems development life-cycle" or the "waterfall model". This
methodology was designed in the late 1960s and it had a great impact on the data processing
community. The SDLC has the following steps:

 Feasibility Study - looks at the present system and its environment

 System Investigation - aims to detail facts such as, functional requirements, problems of
the present working methods etc.
 Systems Analysis - is an attempt to understand all aspects of the present system and why
it developed as it did, and eventually indicate how things might be improved by any new
system
 Systems Design - involves the design of both the computer and manual parts of the system
 Implementation - the major aspect of this phase is quality control - testing and
documentation
 Review and Maintenance - this stage occurs once the system is operational and aims to
ensure the continued efficient running of the system. After some time the operation
System is no longer appropriate and should be replaced - the SDLC then finishes and the life
cycle begins again.

Following are the seven phases of the SDLC:

1. Planning
This is the first phase in the systems development process. It identifies whether or not there is
the need for a new system to achieve a business strategic objectives. This is a preliminary plan
(or a feasibility study) for a company’s business initiative to acquire the resources to build on
an infrastructure to modify or improve a service. The company might be trying to meet or
exceed expectations for their employees, customers and stakeholders too. The purpose of this
step is to find out the scope of the problem and determine solutions. Resources, costs, time,
benefits and other items should be considered at this stage.
2. Systems Analysis and Requirements
The second phase is where businesses will work on the source of their problem or the need for
a change. In the event of a problem, possible solutions are submitted and analyzed to identify
the best fit for the ultimate goal(s) of the project. This is where teams consider the functional
requirements of the project or solution. It is also where system analysis takes place—or
analyzing the needs of the end users to ensure the new system can meet their expectations.
Systems analysis is vital in determining what a business needs are, as well as how they can be
met, who will be responsible for individual pieces of the project, and what sort of timeline
should be expected.
There are several tools businesses can use that are specific to the second phase. They include:
CASE (Computer Aided Systems/Software Engineering)
Requirements gathering
Structured analysis
3. Systems Design
The third phase describes, in detail, the necessary specifications, features and operations that
will satisfy the functional requirements of the proposed system which will be in place. This is
the step for end users to discuss and determine their specific business information needs for
the proposed system. It’s during this phase that they will consider the essential components
(hardware and/or software) structure (networking capabilities), processing and procedures for
the system to accomplish its objectives.
4. Development
The fourth phase is when the real work begins—in particular, when a programmer, network
engineer and/or database developer are brought on to do the major work on the project. This
work includes using a flow chart to ensure that the process of the system is properly organized.
The development phase marks the end of the initial section of the process. Additionally, this
phase signifies the start of production. The development stage is also characterized by
instillation and change. Focusing on training can be a huge benefit during this phase.
5. Integration and Testing
The fifth phase involves systems integration and system testing (of programs and
procedures)—normally carried out by a Quality Assurance (QA) professional—to determine
if the proposed design meets the initial set of business goals. Testing may be repeated,
specifically to check for errors, bugs and interoperability. This testing will be performed until
the end user finds it acceptable. Another part of this phase is verification and validation, both
of which will help ensure the program"s successful completion.
6. Implementation
The sixth phase is when the majority of the code for the program is written. Additionally, this
phase involves the actual installation of the newly-developed system. This step puts the project
into production by moving the data and components from the old system and placing them in
the new system via a direct cutover. While this can be a risky (and complicated) move, the
cutover typically happens during off-peak hours, thus minimizing the risk. Both system
analysts and end-users should now see the realization of the project that has implemented
changes.
7. Operations and Maintenance
The seventh and final phase involves maintenance and regular required updates. This step is
when end users can fine-tune the system, if they wish, to boost performance, add new
capabilities or meet add optional user requirements.
Importance of the SDLC:
If a business determines a change is needed during any phase of the SDLC, the company might
have to proceed through all the above life cycle phases again. The life cycle approach of any
project is a time-consuming process. Even though some steps are more difficult than others,
none are to be overlooked. An oversight could prevent the entire system from functioning as
planned.