Week 12- Chapter 10:Acquiring Information Systems and Applications

1. What are some problems associated with assessing the costs of IT?
Some of the problems that are associated with assessing the cost of IT include the following:
- It is hard to determine the dollar value of IT investments.
- In particular it is difficult to allocate fixed costs among the many IT projects that are needed by the firm in the development, research and collection of data phases of the firm.
- The costs are ongoing and continue well beyond the installation process of the information system. Costs need to be given to accommodate for the maintenance and improving the system as new technology emerges.

2. What difficulties accompany the intangible benefits from IT?
The difficulties that accompany the tangible benefits from IT include:
- Improve customer or firm partner relations
- Improve decision making with more information and data available
- The usage of IT differs in the many ways that it is used. It is hard to quantify why its improved business performance.
- IT support systems and applications can provide strategic benefits through the implementation and upkeep of the firm’s IT infrastructure.
- The proposed systems must be cutting edge but there may not be any returns or value the company can receive from it.


3. Define NPV and ROI, and business case approaches.
NVP is net present value which is a calculation for cost benefit analysis. It allows personnel to convert future values of benefits to their present value equivalent by discounting them. This is a comparative analysis highlighting the future benefits compared to the cost of acquiring those benefits.
ROI is return on investment which is a method of analysing management effectiveness in generating profits with available business assets. This return is calculated by dividing the net income by average assets invested. The greater the value shown, the greater improvement the firm can receive.
Business cases approach is a written document that managers use to justify funding of one or more specific application processes. It evaluates how it can be done, what method would improve and the failure of prior plans or strategies.

4. What type of companies provide outsourcing service?
The types of companies provide outsourcing services include:
- Vendor’s like IBM, Oracle provide services for creating and maintain IT applications to the firm.
- An application services providers as ASP
- Outsourcing can be done by any external organisation or outside contractor in which the firm needs to maintain or acquire IT services.

5. Define ASPs and list their advantages to companies using them.
ASP is an Application Service Provider who is an agent or vendor who assembles the software needed by enterprises and packages them with outsourced development, operations, maintenance and other services.
The advantages of ASP include:
- Saves costs
- Reduce software maintenance and upgrades
- Reduce user training make the company more competitive by reducing time-to-market and enhance the company’s ability to adapt to changing market conditions

6. List some disadvantages of ASPs.
The disadvantages of ASP’s include:
- ASP’s might not offer adequate security protection
- Software might not be a perfect fit for the desired application
- Company must make certain that the speed of the Internet connection between the customer and the ASP is adequate to handle the requirement of the application.

7. List the major steps of selection of a vendor and a software package.
The main steps of selection of a vendor and a software package include:
1. Identify potential vendors: companies can identify potential software applications through things like, software catalogues, technical and trade journals and peer in other companies. The firm needs to establish some kind of criteria to eliminate the ones that are not suitable for the firm.
2. Determine the evaluation criteria: the firm must select a detailed set of evaluation criteria which should include characteristics of the vendor, functional requirements and quality of the vendor package. All of the criteria should be placed in the RFP which can then be sent to the potential vendors inviting them to submit a proposal on the benefits of their software package.
3. Evaluate vendors and packages: the goal of this is to determine the gaps between the company’s needs and the capabilities of the vendors and their application packages. The high score will allow the firm to select which vendor has the most potential.
4. Choose the vendor: the short listing of the vendors, allows the firm to negotiate the benefits and the modifications of the package that will suit the firm.
5. Negotiate the contract: at this stage, the firm and the vendor come together and determine the price of the software and the amount of support that the vendor agrees to provide.
6. Establish a service level agreement: these are formal agreements how the work is to be divided between the company and its vendors.

8. Describe a request for proposal (RFP).
A request for proposal is a document that is sent to potential vendors inviting them to submit a proposal that described their software package and explains how it would meet the company’s needs.

9. Describe SLAs.
Service Level Agreement is a formal agreements regarding the division of work between a company and its vendors.