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9 Developing and Acquiring Information Systems
After reading this chapter, you will be able to do the following:
1. Describe how to formulate and present the business case for
technology investments.
2. Describe the systems development life cycle and its various
phases.
3. Explain how organizations acquire systems via external
acquisition and outsourcing.
Preview
As you have read throughout this book and have experienced in
your own life, information systems and technologies are of
many different types, including high-speed
Web servers to rapidly process customer requests, business
intelligence systems to aid managerial decision making, and
customer relationship management systems to
provide improved customer service. Given this variety, when we
refer to “systems” in this chapter, we are talking about a broad
range of technologies, including
hardware, software, and services. Just as there are different
types of systems, there are different approaches for developing
and acquiring them. If you are a business
student majoring in areas such as marketing, finance,

accounting, or management, you might be wondering why we
have a discussion about developing and acquiring
information systems. The answer is simple: No matter what area
of an organization you are in, you will be involved in systems
development or technology acquisition
processes. In fact, research indicates that spending on systems
in many organizations is controlled by the specific business
functions rather than by the information
systems (IS) department. What this means is that even if your
career interests are in something other than information
systems, it is very likely that you will be
involved in the development and acquisition of systems,
technologies, or services. Understanding this process is
important to your future success.
Managing in the Digital World: Microsoft Is “Kinecting” Its
Ecosystem
How useful would an iPhone or an Android smartphone be
without the apps? How useful would a Blu-ray player be without
a large selection of movies available in that
format? The value of many devices or systems grows with the
size of their ecosystems, including the users, application or
content developers, sellers, and marketplaces. Like
a tree standing still in a world without rain, birds, or flowers—a
tree that would likely not be able to survive—the iPhone sans
the “apps” would be much less useful, less
exciting, and much less successful in the marketplace.
Similarly, Google, Microsoft, and, not surprisingly,
Amazon.com (http://Amazon.com) are trying to build large
ecosystems around their products and services (Figure 9.1
(http://content.thuzelearning.com/books/Valacich.3917.17.1/sec
tions/ch09#ch09fig1) ).
FIGURE 9.1 All parts of an ecosystem are interrelated.

http://amazon.com/
https://content.ashford.edu/books/Valacich.3917.17.1/sections/c
h09#ch09fig1
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Source: Fotolia.
In the mobile device industry, these ecosystems are based on the
products or services developed by the original creators, and are
complemented by a pool of independent
developers that expand the ecosystem’s capabilities in the hope
of developing the next killer app. This collective expansion in
capabilities generates additional marketing buzz
and market demand. To create such an expanded ecosystem, a
cooperative development approach is the norm, as has been
common in many successful software, hardware,
and, more recently, consumer electronics marketplaces. This
approach is characterized by systems development activities
constantly shifting back and forth between the big,
well-known product developers like Apple or Microsoft and
small, virtually unknown independent app developers who build
creative extensions that broaden the products’
market appeal. One example of an ecosystem evolving around a
device is Microsoft’s Kinect, a US$150 body motion capture
device for the Xbox, first launched in 2010.
After initially barring individual developers from tinkering with
the Kinect, Microsoft realized the power of ecosystems and
released a software development kit (SDK),
allowing anyone to build Kinect-related applications.

In 2013, Microsoft launched a much improved Kinect with its
next generation game console, the Xbox One. The Kinect
contains a collection of cameras, microphones, and
sensors that enables users to control and interact with the game
console using gestures and voice commands. For example, the
newest Kinect can recognize faces so you don’t
have to manually log in, and can even read your lips to better
understand your needs. Using these new capabilities, one group
developed an easy method to create 3D scans of
people and objects. Other applications are being developed to
help people try on virtual clothing or help doctors manipulate
images while performing surgery. Just as the
iPhone and Android smartphones have gone beyond just being
phones, the Kinect has become far more than a just gaming
controller, thanks to the innovative ideas from the
Kinect’s ecosystem.
After reading this chapter, you will be able to answer the
following:
1. How can a company make a business case for/against
allowing access to an SDK?
2. What are potential pitfalls if established practices (such as
the systems development life cycle) are not followed when
developing third-party applications?
3. How is the “open sourcing” of systems development different
from traditional outsourcing?
Based on:
Anonymous. (n.d.). The Microsoft Accelerator for Kinect.
Microsoft.comMicrosoft.com (http://Microsoft.com)
(http://Microsoft.com) . Retrieved March 20, 2014, from
http://www.microsoft.com/bizspark/kinectaccelerator
(http://www.microsoft.com/bizspark/kinectaccelerator) .

Greene, J. (2012, June 28). Turns out Kinect is for fashionistas
and surgeons, too. Cnet.comCnet.com (http://Cnet.com)
(http://Cnet.com) . Retrieved March 20, 2014, from
http://news.cnet.com/8301-10805_3-57463197-
75/turns-out-kinect-is-for-fashionistas-and-surgeons-too
(http://news.cnet.com/8301-10805_3-57463197-75/turns-out-
kinect-is-for-fashionistas-and-surgeons-too) .
Kinect. (2014, February 25). In Wikipedia, The Free
Encyclopedia. Retrieved March 20, 2014, from
http://en.wikipedia.org/w/index.php?title=Kinect&oldid=597143
263
(http://en.wikipedia.org/w/index.php?title=Kinect&oldid=59714
3263) .
http://microsoft.com/
http://www.microsoft.com/bizspark/kinectaccelerator
http://cnet.com/
http://news.cnet.com/8301-10805_3-57463197-75/turns-out-
kinect-is-for-fashionistas-and-surgeons-too
http://en.wikipedia.org/w/index.php?title=Kinect&oldid=597143
263
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9.1 MAKING THE BUSINESS CASE
Before people are willing to spend money to acquire or develop
a new system, or spend more money on an existing one, they
want to be convinced that this will be a good

investment. Making the business case refers to the process of
identifying, quantifying, and presenting the value provided by a
system.
Business Case Objectives
What does making the business case mean? Think for a moment
about what defense lawyers do in court trials. They carefully
build a strong, integrated set of arguments and
evidence to prove that their clients are innocent to those who
will pass judgment on their clients. In much the same way, a
manager has to build a strong, integrated set of
arguments and evidence to prove that an information system (or
any type of investment) is adding value to the organization or
its constituents. This is, in business lingo, “making
the business case” for a system.
As a business professional, you will be called on to make the
business case for systems and other capital investments, or you
will have to make the case for a new system or
application you may need for your work to improve certain
business processes. Thus, as a finance, accounting, marketing,
or management professional, you are likely to be
involved in this process and will therefore need to know how to
effectively make the business case for a system (or other capital
expenditures) and need to understand the
relevant organizational issues involved. It will be in the
organization’s best interest—and in your own—to ferret out
systems that are not adding value. In these cases, you will
need to either improve the systems or replace them.
Traditionally, business units turned to IS departments for new
systems or applications. Today, business units often directly
purchase applications from outside vendors, and expect these
applications to function in the infrastructure provided by the IS
departments. As more and more applications are
purchased from external vendors, organizations have to make

sure to go through a proper process in selecting the right
applications.
Making the business case is as important for proposed systems
as it is for the continued investment in an existing system. For a
proposed system, the case will be used to
determine whether the new system is a “go” or a “no-go.” For
an existing system, the case will be used to determine whether
the company will continue to fund the system.
Whether a new system or an existing one is being considered,
your goal is to make sure that the investment adds value, that it
helps the firm achieve its strategy and competitive
advantage over its rivals, and that money is being spent wisely.
The Productivity Paradox
Unfortunately, while it is easy to quantify the costs associated
with developing an information system, it is often difficult to
quantify tangible productivity gains from its use.
Over the past several years, the press has given a lot of
attention to the impact of IS investments on worker
productivity. In many cases, IS expenditures, salaries, and the
number
of people on the IS staff have all been rising, but results from
these investments have often been disappointing. For instance,
the information and technology research firm
Gartner reports that worldwide spending on systems and
technologies will surpass US$3.8 trillion in 2014, and is
forecasted to exceed US$4.4 trillion by 2016. American and
Canadian companies are spending, on average, around 4 percent
of company revenues on system-related investments. As a
result, justifying the costs for IS investments has
been a hot topic among senior managers at many firms. In
particular, “white-collar” productivity, especially in the service
sector, has not increased at the rate one might expect,
given the trillions of dollars spent.

Why has it been difficult to show that these vast expenditures
on technologies have led to productivity gains? Have
information systems somehow failed us, promising increases
in performance and productivity and then failing to deliver on
that promise? Determining the answer is not easy. Information
systems may have increased productivity, but other
forces may have simultaneously worked to reduce it, the end
results being difficult to identify. Factors such as government
regulations, more complex tax codes, stricter financial
reporting requirements (such as the Sarbanes–Oxley Act; see
Chapter 10
tions/ch10#ch10) , “Securing Information
Systems”), and more complex products can all have major
impacts on a firm’s productivity.
It is also true that information systems introduced with the best
intentions may have had unintended consequences. A paramount
example is giving employees access to e-mail
and the Internet—now employees are spending excessive
amounts of time surfing the Web to check sports scores on the
ESPN Web site, read volumes of electronic junk mail
received from Internet marketing companies or from personal
friends, post status updates on social networking sites, or use
company PCs to download and play software games
(Figure 9.2
tions/ch09lev1sec1#ch09fig2) ); recently, it was reported that
visits to social networking sites such as
Facebook and Twitter cost U.K. firms alone approximately
US$2.25 billion in lost productivity every year. In such
situations, information systems can result in less efficient and
less effective communication among employees and less
productive uses of employee time than before the systems were
implemented. Nevertheless, sound technology

investments should increase organizational productivity. If this
is so, why have organizations not been able to show larger
productivity gains? A number of reasons have been
given for the apparent productivity paradox
tions/bm02#bm02_gloss_484) of technology investments
(Figure 9.3
tions/ch09lev1sec1#ch09fig3) ). This issue is examined next.
FIGURE 9.2 Unintended consequences can limit the
productivity gains from IS
investments.
h10#ch10
h09lev1sec1#ch09fig2
https://content.ashford.edu/books/Valacich.3917.17.1/sections/b
m02#bm02_gloss_484
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MEASUREMENTMEASUREMENT PROBLEMS. PROBLEMS.
In many cases, the benefits of information systems are difficult
to pinpoint because firms may be measuring the wrong things.
Often, the biggest increases in productivity result
from increased effectiveness (i.e., the extent to which goals or

tasks are accomplished well). Unfortunately, many business
metrics focus on efficiency (i.e., the extent to which
goals are accomplished faster, at lower cost, or with relatively
little time and effort).
FIGURE 9.3 Factors leading to the IS productivity paradox.
A good example of measurement problems associated with a
technology investment is the use of online banking. How much
has online banking contributed to banking
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productivity? Traditional statistics might look at the adoption
rate of the service and associated reductions in branch-based
services and locations. While informative, such
statistics may not work well for evaluating online banking, at
least at this point in time. For instance, some older customers
may not want to bank online, so a reduction in the
number of traditional branches could threaten a potentially large
number of very good customers while at the same time inflating
the percentage of online banking users (i.e., if
the number of traditional banking customers leave the bank
because of a reduction of branches, the adoption rate of online
customers as a percentage will be increased). So,
investing in online banking may be unimportant for an
important segment of customers while essential for others.
Nevertheless, can you imagine a bank staying competitive
without offering online services? Deploying technologies such

as online banking has become a strategic necessity—something
an organization must do in order to survive (see
Chapter 2
tions/ch02#ch02) , “Gaining Competitive Advantage Through
Information Systems”). The value of
necessary investments is often difficult to quantify.
TIMETIME LAGS. LAGS.
A second explanation for why productivity is sometimes
difficult to demonstrate for some technology investments is that
a significant time lag may occur from when a company
makes the investment until that investment is translated into
improvement in the bottom line. Let us return to our online
banking example. In some markets, it may take years
from the first implementation of this new system before the
magnitude of benefits may be felt by the organization.
REDISTRIBUTION.REDISTRIBUTION.
A third possible explanation for why IS productivity figures are
not always easy to define is that a new type of system may be
beneficial for individual firms but not for a
particular industry or the economy as a whole. Particularly in
competitive situations, new innovations may be used to
redistribute the pieces of the pie rather than making the
whole pie bigger. The result for the industry or economy as a
whole is a wash—that is, the same number of products are being
sold, and the same number of dollars are being
spread across all the firms.
MISMANAGEMENT.MISMANAGEMENT.
A fourth explanation is that the new system has not been
implemented and managed well. Some believe that people often
simply build bad systems, implement them poorly, and
rely on technology fixes when the organization has problems
that require a joint technology/process solution. Rather than

increasing outputs or profits, IS investments might
merely be a temporary bandage and may serve to mask or even
increase organizational inefficiency. Also, as we mentioned in
Chapter 1
tions/ch01#ch01) , “Managing in the Digital World,” an
information system can be only as effective as the business
model that it serves. Bad business models can’t be overcome by
good information systems.
If it is so difficult to quantify the benefits of information
systems for individual firms and for entire industries, why do
managers continue to invest in information systems? The
answer is that competitive pressures force managers to invest in
information systems whether they like it or not. Also, for many
organizations, information systems are an
important source of competitive advantage. You might ask,
then, so why waste time making the business case for a system?
Why not just acquire or develop them? The answer:
Given the vast number of potential systems and technologies
that could be selected, a strong business case aids the decision-
making process and helps direct resources in more
strategic ways.
Making a Successful Business Case
People make a variety of arguments in their business cases for
information systems. When managers make the business case
for an information system, they typically base their
arguments on faith, fear, and/or facts (Wheeler & Marakas,
1999
tions/ch09lev1sec12#ch09_bib15) ). (Wheeler also
adds a fourth “F” for “fiction,” and notes that, unfortunately,
managers sometimes base their arguments on pure fiction,
which is not only bad for their careers but also not at all

healthy for their firms.) Table 9.1
tions/ch09lev1sec1#ch09tab1) shows examples of these three
types of arguments.
Do not assume that you must base your business case on facts
only. It is entirely appropriate to base the business case on
faith, fear, or facts (Figure 9.4
tions/ch09lev1sec1#ch09fig4) ). Indeed, the strongest and most
convincing business case will include a little of each type
of argument. In the following sections, we talk about each of
these types of arguments for the business case.
FIGURE 9.4 A successful business case will be based on faith,
fear, and fact.
h02#ch02
h01#ch01
h09lev1sec12#ch09_bib15
h09lev1sec1#ch09tab1
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BUSINESSBUSINESS CASE CASE ARGUMENTS
ARGUMENTS BASED BASED ON ON FAITH. FAITH.
In some situations, arguments based on faith (or fear) can be the
most compelling and can drive the decision to invest in an
information system despite the lack of any hard data
on system costs, or even in the face of some data that say that
the dollar cost for the system will be high. Arguments based on
faith often hold that an information system must be
implemented in order to achieve the organization’s strategy
effectively and to gain or sustain a competitive advantage over
rivals.
TABLE 9.1 Three Types of Arguments Commonly Made in the
Business Case for an Information System
Type of
Argument
Description Example
Faith Arguments based on beliefs about organizational
strategy, competitive advantage, industry forces,
customer perceptions, market share, and so on
“I know I don’t have good data to back this up, but I’m
convinced that having this customer relationship
management system will enable us to serve our customers
significantly better than our competitors do and,
as a result, we’ll beat the competition… You just have to take it
on faith.”
Fear Arguments based on the notion that if the system is
not implemented, the firm will lose out to the
competition or, worse, go out of business
“If we don’t implement this enterprise resource planning

system, we’ll get killed by our competitors
because they’re all implementing these kinds of systems … We
either do this or we die.”
Fact Arguments based on data, quantitative analysis,
and/or indisputable factors
“This analysis shows that implementing the inventory control
system will help us reduce errors by 50
percent, reduce operating costs by 15 percent a year, increase
production by 5 percent a year, and pay for
itself within 18 months.”
For example, a firm has set as its strategy that it will be the
dominant, global force in its industry. As a result, this firm
must adopt a variety of collaboration technologies, such as
desktop videoconferencing and groupware tools, in order to
enable employees from different parts of the globe to work
together effectively and efficiently. Similarly, a firm that
has set as its strategy a broad scope—producing products and
services across a wide range of consumer needs—may need to
adopt some form of an enterprise resource planning
system to better coordinate business activities across its diverse
product lines.
In short, successful business case arguments based on faith
should clearly describe the firm’s mission and objectives, the
strategy for achieving them, and the types of
information systems that are needed in order to enact the
strategy. A word of caution is warranted here. In today’s
business environment, cases based solely on strategic
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of
arguments, with no hard numbers demonstrating the value of the
information system under consideration, are not likely to be
funded.
BRIEF CASE Software Patent Wars
Have you ever used the slide-to-unlock feature on a
smartphone? Apple has a patent on that. If your smartphone
sends and receives data over a 4G network, well,
Samsung has a patent for that. In the 1970s, when key
technologies that made the Internet possible were being
developed, intellectual property and patent claims were
not much of a big deal. The idea then was to make the
technology an international standard, and open it up for public
use. Come the twenty-first century, things have
changed, and battles over patents are constantly being fought,
especially in the mobile market where companies are trying to
protect clever technologies and
applications and maintain or increase market share.
An overview of the mobile patent wars looks something like
this: Microsoft sued Motorola for video encoding, Motorola
counter-sued Microsoft’s use of e-mail,
instant messaging, and Wi-Fi; likewise, Google was sued by
Oracle for its implementation of the Java programming language
in its Android system. Google then
acquired Motorola to gain access to its patent portfolio. Apple
has made use of its patent rights to prevent Samsung Electronics
from selling some products with
features Apple argues violates its patents. In response, Samsung
has retaliated by attempting to ban iPhone sales in some

countries.
With the global smartphone market being estimated around $300
billion in 2014, the stakes are high. However, many feel that too
much time, energy, and money are
being wasted fighting these battles, and there is also a growing
sense that the patent process itself is flawed. Considering that
the U.S. patent system offers inventors a
limited monopoly on their ideas for 20 years, consumers may
actually find fewer choices in the market the next time they
look for a new mobile handset.
Questions
1. With millions of software patents in existence, some claim
that it is almost impossible to avoid infringing on someone
else’s patent. How does this affect
innovation and small startups?
2. Many believe that the patent wars act to destroy small players
in the mobile phone marketplace who cannot afford expensive
and lengthy legal battles. What
other impacts do the patent wars have on this industry?
Based on:
Holbrook, T. (2014, March 16). Is the Supreme Court about to
rule that software is ineligible for patent protection? Forbes.
Retrieved March 20, 2014, from
http://www.forbes.com/sites/realspin/2014/03/16/is-the-
supreme-court-about-to-rule-that-software-is-ineligible-for-
patent-protection
(http://www.forbes.com/sites/realspin/2014/03/16/is-
the-supreme-court-about-to-rule-that-software-is-ineligible-for-
patent-protection) .

Nazer, D. (2014, March 17). Why is the patent office so bad at
reviewing software patents? Electronic Frontier Foundation.
https://www.eff.org/deeplinks/2014/03/why-patent-office-so-
bad-reviewing-software-patents
(http://www.eff.org/deeplinks/2014/03/why-patent-office-so-
bad-reviewing-software-patents) .
Phillips, M. (2013, November 22). Apple vs. Samsung: A patent
war with few winners. The New Yorker. Retrieved March 20,
2014, from
http://www.newyorker.com/online/blogs/elements/2013/11/a-
patent-war-with-few-winners.html
(http://www.newyorker.com/online/blogs/elements/2013/11/a-
patent-war-with-few-winners.html) .
Software patent debate. (2014, March 18). In Wikipedia, The
Free Encyclopedia. Retrieved March 20, 2014, from
http://en.wikipedia.org/w/index.php?
title=Software_patent_debate&oldid=600233238
(http://en.wikipedia.org/w/index.php?title=Software_patent_deb
ate&oldid=600233238) .
ARGUMENTS BASED BASED ON ON FEAR. FEAR.
There are several different factors to take into account when
making a business case in which you will provide arguments
based on fear. These include a number of factors
involving competition and other elements of the industry in
which the firm operates. For example, a mature industry, such
as the automotive industry, may need systems simply
to maintain the current pace of operations. While having the
newest systems and technologies available may be nice, they
may not be needed to stay in business. However, a
company in a newer, expanding industry, such as the green
technology industry, may find it more important to be on the

leading edge of technology in order to compete
effectively in the marketplace. Likewise, some industries are
more highly regulated than others. In these cases, companies
can use technology investments to better control
processes and ensure compliance with appropriate regulations.
The argument for the business case here would be something
like, “If we do not implement this system, we run
the risk of being sued or, worse, being thrown in jail” (see
Chapter 10
tions/ch10#ch10) ).
Probably the most important industry factor that can affect
technology investments is the nature of competition or rivalry in
the industry. For example, when competition in an
industry is high and use of the newest technologies is rampant,
as it is in the mobile phone industry, strategic necessity, more
than anything else, forces firms to adopt new
systems. Given how tight profit margins are in this industry,
Apple, Samsung, and other manufacturers must use inventory
control systems, business intelligence systems, and a
host of other systems that help them to be more effective and
efficient. If they do not adopt these systems, they will likely go
out of business. As introduced in Chapter 2
tions/ch02#ch02) , a common way for assessing the level of
competition within an industry is the five forces model
(Porter, 1979
tions/ch09lev1sec12#ch09_bib9) ). By assessing the various
competitive forces, you can determine which
specific technologies may be more or less useful. For instance,
in a highly price-competitive market, where buyers have strong
bargaining power, investments to reduce
production costs might be advantageous. Business case
arguments formulated this way sound something like, “If we do

not implement this system, our competitors are going to
beat us on price, we will lose market share, and we will go out
of business.”
ARGUMENTS BASED BASED ON ON FACT. FACT.
Many people, including most chief financial officers, want to
see the business case for an information system based on a
convincing, quantitative analysis that proves beyond the
shadow of a doubt that the benefits of the system will outweigh
the costs. The most common way to prove this is to provide a
detailed cost–benefit analysis of the information
system. Although this step is critical, the manager must
remember that there are inherent difficulties in, and limits to,
cost–benefit analyses for information systems. To illustrate
how a cost–benefit analysis could be used to build a fact-based
business case, let us consider the development of a Web-based
order entry system for a relatively small firm.
http://www.forbes.com/sites/realspin/2014/03/16/is-the-
supreme-court-about-to-rule-that-software-is-ineligible-for-
patent-protection
http://www.eff.org/deeplinks/2014/03/why-patent-office-so-bad-
reviewing-software-patents
http://www.newyorker.com/online/blogs/elements/2013/11/a-
patent-war-with-few-winners.html
http://en.wikipedia.org/w/index.php?title=Software_patent_deba
te&oldid=600233238
h10#ch10
h02#ch02

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IdentifyingIdentifying Costs Costs
One goal of a cost–benefit analysis is to accurately determine
the total cost of ownership (TCO)
tions/bm02#bm02_gloss_639) for an investment. TCO is
focused on understanding not only the total cost of acquisition
but also all costs associated with ongoing use and maintenance
of a system. Consequently, costs can usually be divided into
two categories: non-recurring costs and recurring
costs
tions/bm02#bm02_gloss_505) . Non-recurring costs are one-
time costs that are not expected to continue after the
system is implemented. These include costs for things such as
site preparation and technology purchases. These one-time costs
may also include the costs of attracting and
training a webmaster or renovating some office space for new
personnel or for hosting the Web servers.
Recurring costs are ongoing costs that occur throughout the life
of the system. Recurring costs include the salary and benefits of
the webmaster and any other personnel assigned
to maintain the system, electricity, upgrades and maintenance of
the system components, monthly fees paid to a local Internet
service provider, and the continuing costs for the
space in which the webmaster works or the data center where
the servers reside. Personnel costs are usually the largest
recurring costs, and the Web-based system is no exception
in this regard. These recurring expenses can go well beyond the

webmaster to include expenses for customer support, content
management, ongoing maintenance, and more.
The sample costs described thus far are tangible costs
tions/bm02#bm02_gloss_628) that are relatively easy to
quantify.
Some intangible costs
tions/bm02#bm02_gloss_319) ought to be accounted for as well,
even though they will not fit
neatly into the quantitative analysis. These might include the
costs of reduced traditional sales, losing some customers that
are not “Web ready,” or losing customers if the Web
application is poorly designed or not on par with competitors’
sites. You can choose to either quantify these in some way (i.e.,
determine the cost of losing a customer) or simply
reserve these as important costs to consider outside of—but
along with—the quantitative cost–benefit analysis.
IdentifyingIdentifying Benefits Benefits
Next, you determine both tangible benefits
tions/bm02#bm02_gloss_627) and intangible benefits.
tions/bm02#bm02_gloss_319) Some tangible benefits are
relatively easy to determine. For example, you can estimate
that the increased customer reach of the new Web-based system
will result in at least a modest increase in sales. Based on
evidence from similar projects, you might estimate,
say, a 5 percent increase in sales the first year, a 10 percent
increase the second year, and a 15 percent increase the third
year. In addition, you might also include as tangible
benefits the reduction of order entry errors because orders will
now be tracked electronically and shipped automatically. You
could calculate the money previously lost on faulty

and lost orders, along with the salaries and wages of personnel
assigned to find and fix these orders, and then consider the
reduction of these costs as a quantifiable benefit of the
new system. Cost avoidance is a legitimate, quantifiable benefit
of many systems. Similarly, the new system may enable the
company to use fewer order entry clerks or redeploy
these personnel to other, more important functions within the
company. You could consider these cost reductions as benefits
of the new system.
A Web-based system may have intangible benefits as well.
Some intangible benefits of this new system might include
improvements in customer service resulting from faster
turnaround on fulfilling orders. These are real benefits, but they
might be hard to quantify with confidence. Perhaps an even
more intangible benefit would be the overall
improved perception of the firm. Customers might consider it
more progressive and customer service–oriented than its rivals;
in addition to attracting new customers, this might
increase the value of the firm’s stock if it is a publicly traded
firm. Another intangible benefit might be simply that it was a
strategic necessity to offer customers Web-based
ordering to keep pace with rivals. While these intangibles are
difficult to quantify, they must be considered along with the
more quantitative analysis of benefits. In fact, the
intangible benefits of this Web-based system might be so
important that they could carry the day despite an inconclusive
or even negative cost–benefit analysis.
COMING ATTRACTIONS: IBM’s 5 in 5
As its catchphrase goes, IBM is focused on building a smarter
planet. As part of this campaign, IBM researchers have created
the 5 in 5 forecast: five innovations that
will transform our lives within the next five years. At the core
of this forecast is Big Data and machine learning. Machine

learning is a branch of artificial intelligence
that allows systems to learn by processing massive amounts of
data (see Chapter 6
tions/ch06#ch06) ,
“Enhancing Business Intelligence Using Information Systems”).
Because Big Data and machine learning can help a company
better understand customers and
therefore better meet their needs, IBM believes that Big Data
will help offline retail stores understand their customers as well
as Amazon.com (http://Amazon.com)
does, leading to a resurgence of offline retailing. Likewise, with
the continued drop in costs for processing data, your doctor will
rely more and more on your DNA to
help keep you well.
IBM researchers also predict that a digital guardian will protect
your online information from cyber criminals, by better
understanding you, your friends, and your
habits and activities. Similarly, the classroom will learn about
students, helping students master the necessary skills by
tailoring the educational experience to each
individual student. Finally, cities will help you improve your
day-to-day lifestyle, by suggesting events based on your prior
behavior. Big Data is often viewed by
many as potentially invasive and likened to Orwell’s “Big
Brother.” IBM is hoping to make Big Data your big buddy.
Based on:
The 5 in 5. IBM.comIBM.com (http://IBM.com)
(http://IBM.com) . Retrieved on March 28, 2014, from
http://www.ibm.com/smarterplanet/us/en/ibm_predictions_for_f
uture/ideas
(http://www.ibm.com/smarterplanet/us/en/ibm_predictions_for_
future/ideas) .

PerformingPerforming Cost–Benefit Cost–Benefit Analyses
Analyses
An example of a simplified cost–benefit analysis
tions/bm02#bm02_gloss_139) that contrasts the total expected
tangible
costs versus the tangible benefits is presented in Figure 9.5
tions/ch09lev1sec1#ch09fig5) . Notice the fairly large
investment up front, with another significant outlay in the fifth
year for a system upgrade. You could now use the net
costs/benefits for each year as the basis of your conclusion
about this system. Alternatively, you could perform a break-
even analysis—a type of cost–benefit analysis to identify at
what point (if ever) tangible benefits equal tangible costs
(note that break-even occurs early in the second year of the
system’s life in this example)—or a more formal net-present-
value analysis
tions/bm02#bm02_gloss_409) of the relevant cash flow streams
associated with the system at the organization’s discount
m02#bm02_gloss_639
m02#bm02_gloss_505
m02#bm02_gloss_628
m02#bm02_gloss_319
m02#bm02_gloss_627
m02#bm02_gloss_319

h06#ch06
http://ibm.com/
http://www.ibm.com/smarterplanet/us/en/ibm_predictions_for_f
uture/ideas
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m02#bm02_gloss_409
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rate
tions/bm02#bm02_gloss_192) (i.e., the rate of return used by an
organization to compute the present value of future
cash flows). In any event, this cost–benefit analysis helps you
make the business case for this proposed Web-based order
fulfillment system. It clearly shows that the investment
for this system is relatively small, and the company can fairly
quickly recapture the investment. In addition, there appear to be
intangible strategic benefits to deploying this
system. This analysis—and the accompanying arguments and
evidence—goes a long way toward convincing senior managers
in the firm that this new system makes sense. For
more on cost–benefit analyses, see any introductory finance or

managerial accounting textbook.
FIGURE 9.5 Worksheet showing a simplified cost–benefit
analysis for the Web-based
order fulfillment system.
ComparingComparing Competing Competing Investments
Investments
One method for deciding among different IS investments or
when considering alternative designs for a given system is
weighted multicriteria analysis
tions/bm02#bm02_gloss_707) , as illustrated in Figure 9.6
tions/ch09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1
sec1#ch09fig6) . For example, suppose that for a given
application being considered for purchase, there are three
alternatives that could be pursued—A, B, or C. Let’s also
suppose that early planning meetings identified three key
system requirements and four key constraints that could be used
to help make a decision on which alternative to pursue. In the
left column of Figure 9.6
sec1#ch09fig6) , three system requirements and four
constraints are listed. Because not all requirements and
constraints are of equal importance, they are weighted on the
basis of their relative importance. In other words, you do
not have to weight requirements and constraints equally; it is
certainly possible to make requirements more or less important
than constraints. Weights are arrived at in
discussions among the analysis team, users, and managers.
Weights tend to be fairly subjective and, for that reason, should
be determined through a process of open discussion
to reveal underlying assumptions, followed by an attempt to
reach consensus among stakeholders. Notice that the total of the

weights for both the requirements and constraints is
100 percent.
m02#bm02_gloss_192
m02#bm02_gloss_707
h09lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#c
h09fig6
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=ch0…clientToken=a3e9dfb8-8e7d-6865-d886-
FIGURE 9.6 Decisions about alternative projects or system
design approaches can be
assisted using a weighted multicriteria analysis.
Next, each requirement and constraint is rated on a scale of 1 to
5. A rating of 1 indicates that the alternative does not meet the
requirement very well or that the alternative
violates the constraint. A rating of 5 indicates that the
alternative meets or exceeds the requirement or clearly abides
by the constraint. Ratings are even more subjective than
weights and should also be determined through open discussion
among users, analysts, and managers. For each requirement and
constraint, a score is calculated by multiplying
the rating for each requirement and each constraint by its

weight. The final step is to add up the weighted scores for each
alternative. Notice that we have included three sets of
totals: for requirements, for constraints, and for overall totals.
If you look at the totals for requirements, alternative B or C is
the best choice because each meets or exceeds all
requirements. However, if you look only at constraints,
alternative A is the best choice because it does not violate any
constraints. When we combine the totals for requirements
and constraints, we see that the best choice is alternative C.
Whether alternative C is actually chosen for development,
however, is another issue. The decision makers may
choose alternative A because it has the lowest cost, knowing
that it does not meet two key requirements. In short, what may
appear to be the best choice for a systems
development project may not always be the one that ends up
being developed or acquired. By conducting a thorough
analysis, organizations can greatly improve their decision-
making outcomes.
TABLE 9.2 Characteristics of Different Stakeholders Involved
in Making Is Investment Decisions
Stakeholder Perspective Focus/Project Characteristics
Management Representatives or managers from each of the
functional areas within the firm Greater strategic focus; largest
project sizes; longest project
durations
Steering
committee
Representatives from various interest groups within the
organization (they may have
their own agendas at stake when making investment decisions)

Cross-functional focus; greater organizational change; formal
cost–benefit analysis; larger and riskier projects
User
department
Representatives of the intended users of the system Narrow,
non-strategic focus; faster development
IS executive Has overall responsibility for managing IS
development, implementation, and
maintenance of selected systems
Focus on integration with existing systems; fewer development
delays; less concern with cost–benefit analysis
Source: Based on Hoffer, George, & Valacich (2014
tions/ch09lev1sec12#ch09_bib5) ) and McKeen, Guimaraes, &
Wetherbe (1994
tions/ch09lev1sec12#ch09_bib7) ).
Presenting the Business Case
Up to this point, we have discussed the key issues to consider as
you prepare to make the business case for a system. We have
also shown you some tools for determining the
value that a system adds to an organization. Now you are
actually ready to make the case—to present your arguments and
evidence to the decision makers in the firm.
KNOWKNOW THE THE AUDIENCE. AUDIENCE.
Depending on the firm, a number of people from various areas
of the firm might be involved in the decision-making process.
People from different areas of the firm typically

hold very different perspectives about what investments should
be made and how those investments should be managed (Table
9.2
tions/ch09lev1sec1#ch09tab2) ). Consequently, presenting the
business case for a new system investment can be quite
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challenging. Ultimately, a number of factors come into play in
making investment decisions, and numerous outcomes can occur
(Figure 9.7
tions/ch09lev1sec1#ch09fig7) ). For instance, decisions and
choices are driven by perceived needs, resource availability,
evaluation criteria, and so on. Numerous outcomes can occur
from this decision process. Of course, the project can be
accepted or rejected; often, projects can be conditionally
accepted or asked to be revised in order to more carefully
consider resource, time, or other constraints. Understanding the
audience and the issues important to them is a first step
in making an effective presentation. Various ways to improve
the development of a business case are examined next.

FIGURE 9.7 Investment selection decisions must consider
numerous factors and can
have numerous outcomes.
CONVERTCONVERT BENEFITS BENEFITS TO TO
MONETARY MONETARY TERMS. TERMS.
When making the case for an IS investment, it is desirable to
translate all potential benefits into monetary terms. For
example, if a new system saves department managers an
hour per day, try to quantify that savings in terms of dollars.
Figure 9.8
sec1#ch09fig8) shows how you might convert time savings
into dollar figures. While merely explaining this benefit as
“saving managers’ time” makes it sound useful, managers may
not consider it a significant enough inducement to
warrant spending a significant amount of money. Justifying a
US$50,000 system because it will “save time” may not be
persuasive enough. However, an annual savings of
US$90,000 is more likely to capture the attention of decision
makers and is more likely to result in project approval. Senior
managers can easily rationalize a US$50,000
expense for a US$90,000 savings and can easily see why they
should approve such a request. They can also more easily
rationalize their decision later on if something goes
wrong with the system.
FIGURE 9.8 Converting time savings into dollar figures.
DEVISEDEVISE PROXY PROXY VARIABLES. VARIABLES.
The situation presented in Figure 9.8
sec1#ch09fig8) is fairly

h09fig8
h09fig8
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straightforward. Anyone can see that a US$50,000 investment is
a good idea because the return on that investment is US$90,000
the first year. Unfortunately, not all cases are
this clear-cut. In cases in which it is not as easy to quantify the
impact of an investment, you can come up with proxy variables
tions/bm02#bm02_gloss_489) (i.e., alternative measures of
outcomes) to help clarify what the impact on the firm will be.
Proxy variables can be used to measure changes in terms of
their perceived value to the organization. For example, if
mundane administrative tasks are seen as a low value
(perhaps a 1 on a 5-point scale), but direct contact with
customers is seen as a high value (a rating of 5), you can use
these perceptions to indicate how new systems will add
value to the organization. In this example, you can show that a
new system will allow personnel to have more contact with
customers while at the same time reducing the
administrative workload. Senior managers can quickly see that

individual workload is being shifted from low-value to high-
value activities.
You can communicate these differences using percentages,
increases or decreases, and so on—whatever best conveys the
idea that the new system is creating changes in work, in
performance, and in the way people think about their work. This
gives decision makers some relatively solid data on which to
base their decision.
MEASUREMEASURE WHAT WHAT IS IS IMPORTANT
IMPORTANT TO TO MANAGEMENT. MANAGEMENT.
One of the most important things you can do to show the
benefits of a system is one of the simplest: Measure what senior
managers think is important. You may think this is
trivial advice, but you would be surprised how often people
calculate impressive-looking statistics in terms of downtime,
reliability, and so on, only to find that senior managers
disregard or only briefly skim over those figures. You should
concentrate on the issues senior business managers care about.
The “hot-button” issues with senior managers
should be easy to discover, and they are not always financial
reports. Hot issues with senior managers could include cycle
time (how long it takes to process an order), regulatory
or compliance issues, customer feedback, and employee morale.
By focusing on what senior business managers believe to be
important, you can make the business case for
systems in a way that is more meaningful for those managers,
which makes selling systems to decision makers much easier.
Managers are more likely to buy in to the
importance of systems if they can see the impact on areas that
are important to them. Now that you understand how to make
the business case for new information systems, we
now examine the development process.
ETHICAL DILEMMA: Ethical App Development

In the past, systems development was in the hands of large
software companies, with large development teams and legal
departments that would scrutinize new
functionalities for legal and ethical compliance. With the advent
of the smartphone and social media came the promise of getting
rich quick by developing the next
Facebook, WhatsApp, Pinterest, or some other killer app.
Nowadays, it’s not only large companies building those apps,
but individuals with a creative idea, aided by
easy-to-use development tools.
However, with the hope of developing the next killer app,
ethical implications are often overlooked or outright ignored, as
evidenced by examples such as Facebook or
Path. Throughout its history, Facebook has changed its privacy
policies, at times grossly violating its users’ privacy
expectations. Similarly, in 2012 it became known
that the iOS version of the social media app Path secretly sent
the users’ complete address book data to Path’s servers. Not
only was this not mentioned in the apps’
Terms of Use, the data was also sent in an unencrypted way,
potentially subjecting the app’s users to security problems.
In addition, mobile devices offer various tempting ways of
collecting user data, with many apps requesting access to
functionalities such as your phone book, location,
and so on. Given these vulnerabilities, a new code of conduct
for app development is needed. “Just because you can collect
data, should you?” Many argue that an app
should only be allowed to collect and utilize information it
needs, nothing more. Developers should also carefully consider
the consequences of personal data being
compromised. Who would be affected, and how serious might
the consequences be? Given the high value of your personal
data, the maxim of the app development

industry should be: “Even though you can, maybe you
shouldn’t!”
Based on:
Allamsetty, T. (2013, March 19). User privacy and the ethics of
app data collection. [X]Cubelabs. Retrieved March 27, 2014,
from http://www.xcubelabs.com/blog/user-privacy-and-the-
ethics-of-app-data-collection
(http://www.xcubelabs.com/blog/user-privacy-and-the-ethics-of-
app-data-collection) .
Grothaus, M. (2013, December 4). Do developers need a
standardized code of ethics? Co.LABS. Retrieved March 27,
2014, from http://www.fastcolabs.com/3022968/do-developers-
need-
a-standardized-code-of-ethics
(http://www.fastcolabs.com/3022968/do-developers-need-a-
standardized-code-of-ethics) .
Phillips, J. (2012, December 8). Path social media app uploads
iOS address books to its servers. Wired. Retrieved March 27,
2014, from http://www.wired.com/gadgetlab/2012/02/path-
social-media-app-uploads-ios-address-books-to-its-servers
(http://www.wired.com/gadgetlab/2012/02/path-social-media-
app-uploads-ios-address-books-to-its-servers) .
Siegel, E. (2014, February 5). Becoming an ethical app
developer at Renaissance IO. Apptentive. Retrieved March 27,
2014, from http://www.apptentive.com/blog/ethical-app-
developer-
at-renaissance-io (http://www.apptentive.com/blog/ethical-app-
developer-at-renaissance-io) .
m02#bm02_gloss_489

http://www.xcubelabs.com/blog/user-privacy-and-the-ethics-of-
app-data-collection
http://www.fastcolabs.com/3022968/do-developers-need-a-
standardized-code-of-ethics
http://www.wired.com/gadgetlab/2012/02/path-social-media-
app-uploads-ios-address-books-to-its-servers
http://www.apptentive.com/blog/ethical-app-developer-at-
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9.2 THE SYSTEMS DEVELOPMENT PROCESS
No matter if a software company such as Microsoft is planning
to build a new version of its popular Office software suite, or if
a company such as Netflix is trying to build a
system to improve its movie recommendations, companies
follow a standardized approach. This process of designing,
building, and maintaining information systems is often
referred to as systems analysis and design
tions/bm02#bm02_gloss_612) . Likewise, the individual who
performs this
task is referred to as a systems analyst
tions/bm02#bm02_gloss_613) . Because few organizations can
survive without
effectively utilizing information and computing technology, the
demand for skilled systems analysts is very strong. In 2014,
U.S. News named being a systems analyst one of the
top jobs; in fact, it was ranked as number 2, just behind

software developer. Likewise, the U.S. Bureau of Labor
Statistics ranks systems analysts near the top of all professions
for job stability, income, and employment growth through 2016,
with average growth exceeding 29 percent. Organizations want
to hire systems analysts because they possess a
unique blend of managerial and technical expertise—systems
analysts are not just “techies.” Systems analysts remain in
demand precisely because of this unique blend of
abilities.
Custom Versus Off-the-Shelf Software
When deciding to deploy new systems to support their
operations in order to gain or sustain a competitive advantage,
organizations can typically choose between custom and
off-the-shelf software. For example, many types of application
software (such as word processors, spreadsheet, or accounting
software) can be used by a variety of businesses
within and across industries. These types of general-purpose
systems are typically purchased off the shelf. Often, however,
organizations have very specific needs that cannot be
met by generic technologies. This is especially true for
companies trying to capitalize on a first-mover advantage, and
therefore may not be able to purchase a preexisting system
to meet their specific needs. For example, pioneers in online
retailing (such as Amazon.com (http://Amazon.com) ) or budget
air travel (such as Southwest Airlines) needed
entirely new systems and technologies to support their
revolutionary business models and had to develop (or have
someone else develop) custom solutions. The approaches to
developing or acquiring custom and off-the-shelf software are
quite different, but they also have many similarities. Before
going into the details of developing or acquiring such
systems, we’ll first contrast these two types of systems.
CUSTOMCUSTOM SOFTWARE. SOFTWARE.

Custom software is developed to meet the specifications of an
organization (it is thus also sometimes called tailor-made, or
bespoke, software). Such software may be developed
(or configured) in-house by the company’s own IS staff, or the
development may be contracted, or outsourced, to a specialized
vendor charged with developing the system to the
company’s contractual specifications. Custom software has two
primary advantages over general purpose commercial
technologies:
1. CustomizabilityCustomizability. The software can be tailored
to meet unique organizational requirements. Such requirements,
for example, can reflect a desire to achieve a competitive
advantage through a specific type of system (e.g.,
Amazon.com’s (http://Amazon.com’s) one-click ordering) or to
better fit business operations, characteristics of the
organizational culture, or proprietary security requirements, or
to better interface with existing systems. Further, company- or
industry-specific terms or acronyms can be
included in a new software application, as can unique types of
required reports. Such specificity is not typically possible in
off-the-shelf systems that are targeted at a
more general audience.
2. ProblemProblem Specificity Specificity. The company pays
only for the features specifically required for its users. In
contrast to software packages such as Microsoft Office, which
include a wide range of individual programs (some of which
may never be used), only those components that are really
needed can be implemented.
Today, building a complete system from scratch is quite rare;
most information systems that are developed within an
organization for its internal use typically include a large
number of preprogrammed, reusable modules as well as off-the-
shelf hardware technologies that are purchased from

development organizations or consultants.
OFF-THE-SHELFOFF-THE-SHELF SOFTWARE. SOFTWARE.
Although custom software has advantages, it is not
automatically the best choice for an organization. Off-the-shelf
software (or packaged software) is typically used to support
common business processes that do not require any specific
tailoring. In general, off-the-shelf systems, whether hardware or
software, are less costly, faster to procure, of higher
quality, and less risky than custom systems. Table 9.3
tions/ch09lev1sec2#ch09tab3) summarizes examples of off-the-
shelf application software.
TABLE 9.3 Examples of Off-the-shelf Application software
Category Application Description Examples
Business information
systems
Payroll Automation of payroll services, from the optical reading
of time sheets to generating
paychecks
ZPAY
Intuit Payroll
Inventory Automation of inventory tracking, order processing,
billing, and shipping Intuit
QuickBooks
InventoryPower 5
Office automation Personal
productivity

Support for a wide range of tasks from word processing to
graphics to e-mail OpenOffice
Corel Office
Microsoft Office
Traditionally, the most common option for packaged software
was so-called commercial off-the-shelf (COTS) software; this
type of software is typically developed by software
companies that spread the development costs over a large
number of customers. An alternative to commercial off-the-shelf
software is open source software.
Open Source Software
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Open source is a philosophy that promotes developers’ and
users’ access to the source of a product or idea. Particularly in
the area of software development, the open source
movement has taken off with the advent of the Internet; people
around the world are contributing their time and expertise to

develop or improve software, ranging from
operating systems to application software. As the programs’
source code is freely available for use and/or modification, this
software is referred to as open source software
tions/bm02#bm02_gloss_430) . Open source software owes its
success to the inputs from a large user base, helping to fix
problems or improve the software. One of the great success
stories of open source software is the Android operating system.
In 2014, Android’s share of the global smartphone
shipment market—led by Samsung products—was over 80
percent! Android is based on another open source operating
system called Linux, developed as a hobby by the
Finnish university student Linus Torvalds in 1991. Linux has
since become the operating system of choice for Web servers,
embedded systems (such as TiVo boxes and network
routers), and supercomputers alike (as of June 2014, 97 percent
of the world’s 500 fastest supercomputers ran Linux operating
systems [Top 500, 2014]). In addition to the Linux
operating system, other open source software has been gaining
increasing popularity because of its stability and low cost. For
example, in 2014, 38 percent of all Web sites were
powered by the Apache Web server, another open source project
(Netcraft, 2014
tions/ch09lev1sec12#ch09_bib8) ).
Other popular examples of open source application software
include the Firefox Web browser and the office productivity
suite Apache OpenOffice.
How do large open source projects such as Firefox work?
Typically, most contributors can only suggest modifications for
changes; for example, they can contribute to program
code or provide new designs for the system’s user interface, but
only a small group of carefully selected “committers” can
implement these modifications into the official

releases of the software, which helps to ensure the quality and
stability of the software.
While there are many benefits to open source software, vendors
of proprietary software are still highlighting “hidden” costs of
running open source software, such as obtaining
reliable customer support. On the other hand, however,
commercial open source vendors are providing customer
support, installation, training, and so on to their paying
customers. Men’s Wearhouse, the State of Oregon, and many
other large organizations are using a CRM system offered by
SugarCRM, Inc., a commercial open source vendor
that offers free “community editions” as well as other, more
feature-rich paid editions of its software. Similarly, the popular
MySQL database, which is used by Yahoo!,
Facebook, the Associated Press, and many other companies, is
provided under an open source license for personal use, but the
company employs its own developers and offers
commercial licenses (including dedicated 24/7 technical
support, consulting, and indemnification clauses) to business
users. Further, many open source projects are now backed
by major information technology (IT) companies such as IBM,
which give money and human resources to Linux projects, or
Oracle, which donated the source code of the
OpenOffice productivity suite to the Apache Software
Foundation.
Combining Custom, Open Source, and Off-the-Shelf Systems
It is possible to combine the advantages of custom, open source,
and off-the-shelf systems. Companies can purchase off-the-shelf
technologies and add custom components for
their specific needs. For example, an online retailer may want to
purchase an off-the-shelf inventory management system and
then add tailor-made modules it needs to conduct
its day-to-day business. This system could be based on the open

source database MySQL; further, the online retailer could use
the open source Apache Web server to power its
online shopping site. In some cases, for example, with large
ERP systems, companies selling off-the-shelf software make
customized changes for a fee. Other vendors, however,
may not allow their software to be modified (as is the case with
generic, all-purpose software, such as Microsoft Office).
Commercial, off-the-shelf systems are almost always acquired
from an external vendor, whereas custom systems can be either
developed in-house or developed by an outside
vendor (Figure 9.9
tions/ch09lev1sec2#ch09fig9) ). Regardless of the source of the
new system—custom, open source, or
off-the-shelf—the primary role of managers and users in the
organization is to make sure that it will meet the organization’s
business needs. This may be especially important in
the case of end users developing systems. End users typically do
not program elaborate systems, but frequently use spreadsheet
or database software to create solutions for
accomplishing narrow, well-defined tasks; while such
applications may be useful for accomplishing certain tasks, end
user development may cause problems related to the
adherence to standards, lack of documentation, security
concerns, or a lack of continuity if the employee who built the
spreadsheet or database leaves the organization.
FIGURE 9.9 There are a variety of sources for information
systems.
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IS Development in Action
The tools and techniques used to develop information systems
are continually evolving with the rapid changes in IS hardware
and software. As you will see, IS development is a
fairly disciplined and structured process that moves from step to
step. Systems analysts become adept at decomposing large,
complex problems into many small, simple
problems. The goal of the systems analyst is to design the final
system by piecing together many small software modules and
technologies into one comprehensive system
(Figure 9.10
tions/ch09lev1sec2#ch09fig10) ). For example, think about
using LEGO™ blocks for building a model of a
space station. Each individual block is a small, simple piece
that is nothing without the others. When put together, the blocks
can create a large and very complex design (Google
co-founder Larry Page had gained some notoriety for building a
working printer out of LEGO bricks). When systems are built in
this manner, they are much easier to design,
build, and, most important, maintain.
FIGURE 9.10 Problem decomposition makes solving large,
complex problems easier.

Although many people in organizations, such as managers and
users, are responsible and participate in a systems development
project, the systems analyst has primary
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responsibility. Some projects may have one or several systems
analysts working together, depending on the size and
complexity of the project. The primary role of the systems
analyst is to study the problems and needs of an organization in
order to determine how people, methods, and information
technology can best be combined to bring about
improvements in the organization. A systems analyst helps
systems users and other business managers define their
requirements for new or enhanced information systems.
A systems analyst typically also manages the development
project. As the project manager
tions/bm02#bm02_gloss_485) , the systems analyst needs a
diverse set of management, leadership, technical, conflict
management, and customer relationships skills. The project
manager is the person most responsible for ensuring that a
project is a success. The project manager must deal with
continual change and problem solving. Successful projects
require effective resource and task management as well as
effective communication as the project moves through its

various steps. Project management is an important aspect of the
system development or acquisition process and a critical skill
for successful systems analysts. The focus of
project management is to ensure that projects meet customer
expectations and are delivered within budget and time
constraints. Clearly, a systems analyst is an agent of change
and innovation in modern organizations.
The Role of Users in the Systems Development Process
Many organizations have a huge investment in transaction
processing and management information systems. These systems
are most often designed, constructed, and
maintained by systems analysts within the organization, using a
variety of methods. When building and maintaining information
systems, systems analysts rely on information
provided by system users, who are involved in all phases of the
system’s development process. To effectively participate in the
process, it is important for all members of the
organization to understand what is meant by systems
development and what activities occur. A close, mutually
respectful working relationship between analysts and users is
key
to project success.
Steps in the Systems Development Process
Just as the products that a firm produces and sells follow a life
cycle, so do organizational information systems. For example, a
new type of tennis shoe follows a life cycle of
being designed, introduced to the market, being accepted into
the market, maturing, declining in popularity, and ultimately
being retired. The term systems development life
cycle (SDLC)
tions/bm02#bm02_gloss_616) describes the life of an

information system from conception to retirement
(Hoffer et al., 2014
tions/ch09lev1sec12/books/Valacich.3917.17.1/sections/ch09lev
1sec12/books/Valacich.3917.17.1/sections/ch09lev1sec12/books
/Valacich.3917.17.1/sections/ch09lev1sec12#ch09_bib5)
). The SDLC has four primary phases:
1. Systems planning and selection
2. Systems analysis
3. Systems design
4. Systems implementation and operation
FIGURE 9.11 The SDLC defines the typical process for
building systems.
Figure 9.11
sec2/books/Valacich.3917.17.1/sections/ch09lev1sec2/books/Va
lacich.3917.17.1/sections/ch09lev1sec2/books/Valacich.3917.17
.1/sections/ch09lev1sec2#ch09fig11)
is a graphical representation of the SDLC containing four boxes
connected by arrows. Within the SDLC, arrows flow from
systems planning and selection, to systems analysis,
to systems design, and, finally, to systems implementation and
operation. Once a system is in operation, it moves into an
ongoing maintenance phase that parallels the initial
development process. For example, when new features are
added to an existing system, analysts must first plan and select
which new features to add, then analyze the possible
impact of adding these features to the existing system, then
design how the new features will work, and, finally, implement
these new features into the existing system. While
some consider maintenance another SDLC phase, it is really a
repeated application of the core SDLC phases. In this way, the

SDLC becomes an ongoing cycle. During ongoing
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systems maintenance, the entire SDLC is followed to implement
system repairs and enhancements.
WHO’S GOING MOBILE: Creating Mobile Apps
With the rapid rise of smartphone usage, various useful and
entertaining apps are rapidly being developed, greatly
enhancing the phones’ capabilities. In 2013, both
Google and Apple announced that they had over 1 million apps
in their app stores, with many more apps appearing every day.
The primary reason there are so many
apps is that anyone can build and try to sell apps, from software

companies focused on translating their existing products (such
as Adobe Reader) onto mobile
platforms, to individuals who have a clever idea for a game.
Owing to the intense competition between these apps, it is not
surprising that only relatively few are highly successful.
However, if you have the right idea, creating a
winning app can be surprisingly easy. In fact, it is estimated
that it took the maker of the widely successful game Flappy
Bird a mere two to three days to create that
game (alone, that is). At its peak, the game netted US$50,000
per day for the person who built the game. Given that games for
popular consoles such as the
PlayStation or the Xbox cost millions of dollars to develop, how
did Flappy Bird’s creator manage to pull that off?
In the past few years, a number of marketplaces have sprung up
where anyone can purchase game templates for as low as
US$199. These templates typically include
certain game mechanics, which the buyer can modify to create a
functioning game. Typically, there’s not even a need to write a
single line of code; all that is needed is
a winning idea, coming up with a good story, game title, and
key words, and the skills needed to create the graphics.
What if your idea is for an app other than a game, such as a
productivity tool for students, or a better way to keep track of
your passwords? There are tools to help
develop these as well. Once the app is created, all that is needed
is uploading the app to the various marketplaces, and watching
the download count. Good luck!
Based on:
Anonymous. (2014

tions/ch09lev1sec12#ch09_bib2) ). AppMachine. Retrieved
March 27, 2014, from www.appmachine.com
(http://www.appmachine.com) .
Rubens, P. (February 18, 2014). Flap happy: How you too can
become a mobile games mogul. BBC. Retrieved March 27,
2014, from http://www.bbc.com/news/business-26224428
(http://www.bbc.com/news/business-26224428) .
Phase 1: Systems Planning and Selection
The first phase of the SDLC is systems planning and selection
tions/bm02#bm02_gloss_620) (see Figure 9.11
). Understanding that it can work on only a limited number of
projects at a given time because of limited resources, an
organization must take care that only those projects that
are critical to enabling the organization’s mission, goals, and
objectives are undertaken. Consequently, the goal of systems
planning and selection is simply to identify, plan, and
select a development project from all possible projects that
could be performed. Organizations differ in how they identify,
plan, and select projects. Some organizations have a
formal information systems planning
tions/bm02#bm02_gloss_307) process whereby a senior
manager, a business
group, an IS manager, or a steering committee identifies and
assesses all possible systems development projects that the
organization could undertake. Project managers present
the business case for the new system and it is accepted or

rejected. Others follow a more ad hoc process for identifying
potential projects. Nonetheless, after all possible projects
are identified, those deemed most likely to yield significant
organizational benefits, given available resources, are selected
for subsequent development activities.
Just as there are often differences in the source of systems
projects within organizations, there are often different
evaluation criteria used within organizations when classifying
and ranking potential projects, such as strategic alignment,
costs and benefits, resource availability, project size and
duration, or technical difficulties and risks. During project
planning, the analyst works with the customers—the potential
users of the system and their managers—to collect a broad range
of information to gain an understanding of the
project size, potential benefits and costs, and other relevant
factors. After collecting and analyzing this information, the
analyst builds the business case that can be reviewed and
compared with other possible projects. If the organization
accepts the project, systems analysis begins.
Phase 2: Systems Analysis
The second phase of the SDLC is called systems analysis
). One purpose of the systems analysis phase is for designers to
gain a thorough understanding of an organization’s current way
of doing things in the area for which the new
information system will be constructed. The process of
conducting an analysis requires that many tasks, or subphases,

be performed. The first subphase focuses on determining
system requirements. To determine the requirements, an analyst
works closely with users to determine what is needed from the
proposed system. After collecting the
requirements, analysts organize this information using data,
process, and logic modeling tools.
COLLECTINGCOLLECTING REQUIREMENTS.
REQUIREMENTS.
The collection and structuring of requirements is arguably the
most important activity in the systems development process
because how well the IS requirements are defined
influences all subsequent activities. The old saying “garbage in,
garbage out” very much applies to the systems development
process. Requirements collection
tions/bm02#bm02_gloss_514) is the process of gathering and
organizing information from users, managers, customers,
business processes, and documents to understand how a
proposed information system should function. Systems analysts
use a variety of techniques for collecting system
requirements, including the following (Hoffer et al., 2014
http://www.appmachine.com/
http://www.bbc.com/news/business-26224428
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):
■ InterviewsInterviews. Analysts interview people informed
about the operation and issues of the current or proposed
system.
■ QuestionnairesQuestionnaires. Analysts design and administer
surveys to gather opinions from people informed about the
operation and issues of the current or proposed system.
■ ObservationsObservations. Analysts observe system users at
selected times to see how data are handled and what information

people need to do their jobs.
■ DocumentDocument Analysis Analysis. Analysts study
business documents to discover issues, policies, and rules, as
well as concrete examples of the use of data and information in
the
organization.
■ JointJoint Application Application Design Design
tions/bm02#bm02_gloss_351)
tions/bm02#bm02_gloss_351) . Joint application design (JAD)
tions/bm02#bm02_gloss_351) is a group meeting–based process
for requirements collection (Figure 9.12
tions/ch09lev1sec2#ch09fig12) ). During this meeting, the users
jointly define and agree on system requirements or
designs. This process can result in dramatic reductions in the
length of time needed to collect requirements or specify
designs.
FIGURE 9.12 A JAD room.
Source: Based on Wood & Silver (1989
tions/ch09lev1sec12#ch09_bib16) ); Hoffer et al. (2014
).
MODELINGMODELING DATA. DATA.
Data are facts that describe people, objects, or events. A lot of

different facts can be used to describe a person: name, age,
gender, race, and occupation, among others. To
construct an information system, systems analysts must
understand what data the information system needs in order to
accomplish the intended tasks. To do this, they use data
modeling tools to collect and describe the data to users to
confirm that all needed data are known and presented to users as
useful information. Figure 9.13
tions/ch09lev1sec2#ch09fig13) shows an entity-relationship
diagram, a type of data model describing students, classes,
majors, and classrooms at a university. Each box in the diagram
is referred to as a data entity, and each entity is related to other
entities. Data modeling tools enable the systems
analyst to represent data in a form that is easy for users to
understand and critique. For more information on databases and
data modeling, see the Technology Briefing.
FIGURE 9.13 A sample entity-relationship diagram for
students.
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MODELINGMODELING PROCESSES PROCESSES AND AND
LOGIC. LOGIC.
The next step in this phase is to model how data are being input,
processed, and presented to the users. As the name implies, data
flows
tions/bm02#bm02_gloss_159) represent the movement of data
through an organization or within an information system.
For example, your registration for a class may be captured in a
registration form on paper or in an interactive form on the Web.
After it is filled out, this form probably flows
through several processes to validate and record the class
registration, shown as “Data Flows” in Figure 9.14
. After all students have been registered, a repository of all
registration information can be processed for developing class
rosters or for generating student billing information,
which is shown as “Data” in Figure 9.14

. Processing logic
tions/bm02#bm02_gloss_480) represents the way in which data
are transformed. Processing logic is
often expressed in pseudocode
tions/bm02#bm02_gloss_490) , which is a representation of the
program’s internal
functioning, independent of the actual programming language
being used. As there are no standards for pseudocode, the level
of detail can vary. For example, pseudocode to
calculate students’ grade-point averages at the conclusion of a
term is shown in the “Processing Logic” section in Figure 9.14
.
After the data, data flow, and processing logic requirements for
the proposed system have been identified, analysts develop one
or many possible overall approaches—sometimes
called designs—for the information system. For example, one
approach for the system may possess only basic functionality
but has the advantage of being relatively easy and
inexpensive to build. An analyst might also propose a more
elaborate approach for the system, but it may be more difficult
and more costly to build. Analysts evaluate
alternative system design approaches with the knowledge that
different solutions yield different benefits and different costs.
After a system approach is selected, details of that
particular system approach can be defined.

Phase 3: Systems Design
The third phase of the SDLC is systems design
). As its name implies, it is during this phase that the proposed
system is designed; that is, the details of the chosen approach
are elaborated. As with analysis, many different
activities must occur during systems design. The elements that
must be designed when building an information system include
the following:
■ Processing and logic
■ Databases and files
■ Human–computer interface
DESIGNINGDESIGNING PROCESSING PROCESSING AND
AND LOGIC. LOGIC.
The processing and logic operations of an information system
are the steps and procedures that transform raw data inputs into
new or modified information. There are typically
different ways to complete each process, with some being more
efficient or effective than others. Modeling the processes thus
includes not only specifying what is to be done,
but also the specific algorithms, which outline the steps, or set
of rules, to be followed (that is, how a certain process is
accomplished). For example, when calculating your
grade-point average, your school needs to perform the following
steps:

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FIGURE 9.14 Four key elements to the development of a
system: requirements, data,
data flows, and processing logic.
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1. Obtain the prior grade-point average, credit hours earned, and
list of prior courses
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2. Obtain the list of each current course, final grade, and course
credit hours
3. Combine the prior and current credit hours into aggregate
sums
4. Calculate the new grade-point average
The logic and steps needed to make this calculation can be
represented in many ways, including structure charts, decision
trees, pseudocode, programming code, and so on (see
Figure 9.14

). Regardless of how the logic is represented, the process of
converting pseudocode, structure charts, or decision trees into
actual program code during system implementation is
a relatively straightforward process.
DESIGNINGDESIGNING DATABASES DATABASES AND
AND FILES. FILES.
To design databases and files, a systems analyst must have a
thorough understanding of an organization’s data and
informational needs. For example, Figure 9.15
tions/ch09lev1sec2#ch09fig15) shows the database design to
keep track of student information in a Microsoft Access
database. The database design is more complete (shows each
attribute of the student) and more detailed (shows how the
information is formatted) than a conceptual data model
built during systems analysis (as was shown in Figure 9.14
).
DESIGNINGDESIGNING THE THE HUMAN-COMPUTER
HUMAN-COMPUTER INTERFACE. INTERFACE.
Just as people have different ways of interacting with other
people, information systems can have different ways of
interacting with people. A human–computer interface
(HCI)

tions/bm02#bm02_gloss_290) is the point of contact between a
system and users. With people being used to
interacting with easy-to-use systems and Web sites like
Facebook, Twitter, and Amazon.com (http://Amazon.com) ,
their expectations in terms of ease of use are ever increasing.
In addition, increasing a system’s usability
tions/bm02#bm02_gloss_655) —that is, whether the system is
easy to use
and aesthetically pleasing—can lower error rates, increase
efficiency, or increase customer satisfaction (in the case of
customer-facing systems). Thus, analysts also take great
care in designing data entry forms and management reports. A
form is a business document containing some predefined data,
often including some areas where additional data
can be filled in (Figure 9.16
tions/ch09lev1sec2#ch09fig16) ). Similarly, a report is a
business document containing only
predefined data for online viewing or printing (Figure 9.17
tions/ch09lev1sec2#ch09fig17) ). For more on forms and
reports, see Chapter 6
tions/ch06#ch06) .
Phase 4: Systems Implementation and Operation
Many separate activities occur during systems implementation
tions/bm02#bm02_gloss_617) , the fourth phase of the
SDLC (see Figure 9.11

). One group of activities focuses on transforming the system
design into a working information system. These activities
include software programming and testing. A second
group of activities focuses on preparing the organization for
using the new information system. These activities include
system conversion, documentation, user training, and
support. This section briefly describes what occurs during
systems implementation.
SOFTWARESOFTWARE PROGRAMMING PROGRAMMING
AND AND TESTING. TESTING.
FIGURE 9.15 The database design for student information from
an Access database.
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Source: Courtesy of Microsoft Corporation.
Programming is the process of transforming the system design
into a working computer system. During this transformation,
both programming and testing should occur in
parallel. As you might expect, a broad range of tests is
conducted before a system is complete, including developmental
testing
tions/bm02#bm02_gloss_179) , alpha testing
tions/bm02#bm02_gloss_9) , and beta testing
tions/bm02#bm02_gloss_40) (Table 9.4
tions/ch09lev1sec2#ch09tab4) ).

FIGURE 9.16 A data entry form.
FIGURE 9.17 Sales summary report.
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SYSTEMSYSTEM CONVERSION, CONVERSION,
DOCUMENTATION, DOCUMENTATION, TRAINING,
TRAINING, AND AND SUPPORT. SUPPORT.
System conversion
tions/bm02#bm02_gloss_609) is the process of
decommissioning the current way of doing things
(automated or manual) and installing the new system in the
organization. Effective conversion of a system requires not only
that the new software be installed but also that users
be effectively trained and supported. System conversion can be
performed in at least four ways, as shown in Figure 9.18
tions/ch09lev1sec2#ch09fig18) .

TABLE 9.4 General Testing Types, Their Focus, and Who
Performs Them
Testing Type Focus Performed by
Developmental Testing the correctness of individual modules
and the integration of multiple modules Programmer
Alpha Testing of overall system to see whether it meets design
requirements Software tester
Beta Testing of the capabilities of the system in the user
environment with actual data Actual system users
Many types of documentation must be produced for an
information system. Programmers develop system
documentation that details the inner workings of the system to
ease
future maintenance and to ensure reliability of the system. A
second type of documentation is user-related documentation,
which is typically written not by programmers or
analysts but by users or professional technical writers. The
range of documents can include the following:
FIGURE 9.18 Software conversion strategies.
■ User and reference guides
■ User training manuals and tutorials
■ Installation procedures and troubleshooting suggestions
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of
In addition to documentation, users may also need training and
ongoing support to use a new system effectively. Different
types of training and support require different levels of
investment by the organization. Self-paced training and tutorials
are the least expensive options, and one-on-one training is the
most expensive. Table 9.5
tions/ch09lev1sec2#ch09tab5) summarizes various user training
options.
Besides training, providing ongoing education and problem-
solving assistance for users may also be necessary. This is
commonly referred to as system support, which is often
provided by a special group of people in the organization who
make up an information center or help desk. Support personnel
must have strong communication skills and be
good problem solvers in addition to being expert users of the
system. An alternative option for a system not developed
internally is to outsource support activities to a vendor
specializing in technical system support and training.
Regardless of how support is provided, it is an ongoing issue
that must be managed effectively for the company to realize
the maximum benefits of a system.
Repeating the SDLC: Systems Maintenance
TABLE 9.5 User Training Options
Training Option Description
Tutorial One person taught at a time

Course Several people taught at a time
Computer-aided instruction One person taught at a time by the
computer system
Interactive training manuals Combination of tutorials and
computer-aided instruction
Resident expert Expert on call to assist users as needed
Software help components Built-in system components designed
to train users and troubleshoot problems
External sources Vendors and training providers offering
tutorials, courses, and other training activities
After an information system is installed, it is essentially in the
systems maintenance
phase. A system does not wear out in the physical manner that
cars, buildings, or other physical objects do, but it must still be
systematically repaired and/or improved. The
types of maintenance are summarized in Table 9.6
tions/ch09lev1sec2#ch09tab6) .
TABLE 9.6 Types of Systems Maintenance
Maintenance Type Description
Corrective
maintenance
Making changes to an information system to repair flaws in the
design, coding, or implementation
Adaptive
maintenance
Making changes to an information system to evolve its

functionality, to accommodate changing business needs, or to
migrate it to a different operating
environment
Preventive
maintenance
Making changes to a system to reduce the chance of future
system failure
Perfective
maintenance
Making enhancements to improve processing performance or
interface usability, or adding desired but not necessarily
required system features (in
other words, “bells and whistles”)
During systems maintenance, it is typical that one person within
the systems development group is responsible for collecting
maintenance requests from system users.
Periodically, these requests are analyzed to evaluate how a
proposed change might alter the system and what business
benefits might result from such a change, and are
prioritized accordingly (Figure 9.19
tions/ch09lev1sec2#ch09fig19) ). As with adaptive maintenance
tions/bm02#bm02_gloss_4) , both perfective maintenance
tions/bm02#bm02_gloss_458) and preventive maintenance
tions/bm02#bm02_gloss_474) are typically a much lower
priority than corrective maintenance
tions/bm02#bm02_gloss_138) , which deals with repairing flaws

in the system. Corrective maintenance is most likely to
occur after initial system installation as well as over the life of
a system after major system changes. This means that adaptive,
perfective, and preventive maintenance activities
can lead to corrective maintenance activities if they are not
carefully designed and implemented.
FIGURE 9.19 Change request management is used during
systems maintenance.
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As with developing or acquiring new systems, any changes to an

existing system need to be carefully managed. Unmanaged
change can have a variety of negative
consequences, including system malfunction, system failure,
increasing unreliability (as errors tend to build up over time,
making the system more fragile), or opening the door
for fraud or deliberate misuse (e.g., if a “backdoor” is
introduced during changes to a system). If the change request is
approved, a system change is designed and then
implemented. As with the initial development of the system,
implemented changes are formally reviewed and tested before
being installed into operational systems. Thus,
change request management
tions/bm02#bm02_gloss_88) is a formal process that ensures
that any proposed system
changes are documented, reviewed for potential risks,
appropriately authorized, prioritized, and carefully managed (to
establish an audit trail; to be able to trace back who
reviewed, authorized, implemented, or tested the changes). In
other words, the systems maintenance process parallels the
process used for the initial development of the
information system, as shown in Figure 9.20
tions/ch09lev1sec2#ch09fig20) . Interestingly, it is often during
system
maintenance that the largest part of the system development
effort occurs.
KEY PLAYERS: Game Development Studios
Have you ever wondered how and where tech companies
generate so much money each year? For example, in 2012, some
of the largest tech companies, including
mainstays like IBM (US$104 billion in total revenue) and Apple
(US$164 billion in total revenue), generated their massive
revenues with a mix of hardware, services,

and software sales. For these giants, however, software revenue
was a relatively modest portion, amounting to 27.6 percent
(US$29 billion) for IBM, and only 1.0
percent (US$1.6 billion) for Apple. In contrast, software giant
Microsoft, with total revenue topping US$73 billion, generated
about 80 percent (US$58 billion) of its
revenue through software sales, making Microsoft the highest-
grossing software company in the world.
A closer analysis of the sources of revenue of the largest
“software companies” shows that most derive income from a
variety of sources beyond software sales. Few
software companies are capable of standing out solely by
relying on software revenue—that is, with the exception of
gaming. Top game developers such as CAPCOM
(e.g., Resident Evil), and Rockstar North (Grand Theft Auto)
generate nearly 100 percent of their revenue from software
sales.
While all software development follows a methodology like the
SDLC, game development has some unique characteristics given
the high entertainment or educational
goals of this type of software. In a normal SDLC, analysis and
design activities are carried out by a relatively narrow group of
system and business analysts, while
programming and testing are carried out by programmers and
software testers. Like any software project, game development
begins with the establishment of a
general project goal (such as to have a best-selling game or to
produce a game associated with a certain sports event). From
there, things change quite a bit. Designing
a bestselling game more or less resembles the process of a
heavily invested movie production. Like high-budget,
blockbuster movies, games targeted for massive
markets can be extremely expensive to create. In fact, leading
games have been reported to cost more than US$100 million to

develop. So, building a game that has
low sales can literally bankrupt a game studio. Given the
complexity, expense, and deep specialization required to
develop top-selling games, it is easy to see why
those companies focus their efforts solely on software sales to
create the next bestseller.
Based on:
Anonymous. (n.d.). Global software top 100—edition 2013.
PWC.comPWC.com (http://PWC.com) (http://PWC.com) .
http://www.pwc.com/gx/en/technology/publications/global-
software-100-leaders/compare-results.jhtml
(http://www.pwc.com/gx/en/technology/publications/global-
software-100-leaders/compare-results.jhtml) .
Game development life cycle. (n.d.). Retrieved March 20, 2014,
from http://personanonymous.wordpress.com/2013/01/06/game-
development-lifecycle
m02#bm02_gloss_88
http://pwc.com/
http://www.pwc.com/gx/en/technology/publications/global-
software-100-leaders/compare-results.jhtml
http://personanonymous.wordpress.com/2013/01/06/game-
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(http://personanonymous.wordpress.com/2013/01/06/game-
development-lifecycle) .
LaMothe, A. (n.d.). Designing video games.
Dummies.comDummies.com (http://Dummies.com)
(http://Dummies.com) . Retrieved March 20, 2014, from
http://www.dummies.com/how-to/content/designing-video-
games.html (http://www.dummies.com/how-
to/content/designing-video-games.html) .
Today, vendors of commercial off-the-shelf software packages
incorporate patch management systems
tions/bm02#bm02_gloss_451) to facilitate the different forms of
systems maintenance for the user; patch management
systems use the Internet to check the software vendor’s Web
site for available patches and/or updates. If the software vendor
offers a new patch, the application will download
and install the patch in order to fix the software flaw. An
example of a patch management system in wide use is the
Windows Update Service, which automatically connects to a
Microsoft Web service to download critical operating system
patches for corrective maintenance (e.g., to fix bugs in the
Windows operating system) or preventive maintenance
(e.g., to fix security holes that could be exploited by malicious
hackers).
As you can see, there is more to systems maintenance than you
might think. Lots of time, effort, and money are spent in this
final phase of a system’s development, and it is
important to follow prescribed, structured steps. In fact, the
approach to systems development described here—from the
initial phase of identifying, selecting, and planning for

systems to the final phase of systems maintenance—is a very
structured and systematic process. Each phase is fairly well
prescribed and requires active involvement by systems
people, users, and managers. It is likely that you will have
numerous opportunities to participate in the acquisition or
development of a new system for an organization for which
you currently work or will work in the future. Now that you
have an understanding of the process, you should be better
equipped to make a positive contribution to the success
of any systems development project.
FIGURE 9.20 Mapping of system maintenance activities to the
SDLC.
Other Approaches to Designing and Building Systems
The SDLC is one approach to managing the development
process, and it is a very good approach to follow when the
requirements for the information system are highly
structured and straightforward—for example, for a payroll or
inventory system. Today, in addition to “standard” systems such
as payroll and inventory systems, organizations
need a broad variety of company-specific information systems,
for which requirements either are very hard to specify in
advance or are constantly changing. For example, an
organization’s Web site is likely to evolve over time to keep
pace with changing business requirements. How many Web sites
have you visited in which the content or layout
seemed to change almost every week? For this type of system,
the SDLC might work as a development approach, but it would
not be optimal.
A commonly used alternative to the SDLC is prototyping
tions/bm02#bm02_gloss_488) , which uses a trial-and-error
approach for discovering how a system should operate. You may

think that this does not sound like a process at all; however, you
probably use prototyping all the time in many
of your day-to-day activities, but you just do not know it. For
example, when you buy new clothes, you likely use
prototyping—that is, trial and error—by trying on several
shirts before making a selection.
Figure 9.21
tions/ch09lev1sec2#ch09fig21) diagrams the prototyping
process when applied to identifying/determining
system requirements. To begin the process, the system designer
interviews one or several users of the system, either
individually or as a group, in a JAD session. After the
designer gains a general understanding of what the users want,
he or she develops a prototype of the new system as quickly as
possible to share with the users. The users may
like what they see or ask for changes. If the users request
changes, the designer modifies the prototype and again shares it
with them. This process of sharing and refinement
continues until the users approve the functionality of the
system.
http://personanonymous.wordpress.com/2013/01/06/game-
http://dummies.com/
http://www.dummies.com/how-to/content/designing-video-
games.html
m02#bm02_gloss_451
m02#bm02_gloss_488

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FIGURE 9.21 The prototyping process uses a trial-and-error
approach to discovering
how a system should operate.
Beyond the SDLC and prototyping, there are many more
approaches for designing and constructing information systems
(e.g., Agile Methodologies, Extreme Programming,
RAD [Rapid Application Development], object-oriented
analysis and design, and so on). Each alternative approach has
its strengths and weaknesses, providing a skilled systems
analyst with a variety of tools to best meet the needs of a
situation (for more, see Hoffer et al., 2014
).
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9.3 ACQUIRING INFORMATION SYSTEMS
We have now explained some of the general approaches that
organizations follow when building systems in-house with their
own IS staff. Many times, however, this is not a
feasible solution. The following are four situations in which you
might need to consider alternative development strategies.
■ SituationSituation 1: 1: Limited Limited IS IS Staff Staff.
Often, an organization does not have the capability to build a
system itself. Perhaps its development staff is small or deployed
on other
activities and does not have the capability to take on an in-
house development project.
■ SituationSituation 2: 2: IS IS Staff Staff Has Has Limited
Limited Skill Skill Set Set. In other situations, the IS staff may
not have the skills needed to develop a particular kind of
system. This has been
especially true with the explosive growth of the Web and mobile
devices; many organizations are having outside groups develop
and manage their Web sites and mobile
apps.
WHEN THINGS GO WRONG: Conquering Computer Contagion
Blue Security, an Israel-based Internet security company
startup, thought it had the answer to spammers. For every
unwanted spam message that the half million
clients of the company’s e-mail service, Blue Frog, received, a
message was returned to the advertiser. As a result, 6 of the top
10 spammers were inundated by the
opt-out messages and were forced to eliminate Blue Frog’s
clients from their mailing list. One spamming company,
however, decided to fight back. According to Blue

Security, PharmaMaster responded by sending so many spam
messages to Blue Frog’s clients that several Internet service
providers’ servers crashed. Under
PharmaMaster’s threat of continuing and expanded attacks, Blue
Security folded after a mere two weeks. “We cannot take the
responsibility for an ever-escalating
cyberwar through our continued operations,” said Eran Reshef,
chief executive officer (CEO) and founder of Blue Security.
Like PharmaMaster, all authors of malware have continued to
flout efforts to cleanse the Internet of their disruptive and
exasperating wares. As the Internet evolves, so
have the approaches taken by attackers; Table 9.7
tions/ch09lev1sec3#ch09tab7) lists the top malware issues of
2014. Unfortunately, the battle against malware will probably
rage as long as the Internet exists.
Based on:
Anonymous. (2014
tions/ch09lev1sec12#ch09_bib2) ). Security threat report 2014:
Smarter, shadier, stealthier malware. Sophos.comSophos.com
(http://Sophos.com) (http://Sophos.com) . Retrieved March 20,
2014, from http://www.sophos.com/en-
us/medialibrary/PDFs/other/sophos-security-threat-report-
2014.pdf (http://www.sophos.com/en-
us/medialibrary/PDFs/other/sophos-security-threat-report-
2014.pdf) .
Lemos, R. (2006, May 17). Blue Security folds under
spammer’s wrath. SecurityFocus. Retrieved March 20, 2014,
from http://www.securityfocus.com/news/11392
(http://www.securityfocus.com/news/11392) .

TABLE 9.7 Top Malware Issues for 2014
Rank Issue Description
1 Botnets Grow Botnets are becoming more widespread,
resilient, and camouflaged.
2 Android-Based
Malware
Android malware continues to grow and evolve.
3 Linux Is Attracting
Criminals
Linux is a targeted platform because it is widely used to run
Web sites.
4 Mac OS X Attacks Mostly ignored in the past, a steady stream
of modest, creative, and diverse attacks are being launched.
5 Web-Based Malware
Matures
Dangerous, difficult-to-detect Web server attacks, leading to
more drive-by attacks against vulnerable Web clients.
6 Targeting Financial
Accounts
More persistent attacks aimed at compromising financial
accounts.
7 Windows XP In 2014, Windows XP and Office 2003 were no
longer updated, creating significant issues in specialized
markets such as point-of-
sale and medical equipment.

8 Spam Evolves Spammers continue to reinvent their attacks to
overcome blocking.
■ SituationSituation 3: 3: IS IS Staff Staff Is Is Overworked
Overworked. In some organizations, the IS staff may simply not
have the time to work on all the systems that the organization
requires or
wants.
■ SituationSituation 4: 4: Problems Problems with with
Performance Performance of of IS IS Staff Staff. Earlier in this
book, we discussed how and why systems development projects
could sometimes be risky. Often,
the efforts of IS departments are derailed because of staff
turnover, changing requirements, shifts in technology, or budget
constraints. Regardless of the reason, the result is
the same: another failed (or flawed) system.
When it isn’t possible or advantageous to develop a system in-
house, organizations are pursuing two popular options:
http://sophos.com/
http://www.sophos.com/en-us/medialibrary/PDFs/other/sophos-
security-threat-report-2014.pdf
http://www.securityfocus.com/news/11392
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FIGURE 9.22 Taking software for a “test-drive” prior to
purchase.
1. External acquisition of a prepackaged system
2. Outsourcing systems development
These options are examined next.
External Acquisition
Purchasing an existing system from an outside vendor such as
IBM, HP Enterprise Services, or Accenture is referred to as
external acquisition
tions/bm02#bm02_gloss_245) . How does external acquisition
of an information system work? Think about the process
that you might use when buying a car. Do you simply walk into
the first dealership you see, tell them you need a car, and see
what they try to sell you? You had better not.
Probably you have done some upfront analysis and know how
much money you can afford to spend and what your needs are.
If you have done your homework, you probably
have an idea of what you want and which dealership can provide
the type of car you desire.
This upfront analysis of your needs can be extremely helpful in
narrowing your options and can save you a lot of time.
Understanding your needs can also help you sift through
the salespeople’s hype that you are likely to encounter from one
dealer to the next as each tries to sell you on why his or her
model is perfect for you. After getting some
information, you may want to take a couple of promising
models for a test-drive, actually getting behind the wheel to see
how well the car fits you and your driving habits. You

might even talk to other people who have owned this type of car
to see how they feel about it. Ultimately, you are the one who
has to evaluate all the different cars to see which
one is best for you. They may all be good cars; however, one
may fit your needs just a little better than the others.
The external acquisition of an information system is very
similar to the purchase of a car. When you acquire a new
system, you should do some analysis of your specific needs.
For example, how much can you afford to spend, what basic
functionality is required, and approximately how many people
will use the system? Next, you can begin to “shop”
for the new system by asking potential vendors to provide
information about the systems that they have to offer. After you
evaluate this information, it may become clear that
several vendors have systems that are worth considering. You
may ask those vendors to come to your organization and set up
their systems so that you and your colleagues are
able to “test-drive” them (Figure 9.22
tions/ch09lev1sec3#ch09fig22) ). Seeing how people react to
the systems and
seeing how each system performs in the organizational
environment can help you “see” exactly what you are buying.
By seeing the actual system and how it performs with real
users, with real or simulated data, you can get a much clearer
idea of whether that system fits your needs. When you take a
car for a test-drive, you learn how the car meets your
needs. By seeing how the system meets your needs before you
buy, you can greatly reduce the risk associated with acquiring
that system.
STEPSSTEPS IN IN EXTERNAL EXTERNAL ACQUISITION.
ACQUISITION.
In many cases, your organization will use a competitive bid
process for making an external acquisition. In the competitive

bid process, vendors are given an opportunity to
propose systems that meet the organization’s needs. The goal of
the competitive process is to help the organization ensure that it
gets the best system at the lowest possible price.
Most competitive external acquisition processes have at least
five general steps:
1. Systems planning and selection
2. Systems analysis
3. Development of a request for proposal
4. Proposal evaluation
5. Vendor selection
You have already learned about the first two steps because they
apply when you build a system yourself
as well as when you purchase a system through an external
vendor. Step 3, development of a request for
proposal, is where the external acquisition process differs
significantly from in-house development.
DEVELOPMENTDEVELOPMENT OF OF A A REQUEST
REQUEST FOR FOR PROPOSAL. PROPOSAL.
A request for proposal (RFP)
tions/bm02#bm02_gloss_513) is simply a
document that is used to tell vendors what your requirements
are and to invite them to provide
information about how they might be able to meet those
requirements. An RFP is sent to vendors who
might potentially be interested in providing hardware and/or
software for the system.
Among the areas that may be covered in an RFP are the
following:
■ A summary of existing systems and applications

■ Requirements for system performance and features
■ Reliability, backup, and service requirements
■ The criteria that will be used to evaluate proposals
■ Timetable and budget constraints (how much you can spend)
The RFP is then sent to prospective vendors along with an
invitation to present their bids for the
project. Eventually, you will likely receive a number of
proposals to evaluate. If, on the other hand, you
do not receive many proposals, it may be necessary to rethink
the requirements—perhaps the
requirements are greater than the budget limitations or the time
frame is too short. In some situations,
you may first need to send out a preliminary request for
information simply to gather information from
prospective vendors. This will help you determine whether,
indeed, the desired system is feasible or
even possible. If you determine that it is, you can then send out
an RFP. Often, rather than trying to
identify all potential vendors and sending out RFPs, companies
set up a project Web site, allowing
potential bidders to find out more about the organization and its
current and planned information
systems (Figure 9.23
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of
Source: Yuri Arcurs/Fotolia.
tions/ch09lev1sec3#ch09fig23) ).
PROPOSALPROPOSAL EVALUATION. EVALUATION.
The fourth step in external acquisition is to evaluate proposals
received from vendors. This evaluation
may include viewing system demonstrations, evaluating the
performance of those systems, examining
criteria important to the organization, and judging how the
proposed systems “stack up” to those
criteria. Demonstrations are a good way to get a feel for the
different systems’ capabilities. Just as you
can go to the showroom to look at a new car and get a feel for
whether it meets your needs, it is also
possible to screen various systems through a demonstration
from the vendor. During a demonstration, a
sales team from the vendor gives an oral presentation about the
system, its features and cost, followed
by a demonstration of the actual system. Although such
demonstrations are often useful in helping you
understand the features of different systems being proposed,
they are rarely enough in and of
themselves to warrant purchasing the system without further
evaluation.
FIGURE 9.23 Sample RFP Web site for an information systems
project.

One of the methods you can use to evaluate a proposed system
is systems benchmarking
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, which is the use of standardized performance tests to facilitate
comparison between systems. Benchmark programs are sample
programs or jobs that simulate a system’s
workload. You can have benchmarks designed to test portions of
the system that are most critical to your needs, based on your
systems analysis. A benchmark might test how
long it takes to calculate a set of numbers, how long it takes to
access a set of records in a database, or how long it would take
to access certain information given a certain
number of concurrent users. Some common system benchmarks
include the following:
■ Response time given a specified number of users
■ Time to sort records
■ Time to retrieve a set of records
■ Time to produce a given report
■ Time to read in a set of data

In addition, vendors may also supply benchmarks that you can
use, although you should not rely solely on vendor information.
For popular systems, you may be able to rely on
system benchmarks published in computer trade journals such as
PC Magazine or on industry Web sites, such as www.cnet.com
(http://www.cnet.com) . However, in most cases,
demos and benchmarks alone do not provide all the information
you need to make a purchase. The systems analysis phase
should have revealed some specific requirements for
the new system. These requirements may be listed as criteria
that the organization can use to further evaluate vendor
proposals. Depending on what you are purchasing—
hardware, software, or both—the criteria you use will change.
Table 9.8
tions/ch09lev1sec3#ch09tab8) provides
examples of commonly used evaluation criteria.
VENDORVENDOR SELECTION. SELECTION.
In most cases, more than one system will meet your needs, just
as more than one car will usually meet your needs. However,
some probably “fit” better than others. In these
cases, you should have a way of prioritizing or ranking
competing proposals. One way of doing this is by devising a
scoring system for each of the criteria and benchmarking
results as described when making the business case.
Companies may use other, less formalized approaches to
evaluate vendors. Sometimes they use simple checklists; other
times they use a more subjective process. Regardless of
the mechanism, eventually a company completes the evaluation
stage and selects a vendor, ending the external acquisition
process.
TABLE 9.8 Commonly Used Evaluation Criteria

Hardware Criteria Software Criteria Other Criteria
Clock speed of CPU Memory requirements Installation
Memory availability Help features Testing
Secondary storage (including capacity, access time, and so on)
Usability Price
Learnability
Video display size Number of features supported
Printer speed Training and documentation
Maintenance and repair
MANAGINGMANAGING SOFTWARE SOFTWARE
LICENSING. LICENSING.
When purchasing commercial, off-the-shelf software, companies
usually have to agree to a license agreement. In general,
software licenses can be classified based on their
restrictiveness or the freedom they offer to use or modify the
software. Software licensing has been a hot-button topic for
software companies as they lose billions in piracy and
mislicensed customers (see Chapter 10
tions/ch10#ch10) ). Traditionally, software licensing is defined
as the
permissions and rights that are imposed on applications; the use
of software without a proper license is illegal in most countries.
Most software licenses differ in terms of restrictiveness,
ranging from no restrictions at all to completely restricted. Note
that although freeware or shareware is freely available,
the copyright owners often retain their rights and do not provide
access to the program’s source code. For organizations using
proprietary software, two types of licenses are of
special importance. The first type includes the shrink-wrap
licenses
tions/bm02#bm02_gloss_550) and click-wrap

licenses
tions/bm02#bm02_gloss_95) that accompany the software,
which are used primarily for generic, off-the-shelf
application and systems software. The shrink-wrapped contract
has been named as such because the contract is activated when
the shrink wrap on the packaging has been
removed; similarly, a click-wrap license refers to a license
primarily used for downloaded software that requires computer
users to click on “I accept” before installing the
software. The second type of license is an enterprise license
tions/bm02#bm02_gloss_225) (also known as a volume
license
tions/bm02#bm02_gloss_686) ). Enterprise licenses can vary
greatly and are usually negotiated. In addition to
rights and permissions, enterprise licenses usually contain
limitations of liability and warranty disclaimers that protect the
software vendor from being sued if its software does
not operate as expected.
As shown in Table 9.9
tions/ch09lev1sec3#ch09tab9) , there are a variety of software
licenses. For different business
needs, organizations often depend on a variety of software, each
having different licenses, which can cause headaches for many
organizations. For organizations, not knowing
about the software installed can have a variety of consequences.
For example, companies are not able to negotiate volume
licensing options, unused licenses strain the
organization’s budget, or license violations can lead to fines or
public embarrassment. Software asset management
tions/bm02#bm02_gloss_568) helps organizations to avoid such

negative consequences. Usually, software asset
management consists of a set of activities, such as performing a
software inventory (either manually or using automated tools),
matching the installed software with the licenses,
reviewing software-related policies and procedures, and
creating a software asset management plan. The results of these
processes help organizations to better manage their
http://www.cnet.com/
h10#ch10
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software infrastructure by being able to consolidate and
standardize their software titles, decide to retire unused

software, or decide when to upgrade or replace software.
EXTERNALEXTERNAL ACQUISITION ACQUISITION
THROUGH THROUGH THE THE CLOUD. CLOUD.
Undoubtedly, managing the software infrastructure is a complex
task, often resulting in high operating costs for organizations;
further, many systems are not scalable in response
to large increases in demand. To deal with these issues,
business organizations increasingly use software as a service
(SaaS)—that is, clients access applications in the cloud on
an as-needed basis using standard Web-enabled interfaces (see
Chapter 3
tions/ch03#ch03) , “Managing the
Information Systems Infrastructure and Services”). For
organizations, using SaaS provides a variety of benefits, such as
a reduced need to maintain or upgrade software, variable
costs based on the actual use of the services (rather than fixed
IS costs), and the ability to rely on a provider that has gained
considerable expertise because of a large number of
clients.
TABLE 9.9 Different Types of Software Licenses
Restrictiveness Software Types Rights Restrictions Examples
Full rights Public domain software Full rights No restrictions;
owner forsakes copyright Different programs for outdated
IBM mainframes
Non-protective open source
(e.g., Berkeley software
development [BSD] license)
Protective open source (e.g.,
general public license
[GPL])

Freedom to copy, modify, and
redistribute the software; can be
incorporated into a commercial
product
Freedom to copy, modify, and
redistribute the software
Creator retains copyright
Modified or redistributed software must be
made available under the same license; cannot
be incorporated into commercial product
Free BSD operating system;
BSD components in
(proprietary) Mac OS X
operating system
Linux operating system
Proprietary software Right to run the software (for
licensed users)
Access to source code severely restricted; no
rights to copy or modify software
Windows operating system
No rights Trade secret Software typically only used
internally
Access to source code severely restricted;
software is not distributed outside the
organization
Google PageRank™ algorithm

Outsourcing Systems Development
Outsourcing systems development is a way to acquire new
systems that closely resembles the process of in-house
development. However, in the case of outsourcing, the
responsibility for some or all of an organization’s information
systems development (and potentially the day-to-day
management of its operation) is turned over to an outside
firm. Information systems outsourcing includes a variety of
working relationships. The outside firm, or service provider,
may develop your information systems applications and
house them within their organization; they may run your
applications on their computers; or they may develop systems to
run on existing computers within your organization.
Anything is fair game in an outsourcing arrangement. Today,
outsourcing has become a big business and is a very popular
option for many organizations (see Chapter 1
tions/ch01#ch01) for more information on outsourcing).
WHYWHY OUTSOURCING? OUTSOURCING?
A firm might outsource some (or all) of its information systems
services for varied reasons. Some of these are old reasons, but
some are new to today’s environment (Applegate,
Austin, & Soule, 2009
tions/ch09lev1sec12#ch09_bib3) ):
■ CostCost and and Quality Quality Concerns Concerns. In
many cases it is possible to achieve higher-quality systems at a
lower price through economies of scale, better management of
hardware,
lower labor costs, and better software licenses on the part of a
service provider.
■ ProblemsProblems in in IS IS Performance Performance. IS

departments may have problems meeting acceptable service
standards because of cost overruns, delayed systems,
underutilized
systems, or poorly performing systems. In such cases,
organizational management may attempt to increase reliability
through outsourcing.
■ SupplierSupplier Pressures Pressures. Perhaps not
surprisingly, some of the largest service providers are also the
largest suppliers of software or computer equipment (e.g., IBM
or
Hewlett-Packard). In some cases, the aggressive sales forces of
these suppliers are able to convince senior managers at other
organizations to outsource their IS functions.
■ Simplifying,Simplifying, Downsizing, Downsizing, and and
Reengineering Reengineering. Organizations under competitive
pressure often attempt to focus on only their “core
competencies.” In many cases,
organizations simply decide that running information systems is
not one of their core competencies and decide to outsource this
function to companies such as IBM and HP
Enterprise Services, whose primary competency is developing
and maintaining information systems.
■ FinancialFinancial Factors Factors. When firms turn over
their information systems to a service provider, they can
sometimes strengthen their balance sheets by liquidating their
IT
assets. Also, if users perceive that they are actually paying for
their IT services rather than simply having them provided by an
in-house staff, they may use those services
more wisely and perceive them to be of greater value.
■ OrganizationalOrganizational Culture Culture. Political or
organizational problems are often difficult for an IS group to

overcome. However, an external service provider often brings
enough
clout, devoid of any organizational or functional ties, to
streamline IS operations as needed.
■ InternalInternal Irritants Irritants. Tensions between end users
and the IS staff are sometimes difficult to eliminate. At times
this tension can intrude on the daily operations of the
organization, and the idea of a remote, external, relatively
neutral IS group can be appealing. Whether the tensions
between users and the IS staff (or service provider) are
really eliminated is open to question; however, simply having
the IS group external to the organization can remove a lingering
thorn in management’s side.
MANAGINGMANAGING THE THE IS IS OUTSOURCING
OUTSOURCING RELATIONSHIP. RELATIONSHIP.
h03#ch03
h01#ch01
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The ongoing management of an outsourcing alliance is the
single most important aspect of the outsourcing project’s
success. Some advice includes the following:

1. A strong, active chief information officer (CIO) and staff
should continually manage the legal and professional
relationship with the outsourcing firm.
2. Clear, realistic performance measurements of the systems and
of the outsourcing arrangement, such as tangible and intangible
costs and benefits, should be developed.
3. The interface between the customer and the outsourcer should
have multiple levels (e.g., links to deal with policy and
relationship issues and links to deal with
operational and tactical issues).
Managing outsourcing alliances in this way has important
implications for the success of the relationship. For example, in
addition to making sure a firm has a strong CIO and
staff, McFarlan and Nolan (1995
tions/ch09lev1sec12#ch09_bib6) ) recommend that firms assign
full-time relationship
managers and coordinating groups lower in the organization to
“manage” the project. The structure and nature of the internal
system activities change from exclusively building
and managing systems to also including managing relationships
with outside firms that build and manage systems under legal
contract.
NOTNOT ALL ALL OUTSOURCING OUTSOURCING
RELATIONSHIPS RELATIONSHIPS ARE ARE THE THE
SAME. SAME.
Most organizations no longer enter into a strictly legal contract
with an outsourcing vendor but rather into a mutually beneficial
relationship with a strategic partner. In such a
relationship, both the firm and the vendor are concerned with—
and perhaps have a direct stake in—the success of the other. Yet
other types of relationships exist, meaning that
not all outsourcing agreements need to be structured the same

way. In fact, at least three different types of outsourcing
relationships can be identified:
■ Basic relationship
■ Preferred relationship
■ Strategic relationship
A basic relationship can best be thought of as a “cash-and-
carry” relationship in which you buy products and services on
the basis of price and convenience. Organizations
should try to have a few preferred relationships in which the
buyer and the supplier set preferences and prices to the benefit
of each other. For example, a supplier can provide
preferred pricing to customers that do a specified volume of
business. Most organizations have just a few strategic
relationships in which both sides share risks and rewards.
INDUSTRY ANALYSIS: Broadcasting
Only a few years ago, radio and television were among the
primary sources for satisfying the desire for both entertainment
and up-to-date news and information. Over
the past few years, this situation has changed dramatically, with
many people turning to the Internet for both information and
entertainment.
For many television news companies, the Internet has opened
opportunities, as news features can be easily transmitted over
the Internet, allowing easier connection
between the newsrooms and the “action” on the field. At the
same time, viewing habits have changed, and many viewers
prefer to obtain their latest news via the
Internet or while on the move. As a reaction, television stations
(both focusing on news and entertainment) are increasingly
using the Internet as a distribution medium
for their content.

These changes force TV stations to adjust their revenue models.
Whereas traditionally large revenues were derived from TV
advertising, advertisers are now less
willing to pay high advertising fees in light of dwindling
viewership. On the other hand, TV stations can potentially
charge more for advertising tied to online shows,
as the Internet offers benefits such as advertising targeted at the
individual viewer and provides detailed tracking metrics such as
click-through rates, allowing the
advertiser to directly assess the success of a campaign.
For radio stations, the situation is similar. With more and more
people listening to various Internet radio stations, using music
services like Pandora or Spotify, or
downloading music, the number of listeners to traditional radio
has dwindled and along with it advertising revenues. Online
advertising now surpasses radio
advertising spending. Facing competition from Internet radio,
satellite radio, podcasting, and a plethora of other online
diversions, many radio stations will have to find
innovative ways to prosper in these times of profound change.
Questions
1. What is the effect of the Internet on television and radio
content quality? With less advertising revenue, how can
broadcasters continue to produce high-quality
content?
2. Today there are thousands of AM/FM stations competing with
Internet radio stations and music downloading. Forecast their
future and provide a strategy for
retaining and gaining market share.
Based on:

eMarketer. (2014, February 12). Music listeners pump up the
volume on digital radio. eMarketer. Retrieved April 1, 2014,
from http://www.emarketer.com/Article/Music-Listeners-Pump-
Up-Volume-on-Digital-Radio/1010600
(http://www.emarketer.com/Article/Music-Listeners-Pump-Up-
Volume-on-Digital-Radio/1010600) .
Leggett, T. (2014, January 3). Is niche Internet television
broadcasting the future? BBC.comBBC.com (http://BBC.com)
(http://BBC.com) . Retrieved April 1, 2014, from
http://www.bbc.com/news/business-
25457001 (http://www.bbc.com/news/business-25457001) .
Rose, A. (2013, May 1). Exploring the connected future of TV
and the challenge to broadcasters. The Guardian. Retrieved
April 1, 2014, from http://www.theguardian.com/media-
network/2013/may/01/connected-tv-broadcasters
(http://www.theguardian.com/media-
network/2013/may/01/connected-tv-broadcasters) .
Venturini, F., Marshall, C., & Di Alberto, E. (2011). The future
of broadcasting III: Strategy delivers. Accenture. Retrieved
April 1, 2014, from
http://www.accenture.com/SiteCollectionDocuments/PDF/Accen
ture-Future-of-Broadcasting-III-Strategy-Delivers.pdf
(http://www.accenture.com/SiteCollectionDocuments/PDF/Acce
nture-
Future-of-Broadcasting-III-Strategy-Delivers.pdf) .
http://www.emarketer.com/Article/Music-Listeners-Pump-Up-
Volume-on-Digital-Radio/1010600
http://bbc.com/
http://www.bbc.com/news/business-25457001

http://www.theguardian.com/media-
network/2013/may/01/connected-tv-broadcasters
http://www.accenture.com/SiteCollectionDocuments/PDF/Accen
ture-Future-of-Broadcasting-III-Strategy-Delivers.pdf
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Summary and Review
1. DescribeDescribe how how to to formulate formulate and and
present present the the business business case case for for
technology technology investments investments. Making the
business case is the process of building and presenting the
set of arguments that show that an information system
investment is adding value to an organization. In order to make
a convincing presentation, you should be specific
about the benefits this investment will provide for the
organization. Choosing the wrong measures can yield a negative
decision about a beneficial system.
2. DescribeDescribe the the systems systems development
development life life cycle cycle and and its its various various
phases phases. The development of information systems follows
a process called the systems development
life cycle. The SDLC is a process that first identifies the need
for a system and then defines the processes for designing,
developing, and maintaining an information
system. The process is very structured and formal and requires
the active involvement of managers and users. The SDLC has
four phases: systems planning and

selection, systems analysis, systems design, and systems
implementation and operation. A variety of other approaches are
available to enhance the development process
for different types of systems and contexts.
3. ExplainExplain how how organizations organizations acquire
acquire systems systems via via external external acquisition
acquisition and and outsourcing outsourcing. External
acquisition is the process of purchasing an existing
information system from an external organization or vendor.
External acquisition is a five-step process. Steps 1 and 2 mirror
the first two steps of the SDLC. Step 3 is the
development of a request for proposal (RFP). Step 4 is proposal
evaluation, which focuses on evaluating proposals received
from vendors. Step 5 is vendor selection,
which focuses on choosing the vendor to provide the system.
Outsourcing refers to the turning over of partial or entire
responsibility for information systems
development and management to an outside organization.
Key Terms
adaptive maintenance
.1/sections/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch0
9lev1sec2#page_342)
alpha testing
.1/sections/ch09lev1sec2#page_340)

beta testing
break-even analysis
change request management
9lev1sec2#page_342)
click-wrap license
corrective maintenance
9lev1sec2#page_342)

cost–benefit analysis
data flows
developmental testing
discount rate
enterprise license

external acquisition
sec3#page_346)
human–computer interface (HCI)
sec2#page_339)
information systems planning
sec2#page_335)
intangible benefit
9lev1sec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#pag
e_325)
intangible cost
e_325)
joint application design (JAD)

lacich.3917.17.1/sections/ch09lev1sec2#page_336)
making the business case
tions/ch09lev1sec1#page_320)
net-present-value analysis
ions/ch09lev1sec2/books/Valacich.3917.17.1/sections/ch09lev1s
ec2#page_342
ions/ch09lev1sec2#page_340

ec2#page_342
ec2#page_342

h09lev1sec3/books/Valacich.3917.17.1/sections/ch09lev1sec3#p
age_346
age_339
age_335
ec1/books/Valacich.3917.17.1/sections/ch09lev1sec1#page_325
3917.17.1/sections/ch09lev1sec2#page_336
h09lev1sec1#page_320

8/18/19, 9'57 PMPrint
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non-recurring cost
e_325)
open source software
patch management system
perfective maintenance
9lev1sec2#page_342)
preventive maintenance

9lev1sec2#page_342)
processing logic
productivity paradox
project manager
prototyping
proxy variable
pseudocode

recurring cost
e_325)
request for proposal (RFP)
sec3#page_347)
requirements collection
shrink-wrap license
software asset management

system conversion
systems analysis
systems analysis and design
sec1#page_330)
systems analyst
sec1#page_330)
systems benchmarking
systems design
systems development life cycle (SDLC)

systems implementation
systems maintenance
systems planning and selection
sec2#page_335)
tangible benefit
e_325)
tangible cost

e_325)
total cost of ownership (TCO)
ec2#page_342
ec2#page_342

age_347

age_330
age_330
age_335

8/18/19, 9'57 PMPrint
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e_325)
usability

sec2#page_339)
volume license
weighted multicriteria analysis
Review Questions
9-1. Describe the productivity paradox.
9-2. Describe how to make a successful business case,
contrasting faith-, fear-, and fact-based arguments.
9-3. Compare and contrast tangible and intangible benefits and
costs.
9-4. What are the four phases of the systems development life
cycle (SDLC)?
9-5. List and describe five techniques used in requirements
collection.
9-6. What are the three major components/tasks of the systems
design phase of the SDLC?
9-7. What are the four options for system conversion? How do
they differ from each other?
9-8. Compare and contrast the four types of systems
maintenance.
9-9. Define outsourcing and list three general types of

outsourcing relationships.
9-10. List and describe two main types of software licenses.
Self-Study Questions
9-11
tions/ch09lev1sec4#ch09ans11) . Which of the following is not
one of the four phases of the systems
development life cycle?
A. systems analysis
B. systems implementation
C. systems design
D. systems resource acquisition
9-12
tions/ch09lev1sec4#ch09ans12) .______________is the process
of gathering and organizing information from
users, managers, business processes, and documents to
understand how a proposed information system should function.
A. Requirements collection
B. Systems collection
C. Systems analysis
D. Records archiving
9-13
tions/ch09lev1sec4#ch09ans13) . Which of the following is the
correct order of phases in the systems
development life cycle?
A. analysis, planning, design, implementation
B. analysis, design, planning, implementation
C. planning, analysis, design, implementation
D. design, analysis, planning, implementation

9-14
tions/ch09lev1sec4#ch09ans14) . In the systems design phase,
the elements that must be designed when
building an information system include all of the following
except ______________.
A. the human–computer interface
B. questionnaires
C. databases and files
D. processing and logic
9-15
tions/ch09lev1sec4#ch09ans15) .______________maintenance
involves making enhancements to improve
processing performance or interface usability or adding desired
(but not necessarily required) system features (in other words,
“bells and whistles”).
A. preventive
B. perfective
C. corrective
D. adaptive
9-16
one of the three types of arguments commonly
made in the business case for an information system?
A. fear
B. fact
C. faith
D. fun
9-17
tions/ch09lev1sec4#ch09ans17) . A ______________is a

document that an organization uses to tell vendors
what its requirements are and to invite them to provide
information about how they might be able to meet those
requirements.
A. request letter
B. vendor request
age_339
h09lev1sec4#ch09ans11

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C. request for proposal
D. requirements specification
9-18
a type of outsourcing?
A. basic
B. elite
C. strategic
D. preferred
9-19
tions/ch09lev1sec4#ch09ans19) . Which of the following factors
is a good reason to outsource?
A. problems in IS performance
B. supplier pressures
C. financial factors
D. all of the above
9-20

tions/ch09lev1sec4#ch09ans20) . Most competitive external
acquisition processes have at least five general
steps. Which of the following is not one of those steps?
A. vendor selection
B. proposal evaluation
C. development of a request for proposal
D. implementation.
Answers are on page 356
tions/ch09lev1sec4#page_356) .
Problems and Exercises
9-21. Match the following terms with the appropriate
definitions:
i. Request for proposal
ii. Systems benchmarking
iii. Alpha testing
iv. Systems development life cycle
v. Productivity paradox
vi. Prototyping
vii. Pilot conversion
viii. Systems analysis
ix. Outsourcing
x. External acquisition
xi. Data flows
xii. Requirements collection
a. The movement of data through an organization or within an
information system
b. Term that describes the life of an information system from
conception to retirement
c. The second phase of the systems development life cycle
d. The process of gathering and organizing information from
users, managers, business processes, and documents to
understand how a proposed information system

should function
e. Testing performed by the development organization to assess
whether the entire system meets the design requirements of the
users
f. Using a new system in one location before rolling it out to the
entire organization
g. A systems development methodology that uses a trial-and-
error approach for discovering how a system should operate
h. The practice of turning over responsibility for some or all of
an organization’s information systems development and
operations to an outside firm
i. The observation that productivity increases at a rate that is
lower than expected when new technologies are introduced
j. The process of purchasing an existing system from an outside
vendor
k. A way to evaluate a proposed system by testing a portion of
it with the system workload
l. A report that is used to tell vendors what the requirements are
and to invite them to provide information about how they might
be able to meet those requirements
9-22. After reading this chapter, it should be fairly obvious why
an IS professional should be able to make a business case for a
given system. Why, however, is it just as
important for non-IS professionals? How are they involved in
this process? What is their role in making IS investment
decisions?
9-23. Why can it be difficult to develop an accurate cost–benefit
analysis? What factors may be difficult to quantify? How can
this be handled? Is this something that
should just be avoided altogether? What are the consequences of
that approach?
9-24. Contrast the total cost of acquisition versus the total cost

of ownership for the purchase of a new car. Demonstrate how
the type of car, year, make, model, and so on
change the values of various types of costs and benefits.
9-25. Identify and describe three different situations where fear,
faith, or fact arguments would be most compelling when making
an information systems investment
decision.
9-26. Contrast the differing perspectives of different
stakeholders involved in making information systems
investment decisions.
9-27. Explain the differences between data and data flows. How
might systems analysts obtain the information they need to
generate the data flows of a system? How are
these data flows and the accompanying processing logic used in
the system design phase of the life cycle? What happens when
the data and data flows are modeled
incorrectly?
9-28. When Microsoft posts a new version of Internet Explorer
on its Web site and states that this is a beta version, what does
it mean? Is this a final working version of
the software, or is it still being tested? Who is doing the
testing? Search the Web to find other companies that have beta
versions of their products available to the

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public. You might try Corel (www.corel.com
(http://www.corel.com) ) or Adobe (www.adobe.com
(http://www.adobe.com) ). What other companies did you find?
9-29. Conduct a search on the Web for “systems development
life cycle.” Check out some of the hits. Compare them with the
SDLC outlined in this discussion. Do all
these life cycles follow the same general path? How many
phases do the ones you found on the Web contain? Is the
terminology the same or different? Prepare a
10-minute presentation to the class on your findings.
9-30. Choose an organization with which you are familiar that
develops its own information systems. Does this organization
follow an SDLC? If not, why not? If so, how
many phases does it have? Who developed this life cycle? Was
it someone within the company, or was the life cycle adopted
from somewhere else?
9-31. Describe your experiences with information systems that
were undergoing changes or updates. What kind of conversion
procedure was being used? How did this
affect your interaction with the system as a user? Who else was
affected? If the system was down altogether, for how long was
it down? Do you or any of your
classmates have horror stories, or were the situations not that
bad?

9-32. Find an organization on the Internet (e.g., at
www.computerworld.com (http://www.computerworld.com) or
www.infoworld.com (http://www.infoworld.com) ) or a
company you may want to work for in the future that outsources
work. What are the managerial challenges of outsourcing, and
why is this a popular alternative to
hiring additional staff?
9-33. Imagine that you have just been hired by an organization,
and you have been tasked with purchasing 10 tablet computers.
Compile a list of at least three criteria you
will use to evaluate at least three alternatives using weighted
multicriteria analysis. Make a purchase recommendation based
on your analysis.
Application Exercises
Note: The existing data files referenced in these exercises are
available on the book’s Web site:
www.pearsonhighered.com/valacich
(http://media.pearsoncmg.com/ph/bp/bridgepages/bp_valacich_b
ridgepage/0133940454_data.zip) .
Spreadsheet Application: Outsourcing Information Systems at
Campus Travel
9-34. Campus Travel wants to increase its customer focus and
wants to be able to better serve its most valued customers.
Many members of the frequent flier program
have requested the ability to check on the status of their
membership online; furthermore, the frequent fliers would
welcome the opportunity to book reward flights
online. As you know that there are a number of companies
specializing in building such transactional systems, you have
decided to outsource the development of
such a system. The following weights are assigned to evaluate

the different vendors’ systems:
■ Online booking capability: 20 percent
■ User friendliness: 25 percent
■ Maximum number of concurrent users: 20 percent
■ Integration with current systems: 10 percent
■ Vendor support: 10 percent
■ Price: 15 percent
To evaluate the different offers, you need to calculate a
weighted score for each vendor using the data provided in the
Outsourcing.csv spreadsheet. To calculate the
total points for each vendor, do the following:
■ Open the file Outsourcing.csv.
■ Use the SUMPRODUCT formula to multiply each vendor’s
scores with the respective weights and add the weighted scores.
■ Use conditional formatting to highlight all vendors falling
below a total of 60 percent and above a total of 85 percent to
facilitate the vendor selection.
Database Application: Building a Special Needs Database for
Campus Travel
9-35. In addition to international travel, travel reservations for
people with special needs is an area of specialty of Campus
Travel. However, to be able to recommend
travel destinations and travel activities, you should know what
facilities are available at each destination. Therefore, you have
been asked to create a database of the
destinations and the type of facilities that are available for
people with special needs. In order to make the system as useful
as possible for all, you need to design
reports for the users to retrieve information about each
destination. Your manager would like to have a system that
contains the following information about the
destinations:
■ Location

■ Availability of facilities for the physically handicapped
■ Distance to medical facilities
■ Pet friendliness
Each location may have one or more handicap facility (e.g.,
hearing, walking, sight, and so on). A type of handicap facility
can be present at multiple locations.
Also, each location has to have one pet-friendly
accommodation/activity and may also have accommodation for
different types of pets (dogs, cats, and so on). After
designing the database, please design three professionally
formatted reports that (1) list the locations in alphabetical
order, (2) list all locations that have the
handicap facilities for those that find it difficult to walk, and
(3) list all locations that have a cat-friendly policy.
Hint: In Microsoft Access, you can create queries before
preparing the reports. Enter a few sample data sets and print out
the reports.
Team Work Exercise
Net Stats: Moore’s Law and the Laggards
The technology industry, laboring under Moore’s law, depends
on technology users to regularly adopt new hardware and
software. Millions of users, however, accustomed to the
tried and true, would rather stick with those products they
know—at least as long as possible. Sometimes the reason for
not rushing to replace the old with the new is familiarity
http://www.corel.com/
http://www.adobe.com/
http://www.computerworld.com/
http://www.infoworld.com/
http://media.pearsoncmg.com/ph/bp/bridgepages/bp_valacich_br
idgepage/0133940454_data.zip

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with and an acquired expertise in using the older version of a
product or service:
■ In September 2013, 70 percent of U.S. households had
broadband Internet access, but 3 percent still used dialup; that
is over 2.5 million people.
■ In January 2014, 10 percent of U.S. adults had not yet
purchased a mobile phone.
■ In March 2014, worldwide, hundreds of millions of people
were still using Windows XP, even though Microsoft officially
ended support for this product. By February
2014, Windows 7 had 47 percent of the desktop market share;
Windows XP, initially released in 2001, still retained nearly 30
percent of the market share!
Individual computer users are free to opt to be tortoises or hares
regarding the adoption of new technology. Information
technology (IT) directors, however, must usually follow
company culture and management preferences when opting
whether to adopt new technology. If management is comfortable
with risk and likes to be on the cutting edge, for
example, IT directors can probably feel safe in adopting new
technology early on. A staid, risk-averse management attitude,
however, would probably not appreciate an IT
director who rushes to adopt new technology. In any event,
whether to adopt new technology immediately as it becomes
available is a decision that will always be with us.

Questions and Exercises
9-36. In 2014, 58 percent of Americans owned a smartphone;
search the Web for the most up-to-date statistics on this
technology.
9-37. As a team, interpret the changes in numbers (or stories).
What is striking/important about these findings?
9-38. As a team, discuss what these numbers will look like in 5
years and 10 years. How are things in the U.S. market the same
or different across the world? Where are
things moving faster/slower? Why?
9-39. Using your spreadsheet software of choice, create a
graph/figure most effectively visualizing the finding you
consider most important.
Based on:
Anonymous. (n.d.). Broadband technology fact sheet. Pew
Research. Retrieved March 20, 2014, from
http://www.pewinternet.org/fact-sheets/broadband-technology-
fact-sheet
(http://www.pewinternet.org/fact-sheets/broadband-technology-
fact-sheet) .
Anonymous. (n.d.). Mobile technology fact sheet. Pew
Research. Retrieved March 20, 2014, from
http://www.pewinternet.org/fact-sheets/mobile-technology-fact-
sheet
(http://www.pewinternet.org/fact-sheets/mobile-technology-
fact-sheet) .
Endler, M. (2014, March 17). Windows XP holdouts: 6 top
excuses. InformationInformation Week.com Week.com
(http://Information%20Week.com)
(http://Information%20Week.com) . Retrieved on March 20,

2014, from
http://www.informationweek.com/software/operating-
systems/windows-xp-holdouts-6-top-excuses/d/d-id/1127666
(http://www.informationweek.com/software/operating-
systems/windows-xp-holdouts-6-
top-excuses/d/d-id/1127666) .
Kooser, A (2013, August 26). 3 percent of American adults still
cling to dial-up Internet. Cnet.comCnet.com (http://Cnet.com)
(http://Cnet.com) . Retrieved on March 20, 2014, from
http://news.cnet.com/8301-17938_105-
57600112-1/3-percent-of-american-adults-still-cling-to-dial-up-
internet (http://news.cnet.com/8301-17938_105-57600112-1/3-
percent-of-american-adults-still-cling-to-dial-up-internet) .
Usage share of operating systems. (2014, March 18). In
Wikipedia, The Free Encyclopedia. Retrieved March 20, 2014,
from http://en.wikipedia.org/w/index.php?
title=Usage_share_of_operating_systems&oldid=600217105
(http://en.wikipedia.org/w/index.php?title=Usage_share_of_ope
rating_systems&oldid=600217105) .
Answers to the Self-Study Questions
9-11. D
9-12. A
9-13. C

9-14. B
9-15. B
9lev1sec2#page_342)
9-16. D
9-17. C
sec3#page_347)
9-18. B
9-19. D
9-20. D

sec3#page_346)
CASE 1 Next Generation Identification: FBI, ICE Databases
Expand and Join Forces
As crime-solving aids, first there was fingerprinting; decades
later came DNA analysis. Next is the US$1.2 billion “Next
Generation Identification” (NGI) database of
the Federal Bureau of Investigation (FBI), used to store
biometric identification ranging from palm prints to iris
patterns, photos of scars and tattoos, and distinctive
facial characteristics for criminal identification. In the past,
fingerprints have been the most widely used means of uniquely
identifying people, with the FBI keeping
over 100 million sets of fingerprints in its current database
dubbed “Integrated Automated Fingerprint Identification
System” (IAFIS). The next step includes storing
additional biometric characteristics. Unfortunately, taken alone,
many of those have been proven to be rather unreliable (facial
recognition accuracy in public places
can be as low as 10 to 20 percent, depending on lighting
conditions), such that a real increase in identification accuracy
can come only from combining the results of
multiple biometrics.
Similar to the FBI’s IAFIS database, the Department of
Homeland Security (DHS) maintains the massive “Automated
Biometric Identification System” (IDENT)
database. The Immigration and Customs Enforcement Agency
(ICE), part of the DHS, uses this database in its “Secure
Communities” initiative to aid in capturing
criminal aliens. The Secure Communities program is a federal,
state, and local government partnership that allows state and
local law enforcement officials to quickly
share information with ICE on captured suspects. The data
forwarded to ICE are used to make immigration processing and
removing more efficient if the suspect turns

out to be a criminal alien. At the heart of the Secure
Communities program is the automatic integration of the IAFIS
and IDENT databases. When someone is arrested,
local law enforcement puts the suspect’s fingerprints into the
FBI’s database. However, the fingerprints are not only checked
against the FBI’s IAFIS system, but also
against the DHS’ IDENT database to see if the suspect is in the
country legally. If the suspect isn’t legal, ICE can immediately
begin the deportation process. The
http://www.pewinternet.org/fact-sheets/broadband-technology-
fact-sheet
http://www.pewinternet.org/fact-sheets/mobile-technology-fact-
sheet
http://Information%20Week.com
http://www.informationweek.com/software/operating-
systems/windows-xp-holdouts-6-top-excuses/d/d-id/1127666
http://cnet.com/
http://news.cnet.com/8301-17938_105-57600112-1/3-percent-
of-american-adults-still-cling-to-dial-up-internet
http://en.wikipedia.org/w/index.php?title=Usage_share_of_oper
ating_systems&oldid=600217105

ec2#page_342
age_347
age_346
8/18/19, 9'57 PMPrint
Page 41 of
system also prioritizes removal of criminal aliens based on their
risk to national security and the local community. The
prioritization helps ensure that serious criminals
(aliens or otherwise) are not inadvertently released and cuts
down on the time criminal aliens must be held in custody before
being returned to their home country.

Since its deployment (2009–2013), nearly 32 million queries
into the database have been made, with 1.7 million matches,
leading to more 300,000 deportations. The
FBI’s Next Generation Identification database will take this a
step further, as it will not only be based on data from both
existing databases, but will also include a host
of other biometric identifiers.
Both the FBI and Secure Communities programs have been
criticized by privacy advocates. Critics say that Secure
Communities, for example, can lead to unnecessary
or prolonged detention, make accessing a lawyer difficult, and
prevent release on bail. There is also a fear that there is no
complaint mechanism associated with the
systems. Opponents believe that victims of system errors will
have little redress if they are erroneously identified as a
criminal or illegal alien. In addition, opponents
to the Secure Communities program argue that the integration of
databases undermines the trust between immigrant communities
and local law enforcement agencies.
Fearing that illegal immigrants may be dissuaded from reporting
crimes or may not be willing to serve as witnesses, Washington,
D.C., Mayor Vincent Gray
announced in June 2012 that law enforcement officers would be
prohibited from asking about people’s immigration status.
While the FBI and ICE maintain that their programs are strictly
limited to criminals and those in the country illegally, privacy
and civil rights activists are watching the
developments to ensure that the government respects the rights
of its citizens.
Questions
9-40. List a set of tangible and intangible benefits as well as
tangible and intangible costs for the FBI database system.

9-41. Develop a set of faith-, fear-, and fact-based arguments to
support the continued and ongoing expansion of the FBI
database. Which arguments do you
think are the strongest? Why?
9-42. Some privacy advocates argue that biometric systems can
become unreliable and single out innocent people, especially
over time as these databases
become less accurate because of a person’s natural aging
process, weight loss, weight gain, injury, or permanent
disability. Discuss the problems
associated with having these systems single out innocent
people.
Based on:
American Immigration Council. (2011, November 29). Secure
Communities: a fact sheet.
Immigrationpolicy.orgImmigrationpolicy.org
(http://Immigrationpolicy.org) (http://Immigrationpolicy.org) .
http://www.immigrationpolicy.org/just-facts/secure-
communities-fact-sheet (http://www.immigrationpolicy.org/just-
facts/secure-communities-fact-sheet) .
Anonymous. (n.d.). Integrated Automated Fingerprint
Identification System. FBI.govFBI.gov (http://FBI.gov)
(http://FBI.gov) . Retrieved on March 20, 2014, from
http://www.fbi.gov/about-
us/cjis/fingerprints_biometrics/iafis/iafis
(http://www.fbi.gov/about-
us/cjis/fingerprints_biometrics/iafis/iafis) .
Howell, J. (2012, June 4). D.C. prepares to walk fine line on
deportations. The Washington Times. Retrieved March 20,

2014, from
http://www.washingtontimes.com/news/2012/jun/4/dc-
prepares-to-walk-fine-line-on-deportations
(http://www.washingtontimes.com/news/2012/jun/4/dc-
prepares-to-walk-fine-line-on-deportations) .
Integrated Automated Fingerprint Identification System. (2013,
October 9). In Wikipedia, The Free Encyclopedia. Retrieved
March 21, 2014, from http://en.wikipedia.org/w/index.php?
title=Integrated_Automated_Fingerprint_Identification_System
&oldid=576514800 (http://en.wikipedia.org/w/index.php?
title=Integrated_Automated_Fingerprint_Identification_System
&oldid=576514800)
Lynch, J. (2011, July 8). The FBI’s Next Generation
Identification: Bigger and faster but much worse for privacy.
Electronic Frontier Foundation. Retrieved March 20, 2014, from
https://www.eff.org/deeplinks/2011/07/fbis-next-generation-
identification-database
(http://www.eff.org/deeplinks/2011/07/fbis-next-generation-
identification-database) .
U.S. Immigrations and Customs Enforcement. (2012, June 5).
Activated jurisdictions. Retrieved June 6, 2012, from
http://www.ice.gov/doclib/secure-communities/pdf/sc-
activated.pdf
(http://www.ice.gov/doclib/secure-communities/pdf/sc-
activated.pdf) .
U.S. Immigrations and Customs Enforcement. (2013, September
30). Secure Communities IDENT/IAFIS interoperability
monthly statistics through September 30, 2013. Retrieved March
20,
2014, from http://www.ice.gov/doclib/foia/sc-
stats/nationwide_interop_stats-fy2013-to-date.pdf
(http://www.ice.gov/doclib/foia/sc-

stats/nationwide_interop_stats-fy2013-to-date.pdf) .
CASE 2 The Emergence of Open Source Software
You’re probably well aware by now that some software, such as
the Android mobile phone operating system and the Firefox
browser, is open source. That is, creators
of the programs made the source code available so that anyone
could program changes to improve the software’s performance.
Founded in 1998, the Open Source Initiative (OSI) is a non-
profit organization dedicated to promoting open source
software. The OSI formulated an open source
definition to determine whether software can be considered for
an open source license. An open source license is a copyright
license for software that specifies that the
source code is available for redistribution and modification
without programmers having to pay the original author.
Specifically, the open source definition includes the
following:
■ The software can be redistributed for free.
■ Source code is freely available.
■ Redistribution of modifications must be allowed.
■ No one who wants to modify the code can be locked out.
■ The use of the software cannot be restricted to certain uses.
■ License may not be restricted to a specific product.
What has started as a communal, hacker-driven approach has
matured, to a point where open source software is considered to
be ready for prime time. Instead of
merely being free or low-cost versions of proprietary software,
many open source software projects are on the cutting edge,
providing solutions that are secure and
scalable enough for even the largest corporations. As a result,
open source software is having an ever-expanding role in all
areas of business. In part, the success of

popular open source projects is based on the notion of a free
ecosystem, where a large pool of contributors develops
modifications, add-ons, or extensions, thus
enhancing the value of the original project.
http://immigrationpolicy.org/
http://www.immigrationpolicy.org/just-facts/secure-
communities-fact-sheet
http://fbi.gov/
http://www.fbi.gov/about-
us/cjis/fingerprints_biometrics/iafis/iafis
http://www.washingtontimes.com/news/2012/jun/4/dc-prepares-
to-walk-fine-line-on-deportations
http://en.wikipedia.org/w/index.php?title=Integrated_Automated
_Fingerprint_Identification_System&oldid=576514800
http://www.eff.org/deeplinks/2011/07/fbis-next-generation-
identification-database
http://www.ice.gov/doclib/secure-communities/pdf/sc-
activated.pdf
http://www.ice.gov/doclib/foia/sc-
stats/nationwide_interop_stats-fy2013-to-date.pdf
8/18/19, 9'57 PMPrint
Page 42 of
Open source, making use of the wisdom of the crowds, fuels
some of the big IT megatrends, including cloud computing,
mobile applications, and Big Data. For
example, companies such as PayPal, Intel, and Comcast use
OpenStack, an open source cloud computing platform, to host
their private clouds.

Another megatrend fueled by open source is mobility; in
particular, the Android operating system has made inroads into
the mobile operating system market, now
having the largest market share of all mobile phone operating
systems. Building on the success of the Android operating
system, Amazon even based Fire OS, the
operating system for its popular Kindle Fire HDX tablet, on
Android.
Finally, open source projects have become indispensable for Big
Data initiatives ranging from storing and managing vast
amounts of unstructured data to analyzing
these data. Not only do open source applications provide the
tools to deal with Big Data, the openness of the source code
also helps instill confidence as to why and
where the results come from. Today, many Big Data startups,
but also established companies from Adobe to Yahoo!, use
Hadoop, a framework for distributed
processing of large-scale data sets. For example, recently, the
oil company Chevron turned to the open source project Hadoop
for storing and managing huge amounts
of seismic data needed to locate oil or gas deposits on the ocean
floor.
As with the Internet, servers, cloud computing, mobility, and
Big Data, open source seems to have been at the forefront of
many megatrends. What will be the next
megatrend fueled by open source?
Questions
9-43. What are the pros and cons of depending on open source
software?
9-44. For what types of applications do you think open source is
better than proprietary software? When is it worse?

9-45. Find a for-profit company that is distributing open source
software. What is the software? How does the company make
money? Is its revenue model
sustainable?
Based on:
Anonymous. (2014
tions/ch09lev1sec12#ch09_bib2) ). The open source definition.
Opensource.orgOpensource.org (http://Opensource.org)
(http://Opensource.org) .
Retrieved March 27, 2014, from http://opensource.org/osd
(http://opensource.org/osd) .
Bloom, B. (2012, May 29). The open-source answer to Big
Data. ITWorld.comITWorld.com (http://ITWorld.com)
(http://ITWorld.com) . Retrieved March 27, 2014, from
http://www.itworld.com/open-
source/279090/open-source-answer-big-data
(http://www.itworld.com/open-source/279090/open-source-
answer-big-data) .
King, R. (2012, June 5). Chevron explores open source using
Hadoop. Wall Street Journal. Retrieved March 27, 2014, from
http://blogs.wsj.com/cio/2012/06/05/chevron-explores-open-
source-using-hadoop
(http://blogs.wsj.com/cio/2012/06/05/chevron-explores-open-
source-using-hadoop) .
Rooney, P. (2012, May 22). Open source driving cloud, Big
Data, mobile, survey finds. ZDNet.comZDNet.com
(http://ZDNet.com) (http://ZDNet.com) . Retrieved March 27,
2014, from
http://www.zdnet.com/blog/open-source/open-source-driving-
cloud-big-data-mobile-survey-finds/11015

(http://www.zdnet.com/blog/open-source/open-source-driving-
cloud-big-data-mobile-
survey-finds/11015) .
Volpi, M. (2014, March 25). A “perfect storm” moment for
multibillion-dollar open source companies. Re/code. Retrieved
March 27, 2014, from http://recode.net/2014/03/25/a-perfect-
storm-moment-for-multibillion-dollar-open-source-companies
(http://recode.net/2014/03/25/a-perfect-storm-moment-for-
multibillion-dollar-open-source-companies) .
9-46. Contrast the perspectives of different stakeholders
involved in making information systems investment decisions.
9-47. What are the advantages and disadvantages of
prototyping?
http://opensource.org/
http://opensource.org/osd
http://itworld.com/
http://www.itworld.com/open-source/279090/open-source-
answer-big-data
http://blogs.wsj.com/cio/2012/06/05/chevron-explores-open-
source-using-hadoop
http://zdnet.com/
http://www.zdnet.com/blog/open-source/open-source-driving-
cloud-big-data-mobile-survey-finds/11015
http://recode.net/2014/03/25/a-perfect-storm-moment-for-
multibillion-dollar-open-source-companies
8/18/19, 9'57 PMPrint
Page 43 of

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