The AIS investment process

by Arpine MaghakyanLecture 4

I

Investment process

II

Develop or buy AIS?

iIn-House system

iiPurchasing software

package

Maintenance

III

I. Investment process

Process to the new AIS

Identifying needs

Choosing Software

Buying Hardware

TrainingTransferring

data

What are the benefits of the new AIS?Why invest in a new AIS?

Saves time

Real time

reporting

Simplifies decision making

Reduces errors

AIS benefitsH

idden

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ion

What to do before choosing a new software?

Right timing

Right timingNot the busiest period of the year

Industry specific requirementsAre there industry specific requirements?

What are the most used options in the similar businesses?

Is vendor following the legislation changes in the region?

Needs to make changes in your business process

Are you planning to make changes in your business processes? If yes, then it would be better to take them into account before customizing

the new AIS

New team or new skills?Are your employees ready to learn new software or you need new

people who already have it?

Homework discussion 1

Why Behavioral Problems Occur?

• Fear• Of failure, the unknown, losing

status

• Lack of top-management support

• If the top management is not supportive why should the employee change?

• Bad prior experiences• Bad experience with prior IS

changes

• Poor communication• Employees need to understand

why change is necessary

• Disruption

• Additional requests for information and additional burdens of time is distracting and prompts negative feelings

• Manner change is introduced

• Approaches are different for top level and lower level employees

• Biases and emotions

• Personal characteristics and background

• Age

• Open to technology and comfortable with it

How to Prevent Behavioral Problems

• Management support• Provide resources and motivation

• Satisfy user needs

• Involve users• Participation improves

communication and commitment

• Reduce fears, emphasize opportunities

• Avoid emotionalism

• Provide training

• Performance evaluation

• Reevaluate to ensure performance standards are consistent with the new system

• Keep open communications

• Test the system prior to implementation

• Keep system simple

• Avoid radical changes

• Control user’s expectations

• Be realistic

Source: McKinsey Global Institute, Digital America® 43, figure 14. © McKinsey & Company 2015

Backup plan in case change is not smooth

Before making the decision check listChoose right

timing

Industry specific

requirements

Consistency with

legislation

Needs to make changes in

your business process

Need for new employees or

new skills

Be ready for the change

Backup plan in case change is

not smooth

Gallery walk

II. Develop or buy AIS?

Requirements AIS should satisfy

Usefulness

Economy

Reliability

Availability

Timeliness

Customer service

Capacity

Ease of use

Flexibility

Tractability

Auditability

Security

Hid

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in p

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ion

Learning materials

Trainings

Documentation

Online forums

Integration with other systems

Taxation,

Internet banking

B2B, B2C portals

Logistics

CRM

Payment models

Per user

Per transaction

Per module

For updates and services

To buy or to develop AIS?

II.i. In-House Information Systems

5 key elements of system development life cycle

Systems Analysis

Conceptual Design

Physical Design

Implementation and Conversion

Operation and Maintenance

Communication Problems

Source: Marshall B.R., Paul J.S.® 634, figure 20-5. © 2018 by Pearson Education, Inc.

Conceptual Systems Design

Evaluating design

alternatives

Preparing design

specifications

Preparing conceptual

systems design report

Physical Systems Design

• Output design (e.g., reports)

• File and database design

• Input design (e.g., forms, computer screen input)

• Program design

• Procedures design

• Control design

Program Design

• Determine user needs

• Create and document development plan

• Write the computer code

• Test the program

• Document the program

• Train users

• Install the system (including components and hardware)

• Use and modify the system

Systems Implementation

• Implementation plan

• Select and train personnel

• Complete documentation

• Development documentation

• Operations documentation

• User documentation

• Testing the system

Testing the System

• Walk-throughs

• Step by step review

• Processing test data

• Test all valid transactions and error conditions

• Acceptance tests

• Use copies of real data

Systems Conversion

• Direct conversion

• Terminates the old and begins with the new system

• Parallel conversion

• Operate old and new systems for a period of time

• Phase-in conversion

• Gradual replacement of old elements with new system elements

• Pilot conversion

• Implement a system in a part of an organization (e.g., a branch)

Feasibility analysisEconomic: Will system benefits justify the time, money, and resources required to implement it?

Technical: Can the system be developed and implemented using existing technology?

Legal: Does the system comply with all applicable laws, administrative agency regulations, and contractual obligations?

Scheduling: Can the system be developed and implemented in the time allotted?

Operational: Does the organization have access to people who can design, implement, and operate the proposed system? Will people use the system?

Discuss examples of systems analysis decisions thatinvolve a trade-off between:

a. economy and usefulness

b. economy and reliability

c. economy and customer service

d. simplicity and usefulness

e. simplicity and reliability

f. economy and capacity

g. economy and flexibility

II.ii. Purchasing software packages

Software Evaluation 1/2

Does the software meet all mandatory and desirablespecifications?

Will program modifications be required to meet company needs?

Does the software have adequate control capabilities?

Is the performance (speed, accuracy, reliability) adequate?

How many companies use the software? Are they satisfied?

Is documentation adequate?

Software Evaluation 2/2

Is the software compatible with existing software?

Was the software demonstration/test-drive adequate?

Does the software have an adequate warranty?

Is the software flexible, easily maintained, and user-friendly?

Is online inquiry of files and records possible?

Will the vendor keep the package up to date?

Software package

Standard packages

Customized packages

Vendor Evaluation 1/2

How long has the vendor been in business?

Is the vendor financially stable and secure?

How experienced is the vendor with the hardware and software?

Does the vendor stand behind its products?

How good is its warranty?

Does the vendor regularly update its products?

Will the vendor put promises in a contract?

Vendor Evaluation 2/2

Will the vendor supply a list of customer references?

Does the vendor have a reputation for reliability and dependability?

Does the vendor provide timely support and maintenance?

Does the vendor provide implementation and installation support?

Does the vendor have high-quality, responsive, and experienced personnel?

Does the vendor provide training?

III. Maintenance

Maintenance

By software owner

Outsourcing

End-User Computing

Advantages Disadvantages

• Allows for end-users to create, control, and implement simple systems

• More likely to meet user needs

• Saves time

• Frees up system resources

• Easy to use and understand

• Lack of testing of application and possible calculation errors

• Inefficient systems

• Poorly controlled

• Poorly documented

• System incompatibilities

• Duplication of data

• Increase costs in later years with upgrades

Outsourcing

Advantages Disadvantage• Allows companies to concentrate on core

competencies• Asset utilization• Access to greater expertise and better

technology• Lower costs by standardizing user

applications and splitting development and maintenance costs between projects

• Less development time• Elimination of peaks-and-valleys usage• Facilitates downsizing

• Inflexibility• Loss of control• Reduced competitive advantage• Locked-in system• Unfulfilled goals• Poor service• Increased risk

Thank you!Questions?