System Development and Acquisition

Today’s generation relies heavily in technology. As a company, the software you are using plays a big
role on your success. Deciding whether to buy or build a software isn’t as easy as 1,2,3. There are a lot of things
that a management must consider. But before going through the buy or build concept, there are opportunities
that triggers the management to initiate information system. These are:
1. Organizations may pursue opportunities to use information systems to support a key organization
strategy or to seize a significant, and ideally long-term, competitive advantage.
2. Pressure to increase profitability and improve operational efficiencies often drives organizations to
implement new approaches and technology.
3. The availability of new technology can create an opportunity to offer new services or attract new
customers.
These factors are considered on determining whether we will buy or build a software. Going deeper, there is
a strategy that guides the management in making a decision—the Build vs. Buy Trifecta. When the initial
fear and trepidation wears off, you find out there are three different pieces that go into a build vs. buy
decision: cost, risk, and the problem you are trying to solve. A new project kicks off. It’s been decided that
your company needs a new piece of software. This is where the inevitable build vs. buy decision rears its
ugly head. It is not an easy decision to make. What you decide has long-lasting consequences. Cost should
be your first concern. What is the cost of building the system? What is the cost of buying a vendor
product? In order to answer these questions, you need to understand that there are different kinds of costs:
1. License to Bill
The first cost to consider when deciding to build vs buy is the cost to get the software up and running. For
build, that is the cost of building the software. For buy, that is the cost of licensing. Building software can be
expensive if the software is large and complex, requiring a large development team to create it. However,
license costs can be even more if you don’t understand exactly how license costs are calculated. There are
some vendors that charge you based on how large your processors are. Some data analytic software charges
you based on how much data you put into the system. If you are not careful, you may find yourself racking
up huge license fees in order to accomplish what you feel are basic tasks. Try to find vendors that have
reasonable license requirements, such as a simple per user license or per server license. Some programs
support setting up a pool of licenses on a server that can be “checked out” when users need them and then
given back for others to take after use. When you build, you have no license fees. You only need to pay for
the man-hours and infrastructure needed to build the software. This is sometimes simpler but also
notoriously difficult to estimate accurately. When projects take longer than expected to finish, you’re stuck
spending more and more money before the application is even ready for use. Also, don’t forget to factor in
the cost of maintaining the application over time.
2. Not Plug and Play
When you buy a product, especially when you’re a large enterprise, don’t fall into the trap of thinking that
you can simply install the product and be done. You’ll need a team of your own that will implement the
installation of the product and integrate it with your other systems. You’ll need a team that continues to
 install patches and manage users and features. Also, be wary of consultants and partners of the vendor that
help you to implement the product. They can be a source of expertise and help. They can also screw things
up if they’re not competent, costing you even more money to fix the problems they introduce. Not saying
you shouldn’t hire implementation partners, but let the buyer beware. Try to do your homework on them
before you sign a contract. With all this in mind, you might get the idea that you should simply choose the
cheapest option. That is not really the case. There are still two factors to consider.
Risky Business
The second key piece of the build vs buy decision is risk. Risk is the likelihood and potential impact of
something going wrong. Either choice has different risks, and it’s up to you to know which ones matter the
most.A large risk when you build a piece of software is whether or not you actually deliver. We’ve all been
a part of software projects that deliver late or not at all, even though large amounts of money were invested
in them. This risk can be higher or lower based on what kind of software you’re trying to build. Building
software in a domain that you’re not familiar with can lead to trouble and high expenses. Risk rears its head
quite a bit when you go for the buy option. The main risk is that you have a piece of software in your
environment that you don’t fully control. You also don’t have access to the source code. Why is this a risk?
One word: bugs. When you find a bug in a piece of software you built, you can simply create a ticket for the
development team and fix it. when you find one in a product you bought, you likely have to submit a ticket
to the vendor support site. They try to recreate the bug in their own environment and then get back to you. If
they agree it’s a bug, then they slate it for their next release. You’ll get that in a few months at the earliest. If
that bug is a security vulnerability, then you might be stuck running vulnerable software in production that
you can’t patch right away.
What Problem Do You Solve?
When you created your business, you did it to solve a problem. Your customers or clients pay you to
solve that problem for them. This is an important factor in the build vs buy decision. What problem are you
trying to solve by building or buying software? Is the specific problem you are trying to solve related in any
way to your core value proposition? If not, then buying software usually is the best way to go. Don’t go
through the trouble of building from scratch something highly specialized or doesn’t really add to your
revenue in any way. For example, how many companies do you know that built their own custom email
client? It seems silly. Email is a specialized service that doesn’t really directly relate to how you make
money (unless your business is email services). Therefore, you simply buy software to do it for you. If you
are a financial company, you wouldn’t buy software that holds your client funds and transactions. You’ll
likely want to keep that in-house. Your HR system, on the other hand? Use a SaaS product so that you can
concentrate on building software that makes your clients money. Buy the stuff around the edges that every
company needs. You build what differentiates you.
PROS AND CONS

Pros of Building

 Customization and Scale: One of the biggest pros of building your own custom software solution is that it
will include all the functionality you need to operate in exactly the ways you need it to. The software you end
up with will be tailored to your unique business model and challenges. Total control over the development
 also allows you to add any new features when needed so that your business can continue to run like a well-
oiled machine. You can start with a prototype and grow the software as your revenues grow. Additionally,
your employees will be able to give their feedback on what features are essential to streamline their
workflows.

 Greater control: As the sole owner of the solution, you will have full control over user options, security
measures, and system updates. Plus, complete ownership gives you the option to market the product, itself,
offering your software as a service down the line.

 Competitive edge: With a custom software solution, you can gain a competitive advantage by leveraging the
most efficient, connected, and scalable technology, helping your business get ahead of the game in your
industry. Your software can differentiate your business from others in the crowded marketplace.

 Guaranteed integration: Building your own solution means you can ensure seamless integration with any
existing software, tools, and processes already in use.

Cons of Building

 Significant upfront cost: Like anything that is customized, a custom solution will cost more than an off-the-
shelf product. However, off-the-shelf solutions may not always be the most economically feasible route in the
long run. Over time, the use of pre-built software can create a loss of revenue due to the lack of scalability or
critically essential functionality. Software that is specifically created and customized to your workflow can
push production and profitability through the roof and lead to exponentially faster business growth.

 Time to build: It takes time to identify your organization’s workflow processes and develop the software that
optimizes them. You have to be prepared to spend time gathering this information so that a custom solution
will be appropriate and powerful for your business.

Pros of Buying

 Lower upfront cost: If cost is a major concern and you have limited resources to launch, pre-built software
may be your best option since it is typically cheaper to buy and implement.

 Rapid deployment: Ready-made programs should be good to go as soon as you pay for them and load them
onto your system. If an existing solution perfectly meets most of your needs, there may be little point
investing time and money in developing a version of something that is already out there.

 Updates, new features and ongoing maintenance: Third-party providers will want to stay competitive. As
well as keeping up with maintenance, a third-party solution will often be updated regularly with new features
and functionality.

Cons of Buying

 Less customization: While many third-party software solutions enable some customization, the solution
won’t be custom built for you.
  Less control: The vendor controls the solution’s updates, volume capacity, and functionalities. All the key
decisions on the software’s features and future are out of your hands.

 Compatibility and connectivity issues: Pre-built software may not be compatible with other programs,
devices, or products that you are using today — or with solutions you may need to implement in the future.

 Long-term Cost: Although ready-made software may be cheaper to buy initially, its costs may grow over
time. Subscriptions and licenses tend to be time-limited, so you'll have to reinvest whenever they run out.
What is more, if your company grows significantly, you will have to add more licenses for new employees.

SYSTEM DEVELOPMENT

Systems development is the art and science of creating man-made systems to satisfy predetermined
needs. It is a problem-solving process where we bring to bear appropriate elements of mankind's knowledge
base to create new knowledge specific to the problem and, as a result, define a solution to the problem. In
this book, we refer to organizations that accomplish this work as system development enterprises,
developers, or contractors that may, at any one time, be in the process of developing several systems, each
through the exercise of an organizational structure called a program.
WATERFALL SYSTEM PROCESS
The Waterfall Model was the first Process Model to be introduced. It is very simple to understand and use. In a
Waterfall model, each phase must be completed before the next phase can begin and there is no overlapping in
the phases. The waterfall model is the earliest SDLC approach that was used for software development. In “The
Waterfall” approach, the whole process of software development is divided into separate phases. The outcome
of one phase acts as the input for the next phase sequentially. This means that any phase in the development
process begins only if the previous phase is complete. The waterfall model is a sequential design process in
which progress is seen as flowing steadily downwards (like a waterfall) through the phases of Conception,
Initiation, Analysis, Design, Construction, Testing, Production/Implementation, and Maintenance. As the
Waterfall Model illustrates the software development process in a linear sequential flow; hence it is also
referred to as a Linear-Sequential Life Cycle Model.
ADVANTAGES AND DISADVANTAGES
Advantages of the Waterfall Model
 The advantage of waterfall development is that it allows for departmentalization and control. A schedule
can be set with deadlines for each stage of development and a product can proceed through the
development process model phases one by one.
 The waterfall model progresses through easily understandable and explainable phases and thus it is easy
to use.
 It is easy to manage due to the rigidity of the model – each phase has specific deliverables and a review
process.
 In this model, phases are processed and completed one at a time and they do not overlap. The waterfall
model works well for smaller projects where requirements are very well understood.
Disadvantages of Waterfall Model
 It is difficult to estimate time and cost for each phase of the development process.
 Once an application is in the testing stage, it is very difficult to go back and change something that was
not well-thought-out in the concept stage.
 Not a good model for complex and object-oriented projects.
 Not suitable for the projects where requirements are at a moderate to high risk of changing.