This chapter has new material, examples, and references. In addition, the end-of-chapter
material has been completely updated with new questions and exercises. As with other editions, all cases are new to this edition.
In the introductory material, which provides an overview of systems development, we
include new material on the importance of removing old systems. For example, Walt Disney
developed the Virtual Magic Kingdom (VMK) game to celebrate the 50th anniversary of
Disneyland. The VMK game used Disney avatars and offered virtual rewards to game players.
When Disney decided to remove or terminate the game, some players were outraged and
protested outside Disney offices in California.
This chapter has a new emphasis on entrepreneurs and small business owners. The systems
development skills and techniques discussed in this chapter and the next can help people
launch their own businesses. When Marc Mallow couldn’t find off-the-shelf software to
schedule workers, he took a few years to develop his own software. The software he created
became the core of a company he founded, located in New York. We also have new material
and examples on the use of systems development for nonprofit organizations. To stay competitive in today’s global economy, some cities, including Chattanooga, Tennessee, are
investing in high-speed fiber optic cables that have the potential to deliver greater speed
compared to existing cable and phone company offerings.
We have increased the emphasis on long-range planning in systems development projects.
It can result in getting the most from a systems development effort. It can also help make
sure that IS goals are aligned with corporate goals. Hess Corporation, a large energy company
with over 1,000 retail gasoline stations, used long-range planning to determine what computer equipment it needed and the IS personnel needed to run it.
The section on participants in systems development has new material and examples.
Today, companies are using innovative ways to build new systems or modify existing ones
without using in-house programmers. Constellation Energy, a $19 billion utility company,
is using an approach that asks programmers from around the world to get involved. The
approach, called crowd sourcing, asks programmers to contribute code to the project. Winning programmers that submit excellent code can be given from $500 to more than $2,000.
Constellation is hoping to save time and money by using crowd sourcing, but neither result
is guaranteed.
We’ve included new examples on initiating systems development projects. For example,
systems development can be initiated when a vendor no longer supports an older system or
older software. When this support is no longer available, companies are often forced to upgrade to new software and systems, which can be expensive and require additional training.
Major system and application software companies, for example, often stop supporting their
older software a few years after new software has been introduced. This lack of support is a
dilemma for many companies trying to keep older systems operational and running. We also
discuss that a company’s customers or suppliers can cause the initiation of systems development. Daisy Brand, a dairy products company, was asked by one of its major customers,
Wal-Mart, to start using special RFID tags. By putting RFID tags on every pallet of dairy
products that it ships to customers, the company cut in half the time it used to take to load
pallets onto delivery trucks.
The section on quality and standards includes a new example. Although many companies
try to standardize their operations on one operating system or standard, others have multiple
systems and platforms to take advantage of the strengths of each. In these cases, many IS
managers seek one tool to manage everything. Today, many companies, including Microsoft,
are developing software and systems that can be used to manage different operating systems
and software products. We also describe how creative analysis can help organizations achieve
their performance goals and include a new quote from Michael Hugos, principle at the Center
for Systems Innovation and one of Computerworld’s 2006 Premier 100 IT Leaders, about
the importance of creativity.
The impact of laws and regulations, such as Sarbanes-Oxley, has been emphasized. Some
of the disadvantages of new laws and regulations are also discussed, including the increased
use of outsourcing by U.S. companies to reduce costs in complying with laws and regulations.
The importance of user involvement and top management support has been included in the
section on factors affecting systems development success.
New examples are provided in the section on IS planning and aligning corporate and IS
goals. Procter & Gamble (P&G), for example, uses ROI to measure the success of its projects
and systems development efforts. Providing outstanding service is another important corporate goal. Coca-Cola Enterprises, which is Coca Cola’s largest bottler and distributor,
decided to use online services from Microsoft and SharePoint to speed its systems development process.
We have updated the material on establishing objectives for systems development with
new examples. Southern States, which sells farm equipment in over 20 states and is owned
by about 300,000 farmers, decided to use Skyway Software, Inc.’s Visual Workplace to develop a new pricing application. The use of this service-oriented architecture (SOA) tool
allowed Southern States to generate $1.4 million more in revenue the year after it was placed
into operation.The section on cost objectives also includes a new example that shows how Tridel Corporation used systems development to build a new invoicing application, called Invoice Zero,
to save over $20 thousand in operating costs. The new invoicing application, which consolidated invoices and sent them out once a month, cut the number of monthly invoices from
2,400 to just 17. Reducing costs was also an important factor for Cincinnati Bell. By switching from dedicated PCs to thin client computers and virtualization software, Cincinnati Bell
expects to see a large reduction in help desk costs. Some experts predict that help-desk costs
could be reduced by 70 percent or more.
We continue to emphasize the importance of rapid and agile application development.
Microsoft, for example, has adopted a more agile development process in its server development division. BT Group, a large British telecommunications company, uses agile systems
development to substantially reduce development time and increase customer satisfaction.
We also have a new example of the importance of information systems speed for Six Flags,
one of the largest amusement parks in the world with about $1 billion in annual sales.
New examples of systems development failure have also been included. The United Airlines automated baggage systems development project, for example, failed to deliver baggage
to airline passengers in good shape or on time. The $250 million systems development project
costs United Airlines about $70 million to operate each year. Computers were overwhelmed
with data from the cars carrying the baggage. United Airlines eventually abandoned the
computerized system. In another case, a large $4 billion systems development effort ran into
trouble. The objective was to convert older paper-based medical records to electronic records
for a large healthcare company.
New examples of outsourcing are discussed. IBM, for example, has consultants located
in offices around the world. In India, IBM has increased its employees from less than 10,000
people to more than 30,000. We have also included information on the scope of outsourcing,
including hardware maintenance and management, software development, database systems,
networks and telecommunications, Internet and Intranet operations, hiring and staffing, and
the development of procedures and rules regarding the information system. Increasingly,
companies are using several outsourcing services. GM, the large automotive company, uses
six outsourcing companies after its outsourcing agreement with EDS expired. Using more
than one outsourcing company can increase competition and reduce outsourcing costs. Small
and medium-sized firms are also using outsourcing to cut costs and get needed technical
expertise that would be difficult to afford with in-house personnel. Millennium Partners
Sports Club Management, for example, used Center Beam to outsource many of its IS functions, including its helpdesk operations. The Boston-based company plans to spend about
$30,000 a month on outsourcing services, which it estimates to be less than it would have
to pay in salaries for additional employees. The market for outsourcing services for small and
medium-sized firms is expected to increase by 15 percent annually through 2010 and beyond.
Some of the disadvantages of outsourcing are also included. Some companies, such as J. Crew,
are starting to reduce their outsourcing and bring systems development back in-house.
The section discussing on-demand computing has new material and examples. Amazon,
the large online retailer of books and other products, will offer on-demand computing to
individuals and other companies of all sizes, allowing them to use Amazon’s computer expertise and database capacity. Individuals and companies will only pay for the computer
services they use.
There are new project management references and examples. We also discuss new project
management tools and software. As an academic exercise, Purdue University undertook a
project to build a supercomputer using off-the-shelf PCs. The project was completed in a
day and required more than 800 PCs. In what some people believe is the largest private
construction project in the U.S., MGM Mirage and others used project management software
to help them embark on an ambitious $8 billion construction project on 76 acres with over
4,000 hotel
This chapter has new material, examples, and references. In addition, the end-of-chapter
material has been completely updated with new questions and exercises. As with other editions, all cases are new to this edition.
In the introductory material, which provides an overview of systems development, we
include new material on the importance of removing old systems. For example, Walt Disney
developed the Virtual Magic Kingdom (VMK) game to celebrate the 50th anniversary of
Disneyland. The VMK game used Disney avatars and offered virtual rewards to game players.
When Disney decided to remove or terminate the game, some players were outraged and
protested outside Disney offices in California.
This chapter has a new emphasis on entrepreneurs and small business owners. The systems
development skills and techniques discussed in this chapter and the next can help people
launch their own businesses. When Marc Mallow couldn’t find off-the-shelf software to
schedule workers, he took a few years to develop his own software. The software he created
became the core of a company he founded, located in New York. We also have new material
and examples on the use of systems development for nonprofit organizations. To stay competitive in today’s global economy, some cities, including Chattanooga, Tennessee, are
investing in high-speed fiber optic cables that have the potential to deliver greater speed
compared to existing cable and phone company offerings.
We have increased the emphasis on long-range planning in systems development projects.
It can result in getting the most from a systems development effort. It can also help make
sure that IS goals are aligned with corporate goals. Hess Corporation, a large energy company
with over 1,000 retail gasoline stations, used long-range planning to determine what computer equipment it needed and the IS personnel needed to run it.
The section on participants in systems development has new material and examples.
Today, companies are using innovative ways to build new systems or modify existing ones
without using in-house programmers. Constellation Energy, a $19 billion utility company,
is using an approach that asks programmers from around the world to get involved. The
approach, called crowd sourcing, asks programmers to contribute code to the project. Winning programmers that submit excellent code can be given from $500 to more than $2,000.
Constellation is hoping to save time and money by using crowd sourcing, but neither result
is guaranteed.
We’ve included new examples on initiating systems development projects. For example,
systems development can be initiated when a vendor no longer supports an older system or
older software. When this support is no longer available, companies are often forced to upgrade to new software and systems, which can be expensive and require additional training.
Major system and application software companies, for example, often stop supporting their
older software a few years after new software has been introduced. This lack of support is a
dilemma for many companies trying to keep older systems operational and running. We also
discuss that a company’s customers or suppliers can cause the initiation of systems development. Daisy Brand, a dairy products company, was asked by one of its major customers,
Wal-Mart, to start using special RFID tags. By putting RFID tags on every pallet of dairy
products that it ships to customers, the company cut in half the time it used to take to load
pallets onto delivery trucks.
The section on quality and standards includes a new example. Although many companies
try to standardize their operations on one operating system or standard, others have multiple
systems and platforms to take advantage of the strengths of each. In these cases, many IS
managers seek one tool to manage everything. Today, many companies, including Microsoft,
are developing software and systems that can be used to manage different operating systems
and software products. We also describe how creative analysis can help organizations achieve
their performance goals and include a new quote from Michael Hugos, principle at the Center
for Systems Innovation and one of Computerworld’s 2006 Premier 100 IT Leaders, about
the importance of creativity.
The impact of laws and regulations, such as Sarbanes-Oxley, has been emphasized. Some
of the disadvantages of new laws and regulations are also discussed, including the increased
use of outsourcing by U.S. companies to reduce costs in complying with laws and regulations.
The importance of user involvement and top management support has been included in the
section on factors affecting systems development success.
New examples are provided in the section on IS planning and aligning corporate and IS
goals. Procter & Gamble (P&G), for example, uses ROI to measure the success of its projects
and systems development efforts. Providing outstanding service is another important corporate goal. Coca-Cola Enterprises, which is Coca Cola’s largest bottler and distributor,
decided to use online services from Microsoft and SharePoint to speed its systems development process.
We have updated the material on establishing objectives for systems development with
new examples. Southern States, which sells farm equipment in over 20 states and is owned
by about 300,000 farmers, decided to use Skyway Software, Inc.’s Visual Workplace to develop a new pricing application. The use of this service-oriented architecture (SOA) tool
allowed Southern States to generate $1.4 million more in revenue the year after it was placed
into operation.The section on cost objectives also includes a new example that shows how Tridel Corporation used systems development to build a new invoicing application, called Invoice Zero,
to save over $20 thousand in operating costs. The new invoicing application, which consolidated invoices and sent them out once a month, cut the number of monthly invoices from
2,400 to just 17. Reducing costs was also an important factor for Cincinnati Bell. By switching from dedicated PCs to thin client computers and virtualization software, Cincinnati Bell
expects to see a large reduction in help desk costs. Some experts predict that help-desk costs
could be reduced by 70 percent or more.
We continue to emphasize the importance of rapid and agile application development.
Microsoft, for example, has adopted a more agile development process in its server development division. BT Group, a large British telecommunications company, uses agile systems
development to substantially reduce development time and increase customer satisfaction.
We also have a new example of the importance of information systems speed for Six Flags,
one of the largest amusement parks in the world with about $1 billion in annual sales.
New examples of systems development failure have also been included. The United Airlines automated baggage systems development project, for example, failed to deliver baggage
to airline passengers in good shape or on time. The $250 million systems development project
costs United Airlines about $70 million to operate each year. Computers were overwhelmed
with data from the cars carrying the baggage. United Airlines eventually abandoned the
computerized system. In another case, a large $4 billion systems development effort ran into
trouble. The objective was to convert older paper-based medical records to electronic records
for a large healthcare company.
New examples of outsourcing are discussed. IBM, for example, has consultants located
in offices around the world. In India, IBM has increased its employees from less than 10,000
people to more than 30,000. We have also included information on the scope of outsourcing,
including hardware maintenance and management, software development, database systems,
networks and telecommunications, Internet and Intranet operations, hiring and staffing, and
the development of procedures and rules regarding the information system. Increasingly,
companies are using several outsourcing services. GM, the large automotive company, uses
six outsourcing companies after its outsourcing agreement with EDS expired. Using more
than one outsourcing company can increase competition and reduce outsourcing costs. Small
and medium-sized firms are also using outsourcing to cut costs and get needed technical
expertise that would be difficult to afford with in-house personnel. Millennium Partners
Sports Club Management, for example, used Center Beam to outsource many of its IS functions, including its helpdesk operations. The Boston-based company plans to spend about
$30,000 a month on outsourcing services, which it estimates to be less than it would have
to pay in salaries for additional employees. The market for outsourcing services for small and
medium-sized firms is expected to increase by 15 percent annually through 2010 and beyond.
Some of the disadvantages of outsourcing are also included. Some companies, such as J. Crew,
are starting to reduce their outsourcing and bring systems development back in-house.
The section discussing on-demand computing has new material and examples. Amazon,
the large online retailer of books and other products, will offer on-demand computing to
individuals and other companies of all sizes, allowing them to use Amazon’s computer expertise and database capacity. Individuals and companies will only pay for the computer
services they use.
There are new project management references and examples. We also discuss new project
management tools and software. As an academic exercise, Purdue University undertook a
project to build a supercomputer using off-the-shelf PCs. The project was completed in a
day and required more than 800 PCs. In what some people believe is the largest private
construction project in the U.S., MGM Mirage and others used project management software
to help them embark on an ambitious $8 billion construction project on 76 acres with over
4,000 hotel
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