September 25, 2020

SB-Accounting

Accounting + Finance Blog

Methods of acquiring an Information System

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Acquiring Information System (IT) can be a daunting task. Especially if you have little or no knowledge of the method system to acquire. In general, there are two methods to acquire this system.

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1. Acquisition by building an in-house customised system
2. Purchased Programmed commercial system from vendors

In-house System

An entity can build its own information system. Here the entity will employ the service of a system designer and software developers as well as system security specialist and administrator.

Building an in-house system is for an organisation with unique and frequently changing data needs. Small businesses cannot build an in-house system. The reasons are the huge cost of building it, the maintenance cost and employee cost.

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However, large companies, especially multinationals can afford an in-house system. This is possible as the same IT will be used for all offices worldwide.

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The commercial system purchased from vendors

An entity either small or large may decide to buy a commercial system. Most commercial systems are universal. That is, it can be used by any entity both service and product firms. While others are industry base system.

Entities go for commercial system especially if their processes and activities are standardised. Or if the IT can be standardized to suit the entity’s needs.

There are three types of commercial systems

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Turnkey system

Here, the commercial system is a general or multipurpose system that can fit into any entity. It can also be a system for a specific industry. In any case, it is a standardised system that cannot be adjusted by the user to suit the entity concern.

A good turnkey system will allow the user to customize its inputs, outputs and processes. But cannot configure it to suit the particular organization. The business will, therefore, adjust its needs to suite that of the system. QuickBooks and Sage 50 are good examples of the Turnkey system.

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Backbone system

This commercial system allows the user to add flesh to the system’s structure. This means that the system is already programmed in a way that allows the vendor to adjust the interface to meet unique user needs. It is seen as a compromise between a turnkey and customised systems. However, it is more expensive.

Customized system

In a customized commercial system, the vendor built a unique system and sells to the user. A customized system is similar to a built in-house system. The difference is that in an in-house system, the user will employ information technology staff to handle the maintenance of the Information system.

However, in a customized system, the user purchases the system while the vendor does the maintenance of the system. The user does not need to employ system development staff.

Conclusion

Acquiring Information system is expensive, therefore, management needs to decide which method suite the entity.

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