Enterprises IS Construction Strategies And Selecting

Information technology has been advancing at an exponential rate. Cheaper and faster computers and communication devices are introduced to the market every day. Nevertheless, the software cost of building information systems (IS) is significantly higher than that of hardware, the ratio being 80:20 or even higher. Companies spend millions of dollars to automate their processes, improve decision-making, and gain strategic advantage. In spite of that, many systems are late and over-budget, and thus, many development efforts fail. Improving the effectiveness of software development is one of the top concerns of IS management. Their frustration with IT costs, backlog of system requests, and standards on infrastructure are forcing IT managers to seek alternative solutions to in-house development. Outsourcing and purchasing package software are frequently used as solutions to these problems. In order to compete, companies have to exploit their advantages. When the companies want to build IS, there are many challenges. Questions such as: how to get support from all the employees, how and who should go about gathering the information requirements, who should build the system, how to exploit existing applications, what code should be common and what should be local, how many versions of the code are needed, etc. present a wide variety of difficult choices. The choices are not clear-cut and require careful consideration. A major problem facing the firm is to identify the acquisition option or development strategy that will maximize the net present value of software acquisition,subject to organizational considerations (e.g. corporate policy and resources availability). Because many strategies are available, the choice is very difficult. In this paper, insourced development, package acquisition, and outsourcing are the primary strategies available to companies. We discuss the advantages and disadvantages of every strategy. After that, we analyze the factors that affects the strategies selecting of companies. They are:...