408 Part III • Acquiring Information Systems
code of the package is modified, which may be done by
the vendor, another outside supplier, or the purchasing
company. In the case of large packaged systems for
which there are expected to be frequent future releases
(e.g., ERP modules), modifications are typically kept to a
bare minimum. In contrast, the Implementation phase for
a software package can be more challenging than for a
custom application because of the purchasing company’s
lack of familiarity with the details of how the package
operates as well as the need for large-scale changes in the
way the company will operate once the new package has
been implemented. The software vendor might be heavily
involved in the installation step and is also typically
relied on for ongoing maintenance. Large enterprise
system vendors (e.g., SAP) typically release new
versions on a frequent basis and support older versions of
the package only for a set period of time.
Expertise in the implementation of packaged
systems has become an important IT capability. In some
firms, new manager positions have been created in order to
manage relationships with IT vendors. Organizations are
increasingly considering open source packages in addition
to proprietary application packages. Open source packages
can be obtained with low up-front investment; support can
be obtained for a fee from various service providers. A
new procurement option is to pay an application service
provider to host a software application for remote access
by company employees via the Internet.Review Questions
1.What are the major trade-offs in a make-or-buy decision?
2.Summarize the five additional steps for purchasing a system
that are not part of the Definition phase of a traditional SDLC
process.
3.What is an RFP, and what critical tasks does it facilitate in the
purchasing process?
4.Why is making a lot of modifications to a packaged system
sometimes a risky approach, and what are the alternatives?
5.Briefly summarize how the phases of the traditional SDLC
are similar to or different from the phases of the modified
life-cycle approach in support of the cost comparisons in
Figure 10.2.
6.Describe the role of the vendor for each of the three phases of
the purchasing life cycle.
7.Describe why the methodology for purchasing a small system
could differ from purchasing a large system.8.Describe what a purchasing company might want to learn
from a vendor demonstration of a packaged system.
9.What are the criteria that should be applied when choosing
among candidate application software packages?
10.What do you think are the most important advantages and
disadvantages of purchasing a package?
11.What kinds of modifications tend to be easy to do and what
others tend to be difficult to do with packaged software?
12.What are some of the major differences between a process to
implement an ERP package and the process to implement a
less complex package?
13.What are the critical success factors for running an ERP project?
14.What are the relative advantages and disadvantages of open
source software versus proprietary application packages?
15.What is an ASP and why is this an attractive purchasing
alternative?Discussion Questions
1.Critique the following statements: It would cost us
$800,000 to build this system, but we can purchase an
equivalent package for $125,000. Therefore, we can save
the organization $675,000 by purchasing the software
package.
2.Discuss the options an organization needs to choose from
when the best packaged-system solution is not a perfect fit
with the needs of the organization.
3.You run a small business. You have no IS specialists on your
staff and plan to purchase all your software. What might be
your three most important concerns?
4.You are a manager in a company that has a lot of in-house
IS expertise. What might be your key decision rules for
when to purchase a system versus when to develop it
in-house?5.Discuss why an assessment of the financial stability of
the vendor can be a critical consideration when evaluating
responses to an RFP.
6.Choose one of the five factors associated with successful
ERP implementations (presented in the section entitled
“Special Case: Enterprise System Packages”) and comment
on how different this really is (or is not) from other packaged
system implementations.
7.Many midsized firms are investing in ERP system packages,
such as SAP and Oracle/PeopleSoft. Comment on what you
think might be particularly important parts of the decision-
making process when the purchasing organization has only a
small IS department.
8.Revise Figure 10.3 to make it a list of criteria for assessing an
application service provider (ASP).