Procurement Options of Information System

Presented by: Neha (137) Shikha Popli (146)

Information system
An IS can be any organized combination of people, hardware, software, communication networks. A data resource that collects , transforms and disseminate information in an organization. It the use of information technology to transform data resources into an endless variety of information products for customers and business professionals.

Procurement of IS
Procurement is the acquisition of goods and/or services. The electronic integration and management of all procurement activities including purchase request, authorization, ordering, delivery and payment between a purchaser and a supplier.

MAKE OR BUY DECISION

INTRODUCTION
The make-or-buy decision is the act of making a strategic choice between producing an item internally (in-house) or buying it externally (from an outside supplier). Purchasing commercially available solutions requires that the business adapt to the functionality of the system. Buying an existing package can be a cost effective and time saving strategy compared with in-house development.

DECISIVE THOUGHT ON MAKE OR BUY DECISION FACTORS

MAKE DECISION
Cost considerations Better quality control Unreliable suppliers No competent suppliers Need to exert direct control over quality

BUY DECISION
Lack of expertise Small-volume requirements Indirect managerial control consideration Suppliers' research and specialized knowhow exceeds that of the buyer

ADVANTAGES
MAKE DECISION Best fit with the company requirements Have control over software improvements Have all of the required features Main core competencies and maintain level of quality service Make a distinction with other companies BUY DECISION Shorter implementation time Use of proven technology Availability of outside technical expertise Easier to define costs Frequent software updates The price is usually cheaper Minimal IT personnel

DIS- ADVANTAGES
MAKE DECISION Required more IT personnel High overhead cost Time consuming Problem with usability of the system High switching cost Difficult to update to newer technology BUY DECISION Incompatibility with company needs Incompatibility between different applications Limitation on the software customization Have no control over software improvements Long term reliance on vendor support Specific hardware or software requirements

OUTSOURCING

Meaning
The process of turning over an organizations computer center operations, telecommunications network, or applications development to external vendors of these services.

Advantages
Economy Service Quality Predictability Flexibility Making FIXED COST Variable Freeing up Human Resources for other projects Freeing up Financial Capital

Disadvantages
Loss of Control Vulnerability of Strategic Information Dependency

When to use Outsourcing

When there is limited opportunity for the firm to distinguish itself competitively through a particular information system application or series of applications. When the predictability of information systems service important. uninterrupted is not very

When to use Outsourcing

When outsourcing does not strip the company of the technical know-how required for future information systems innovation. When the firms existing information system capabilities are limited, ineffective, or technically inferior.

Managing Outsourcing
Proper Management Sound business analysis Segmentation of Information System activities ( mainly the Noncritical applications) Technology strategy should be retained. Develop TRUST with vendor. BEST KEPT IN HOUSE.

Conclusion
IS procurement is expected to grow as more organizations seek to leverage the business goals. IS procurement strategy is often considered to be faster, easier, and most powerful way for companies to meet their business needs. While procurements method can be very successful and boost companys competitive advantage, it can also fail. There are many factors that should be considered prior to acquire information systems functions. Managers should consider alignment between companys business and IS strategy; core competencies and critical success factors, and wide range specific information system functions that can be acquired, as well as understanding of the related acquisition and implementation methodologies.

 Ultimately, the work does not end with the implementation of the systems. Indeed monitoring and evaluating the developed system in ongoing basis is also crucial for the success of IS procurement.

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