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.

Case Assignment

Based on the assigned materials, write a paper answering the following questions.

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?