USA: +1(669)289-8683 
Sign in
Chapter 7Development Strategies
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
Describe the concept of Software as a
Service
Define Web 2.0 and cloud computing
Explain software acquisition alternatives,
including traditional and Web-based
software development strategies
Describe software outsourcing options,
including offshore outsourcing and the role
of service providers
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Explain advantages and disadvantages of in-
house software development
Discuss cost-benefit analysis and financial
analysis tools
Describe a request for proposal (RFP) and a
request for quotation (RFQ)
Describe the system requirements document
Explain the transition from systems analysis
to systems design
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Earlier, certain work functions in the company
required:
◦ Development of software by in-house efforts
◦ Employing the services of external entities
Today, organizations have following choices
for software acquisition
◦ Application service providers
◦ Web-hosted software options
◦ Firms that offer enterprise-wide software solutions
Selecting the best development path is an
important decision
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Software as a Service (SaaS)
◦ Software deployment model that hosts an
application as a service provided to customers over
the Internet
◦ Reduces the customer’s need for software
maintenance, operation, and support
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Traditional vs. Web-Based Systems
Development
◦ Service-oriented architecture (SOA)
A way of engineering systems in which reusable
business functionality is provided by services through
well-defined interfaces
Technically, not software architecture but an
architectural style
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Traditional vs. Web-Based Systems
Development
◦ Traditional Development
System design is influenced by compatibility issues
Systems are designed to run on local and wide-area
networks
Systems often utilize Internet links and resources
Development typically follows one of three main paths:
In-house development
Purchase of a software package with possible modification
Use of outside consultants
Scalability is affected by network limitations and
constraints
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Traditional vs. Web-Based Systems
Development (Cont.)
◦ Web-Based Development
Systems are developed and delivered on an Internetbased framework
Treats the Web as the platform rather than just a
communication channel
Web-based systems are easily scalable and can run on
multiple hardware environments
Used for customer relationship management, order
processing, and materials management
Treats software applications as services that are less
dependent on desktop computing power and resources
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Traditional vs. Web-Based Systems
Development (Cont.)
◦ Web-Based Development
Requires additional layers, called middleware, to
communicate with existing software and legacy
systems
Middleware: Connects dissimilar applications and enables
them to communicate and exchange data
Open more complex security issues that should be
addressed
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Evolving Trends – Web 2.0, Cloud Computing,
and Mobile Devices
◦ Web 2.0: second generation of the web that enables
people to collaborate, interact, and share
information much more effectively
Enhances interactive experiences
◦ Cloud computing: Online software in which
applications and services are accessed and used
through an Internet connection
◦ Mobile devices: Smartphones, tablets, and other
computing devices that are not permanently
tethered to a desk
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Transfer of information systems development,
operation, or maintenance to an outside firm
The Growth of Outsourcing
◦ Service provider: Offers outsourcing solutions
Application service provider (ASP)
Delivers a software application or access to an
application by charging a usage or subscription fee
◦ Internet business services (IBS)
Also called managed hosting
Provide web-based support for transactions
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Outsourcing Fees
◦ Fixed fee model: Uses a set fee based on a specified
level of service and user support
◦ Subscription model: Has a variable fee based on the
number of users or workstations that have access
to the application
◦ Usage model or transaction model: Charges a
variable fee based on the volume of transactions or
operations performed by the application
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Outsourcing Issues and Concerns
◦ Mission-critical IT systems are outsourced if the
result is a cost-attractive and reliable business
solution
◦ Overseas outsourcing can raise issues with control,
culture communication, and security
◦ Reviewing the outsourcing firm’s history and
financial condition is vital
◦ Outsourcing clients can be affected by mergers and
acquisitions
◦ Employee job security is a major concern
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Offshore Outsourcing
◦ Called global outsourcing
◦ Shifting IT development, support, and operations to
other countries
◦ Reason – Lower bottom-line costs
◦ Risks and concerns
Impact on the economy
Project control
Security issues
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Software development options
◦ Develop own systems
◦ Purchase, possibly customize, and implement a
software package
Most important consideration is the total
cost of ownership (TCO)
Companies can develop user applications
based on commercial software packages
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Make or Buy Decision
◦ Refers to the choice between developing and
purchasing
◦ A company’s IT department makes, builds, and
develops in-house software
◦ A software
package is
obtained from
a vendor or
application
service provider FIGURE 7-8 Instead of outsourcing, a company can choose to
develop a system in-house, or purchase and possibly customize a
commercial package.
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Make or Buy Decision (cont.)
◦ Software package: Obtained from a vendor or
application service provider
◦ Software vendors: Develop software for sale
◦ Value-added reseller (VAR): Enhances a commercial
package by adding custom features and configuring
it for a particular industry
◦ Horizontal application: Can be used by many
different types of organizations
◦ Vertical application: Developed to handle
information requirements for a specific type of
business
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
17
FIGURE 7-10 Companies consider various factors when comparing inhouse development with the purchase of a software package.
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Developing Software In-House
◦ Satisfies unique business requirements
Not possible with standard commercial software
packages
Minimizes changes in business procedures and
policies
Installing a new software package almost always
requires some degree of change in how a company
does business
◦ Meets constraints of existing systems
Any new software installed must work with existing
systems
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Developing Software In-House (Cont.)
◦ Meets constraints of existing technology
The new system must work with existing hardware and
legacy systems
◦ Develops internal resources and capabilities
Companies can develop and train IT staff who
understand the organization’s business functions and
information support needs
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
20
Purchasing a Software Package
◦ Lower costs
A software package is less expensive than the one
developed in-house
◦ Requires less time to implement
Packages have already been designed, programmed,
tested, and documented
◦ Proven reliability and performance benchmarks
Major problems would have been detected and
corrected by the vendor
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
21
Purchasing a Software Package (Cont.)
◦ Requires less technical development staff
Companies can reduce the number of programmers
and systems analysts on the IT staff
◦ Future upgrades provided by the vendor
Improvements and enhancements are included in
regular updates
◦ Input from other companies
Users in other companies can be contacted to obtain
their input and opinions
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
22
Customizing a Software Package
◦ Purchase a basic package that vendors will
customize to suit project requirements
◦ Negotiate directly with the software vendor to make
enhancements to meet project needs by paying for
the changes
◦ Purchase the package and make project-specific
modifications
Ensure modifications are permissible under the terms
of the software license
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
23
Creating User Applications
◦ User application: Utilizes standard business software
◦ User interface: Enables effective interaction with the
application
◦ Service desk or information center (IC): Provides user
support
◦ Screen generators and report generators: Allow users
to design their own data entry forms and reports
◦ Appropriate controls must be provided to ensure data
security and integrity
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
24
Figure 7-11 Microsoft Access
includes Form Wizard and a
Report Wizard tools that ask
a series of questions and
then create the form or
report.
Source: Screenshots used with permission from
Microsoft
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
25
Based on decisions taken by the organization
in the systems development process
◦ Current and future needs are considered
Evaluation and selection of alternatives is a
complicated process
◦ Forecasting actual costs is difficult
Evaluation and selection team: Selects
hardware and software, includes systems
analysts and users
◦ Ensures that critical factors are not overlooked
and that a sound choice is made
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
26
Financial Analysis Tools
◦ Payback analysis
Determines the time taken for an information system
to pay for itself through reduced costs and increased
benefits
◦ Return on investment (ROI)
Percentage rate that compares the total net benefits
(the return) received from a project to the total
costs (the investment) of the project
◦ Net present value (NPV)
Total value of the benefits minus the total value of the
costs
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
27
Figure 7-12 In this example,
the HP interactive TCO
calculator is used to
determine the ROI of
migrating to an
Infrastructure-as-a-Service
(IaaS) environment in the
cloud from a traditional
server environment
Source: Hewlett-Packard Development Company, L.P.
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
28
Cost-Benefit Analysis Checklist
◦ List each development strategy being considered
◦ Identify all costs and benefits for each alternative
◦ Consider future growth and the need for scalability
◦ Include support costs for hardware and software
◦ Analyze various software licensing options
◦ Apply the financial analysis tools to each alternative
◦ Study the results and prepare a report
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
29
Step 1 – Evaluate the Information System
Requirements
◦ Identify key features
◦ Consider network and Web-related issues
◦ Estimate volume and future growth
◦ Specify hardware, software, or personnel
constraints
◦ Prepare a request for proposal or quotation
Request for proposal (RFP): Describes the company,
lists the IT services or products needed, and
specifies the features required
Request for quotation (RFQ): more specific than an RFP
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
30
FIGURE 7-13 Volume estimates for an order processing system showing current activity
levels and two forecasts: one based on the existing order processing procedures and
another that assumes a new Web site is operational.
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
31
FIGURE 7-15 The three
vendors have the same initial
ratings, but the two evaluation
models produce different
results. In the unweighted
model at the top of the figure,
vendor A has the highest total
points. However, after
applying weight factors,
vendor C is the winner, as
shown in the model at the
bottom of the figure.
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
32
Step 2 – Identify Potential Vendors or
Outsourcing Options
◦ The Internet contains information on all major
products and acquisition services
◦ The organization can avail the services of a
consulting firm that help companies select software
packages
◦ Online forums or newsgroups provide opinions and
ideas
Google Groups
Yahoo Groups
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
33
Step 3 – Evaluate the Alternatives
◦ Existing users
Provide feedback about their experiences
◦ Application testing
Users in the organization may be able to test the
product
◦ Benchmarking
Benchmark: Measures the time a package takes to
process a certain number of transactions
Each package is matched against RFP features and the
choices are ranked
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
34
Step 4 – Perform Cost-Benefit Analysis
◦ Identify and calculate total cost of ownership (TCO)
for each option being considered
◦ Study the conditions of use that come along with
the software license
◦ If a software package is purchased, consider a
supplemental maintenance agreement
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
35
Step 5 – Prepare a Recommendation
◦ Evaluate and describe alternatives along with:
Costs
Benefits
Advantages
Disadvantages
◦ Submit a formal system requirements document
and deliver a presentation
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
36
Step 6 – Implement the Solution
◦ Implementation tasks will depend on the solution
selected
◦ Before the new software becomes operational,
complete all implementation steps
Loading
Configuring and testing the software
Training users
Converting data files to the new system’s format
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
37
System Requirements Document
◦ Called software requirements specification
◦ Contains the requirements for the new system
◦ Describes the alternatives considered
◦ Makes a specific recommendation to management
◦ Similar to a contract
Identifies items that system developers must deliver
to users
◦ Format and organize the systems document
Easy to read and use
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
38
Presentation to Management
◦ Helps take key decisions that affect the future
development of the system
◦ Suggestions for effective presentations
Start with a brief overview
Summarize the primary viable alternatives
Explain why the evaluation and selection team chose
the recommended alternative
Allow time for discussion
Obtain a final decision from management or agree on
a timetable for the next step in the process
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
39
Presentation to Management (Cont.)
◦ Depending on management’s decision, a systems
analyst will do one of the following
Implement an outsourcing alternative
Develop an in-house system
Purchase or customize a software package
Perform additional systems analysis work
Stop all further work
◦ Post presentation and management decision, the
project begins a transition to the systems phase of
the SDLC
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
40
Preparing for Systems Design
◦ Systems design requires accurate documentation
Provide detailed specifications for output, input, data,
processes, and other requirements
Logical and Physical Design
o
o
o
Logical design: Defines what must take place
Physical design: Describes the actual process of
entering, verifying, and storing data
Logical and physical designs are closely related
•
Accurate systems analysis is required
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
41
A new trend views Software as a Service
(SaaS), rather than a product
Traditional systems must:
◦ Function in various hardware and software
environments
◦ Be compatible with legacy systems
◦ Operate within the constraints of company
networks and desktop computing capability
Companies that choose to handle their own
software development needs can:
◦ Create in-house systems
◦ Commercially purchase software packages
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
42
The systems analyst’s role in the software
development process depends on the specific
development strategy
The most important factor in choosing a
development strategy is total cost of
ownership (TCO)
Financial analysis tools include:
◦ Payback analysis
◦ Return on investment (ROI)
◦ Net present value (NPV)
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
43
Acquiring software involves a series of
specific steps
The system requirements document is the
deliverable, or end product, of the systems
analysis phase
Copyright ©2017 Cengage Learning. All Rights Reserved. May not be scanned, copied
or duplicated, or posted to a publicly accessible website, in whole or in part.
44
