Question

Development Strategies

Lucas is a proud owner of a small grocery store wherein he keeps track of his business transactions and records on his own personal computer. Using his knowledge, he was able to create a database to keep track of the inventory which is manually updated. Using his self-devised system, he was able to track expenses and do the payroll for his employees. The business itself has grown out of proportion and Lucas decided to install a software to handle all his business transactions.

Lucas decided to hire you, a software designer, to help him plan and design a system for his grocery store using an object-oriented approach to create the business function models and requirements specifications. He tasked you to analyze whether to design an in-house system or to buy a commercial software. After thorough research regarding the pros and cons of an in-house system and a commercial software, you presented a known software known as iGrocery which provides all the needs of Lucas’ grocery store system. Lucas is uncertain if he will push through with the commercial software due to budget constraints but are still open to the possibility of shifting to a new system due to improved customer quality, better records management, and increase productivity. As the owner, Lucas estimates that all these benefits will add up to Php 6,000.00 per year; regardless if your developed system is developed in-house or procuring of the commercial software iGrocery.

You compared all relative costs to establish the total cost of ownership over the life span of the system and have presented the following to Lucas:

In-house Development Option

• The system will have a six-year life span.
• The developed system will be extremely flexible and easy to maintain.
• Preliminary Installation costs are Php 15,000.00; which includes the development and configuration of the system.
• The cost of loading the existing data from the old system is Php 1,000.00.
• The owner can handle their daily expenses with at no additional cost.

iGrocery Commercial Software Option

• This system will have a four-year life span.
• There are reviews about the software regarding its poor features which needs further customization.
• The software is less flexible compared to an in-house system.
• The cost of purchasing the software is Php 8,000.00.
• The installation fee for the software is Php 1,500.00
• The loading of the existing data in the software is Php 2,500.00
• An additional amount of Php 1,000.00 is charged for additional hardware needed in the system.
• The commercial package offers free support for the first year but charges a Php 2,000.00 annual fee.

Tasks:

1. Create a detailed table listing down the advantages and disadvantages of the in-house development system with respect to the commercial software option and vice-versa (2 points)
2. Compute for the return of investment for the in-house development option (2 points)
3. Compute for the return of investment for the iGrocery commercial software option (2 points)

Answer 1

Above picture answers ROI of both the process.

As we have understood above There are two types of software settings which can be implemented. So the first his in-house software development and the other one is the commercial software development. We start analysing advantages and disadvantages of both the systems there can be few pros and cons on either side of the developing methods. So let's discuss each of the points in detail with respect to both the developing processes.

1. One of the prominent point of developing a software it in house is the cultural fit when the developers sit within the premises of the office they are more exposed to the culture of the company also they can be reached out directly which is not possible in case of commercial software development. When they are working together they can pay more attention to the client and also they are more readily available all the time. It motivates them to work and bring the best results.
2. Now when the work face to face and sit in front of us, It is easier for the company to convey the messages and avoid any miscommunication. Any requirement can be directly communicated and the chances of miscommunication through emails and indirect communication will be reduced.
3. Now as the availability of the developers or the IT professionals working on the software has increased it in turn increases the efficiency and also the time required to make any change. Any changes required can be communicated quickly as they are sitting with us in the same premises and those changes can be implemented quickly as well so the time pertaining to any change would be decreased drastically.
4. The major disadvantage of in-house software development is the cost that may arise because of buying different infrastructure and the workforce for the technical team. The high cost impacts directly on the revenue that would be generated or could have been saved while in case of commercial software development. The infrastructure cost is equally high and affects the revenue as well.
5. Not only the cost the management of staff in the technical side is also not that easy it requires extra deployment of workforce and the hiring system. Sometimes it is very difficult to extract the best technical talent out of a region says it is not always preferable or easily available in all the areas of the country.

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