Evaluating Software Alternatives

„ Examine software alternatives and select an overall

strategy for the proposed system to prepare for the
Chapter 4 transition to the systems design phase.

Methods of Software Acquisition

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Advantages of Custom Developed

Custom Developed Software
Software
„ Some businesses consider that their processing „ The advantages of this type of applications
requirements are specific to their own organization and
they have the application software developed specifically. software development is that the resultant program
„ In-house Development – Employing programmers and will exactly fulfill the processing requirements.
analysts and setting up an internal IT group.
„ Contract an External Software – The company could use
the services of a computer bureau or software house,
especially if it is a small organization which couldn't afford
a fulltime development team.
„ The resultant software is known as Custom-developed or
Tailor-made Software since it exactly fits the
requirements of the organization, just as a tailor-made suit
exactly fits the purchaser.
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Disadvantages of Custom Developed Disadvantages of Custom Developed
Software Software
„ Higher Cost „ Higher Cost
„ Software Defects ‹ The cost of producing tailor-made software is
high, just as tailor-made clothing is expensive.
This is because the costs of developing the
software are entirely borne by the one
organization instead of them being borne by
many organizations.

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Disadvantages of Custom Developed

Reasons for In-House Developing
Software
„ Software Defects „ Companies choose in-house development to:
‹ It is very unusual for software to be perfect ‹ Satisfy Unique Business Requirements
when the programmers have finished. There is ‹ Minimize Changes in Business Procedures and
typically a period when the software is first Policies
operated where faults, or bugs, become exposed ‹ Meet Constraints of Existing Systems
and have to be corrected. This can often cause
‹ Meet Existing Technology
serious inconvenience to the end-user and, in
terms of lost time and efficiency, increases the ‹ Develop Internal Resources and Capabilities

overall cost of the software.

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Reasons for In-House Developing Reasons for In-House Developing

„ Satisfy Unique Business Requirements „ Minimize Chances in Business Procedures and

‹ No commercially available software package Policies
can meet their unique business requirements. ‹ While installing a new software package almost
always requires some degree of change in how
a company does business
‹ If the installation of a purchased package will
be too disruptive, then the organization might
decide to develop its own software instead.

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Reasons for In-House Developing Reasons for In-House Developing

„ Meet Constraints of Existing Systems „ Meet Constraints of Existing Technology
‹ Any new software installed must work with ‹ Another reason to develop software in-house is
existing systems. that the new system must work with existing
‹ Ensure that the new system will interface with hardware and legacy systems
the old system.

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Reasons for In-House Developing Purchasing a Software Package
„ Develop Internal Resources and Capabilities „ A commercially available software package could
‹ Many firms feel that in-house IT resources and satisfy system requirements.
capabilities provide a competitive advantage ‹ Lower Cost
because they can respond quickly when
‹ Less Time to Implement
business problems or opportunities arise.
‹ Proven Reliability and Performance
Benchmarks
‹ Less Technical Development Staff

‹ Future Upgrades Proved by the Vendor

‹ Other Companies as Resources

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Reasons for Package Purchasing Reasons for Package Purchasing

„ Lower Costs „ Less Time to Implement

‹ Because many companies use software ‹ When you purchase a package, it already has
packages, software vendors spread the been designed, programmed, tested, and
development costs over many customers. documented.

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Reasons for Package Purchasing Reasons for Package Purchasing

„ Proven Reliability and Performance Benchmarks „ Less Technical Development Staff

‹ If the package has been on the market for any ‹ Companies that use commercial software
length of time, any major problems probably packages often are able to reduce the number of
have already been detected and corrected by the programmers and systems analysts on the IT
vendor. staff.
‹ If the product is popular, it almost certainly has
been rated and evaluated by independent
reviewers.

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Reasons for Package Purchasing Reasons for Package Purchasing

„ Future Upgrades Provided by the Vendor „ Other Companies as Resources
‹ Software vendors regularly upgrade software ‹ Using a commercial software package means
packages by adding improvements and you can contact users in other companies to get
enhancements to create a new version or release. their impressions and input about the software
package.

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Advantages of Packaged Software Advantages of Packaged Software

„ Lower Cost „ Lower Cost

„ Less Software Defects ‹ The most obvious and important advantage is

„ Better Documentation that packages are significantly cheaper to buy

„ Training Easily Available than custom-developed software.
‹ This is because package is sold to a large
market and the development costs can be
spread among a large number of purchasers.

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Advantages of Packaged Software Advantages of Packaged Software

„ Less Software Defects „ Better Documentation
‹ Given the large market to which packages are ‹ Given the scale of the applications package
sold, most of the problems which commonly market, it is more feasible for the producers to
beset new software have been ironed out prior provide good documentation to accompany the
to the introduction into the market place.
software.
‹ It is good policy, however, to avoid pioneering
‹ Clearly, this will make the package easier to
by buying new software.
‹ It is always better to purchase software that has
use, which will make it more attractive to the
been available for some time and will be well market and therefore easier to sell.
tried and tested.

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Advantages of Packaged Software Disadvantages of Packaged Software

„ Training Easily Available „ May not meet all requirements

‹ The ease of use is also improved by the fact that „ Less efficient
it becomes viable for consultants and training
organizations to offer training courses in using
it.

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Disadvantages of Packaged Software Disadvantages of Packaged Software

„ May not meet all requirements „ Less efficient

‹ The facilities that are offered by a package are ‹ Since the system is designed for more general
not as specific to a business as tailor-made purposes than the tailor-made software, the
software and might not quite satisfy the design may be less efficient. For example, a
processing requirements of the business. user may have to go through some unnecessary
steps in processing which cannot be avoided.

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Customizing Software Packages Comparison

„ Acquire a package that can be customized to meet

the needs of an organization.
‹ Purchase a basic package that vendor will
customized to suit your needs
‹ Negotiate directly with the software vendor to
make enhancements to meet your needs by
paying extra charge
‹ Purchase the package and make your own
modification.

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Other Software Alternatives Application Service Providers (ASP)

„ Other possibilities include using an application „ An ASP delivers applications, or access to

service provider, outsourcing, and developing end- applications, by charging a usage or subscription
user applications. fee.
‹ Application Services Providers „ An ASP provides more than a license to use the
‹ Outsourcing software; it rents an operational package to the
‹ User Application
customer.
„ The service that the ASP provides is called
Application Hosting.

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Outsourcing User Applications

„ Outsourcing is the use of outside companies called „ User applications utilize standard business
Service Providers to handle a portion of a software, such as Microsoft Office, which has
company’s IT workload on a temporary or long- been configured in a specific manner to enhance
term basis. user productivity.
„ Many firms outsource IT work as a way of ‹ For example, to help a sales respond rapidly to
controlling costs and dealing with rapid customer price requests, an IT support person
technological change. can set up a form letter with links to a
spreadsheet that calculates incentives and
discounts.

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Steps in Evaluating and Purchasing

Selecting a Software Alternative
Software Packages
1) Evaluate the Information System Requirements
„ Identify the Key Features of the system
„ Estimate Volume and Future Growth
„ Specify any Hardware Constraints
„ Prepare a Request for Proposal or Quotation
2) Identify Potential Software Vendors
3) Evaluate Software Package Alternatives
4) Make the Purchase
5) Install the Software Package

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Step 1A: Evaluate the Information System Step 1B: Evaluate the Information System
Requirements Requirements
„ Based on your analysis of the system requirements, „ Identify The Key Features of The System
‹ Identify the system’s key features ‹ Evaluating system requirements involved

‹ Estimate volume and future growth highlighting any critical features the system
‹ Specify any hardware constraints
must have.
‹ Prepare a request for proposal or quotation

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Step 1C: Evaluate the Information System Step 1D: Evaluate the Information System
Requirements Requirements
„ Estimate Volume and Future Growth „ Specify any Hardware Constraints
‹ Know the current volume of transactions and ‹ The software must run properly on your current
processing or proposed hardware platform.
‹ Forecast changes over a three-to-five-year
period.

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Step 1E: Evaluate the Information System
Step 2: Identify Potential Software Vendors
Requirements
„ Prepare a Request for Proposal or Quotation „ The next step is to contact potential vendors.
‹ Prepare a Request for Proposal (RFP) or a „ Preparing an RFP will help the vendor’s sales
Request for Quotation (RFQ) to obtain the representatives identify possible solutions.
information for making decision. „ Identify popular products and strategies by
‹ Request for proposal (RFP) is a written list of contacting software vendors, industry sources, and
features and specifications given to prospective IT consultants.
vendors when not identified a specific product
or package to use.

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Step 3: Evaluate Software Package

Alternatives
Step 4: Make the Purchase
„ After identifying possible software packages, „ When you purchase software, usually you do not
compare them and select one to fit the company’s own it – what you are buying is a software license
needs. that gives you the right to use the software under
„ Obtain information about the packages from as certain terms and conditions.
many sources as possible (vendor presentations „ Although most software packages are purchased,
and literature, product documentation, trade some vendors offer leasing as a financial
publications), and companies that perform alternative.
software testing and evaluation. „ Another alternative is to investigate whether the
„ Obtain information from existing users, test the package is available through an ASP for a rental
application, and benchmark the package if of subscription fee.
necessary.
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Step 5. Install the Software Package

„ After purchasing the software package, the final step is

installation.
„ Installation strategy should be planned well in advance,
especially if any disruption of normal business operations
is expected.
„ If the software package is customized, then the task will be
more complex and difficult.
„ Before the use of new software package, all
implementation steps must complete, including loading,
configuring, and testing the software, training users; and
converting data files to the new system’s format.

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