ITM426 Module 4 Case: Building Vs. Buying an Information System to Automate Sales Transactions and Manage Inventory for a Large Chain Retail Store
Module 4 - Case
FEASIBILITY STUDY AND QUALITY DEVELOPMENT
Assignment Overview
Organizations install information systems to achieve competitive advantage, provide services to customers, and to simplify operations. These considerations are key points and enter into the choice of development alternatives. Using software packages can save time and effort in systems development, and management can purchase it immediately and negotiate customization with the vendor. A popular alternative is selecting COTS software to maintain control internally. When selecting COTS, the total cost of ownership (TOC) must be considered. The system must also support future growth to accommodate higher transaction volumes, storage capacity, and new business requirements. The TOC is calculated by adding all development cost and future expenses relative to maintenance and support. Software options and their application are described as follows.
Develop In-house
This option is chosen for applications that are strategic to the company or simply to satisfy unique system requirements or hardware constraints. Organizations having other in-house systems may find in-house development a necessity to easily interface to other applications.
Purchase COTS
Investigating software packages and comparing them to in-house development is usually done before the feasibility study is completed. The advantages of package software include lower cost, shorter implementation cycle, reliability, available upgrades, and vendor’s reputation.
Outsourcing
One main reason for outsourcing is cost reduction on non-strategic activities. Outsourcing companies offer specialized systems design and IT services including conversion, training, and maintenance support. The decision to outsource is consistent with downsizing staff and equipment.
The goal of most organizations is to operate in an environment similar to CMM levels 2 repeatable or level 3 defined where projects are well documented and follow standards and best practices learned from previous implementations. It is virtually impossible to operate at the initial level 1 and expect development success. Even if an organization has not adopted the CMM framework, a good system analysis must be aware that at least a level 2 will produce much better results. As reviewed in Module 1, the SDLC is a tool to bring system development to a relative CMM level 2. Other applicable models are Six-sigma, ISO 9000, and simulations among others.
You can review the following articles to gain insight into how software development alternatives are considered.
Ledeen, K. (2009). Build v. buy a decision paradigm for information technology applications. Nevo Technologies. Retrieved from http://www(dot)nevo(dot)com/our-knowledge/whitepapers/BuildVsBuy.pdf
Webster, B. (2008, August 27). Buy vs. build software applications: The eternal dilemma. Baseline. Retrieved from http://brucefwebster(dot)com/2013/08/12/buying-vs-building-software-applications-the-eternal-dilemma/
FSOKX. (2013). Outsourcing performance metrics: What matters, and why. Thought Leadership Perspectives. Retrieved from http://www(dot)fsokx(dot)com/Thought-Leadership-Prespecitves/Outsourcing-Performance-Metrics-What-Matters-and-Why
CS211 (2007). Transition to systems design. [PPT presentation]. Retrieved from http://www(dot)peter-lo(dot)com/Teaching/CS211/L06.pdf
Optional Material
Office of the Secretary of Defense. (2009). Report of the defense science board task force on integrating commercial systems into the DOD effectively and efficiently. Retrieved from http://www(dot)acq(dot)osd(dot)mil/dsb/reports/ADA494760.pdf
Emery, P. (February, 2007). Evaluating RM software alternatives in a real world environment. The Information Management Journal. Retrieved from http://www(dot)arma(dot)org/bookstore/files/Emery1.pdf
To attain quality in systems development, you will be reviewing selected chapters from the Project Management Book, an online textbook by Mike Harding Roberts. The chapters provide excellent tips and quality checkpoints through the SDLC.
Harding Roberts, M. (2012). Chapter 12 quality management. Project Management Book. Retrieved from http://www(dot)hraconsulting-ltd(dot)co(dot)uk/project-management-book-1201.htm
Harding Roberts, M. (2012). Chapter 9 project support. Project Management Book. Retrieved from http://www(dot)hraconsulting-ltd(dot)co(dot)uk/project-management-book-0901.htm
In addition, the Capability Maturity Model is introduced as a framework for quality development. Of significant interest is CMM levels 1-5: initial, repeatable, defined, managed, and optimizing. A company in level 1 is bound to experience problematic processes in the software quality assurance area.
Select Business Solutions (2012). What is the Capability Maturity Model? (CMM). Retrieved from http://www(dot)selectbs(dot)com/process-maturity/what-is-the-capability-maturity-model
CMU. (2010). Software process improvement CMM. [PPT presentation]. Retrieved from www(dot)cs(dot)ru(dot)nl/~ths/sdm1/theo2010/Capability.ppt
Case Assignment
Based on the assigned materials, write a paper answering the following questions.
Case Assignment Part I
Suppose you were a business analyst developing a new information system to automate the sales transactions and manage inventory for each retail store in a large chain. The system will be installed at each store and exchange data with a main server in the head office. Based on the Case readings, discuss the decision criteria you will use to evaluate in-house development versus buying a COTS application. What option would you recommend?
Case Assignment Part II
Identify and discuss five of the most common problems encountered in systems development. What are some of the solutions that you will offer to minimize the identified issues? Please, justify your answer.
Assignment Expectations
Your paper should be short (6-8 pages, not including cover sheet and references) and to the point. It is to be structured as a point/counterpoint argument, in the following manner.
You are expected to:
Begin this paper by stating your position on these questions clearly and concisely
Cite appropriate sources and answer questions directly. Be sure to make the most effective case you can. Then present the best evidence you can, again citing appropriate sources.
By the end of your paper, you should be able to unequivocally re-affirm your original position.
You will be particularly assessed on:
Your ability to see what the module is all about and to structure your paper accordingly.
Your informed commentary and analysis -- simply repeating what your sources say does not constitute an adequate paper.
Your ability to apply the professional language and terminology of systems design and analysis correctly and in context; you are expected to be familiar with this language and use it appropriately.
Your effective and appropriate use of in-text citations to the assigned readings and other source material to support your arguments. Refer to the TUI Course Guidelines and or the Purdue University APA formatting and style guide (see optional readings for Module 1) for the proper formats.
Building Vs. Buying an Information System to Automate Sales Transactions and Manage Inventory for a Large Chain Retail Store
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Building Vs. Buying an Information System to Automate Sales Transactions and Manage Inventory for a Large Chain Retail Store
Part I
Introduction
Changes in the dynamics of business operations have brought the need for the manual systems to drastically shift directions. Manual systems of the past are being replaced with automated systems, which are swifter. Whether to build or buy such systems is a difficult and contentious decision an organization makes whenever it seeks to acquire a system that satisfies its needs. This paper is based upon a discussion of the criteria used to make this decision.
Building vs. buying
In my view, it is recommendable to buy a COTS information system. Barroso et al., (2013) state that historically, building one was more favorable because there were no systems available commercially. However, nowadays the trends have changed since there are many systems available in the market. FSOKX (2013) states that a meticulous approach to designing a performance scorecard that measures costs and whether the primary outsourcing objectives are met is needed by organizations. FSOKX further argues that the performance scorecard should include both tangible as well as intangible KPIs agreed upon by the organization management. These KPIs must be regularly assessed, evaluated, and discussed in order to accurately measure the value for money of the outsourcing deal. In this light, Ledeen (2009) established a step-by-step criterion to help organizations in making the best decision. The criterion included; core vs. context, coverage, direction, TCO, scale, timing, and standards.
Langer (2012) states that, the core vs. context criterion relates to the strategic importance of the system to the organization. Core functions form the basis of defining competitive advantage while contextual function supports the core function by adding value. In this case, automation of sales transactions and inventory management do not really drive the competitive advantage of a chain of retail stores and thus, cannot be viewed as core business processes that warrant the attention that an in-house developed system requires. It is also good to consider the extent to which the system covers the organization’s needs. Generally, it should have at least 80% of the features and functions that the organization needs. However, it is prudent to consider the requirements from the perspective of business processes and not exclusively from features and functions because a system may have all the functional requirements but fail to deliver. Any additional functions that the system offers should be adopted in anticipation of the future needs (Ledeen, 2009).
Direction relates to flexibility, maintainability and extendibility of the software throughout its life (Langer, 2012). The level of control the organization has over the system determines the ease of modification whenever the need arises. If business processes changes substantially over a period of time, the organization should have enough control to add the desirable features with ease. This is may not be possible with COTS information systems because most of them do not allow a lot of customization and organization have to get used to the way it works. Having to compromise is not the best way out when an organization wants to simplify its operations.
TCO is the total cost of the system. This does not only include the cost of acquisition but also configuration, customization, support, and maintenance costs, which may be more than the initial cost. Apart from these, creating an information system has many legal obligations that an organization must meet such as licensing the software. Ledeen (2009) suggests that the importance of the core business function is determined by the size of the scale; the larger, the more fundamental it is. He further indicates that scale is a vital factor in measuring and mitigating risks for the project. The decision process must encompass comparison of costs and risks for informed resolutions to be made. Implementation of any system requires time, which depends on the system complexity. Ledeen (2009) argues that if an organization can use a system without any modification, then the implementation will be simpler and shorter.
Conclusion
Buying a COTS information system is cheaper as compared to an in-house developed system, especially if the task it is intended to perform is of supportive nature. This is the cost of acquisition and implementation is lower, and fewer technical staff is needed (CS211, 2007). Moreover, where the system has been used by other organizations, it allows one to test reliability and benchmark, and the vendor’s reputation is measured. Therefore, as Webster (2008) argues, buying is a better solution than developing own system from scratch because the time, money and IT resources should instead be spent on custom systems that given the retail chain a competitive edge.
Part II
Introduction
Modern businesses have one of the most valuable assets, information. The emergence of IT has seen the need to develop information systems that help in the management of this precious asset. This venture has experienced a fair share of problems, which are being aggravated day by day. This paper discusses common problems encountered in system development and solutions that will reduce them.
Problems Encountered in System Development
According to Sommerville (2010), system development is about building new information systems that support the needs of the business and is commonly organized in projects with fixed goals, budgets, and time limits. A number of failures may be involved as the budget may exceed, system delivery may be behind schedule, or the system may not meet the user&rsquo...