Description
Software is a general term. It can refer to all computer instructions in general or to any specific set of computer instructions. It is inclusive of both machine instructions (the binary code that the processor understands) and source code (more human-understandable instructions that must be rendered into machine code by compilers or interpreters before being executed).
Management Information Systems (MIS) K.S. School of Business Management
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
1. Determining Size and Capacity Requirements
? Starting point in an equipment decision process ? Various models and configurations to select ? Key factors
? Internal memory size
? Cycle speed of system for processing ? # of channels for input, output and communication ? Characteristics of display and communication components
? Types and numbers of auxiliary storage units that can be attached
? Systems support and utility software provided or available
? Minimum Configuration? Limits? ? Source of information?
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
2. Computer Evaluation and Measurement
? ?
Basis: Actual performance data Tech specs vs. Performance Data
1.
2. 3.
Benchmarking Design of Synthetic Programs Comparison of Benchmarks
2.1 Benchmarking
? Application of synthetic programs to emulate actual processing work ? Based on projected work load ? Limitations – Early in acquisition process
? Any type of system environment (e.g. batch, online streams)
? Common benchmarks:
? Speed of central processor
?
?
Multiple jobs Multiprogramming environment
? Interrupt Handling ? Peripheral Channel Speed ? Communication Speed
2.1 Benchmarking
? Actual benchmarks OR System simulators
? How many I/O operation there are ? How many instructions are utilized in one computation ? Order of execution
2.2 Design of Synthetic Programs
? Synthetic job = “program written to exercise a computer’s resources in a
way that allows the analyst to imitate the expected job stream and determine results”
2.3 Comparison of Benchmarks
? Some comparison is better than no comparison! ? Limitations of Benchmarks:
? Comparisons made purely on quantitative grounds
? “Learning time needed to become accustomed to the system” is
never accounted for ? No assurances ? False vendor claims – No direct verifications possible
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
3. Plug Compatible Equipment
? Equipment for a particular make of computer that is not manufactured
by the computer vendor. ? CPU does not care / know about the different make! ? Advantage: Lower cost
? Specialization game – Volumes! ? Lower R&D Costs => Lower end product costs
? Things to take care of:
? Quality levels ? Performance (better than original equipments) ? Doesn’t affect warranties and service agreements on the rest of the system
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
4. Financial Factors
? Rental ? Lease ? Purchase
No one option is better than the other!
4. Financial Factors
? Rental
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
•
Short term commitment (usually 1-12 months) High flexibility (Cancellations, delayed purchase decisions) No major cash requirement upfront
• • •
Most expensive • Higher monthly payments • No major tax / ownership benefits Not enough security (notice period short) Little / no control on equipment change Not all vendors will rent
4. Financial Factors
? Lease
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
• •
•
• •
Commitment for a specified time (generally 3-7 years) Predetermined payments throughout the lease duration No major cash required upfront Usually better service from vendors than the RENTAL option Less expensive than RENTAL System upgrade option
More expensive than PURCHASE May have limitations on hours / equipment use
4. Financial Factors
? Purchase
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
• • • • •
• •
Lowest cost in the long run Preferred option with the rise in lease costs; also the most preferred Tax advantages • Monthly maintenance deductible as business expense • Interest on any loan to finance the purchase deductible as business expense • Local state, federal taxes paid on purchase deductible A business investment Full control over equipment use
Risk of obsolescence Permanent commitment Once in, no real way out Complete responsibility for all problems Cash requirements high
4. Financial Factors
? Comparing costs
RENTAL Basic System Monthly Payment Monthly Maintenance Annual Cost Cost over 5 years $ 6,807 $ 1,225 $ 98,631 $ 493,155
LEASE $ 4,846 $ 58,152 $ 290,760
PURCHASE $ 189,678 $ 4,817 $ 1,225 $ 72,504 $ 362, 520
+ Tax Savings + Own the system
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
5. Maintenance and Support
? Post installation factor ? Includes:
1.
2.
3. 4.
Maintenance Source Terms Service and Response Options to In-house systems
5.1 Maintenance Source
? Warranty Period (usually 90 days) – Sales Unit responsible ? Post warranty, maintenance source is anybody’s guess!
? Most common source – The firm from where it was purchased
? Specialized service providers (3rd party maintenance)
5.2 Terms
? Terms are as important as the cost! ? Contract covers:
? Both labor and parts (Most common… for large systems)
? Labor + allowance for parts
? Labor only (parts charged extra)
? Decision for the organization: What kind of contract?
? Expenditures the org is willing to make, versus ? How frequently it estimates services will be required
? Other factors:
? How maintenance costs will change over time?
?
Protection opportunities?
5.3 Service and Response
? Concerns in maintenance:
? Response time when service is requested ? Hours of service
? Response time SLAs should be part of the contract / agreement (e.g. 2
hours, same day, next morning, 3 business days etc.)
? Online vs. Batch Processing
? Onsite vs. Carry-in service (in case of laptops / desktops) ? Repair is fine, but what if we prevent problems in the first place?
? Preventive maintenance ? Cleaning / adjusting equipments ? Stocking of sufficient spare parts (for quick problem resolution)
5.4 Options to In-house systems
? Service bureaus / Facilities Management Companies ? Service Bureaus:
? User submits data for processing -> performed at service bureaus
? Monthly cost + charge depending on the time taken for processing
? Additional fees for storing data, mounting on tapes etc. ? Custom programming ? Service bureaus common in accounting / payroll apps (Firms want automated
services, but do not want to purchase equipment / hire specialists)
? Facilities Management companies:
? For companies who wish to develop Information Management s/w, but do not want
to hire analysts / programmers etc. ? Purchase computer systems -> Hire facilities management services to operate ? Fac Man develop s/w or acquire software as per client demands ? Advantage for clients: Obtain professional information processing / service without investing time + resources in managing systems staff, while still receiving the benefits of owning a computer system!
Software Selection
Many of the same concerns addressed in the selection of hardware and software.
Primarily: 1. Evaluation of Software 2. Software contracts
Software Selection
1. 2.
Evaluation of Software Software contracts
1. Evaluation of Software
1. 2. 3.
4.
5.
Application Requirements Questions Flexibility Audit and Reliability Provisions Capacity Vendor Support
1.1 Application Requirements Questions
?
Representative requirement considerations:
? ? ? ? ? ? ? ?
What transactions and what data about each transaction must be handled? What reports, documents and other output must the system produce? What files and databases drive the system? What is the volume of data to be stored? What volume of transactions will be processed? Are there any unique features about this application that require special consideration when selecting software? What future enhancements are possible, and which will be supported? What hardware and communication features does the software require? What are the limitations of the software?
?
These questions, plus cost / expenditure limitations should help the analyst software options that do not meet requirements
1.2 Flexibility
? ? ?
?
Ability to meet changing requirements and varying user needs. Flexible softwares are more expensive! However, defining a limit for flexibility is the key Areas where flexibility makes sense:
? ? ? ?
Data Storage Reporting Definition of parameters Data Input
1.2 Flexibility
?
Output flexibility is equally important.
?
? ? ?
Example # 1: Mailing labels
In different formats, based on various country-specific requirements Along with reports, sorted alphabetically & by zip-code Other extended reports (including telephone numbers, employee classifications), which is parameterized Size adjustments for mailing labels, number of labels to be printed per page Number of lines for user addresses
? ?
1.3 Audit and Reliability Provisions
? ?
?
Users often have a tendency to trust systems more than they should Auditors must have the ability to validate reports and output and to test the authenticity and accuracy of data and information Audit and control procedures include:
? ? ? ?
Trace a transaction through each processing step by having the capability to examine intermediate data values during processing Print selected records / transactional information Maintain constant balance in the system, especially when financial matters are involved Track the effect of transactions on account balances, prepare journals
? ?
Data / Information should be accurate, timely, reliable and secure. Password levels
1.4 Capacity
? ? ?
Number of files that can be stored; amount each file will hold. Other associated restrictions: files / databases / kind of processing Capacity is also determined by:
?
? ? ? ?
Max size of each record (# of bytes) Max size of file (# of bytes) Max size of file (# of fields per record) # of files that can be active at one time # of files that can be registered in a file directory
System 1: 2 files active at one time; 64000 records per file; 64 fields per record; 1000 characters per field System 2: 8 files active at one time; 64000 records per file; 128 fields per record; 1000 characters per field
?
Example:
? ?
1.5 Vendor Support
? ?
?
Evaluate the services provided As with hardware, it is not enough to know that the quality of the item purchased is adequate. Terms of software maintenance should be detailed:
? ? ?
?
? ?
How frequently will software maintenance be performed? New versions? Charge for updates? Monthly maintenance fee? What does it cover? Custom programming? At what cost? Agreements for controlling increase in maintenance fees? Resolution of disagreements – How? Hours of support available? Mode of communication?
?
The analyst is responsible for asking the questions and getting the answers!
Software Selection
1. 2.
Evaluation of Software Software contracts
2. Software Contracts
? ?
Contract negotiation is a legal process – should involve experts Two types of software contracts:
?
?
Outlining the terms of leasing a software package. If an organization acquires software, they only receive the right to use it for a fee. A paid license allows it to be used indefinitely. However, the purchaser does not own it, and cannot sell the package or distribute copies. Outlining the terms of a custom programming assignment, wherein the organization contracts with and independent agency to produce software. Fixed vs. T&M Ownership & Maintenance Pricing / Split pricing (phased) Protection against changing business environments (eg. What is a company is acquired and changes names – what happens to the contract then? Bankruptcy?)
?
Key aspects:
? ? ?
Decision Matrix
? Allows decision makers to structure ? … then solve their problems by:
? Specifying and prioritizing their needs with a list criteria ? Evaluating, rating and comparing different solutions ? Selecting the best matching solution
? Is usually a part of a Decision Support System (DSS)
? Also helps determine the winning bid / proposal amid all
those sent in response to an invitation
Decision Matrix
COWS Method
C – Criteria
Develop a hierarchy of decision criteria (decision model)
W – Weights
Assign a weight to each criterion based on its importance in the final decision
O – Options
Identify options (solutions / alternatives)
S – Scores
Rate each option on a ratio scale by assigning it a score
Decision Matrix
Example
C – Criteria
C1, C2, C3
W – Weights
C1 – 1, C2 – 2, C3 - 3
Measurements? • Ratio Scale (0-10, 0-50, 0-100) • Point Scale (max speed, temperatures) • High values => Bias
O – Options
Provider A, B, C
Decision Matrix - COWS
? 2-dimensional, L-shaped matrix ? Compute scores
Score = Rating x Weight and then Total Score = SUM(Scores)
Decision Matrix - COWS
? Scenario # 1
Decision Matrix - COWS
? Better interpretation - Histograms ? Data Source – Ratings and Scores of evaluated solutions
Decision Matrix - COWS
Solution Ratings ? In terms of ratings, both B and C are equivalent, and outperform A ? B is better than C for criterion C3, but weaker on C2 ? C is more evenly distributed across all three criteria Therefore, ? Option B is usually called a best-ofbreed solution ? Option C is a typical suite or integrated solution
Decision Matrix - COWS
Solution Scores ? B – Higher weight applied to its strength and lesser to weakness, resulting in first place. ? We have here an interesting example of a battle opposing 2 alternatives at first sight equivalent, but one showing an explicit differentiated strength against another solution that spreads its strengths more evenly. ? This battle is called:
? The One versus The Best ? All-in-one versus Best-of-Breed ? Suite versus Best-of-Breed ? Best-of-Breed versus Integrated
Decision Matrix - COWS
Solution Scores ? Solution: No real answer ? “It depends” ? Depends on?
? Contextual needs (Could lead to choosing one solution over another)
? Whatever the path chosen, the decision matrix won’t be of any help in this matter, but raising the concern.
? You will have to decide what’s best for the enterprise
…. Let’s look at what would happen should your priorities change …
Decision Matrix - COWS
Importance of weight in the final decision ? Relative importance / effectiveness of weights coupled with ratings ? Let’s use the same example, and play with weights, given the ratings stay the same….
• In scenario # 1, weights were distributed as 1, 2 and 3 for C1, C2, C3 respectively. • Let’s increase the second weight from 2 to 3…
Decision Matrix - COWS
Scenario # 2
Decision Matrix - COWS
Scenario # 2
Decision Matrix - COWS
Solution Ratings ? Ratings don’t change since solution capabilities remain the same. Solution Scores ? B and C – Globally equivalent in their ratings, and now have equal weights, therefore they’re pretty much equilevel. ? However, as you may notice, their internal differences remain
Decision Matrix - COWS
? Now, let’s keep the 2nd weight as 3, and decrease the 3rd weight from 3 to 2 ? Scenario # 3
Decision Matrix - COWS
? Scenario # 3
Decision Matrix - COWS
Solution Ratings ? Ratings still don’t change since solution features and benefits stay the same. Solution Scores ? B and C were at the same effective levels earlier, but the new weights inhibit what appeared to be a strength for B in criterion C3 earlier. ? Indeed, a lesser weight was applied to its strength, and a higher weight to its weakness, resulting in losing the first place to Option C. ? In this particular context, the more integrated the solution, the better it is.
Decision Matrix - COWS
Conclusion ? Recap of the 3 scenarios with the respective weights… ? Be careful in your interpretation of the result you get using a decision matrix. ? Indeed, you have to question the validity of the path you took to reach the conclusion you found. ? To challenge each step of your decision cycle:
? Sensitivity Analysis ? Robustness Analysis
doc_809822535.pptx
Software is a general term. It can refer to all computer instructions in general or to any specific set of computer instructions. It is inclusive of both machine instructions (the binary code that the processor understands) and source code (more human-understandable instructions that must be rendered into machine code by compilers or interpreters before being executed).
Management Information Systems (MIS) K.S. School of Business Management
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
1. Determining Size and Capacity Requirements
? Starting point in an equipment decision process ? Various models and configurations to select ? Key factors
? Internal memory size
? Cycle speed of system for processing ? # of channels for input, output and communication ? Characteristics of display and communication components
? Types and numbers of auxiliary storage units that can be attached
? Systems support and utility software provided or available
? Minimum Configuration? Limits? ? Source of information?
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
2. Computer Evaluation and Measurement
? ?
Basis: Actual performance data Tech specs vs. Performance Data
1.
2. 3.
Benchmarking Design of Synthetic Programs Comparison of Benchmarks
2.1 Benchmarking
? Application of synthetic programs to emulate actual processing work ? Based on projected work load ? Limitations – Early in acquisition process
? Any type of system environment (e.g. batch, online streams)
? Common benchmarks:
? Speed of central processor
?
?
Multiple jobs Multiprogramming environment
? Interrupt Handling ? Peripheral Channel Speed ? Communication Speed
2.1 Benchmarking
? Actual benchmarks OR System simulators
? How many I/O operation there are ? How many instructions are utilized in one computation ? Order of execution
2.2 Design of Synthetic Programs
? Synthetic job = “program written to exercise a computer’s resources in a
way that allows the analyst to imitate the expected job stream and determine results”
2.3 Comparison of Benchmarks
? Some comparison is better than no comparison! ? Limitations of Benchmarks:
? Comparisons made purely on quantitative grounds
? “Learning time needed to become accustomed to the system” is
never accounted for ? No assurances ? False vendor claims – No direct verifications possible
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
3. Plug Compatible Equipment
? Equipment for a particular make of computer that is not manufactured
by the computer vendor. ? CPU does not care / know about the different make! ? Advantage: Lower cost
? Specialization game – Volumes! ? Lower R&D Costs => Lower end product costs
? Things to take care of:
? Quality levels ? Performance (better than original equipments) ? Doesn’t affect warranties and service agreements on the rest of the system
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
4. Financial Factors
? Rental ? Lease ? Purchase
No one option is better than the other!
4. Financial Factors
? Rental
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
•
Short term commitment (usually 1-12 months) High flexibility (Cancellations, delayed purchase decisions) No major cash requirement upfront
• • •
Most expensive • Higher monthly payments • No major tax / ownership benefits Not enough security (notice period short) Little / no control on equipment change Not all vendors will rent
4. Financial Factors
? Lease
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
• •
•
• •
Commitment for a specified time (generally 3-7 years) Predetermined payments throughout the lease duration No major cash required upfront Usually better service from vendors than the RENTAL option Less expensive than RENTAL System upgrade option
More expensive than PURCHASE May have limitations on hours / equipment use
4. Financial Factors
? Purchase
FEATURES / ADVANTAGES
• • •
DISADVANTAGES
• • • • •
• •
Lowest cost in the long run Preferred option with the rise in lease costs; also the most preferred Tax advantages • Monthly maintenance deductible as business expense • Interest on any loan to finance the purchase deductible as business expense • Local state, federal taxes paid on purchase deductible A business investment Full control over equipment use
Risk of obsolescence Permanent commitment Once in, no real way out Complete responsibility for all problems Cash requirements high
4. Financial Factors
? Comparing costs
RENTAL Basic System Monthly Payment Monthly Maintenance Annual Cost Cost over 5 years $ 6,807 $ 1,225 $ 98,631 $ 493,155
LEASE $ 4,846 $ 58,152 $ 290,760
PURCHASE $ 189,678 $ 4,817 $ 1,225 $ 72,504 $ 362, 520
+ Tax Savings + Own the system
Hardware Selection
1. 2. 3.
4.
5.
Determining Size and Capacity Requirements Computer Evaluation and Measurement Plug-Compatible Equipment Financial Factors Maintenance and Support
5. Maintenance and Support
? Post installation factor ? Includes:
1.
2.
3. 4.
Maintenance Source Terms Service and Response Options to In-house systems
5.1 Maintenance Source
? Warranty Period (usually 90 days) – Sales Unit responsible ? Post warranty, maintenance source is anybody’s guess!
? Most common source – The firm from where it was purchased
? Specialized service providers (3rd party maintenance)
5.2 Terms
? Terms are as important as the cost! ? Contract covers:
? Both labor and parts (Most common… for large systems)
? Labor + allowance for parts
? Labor only (parts charged extra)
? Decision for the organization: What kind of contract?
? Expenditures the org is willing to make, versus ? How frequently it estimates services will be required
? Other factors:
? How maintenance costs will change over time?
?
Protection opportunities?
5.3 Service and Response
? Concerns in maintenance:
? Response time when service is requested ? Hours of service
? Response time SLAs should be part of the contract / agreement (e.g. 2
hours, same day, next morning, 3 business days etc.)
? Online vs. Batch Processing
? Onsite vs. Carry-in service (in case of laptops / desktops) ? Repair is fine, but what if we prevent problems in the first place?
? Preventive maintenance ? Cleaning / adjusting equipments ? Stocking of sufficient spare parts (for quick problem resolution)
5.4 Options to In-house systems
? Service bureaus / Facilities Management Companies ? Service Bureaus:
? User submits data for processing -> performed at service bureaus
? Monthly cost + charge depending on the time taken for processing
? Additional fees for storing data, mounting on tapes etc. ? Custom programming ? Service bureaus common in accounting / payroll apps (Firms want automated
services, but do not want to purchase equipment / hire specialists)
? Facilities Management companies:
? For companies who wish to develop Information Management s/w, but do not want
to hire analysts / programmers etc. ? Purchase computer systems -> Hire facilities management services to operate ? Fac Man develop s/w or acquire software as per client demands ? Advantage for clients: Obtain professional information processing / service without investing time + resources in managing systems staff, while still receiving the benefits of owning a computer system!
Software Selection
Many of the same concerns addressed in the selection of hardware and software.
Primarily: 1. Evaluation of Software 2. Software contracts
Software Selection
1. 2.
Evaluation of Software Software contracts
1. Evaluation of Software
1. 2. 3.
4.
5.
Application Requirements Questions Flexibility Audit and Reliability Provisions Capacity Vendor Support
1.1 Application Requirements Questions
?
Representative requirement considerations:
? ? ? ? ? ? ? ?
What transactions and what data about each transaction must be handled? What reports, documents and other output must the system produce? What files and databases drive the system? What is the volume of data to be stored? What volume of transactions will be processed? Are there any unique features about this application that require special consideration when selecting software? What future enhancements are possible, and which will be supported? What hardware and communication features does the software require? What are the limitations of the software?
?
These questions, plus cost / expenditure limitations should help the analyst software options that do not meet requirements
1.2 Flexibility
? ? ?
?
Ability to meet changing requirements and varying user needs. Flexible softwares are more expensive! However, defining a limit for flexibility is the key Areas where flexibility makes sense:
? ? ? ?
Data Storage Reporting Definition of parameters Data Input
1.2 Flexibility
?
Output flexibility is equally important.
?
? ? ?
Example # 1: Mailing labels
In different formats, based on various country-specific requirements Along with reports, sorted alphabetically & by zip-code Other extended reports (including telephone numbers, employee classifications), which is parameterized Size adjustments for mailing labels, number of labels to be printed per page Number of lines for user addresses
? ?
1.3 Audit and Reliability Provisions
? ?
?
Users often have a tendency to trust systems more than they should Auditors must have the ability to validate reports and output and to test the authenticity and accuracy of data and information Audit and control procedures include:
? ? ? ?
Trace a transaction through each processing step by having the capability to examine intermediate data values during processing Print selected records / transactional information Maintain constant balance in the system, especially when financial matters are involved Track the effect of transactions on account balances, prepare journals
? ?
Data / Information should be accurate, timely, reliable and secure. Password levels
1.4 Capacity
? ? ?
Number of files that can be stored; amount each file will hold. Other associated restrictions: files / databases / kind of processing Capacity is also determined by:
?
? ? ? ?
Max size of each record (# of bytes) Max size of file (# of bytes) Max size of file (# of fields per record) # of files that can be active at one time # of files that can be registered in a file directory
System 1: 2 files active at one time; 64000 records per file; 64 fields per record; 1000 characters per field System 2: 8 files active at one time; 64000 records per file; 128 fields per record; 1000 characters per field
?
Example:
? ?
1.5 Vendor Support
? ?
?
Evaluate the services provided As with hardware, it is not enough to know that the quality of the item purchased is adequate. Terms of software maintenance should be detailed:
? ? ?
?
? ?
How frequently will software maintenance be performed? New versions? Charge for updates? Monthly maintenance fee? What does it cover? Custom programming? At what cost? Agreements for controlling increase in maintenance fees? Resolution of disagreements – How? Hours of support available? Mode of communication?
?
The analyst is responsible for asking the questions and getting the answers!
Software Selection
1. 2.
Evaluation of Software Software contracts
2. Software Contracts
? ?
Contract negotiation is a legal process – should involve experts Two types of software contracts:
?
?
Outlining the terms of leasing a software package. If an organization acquires software, they only receive the right to use it for a fee. A paid license allows it to be used indefinitely. However, the purchaser does not own it, and cannot sell the package or distribute copies. Outlining the terms of a custom programming assignment, wherein the organization contracts with and independent agency to produce software. Fixed vs. T&M Ownership & Maintenance Pricing / Split pricing (phased) Protection against changing business environments (eg. What is a company is acquired and changes names – what happens to the contract then? Bankruptcy?)
?
Key aspects:
? ? ?
Decision Matrix
? Allows decision makers to structure ? … then solve their problems by:
? Specifying and prioritizing their needs with a list criteria ? Evaluating, rating and comparing different solutions ? Selecting the best matching solution
? Is usually a part of a Decision Support System (DSS)
? Also helps determine the winning bid / proposal amid all
those sent in response to an invitation
Decision Matrix
COWS Method
C – Criteria
Develop a hierarchy of decision criteria (decision model)
W – Weights
Assign a weight to each criterion based on its importance in the final decision
O – Options
Identify options (solutions / alternatives)
S – Scores
Rate each option on a ratio scale by assigning it a score
Decision Matrix
Example
C – Criteria
C1, C2, C3
W – Weights
C1 – 1, C2 – 2, C3 - 3
Measurements? • Ratio Scale (0-10, 0-50, 0-100) • Point Scale (max speed, temperatures) • High values => Bias
O – Options
Provider A, B, C
Decision Matrix - COWS
? 2-dimensional, L-shaped matrix ? Compute scores
Score = Rating x Weight and then Total Score = SUM(Scores)
Decision Matrix - COWS
? Scenario # 1
Decision Matrix - COWS
? Better interpretation - Histograms ? Data Source – Ratings and Scores of evaluated solutions
Decision Matrix - COWS
Solution Ratings ? In terms of ratings, both B and C are equivalent, and outperform A ? B is better than C for criterion C3, but weaker on C2 ? C is more evenly distributed across all three criteria Therefore, ? Option B is usually called a best-ofbreed solution ? Option C is a typical suite or integrated solution
Decision Matrix - COWS
Solution Scores ? B – Higher weight applied to its strength and lesser to weakness, resulting in first place. ? We have here an interesting example of a battle opposing 2 alternatives at first sight equivalent, but one showing an explicit differentiated strength against another solution that spreads its strengths more evenly. ? This battle is called:
? The One versus The Best ? All-in-one versus Best-of-Breed ? Suite versus Best-of-Breed ? Best-of-Breed versus Integrated
Decision Matrix - COWS
Solution Scores ? Solution: No real answer ? “It depends” ? Depends on?
? Contextual needs (Could lead to choosing one solution over another)
? Whatever the path chosen, the decision matrix won’t be of any help in this matter, but raising the concern.
? You will have to decide what’s best for the enterprise
…. Let’s look at what would happen should your priorities change …
Decision Matrix - COWS
Importance of weight in the final decision ? Relative importance / effectiveness of weights coupled with ratings ? Let’s use the same example, and play with weights, given the ratings stay the same….
• In scenario # 1, weights were distributed as 1, 2 and 3 for C1, C2, C3 respectively. • Let’s increase the second weight from 2 to 3…
Decision Matrix - COWS
Scenario # 2
Decision Matrix - COWS
Scenario # 2
Decision Matrix - COWS
Solution Ratings ? Ratings don’t change since solution capabilities remain the same. Solution Scores ? B and C – Globally equivalent in their ratings, and now have equal weights, therefore they’re pretty much equilevel. ? However, as you may notice, their internal differences remain
Decision Matrix - COWS
? Now, let’s keep the 2nd weight as 3, and decrease the 3rd weight from 3 to 2 ? Scenario # 3
Decision Matrix - COWS
? Scenario # 3
Decision Matrix - COWS
Solution Ratings ? Ratings still don’t change since solution features and benefits stay the same. Solution Scores ? B and C were at the same effective levels earlier, but the new weights inhibit what appeared to be a strength for B in criterion C3 earlier. ? Indeed, a lesser weight was applied to its strength, and a higher weight to its weakness, resulting in losing the first place to Option C. ? In this particular context, the more integrated the solution, the better it is.
Decision Matrix - COWS
Conclusion ? Recap of the 3 scenarios with the respective weights… ? Be careful in your interpretation of the result you get using a decision matrix. ? Indeed, you have to question the validity of the path you took to reach the conclusion you found. ? To challenge each step of your decision cycle:
? Sensitivity Analysis ? Robustness Analysis
doc_809822535.pptx