E. Wainright Martin Carol V. Brown Daniel W. DeHayes Jeffrey A. Hoffer William C. Perkins MANAGING MANAGING INFORMATION INFORMATION TECHNOLOGY TECHNOLOGY FIFTH EDITION CHAPTER 11 METHODOLOGIES FOR PURCHASED SOFTWARE PACKAGES
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E. Wainright Martin Carol V. Brown Daniel W. DeHayesJeffrey A. Hoffer William C. Perkins
MANAGINGMANAGINGINFORMATIONINFORMATIONTECHNOLOGYTECHNOLOGY
FIFTH EDITION
CHAPTER 11
METHODOLOGIES FOR PURCHASED
SOFTWARE PACKAGES
© 2005 Pearson Prentice-Hall Chapter 11 - 2
THE MAKE-OR-BUY DECISION
Page 406
Decision should be made jointly by business managers and IS professionals
Advantages of purchasing: Cost savings Faster speed of implementation
Disadvantages of purchasing: Seldom exactly fits a company’s needs Often forces trade-offs
© 2005 Pearson Prentice-Hall Chapter 11 - 3
PURCHASING METHODOLOGY
Page 407
The Purchasing Steps
Figure 11.1 The Purchasing Process
© 2005 Pearson Prentice-Hall Chapter 11 - 4
PURCHASING METHODOLOGY
Page 407
Initiating the Purchasing Process
Figure 11.2 Comparison of Costs and Building vs Purchasing a System
© 2005 Pearson Prentice-Hall Chapter 11 - 5
PURCHASING METHODOLOGY
Page 408
Establish Criteria for Selection
Figure 11.3 Key Criteria for Software Selection
© 2005 Pearson Prentice-Hall Chapter 11 - 6
PURCHASING METHODOLOGY
Page 409
Develop and Distribute the RFP
Request for proposal (RFP) – a formal document sent to potential vendors inviting them to submit a proposal describing their software package and how it would meet the company’s needs
© 2005 Pearson Prentice-Hall Chapter 11 - 7 Page 409
Develop and Distribute the RFP
Figure 11.4 Sample RFP Table of Contents
© 2005 Pearson Prentice-Hall Chapter 11 - 8 Page 410-411
Evaluation steps: Review vendors’ responses from RFPs Request demonstrations of leading packages Request references from users of software packages in other companies Assess how well package capabilities satisfy company’s needs Understand extent of any additional development efforts or costs to tailor software Make decision
PURCHASING METHODOLOGYEvaluate Vendor Responses to RFP and Choose Package
© 2005 Pearson Prentice-Hall Chapter 11 - 9 Page 411
PURCHASING METHODOLOGYEvaluate Vendor Responses to RFP and Choose Package
Figure 11.6 Matching Company Needs with Capabilities of the Package
© 2005 Pearson Prentice-Hall Chapter 11 - 10 Page 413
If no software package modifications required: Skip system design and building steps Move directly to system testing Develop any necessary process changes
If software package is modified: Consider contracting with vendor or a third party for changes versus modifying in-house Determine if changes are required to other existing company systems
PURCHASING METHODOLOGYConstruction Phase
© 2005 Pearson Prentice-Hall Chapter 11 - 11 Page 413-414
PURCHASING METHODOLOGYImplementation Phase
© 2005 Pearson Prentice-Hall Chapter 11 - 12 Page 414-415
Business managers and users IS professionals Project manager – usually a business manager Software vendor personnel Sometimes includes a third-party implementation partner Purchasing specialists Attorneys
PURCHASING METHODOLOGYProject Team for Purchasing Packages
© 2005 Pearson Prentice-Hall Chapter 11 - 13 Page 416
PURCHASING METHODOLOGYPurchasing Advantages and Disadvantages
Figure 11.7 Advantages and Disadvantages of Purchasing Packaged Software
© 2005 Pearson Prentice-Hall Chapter 11 - 14 Page 417
SPECIAL CASE: ENTERPRISE SYSTEM PACKAGES Enterprise Resource Planning (ERP) system packages:
Companies purchase to achieve business benefits and IT platform benefits
Enables access to integrated data for better decision making Often require heavy reliance on third-party consultants Implementation efforts usually complex, and sometimes not
successful
© 2005 Pearson Prentice-Hall Chapter 11 - 15 Page 417
SPECIAL CASE: ENTERPRISE SYSTEM PACKAGES Factors that need to be managed well for ERP implementation to be
successful: Top management is engaged in the project, not just involved Project leaders are veterans, and team members are decision makers Third parties fill gaps in expertise and transfer their knowledge Change management goes hand-in-hand with project planning A satisfying mindset prevails
Brown and Vessey, 2003
© 2005 Pearson Prentice-Hall Chapter 11 - 16 Page 418
NEW PURCHASING OPTION: APPLICATION SERVICE PROVIDERS (ASPs) New trend beginning 2000s
Purchasing option: purchaser elects to use a “hosted” application rather than to purchase the software application and host it on its own equipment
ASP is an ongoing service provider
Company pays third party (ASP) for delivering the software functionality over the Internet to company employees and sometimes business partners
© 2005 Pearson Prentice-Hall Chapter 11 - 17 Page 418-419
NEW PURCHASING OPTION: APPLICATION SERVICE PROVIDERS (ASPs) Some advantages:
Cost savings and faster speed of implementation Usually involves monthly fees rather than large infrastructure investment
Disadvantages: Dependence on an external vendor for both software and ongoing operations Good assessment of required service levels even more critical
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