TOPIC SIX: INFORMATION SYSTEM ACQUISITION

System Acquisition: involves obtaining and installing a hardware or software system,

incorporating the system into the current technological infrastructure and integrating the system
into the data and procedures people use to make things happen in an organization.

Acquisition Process

The acquisition process should involve the identification and analysis of alternative

solutions that are each compared with the established business requirements.

STAGE 1: IDENTIFYING, PLANNING, AND JUSTIFYING THE INFORMATION AND

SYSTEM REQUIREMENTS

One of the most essential assessments in decision making process is identifying the

business objective after first knowing the problems being solved. The management should

primarily identify the business processes involved in the organization. Information systems are

usually developed as enablers of the business processes. The first phase of the acquisition

process should align the business process with the company objectives and the business plan. 

STAGE 2: RESTRUCTURING INFORMATION SYSTEM ARCHITECTURE

With the regards of system analysis approach, an organization which is still in the

progress of acquiring IT should remodel its information system (IS) architecture. IS architecture

is the conceptualization of how the organization’s information objectives are met by the

capabilities of the specific applications.

STAGE 3: IDENTIFYING A DEVELOPMENT ALTERNATIVE

There are several options in procuring software solutions. Some available alternatives

are: (1) Developing the system in-house, (2) Off-the self solutions (Purchasing commercially

available solution),

(3)Buying a custom made system for a vendor, (4) Leasing software from an application service

provider (ASP) or lease through utility computing (contracted development), (5) Outsourcing a

system from other companies (6) Participating in auction, e-marketplace, or a public exchange

(consortium) ,(7)Use a combination of these listed options.

STAGE 4: CONDUCTING A FEASIBILITY ANALYSIS

 As a part of the assessment in acquiring the solutions, a feasibility analysis is important to

identify the constraints for each alternative from both technical and business perspective.

Feasibility analysis incorporates the following categories:

·       Economic feasibility analysis provides cost-benefit justification with being regard to the

expenses of a system, which include procurement, project-specific, start-up, and operational

costs.

·       Technical feasibility assessment analyzes the technical reasonableness of the proposed

solution. Technical feasibility evaluates whether the company has the infrastructure and

resources including hardware, software, and network capability to support the application.

·       Operational feasibility evaluation reviews the extent of organizational changes

required to accommodate the proposed system. The proposed system should solve the

business problems and provide better opportunity for the business since the business process

might be changed.

·       Legal and contractual feasibility. The proposed solution must pass any related legal or

contractual obligations associated with.

·        Political feasibility. The nature of the organization most likely will be affected by the

presence of the new system. Therefore, this feasibility analysis evaluates how the internal

organization will accept the new system.

STAGE 5: PERFORMING THE SELECTION PROCEDURE

Selection procedure is the process of identifying the best match between the available

options and the identified requirements. In this process, the company requests for a proposal

from prospective providers, evaluates the proposal, and selects the best available alternative.

There are various ways to solicit responses from providers. Some of the common methods

comprise request for information (RFI), request for bid (RFB), and request for proposal (RFP).

An RFI is used to seek information from vendors for a specific intention.

STAGE 6: PROPOSAL EVALUATION PROCESS

           Proposal evaluation is a crucial process in the software acquisition since one of more key

stakeholders reviews submitted proposals using a list of objective selection criteria and decide

the best match between the product features and functionality with the identified requirements.

Martin, et al (2000) identified six steps in selecting a software vendor with its application

package:[8]

1. Examining potential vendors’ background. 

2. Determining the evaluation criteria.

3. Evaluating providers and their applications. 

4. Selecting the provider and its solution. 

In general, defined list of criteria for selecting a software application package are following:
TABLE 1. Criteria for Selecting a Software Application Package to use
 
·   Usability and functionality ·   Required training
·   Cost-benefit analysis ·   System security
·   Upgrade policy and cost ·   Maintenance and operational requirements
·   Vendor reputation ·   User easiness to learn
·   System flexibility and scalability ·   Performance measurement
·   Manageability ·   Interoperability and data handling
·   Quality of documentation ·   Ease of integration
·   Hardware and networking resources ·   Reliability measurement
·   Upgradeability ·   Compatibility with other applications
 
 
5. Negotiate a contract. 

6. Establishing a service level agreement (SLA). 

STAGE 7: IMPLEMENTING THE SELECTED SOLUTION

Upon completion of the contract negotiation, an acceptance plan should be agreed by

both the company and the vendor so the new application can be ready to be installed or

developed.

STAGE 8: REVIEWING AND MONITORING THE ACQUISITION PROCESS

 Software acquisition process is a continuing process that must be reviewed in ongoing

basis. A purchased software solution should effectively and efficiently satisfy user requirements.

Software maintenance and operation can be an issue due to rapid changes in IT technology.

 
Factors that influence information system acquisition
The factors considered most important in the choice of acquisition of information system are size
of the system and top management support to the approach. Other factors include;

 Cost benefit justification,
 Conversion risk,
 Ability to enhance user motivation,
 Amenability of approach to facilitate interaction between users and system development,
 Volume of data to stored

Information system acquisition methods

1. Buying the Applications (Off-the-Shelf Solution)

Purchasing commercially available solutions requires that the business adapt to the functionality
of the system. Buying an existing package can be a cost effective and time saving strategy
compared with in-house development.

Note that when selecting a vendor package, organizations should consider the following key
factors:

 Vendor stability
 System upgrades
 Customer support provided by vendor
 Hardware and software requirements
 Required customization of the base software

The advantages and disadvantages of ‘buy’ option

Advantages and Disadvantages of  ‘Buy’ Option

 
ADVANTAGES DISADVANTAGES
·   Shorter implementation time ·   Incompatibility with company needs

·   Use of proven technology ·   Incompatibility between different

 ·   Availability of outside technical
expertise
·   Easier to define costs
·   Frequent software updates
·   The price is usually cheaper
·   Minimal IT personnel
2. Leasing the Applications
The advantages and disadvantages of ‘lease’ option are summarized in Table 3.
TABLE 3. Advantages and Disadvantages of  ‘Lease’ Option
ADVANTAGES
·   Shorter time implementation
·   Cost saving (cheaper than buy option)
·   Ease to maintain cash flow
·   Required only minimum IT staff
·   Less risky to anticipate technology
updates
·   Having most of the required features
3. Developing the applications in-house
applications
·   Limitation on the software customization
·   Have no control over software
improvements
·   Long term reliance on vendor support
·   Specific hardware or software
requirements
DISADVANTAGES
·   May not exactly fit with company needs
·   Limitation on the software customization
·   Have no control over software
improvements
·   Specific hardware or software
requirements
·   Include an interest component that a
cash purchase would not include
Another strategy of IT acquisition is to build the application in-house. This option works well for
the organization that has the resources and time to develop the IT applications by its own.

There are two major ways to develop the system in-house.

 Building the application from the scratch is one of the approaches to match the specific
application with the requirements.
 Another way of building the in-house application is using the standard components or
features that have been included in some commercial packages (i.e. Java, Visual Basic,
C++) or using available packaged software that can be customized.

However, the second approach offers greater flexibility, cost and time saving rather than building
the software from the base.

The advantages and limitations of ‘in-house development’ option are summarized in Table 4.

 TABLE 4. Advantages and Disadvantages of  ‘In-house development’ Option

 
ADVANTAGES DISADVANTAGES
·   Best fit with the company ·   Required more IT personnel
requirements
·   High overhead cost
·   Have control over software
improvements ·   Time consuming

·   Have all of the required features ·   Problem with usability of the system

·   Main core competencies and maintain ·   High switching cost
level of quality service
·   Difficult to update to newer technology
·   Make a distinction with other
companies  
 

4. Outsourcing the applications

Outsourcing is the use of external service providers to effectively deliver IT-enabled business
process, application service and infrastructure solutions for business outcomes
Outsourcing entails transferring the major components of the firm’s systems, such as data
centres, telecommunications, and software development and maintenance, to a specialized
company that provides its services under long-term contracts specifying the service levels.

Outsourcing is a strategic use of outside resources to perform activities traditionally handled by

internal staff and resources.

However, in general, the reasons boiled down to one factor. It is less costly for the purchasing
company to turn outside rather than do the work in house.

The advantages and shortcomings of the ‘outsourcing' option are summarized below

Advantages and Disadvantages of Outsourcing

 
ADVANTAGES DISADVANTAGES
·   Cost Reduction ·   Loss of organizational competencies

·   Access to word class specialist ·   Reduction in quality of services

providers
·   Cost escalation from unforeseen expenses
·   Improved focus on core business

·   Subcontracting of workload

·   Better risk management

Review Questions
1. Define the following terms in relation to IS acquisition. 6 marks
Buying-off-the –shelf
Leasing
Outsourcing
2. What are the possible bottlenecks to IS acquisition Explain any four. 4marks
3. Explain five factors that influence the choice of information acquisition method. 10 marks
TOPIC SEVEN: THE ROLE OF INFORMATION SYSTEM IN ORGANIZATION
The applications of IS in an organization

The term information system refers to any collection of equipment that makes it possible for an
individual or organization to organize and analyze data. This means that the purpose of an
information system is to collect raw data and transform it into useful information that an
individual or larger entity can then use for decision making.

A great example of a commonly implemented business information system is a customer

relationship management. Customer relationship management (CRM) systems are designed to
accumulate and track consumer activities such as how they first interacted with the brand, overall
purchasing trends, customer inquiries, and much more.

Key Ways Information Systems Assist Organizations

1. Seamless communication: A key component of organizational leadership and
management is gathering and distributing information so that every position has the things
they need to succeed in their company role. Information systems assist in disseminating
information by allowing managers and other organization leaders to store data in folders
and documents that can be seamlessly shared with the appropriate employees. Most
information systems also allow users to communicate remotely so that no matter where an
employee is, they can receive information and react accordingly.
2. More efficient operations management: Information systems enable organizations to
collect and access recent information as well as keep a comprehensive collection of all
organization data. Combined, this enables businesses to operate more efficiently as things
like real-time sales data offer insights into immediate customer purchases to inform better
stocking or production practices.
3. Better record keeping: No matter what industry an organization is in, efficient record
keeping is necessary. There are industry regulations that need to be adhered to and
recorded proof those regulations have been adhered to. Then there is the long list of
different financial records that are a component of every business. Information systems
make record keeping easier, faster, and more accurate with features that enable document
storage, revision histories, communication records, and other aspects of operational data.
This type of record keeping is not just useful for ensuring an organization stays within the
necessary regulatory and financial lines, but it also assists business leaders in preparing
cost estimates and making better forecasts to understand how certain past actions
influenced operations.
4. More informed decision-making: This point bears repeating as frequently information
systems are used to inform the decision-making processes that can make or break an
organization. Organization and business leaders need the most accurate, up-to-date
information if they are to make the best decisions for the future of their group. Information
systems not only offer past trends, but they offer real-time business information and can be
set to forecast future possibilities. Business leaders need all of the above in order to make
the right decisions that will enable their organization to thrive.

Application of IS for competitive advantages in an organization

Information systems aid organizations in competing with other competitors by maintaining low
costs, differentiating products or services, focusing on market niche, and strengthening ties with
customers and suppliers, and increasing market entry high competition. These competitions are
on a global scale and are not just within the industry.
Using Information Systems to achieve competitive advantage can be described by Porter's
competitive forces model. This model "provides a general view of the firm, its competitors, and
the firm's environment". In this model five competitive forces decide about the firm's future.
Traditional Competitors are companies which produce similar products and services within the
market. Firms compete to attract consumers and make sure that they have the strategy and
resources to keep their customers satisfied.

New Market Entrants are companies that are entering the business industry. However, every firm
have a different way of entering the market. The way a computer firm enters a market is different
from how a pizza business introduces itself into a market. They can have high or low barriers of
entry depending on how high are the capital costs. In just about every industry there will be
Substitute Products that can be bought.

Businesses attains it's competitive advantage with the great help of information systems. The
competitive forces, which assist in competitive advantage, include traditional competitors, new
market entrant, subsitute products, customers, and suppliers. Also, the methods that businesses
utilize in order to fight against these competitive forces are vital and important. The internet also
influences competitive advantage greatly. With this help and the help of information systems,
businesses compete on a global scale, with different business models. Furthermore, a business
can compete on quality, design and business process.

Having information systems in today's society helps businesses stay more connected with the
world, and most importantly its customers. Information systems help connect businesses with its
customers by relaying information quickly back and forth. This fast transmission, for example,
helps suppliers know more rapidly what to supply and the demand for their supply. Knowing the
demand for the supply not only creates efficiency in the business, but also make customers
happy. This efficiency created by information systems helps suppliers with its overall success by
having high revenues.

Porter's competitive forces model helps companies determine what they should do to be more
productive by comparing what their competitors are doing. It also brings the companies costs
down and makes them more efficient as a business by using Information Systems. Value chain
models and value web models are also introduced in this chapter which show where a company
can be most efficient. When businesses redesign their practices they are going to be more
efficient in their technology department.

Microsoft Access is one software that relates databases to one another, creating relationships,
allowing businesses to use applications more efficiently. Also, Microsoft Access is preferred to
be used over Microsoft Excel, because it allows to create relations as mentioned above and work
with larger amounts of data.
Review Questions
1. According to you, what is the main role of Information system in an organization?