Business Information Systems

For this report we were to answer the following questions should new systems be purchased, developed in house (cover in-sourcing / self-sourcing), or outsourced? What are the benefits? What are the areas of concern?

The first part of this essay I am going to answer the question should new systems be purchased? "The dependency on information technology (IT) has increased progressively for organizations as a strategically important competitive advantage. If planned, developed, and managed properly, IT can bring about greater efficiency in organizational operations, better working environments, and effective decision-making processes.[1] Therefore, many organizations are trying to catch up the development gap with the industry by means of technology acquisition.2 Technology acquisition process is essential in developing a good management information system for an organization. Many IT projects have failed because of poor design planning, false selection of the development, and a lack of follow up on key milestones addressed in the acquisition process. This research paper discusses proper steps and key factors in planning, acquiring, developing, and reviewing the IT acquisition." (1) "The term 'acquisition' refers to all the stages from buying, introducing, applying, adopting, adapting, localizing, and developing through to diffusion. [2]The acquisition issue is multifaceted for various reasons including large variety of IT applications, rapid change in new technology, and involvement of several business entities in the organization. The set of processes for the build, lease, or buy decision must be identical for every instance or business opportunity that arises. The processes determine the strategic value and potential savings of the proposed project, as well as factors like business transformation versus drive for competitive advantage.[3]

The range of IT applications stipulates a variety of advance approaches. The application itself can be acquired by in-house development, buy, lease, outsource, or any combination of two. For example, a company website can be developed in-house with HTML, JAVA, or any other web programming languages. Some other alternatives would be implementing commercial web development packages, leasing a web application from application service providers (ASPs) with some monthly or yearly fees, or purchasing on-demand application from a vendor.[4] If we look at larger applications such as enterprise-wide application, building such system would require more extensive integration with existing information systems such as corporate databases, intranets, enterprise resource planning (ERP), and other application programs.[5] Thus, implementing accurate IT application involves critical control process that need to be in place in order to support and protect company's best-interest.

For an organization, the major reason of acquiring IT applications is to effectively and efficiently support one or more business process.[6] Prior to the acquisition process, the detail requirements of the process should have already been identified clearly.[7] More importantly, the business objectives should be identified for the solution being sought and the management decision whether building, leasing, or buying the IT application should consider a value-versus-risk matrix to determine which options can be applied. Both IT auditors and corporate management should evaluate offerings over the long term and compare the "trickling" investment over time to the one-time cost of buying and implementing a system. Moreover, this technology acquisition process requires an extensive evaluation considering the system requirements, feasibility analysis, and risk management assessment. Therefore, the decision here is not as easy as to make, lease,-or-buy the solutions, but then supposed if we decide to buy, the next question should be, "how to create company's competitive advantages through such decision?" Decision making science requires that management understand the fundamentals of how IS acquisition decisions related to management information system (MIS) are made. What are the expectations and how they will be achieved? The value of using managerial sciences to approach this decision is to understand the motivation drivers that justify MIS and IT acquisition decision. [20]" (1) All of these things should be considered when deciding on weather or to purchase a system or not.

The next part of this discussion I am going to talk about is should a system be developed in house (cover in-sourcing / self-sourcing), or outsourced. Some alternative ways to develop systems are "Purchasing pre-written software - Purchasing off-the-shelf software packages that are freely available on the market and are written by software developers and tested thoroughly before being released into the market. Comprehensive manuals with software, technical and user support are also available. Prototyping - Building a scaled-down experimental version of the new information system quickly and inexpensively and is demonstrating it to representatives of end-users. Applications development tools - Computer Aided Software Engineering (CASE) assists analyst in analysis and design phase of developing information systems/ software. Using software houses or bureaus - Instead of buying computer hardware, software houses are used in the short-term for data processing, as well as for back up facilities. End-user development - Due to backlog in development of information systems end-users develop their own applications.

Outsourcing the operation or development of the information system - Hiring of an outside company to handle all or part of the data processing and development activities of an organization at a fixed annual fee. Re-engineering business processes - Business process re-engineering not only concentrates on the redesigning of an information system but also the reshaping of work practices, information flows and the whole organization, so as to take advantage of technological advancements with the objective to improve the quality, service and speed