Transitions in Information Systems Development: SME's Issues and

Challenges

Lakshminarayana Kompella

School of Management, National Institute of Technology Warangal, Warangal, Telangana, India

Keywords: Small and Medium Enterprises, Product Architecture, Product Development, Requirements Engineering.

Abstract: Organizations experience external pressures such as changing technologies and faster time-to-market, which

drive them to make changes. We can refer to these changes as transitions. The organizations that use cloud

infrastructure leverage faster application availability at reduced cost and pay-per-usage of features advantages

to reduce their total cost of ownership (TCO). TCO manifests as external pressure on organizations that

develop on-premises software applications. To stay competitive, these organizations either need to migrate

their applications to the cloud or change their existing on-premises software application. This paper considers

the latter of bringing changes for a successful transition. The software application development involves social

and technical aspects, and change must include both these aspects. To examine the change as a phenomenon,

we need to examine it in its settings, and a case-study method is best suited. The selected case is a Small and

Medium Enterprise (SME) with on-premises application development in human capital management. The

findings indicate that agility is necessary to stay competitive. For agility, across different stages of its value

chain, associated contexts come into play, which requires appropriate social and technical changes and not

necessarily migrate to cloud-based development. To reduce TCO, a change in the form of adopting open-

source technologies is a necessity. Further, for the changed on-premises application to provide

competitiveness, apart from managing prevalent external pressures, the organization must manage debt, which

comprises technical and social changes.

1 INTRODUCTION

Cloud-based information technology (IT), since its

inception, developed and matured to provide a range

of services, systems, applications, and mobile

computing services. These provide savings to an

organization's upfront capital expenses (Attaran et al.,

2019), seen in government scenarios (Jones et al.,

2019). Cloud infrastructure providers' elastic increase

of resources meets peak-load capacity, faster

implementation, self-provisioning, and easier access.

They contend that outsourcing these services

outweighs internal operating costs; however, these

require careful evaluation (Brabra et al., 2018).

Brabra et al., (2018) contend that especially for

organizations that use their resources and host them

https://orcid.org/0000-0003-0190-7694

The organization develops the application using web

technologies and hosts it in its datacentre, accessible to users over

the Internet. As compared to cloud infrastructure services, its

datacentre provides limited elasticity of storage, computing

on their premises

, to compete effectively, they need

to manage the total cost of ownership (TCO). TCO

decides the price, considered prominent by the

marketplace. Apart from cost rationalization, external

pressures drive competitiveness. These are changing

technologies (security, architecture, virtualization,

visualization, and so forth), societal trends

(institutional change, globalization, privatization, and

so forth), human elements (privacy, identity, access,

trust, confidentiality, and so forth), and local

government regulations (Kompella, 2017). The

external pressures are a source of a trigger to bring

changes, i.e., transitions. This paper examines

changes by considering information systems

development. In doing so, include information

management, development methodology,

requirements engineering (RE), and a range of

resources, and self-provisioning to the users. In this paper, the

author refers to such hosted applications as on-premises and

applications that use cloud infrastructure as cloud based.

Kompella, L.

Transitions in Information Systems Development: SME’s Issues and Challenges.

DOI: 10.5220/0010516904130420

In Proceedings of the 23rd International Conference on Enterprise Information Systems (ICEIS 2021) - Volume 2, pages 413-420

ISBN: 978-989-758-509-8

413

customers under consideration. Apart from these,

interaction, complexity, collaboration, risk

management, cooperation, and workforce ratio

(personnel in development and operations) are

necessary during information systems development.

We can use multi-level perspective (MLP) and

analyze information systems development and its

response to external pressures. Kompella (2017)

examined it for E-Governance. MLP conceptualizes

the system in three levels, where external pressures

act at macro and niche-innovations at micro-levels.

At the intermediate level meso, organizations select

niche-innovations from the micro-level, shape their

organizational systems better to adapt their IT

systems to the external pressures. This shaping and

selection logic decides their ICT innovations

adoption, in turn, their transition success.

The application development factors comprising

upstream (architecture and RE), downstream

(software development methodology and

deployment), and organizational (interaction and

complexity, tools used, culture, growth plans, and so

forth) span the entire value chain decide the shaping

and selection logic and TCO. Therefore, we need to

identify appropriate factors for a significant TCO

reduction and make necessary social and technical

changes along the entire value chain. The changes are

not bereft of challenges and based on the

improvements attempted and the stage in the value

chain associated contexts coming into play.

Nevertheless, the changes apart from improving their

value chain and TCO improve the TCO of

organizations' using their products/services.

This paper considers the entire value chain of a

Small and Medium Enterprise (SME). The SME

attempted to transition from Business Process

Outsourcing (BPO) on-premises applications'

software development. The transition demanded

considerable changes to its existing architecture,

technology, and development process.

The paper's composition is as follows - the next

section discusses the factors that drive organizations

to use cloud-based applications. Section 3 discusses

the social and technical aspects that help examine the

changes to effect successful transitions and form the

paper's theoretical basis. The subsequent section

discusses the research methodology. Section 5

examines the selected organization's social and

technical changes, followed by section 6, which

contrasts the approach and subsequent steps. Finally,

the last section concludes the paper with its

limitations and directions for future work.

2 LITERATURE REVIEW

The on-premises application development

organizations compete with cloud-based application

development organizations. Therefore, reasons for

cloud transition and adoption can provide insight into

necessary on-premises changes. The period of on-

premises changes selected for this study is 2015-16;

therefore, during 2005-2016, gathered information on

cloud transitions and adoption.

Transition to cloud emphasizes security, privacy,

reliability, sharing, hybrid cloud, and collaboration

(Phaphoom et al., 2015) and (Senyo et al., 2018). In

scenarios where service delivery efficiency,

effectiveness, and cost are required, cloud-adoption

improved UK public sector service delivery (Jones et

al., 2019). We can infer that by including other

aspects, we can enhance cloud adoption. Better

adoption was noted by considering organizational

policies around security and standardization (Lin and

Chen, 2012), the full context of the environment, and

performance trade-offs while implementing

encryption security features (Chang et al., 2016). We

can summarize that decision to adopt cloud requires

addressing diverse managerial and technical aspects.

The transition from on-premises to cloud-based

requires decisions on technological acceptance and

trajectory, business models, absorptive capacity,

flexibility in operations (Kranz et al., 2016). As

organizations connect with the environment, can

improve knowledge management (Palacios-Marqués

et al., 2015), and usage can improve collaboration and

communication (Chang et al., 2016). Therefore, as

organizational capabilities and applications work in

tandem, they can improve their operational

flexibility, service delivery effectiveness and

efficiency, and sensitivity to upstream and

downstream processes. In other words, whether it is a

cloud or on-premises application, it is essential to be

responsive to both upstream and downstream

processes.

The requirements determine the value, but

architecture decides the cost, schedule, and the extent

to which software adapts to later requirement changes

(Boehm, 2000). A dynamic, flexible, and responsive

RE can develop sensitivity into both the upstream and

downstream activities. When upstream and

downstream processes have the right social and

technical changes, RE's sensitivity turns into agility.

In doing so, can effectively manage the transition of

information systems development. This study

considers all these, and the next section discusses the

theoretical underpinnings necessary to bring agility in

software development and deployment.

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3 THEORETICAL PERSPECTIVE

The value chain for a software development

organization comprises upstream and downstream

processes. The architecture and RE are upstream,

while downstream is software development. Both the

processes decide the organization's TCO. In their

endeavour to respond to external pressures,

eventually reduce TCO, they rearchitect monolithic to

modular and transition from waterfall to iterative

methodology. In doing so, make associated cultural

changes. This paper examines the extent to which

architecture displays software product lines (SPL)

characteristics such as multiple cores and varying

features, reuse of assets, and modularity. It also

examines the extent to which downstream processes

assist in exhibiting SPL characteristics. The

subsequent subsections discuss the key

underpinnings necessary to examine SPL

characteristics.

Product Architecture and Requirements

Engineering. The modular and integrative

architectures play a decisive role in managing

technological changes and delivering innovative

products/services. When organizations stay

competitive, play on cost reduction, which can result

in technology not evolving. On the contrary, when

they use continuous innovation and incorporate the

latest technologies into their final product, it results

in a dynamic, flexible, and evolving product

architecture. Park (2014) suggests that modular

architectures help develop a platform that encourages

reuse at a large-scale with multiple cores and varying

features—thereby enabling us to focus on cost and

platform leadership and strive for market supremacy

and leadership. An architecture-centric development

attempted in other industries before finding useful in

software is SPL. (Hohl et al., 2017) contend that it

emphasizes meeting three key requirements 1)

architectural design of new applications in product

lines, 2) development of reusable core assets to

develop new product lines, and 3) permit analysis to

assess the impact, especially on cost, time-to-market,

maintainability, large-scale productivity gains, and

use of human resources to sustain unprecedented

growth. As suggested by Hohl et al., (2017), we can

attempt SPL by following proactive development of

reusable components (assets developed upfront are

heavyweight), reactively (acquire assets on time

during production), use distinct organization teams to

develop reusable assets, usage of reusable assets.

As organizations focus on developing products

based on SPL, they need to manage both market-

oriented and technical input. Bashroush et al., (2017)

suggest that product management can manage both

market-oriented and technical inputs. Product

management performs functions such as positioning

the product, aligning corporate strategy and the

products, marketing instruments (product, price,

place, and promotion), and communication with

sales, customers, and suppliers. When managing

market-oriented and technical input, product

management needs to focus on market-driven product

development (MDPD). As in MDPD, unlike bespoke

development, a single customer does not decide its

features. Dzamashvili Fogelström et al., (2010)

suggested that the market investigation and business

intelligence need to accomplish RE's elicitation

phase. In the endeavor to meet customer's wants-and-

needs, the product management needs to balance

different requirement types, the trade-off between

technology-push (future needs) and market-pull

(existing customer needs), and release planning

(triaging and prioritizing diverse initial

requirements). The scope of the release and its

evolution must reflect in the upstream activities such

as corporate strategy, sales, revenue, market growth,

and ability to create and maintain a flexible

architecture. When the upstream and downstream

activities align, the scope evolves and contributes to

multiple product releases leading to a product and

organization's success. Notwithstanding, we need to

consider development teams' capabilities to refactor,

update, and correct after-the-fact activities. After-the-

fact activities include defects, involuntary (scope

creep) and voluntary (change in assumption), missing

of requirements, and so forth.

Agility in Software Development and Deployment.

The faster time-to-market and responsiveness are

reasons organizations adopt the Agile methodology

(Agile, 2001). Dzamashvili Fogelström et al., (2010)

contend that Agile methods (Agile, 2001) are bespoke

and unsuitable for MDPD. To develop products for

mass customers, Dzamashvili Fogelström et al.,

(2010) suggest that ASD requires a considerable

amount of tweaking to 1) accommodate

heterogeneous communities, 2) to consider long-term

product maintainability, 3) associated architectural

changes, 4) update release plan to include features

that address time-to-market, 5) understanding of the

value and 6) assumptions about requirements. Using

continuous integration (CI) and continuous

deployment (CD), we can further improve upstream

and downstream orchestration. Fitzgerald and Stol

Transitions in Information Systems Development: SME’s Issues and Challenges

415

(2017) researched the transition from CI to CD and

suggested a holistic view of business, development,

operations, and innovativeness. Organizations have

avenues to choose and orchestrate their upstream and

downstream activities that require appropriate social

and technical changes. The chosen avenues and the

appropriate changes influence their products/services

and their successful competition in the marketplace,

thereby, their transition.

4 RESEARCH METHODOLOGY

The organizational changes as responses to external

pressures need to reduce TCO and influence its entire

value chain, thereby assisting in staying competitive.

Therefore, the selected organization needs to provide

the required dynamics and complexities at different

stages of its value chain. The study's scope examines

the transitions in information systems development;

hence, a single case-study, as mentioned by Yin

(2009), is appropriate. The selected organization is

COMP-XLL (real name is made anonymous). The

JSP-based application (technology), acquisitions,

cost per payslip, managed services, architecture as

shown in Figure 1, and footprint (9 million annual

payslips for 400 customers spread across 17

countries) provided the required dynamics and

complexities. The study objects are the departments

of COMP-XLL involved in application development.

The analysis unit is the groups involved in application

development, associated processes, products, and

technology.

The author worked as an observer in COMP-

XLL from 01/2015 till 08/2016 and provided inputs

for their transition plans. The author conducted

fieldwork close to the study objects and involved

respondents who were decision-makers during

software development and at various customer

engagement stages from response-to-proposal to end-

user acceptance. It involved gathering information

around COMP-XLL's approach to transitioning and

the finalization of the plan. It involved various

avenues such as semi-structured interviews, technical

reports, archives, records, meetings, media reports,

and written sources. Data collection from diverse

information sources helped achieve construct

validity. The purposive sampling assisted in selecting

respondents for the semi-structured interview. It

ensured that respondents represent at least one

business unit, and no business unit is left

unrepresented; moreover, it ensured that respondents

are at various business units. The respondents

involved COMP-XLL's leadership team consisting of

the Chairperson, chief Technology, human resources,

sales and marketing, operations, and finance officers.

The interviewee respondents extended to directors,

architects, senior managers, and managers from the

technology, operations, and human resources

departments. The author spent around seven to nine

months gathering information.

While firming up the transition plan, the COMP-

XLL team referred to technical reports and other

relevant reports related to database, development

environment, automation tools, and so forth and

formed part of the fieldwork. The notes were the

output of the fieldwork, which provided material for

open and axial coding. The output of open and axial

coding was categories and patterns mapped to

constructs in the section' Theoretical perspective.'

The coding and mapping assisted in achieving

triangulation. This exercise resulted in specific

expressions to develop explanations for causal effect

relationships, thereby, internal validity. The case

findings are from a single case of on-premises

application; therefore, the findings' external validity

applies to similar organizations.

Figure 1: Current application architecture along with

database and its instances. Source (Oracle, 2015).

5 ANALYSIS

5.1 Existing Operations and

Workplace Culture

The selected organization wants to transition from

providing BPO services to a technology-based and

provide offerings comprising products/services. It

requires changes at social and technical levels. It also

requires changes to the underlying approaches to RE,

such as from bespoke to MDPD. To compete in the

marketplace, COMP-XLL redefined its business

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direction; the following statement from Chairperson

summarizes COMP-XLL's direction

"Organization to fast transition from HCM BPO

to a technology-centric one." – The Chairperson of

COMP-XLL.

The author conducted qualitative research

immediately after the COMP-XLL took over from the

MNC before initiating the social and technical

changes. The remaining of this subsection highlights

the operating dynamics using excerpts gathered

during the semi-structured interview.

The teams' sales, product management, and

operations performed requirements elicitation while

the technology team used waterfall-based software

development. The technology team focused on

support activities; due to changing priorities, it

focused more on support activities and not revenue-

generating activities.

The sales and operations teams gathered

requirements, but the lack of effective RE

complicated the inter-departmental operational

dynamics. The subsequent part of this section

highlights the inter-departmental operational

dynamics with quotes from the interviewees.

"The backbone of operations is technology.

Without technology support, we cannot meet our

targets." – An operations manager and part of the

leadership team.

"Infrastructure and software applications

invariably fail during peak loads and happens every

year; moreover, the technology team does not

address issues immediately." – A manager of the

operations team.

"We need the technology team to participate in

customer conference calls and provide reasons when

the operations team deliverables get delayed." – A

manager of the operations team.

"Operations team does not communicate clearly

during the requirements gathering phase and user

acceptance testing; they make noise when customers

complain." – A manager of the technology team.

"While committing enhancements with customers,

we require the technology team to participate; they

frequently display their unwillingness." – A manager

of the operations team.

Apart from the above, managing and engaging

human resources also added to the operational

dynamics. The following remark from managers in

the technology and human resources team

summarizes the dynamics.

"A consistent policy in the recruitment of

resources is missing, sometimes, contractors

onboard, in three months, the cost becomes a key

component resulting in the release of the new

contractors. We only ended up training them on our

products." – A manager of the technology team.

"Services from the human resources department

are only for recruitment, onboarding, and on special

occasions, we connect with employees." – A manager

of the human resources team.

The COMP-XLL based its transition plans on

payroll and non-payroll classifications of HCM space

and Everest Group's assessments by Basak et al.,

(2014) and (2015). Basak et al., 2015) placed COMP-

XLL in the second category of the three-group

classification in their assessment. They forecasted

payroll operations, especially multi-country, to grow

at 20% and reach US $1.2 BN. On non-payroll, Basak

et al., (2014) placed COMP-XLL in the first category

of the three-group classification. Both to stay ahead

of the competition and gain market share suggested a

wide spectrum of product offerings, mobility,

analytics, and dashboard. The next subsection

discusses the transition activities of COMP-XLL.

5.2 Modified Product Architecture and

Associated Workplace Mechanisms

Oracle, specifically for the cloud, launched database

version 12c with CDB and PDB. COMP-XLL

modified its architecture to include container

database (CDB) and pluggable databases (PDB).

Their architectural changes focused on displaying the

SPL characteristics. Figures 2 and 3 depict the CDB,

PDB, and modularity of their modified architecture.

In pursuit of their modularity, COMP-XLL followed

a phased approach, as depicted in Table 1. The

modularity assisted COMP-XLL in combining

products that complement one another and form

product families. These are 1) payroll, 2) benefits

management, 3) strategic human resource

management, and 4) workforce administration. A

phased approach was also the approach to expand its

market share. The first phase contained payroll, while

the second phase focused on combining the second

phase components of Table 1 with product families.

To address evolving release scope, bespoke

development, and reduced turnaround time, it relied

on DevOps, Agile methodology, and changes to its

horizontal organization structure. COMP-XLL used

DevOps principles suggested by Bang et al., (2013)

and the digital competence framework of Vieru et al.,

(2015). It relied on principles- feature orientation and

reactive development based on expert judgment.

These principles required imbibing new methods

such as collaboration, teamwork, and reduction of

Transitions in Information Systems Development: SME’s Issues and Challenges

417

Figure 2: Application, platform, and associated

components. Platform components in two phases are in

shades of grey.

isomorphic teams and displayed these. However, there

were instances where it struggled to display advanced

Agile constructs such as shared decision-making,

shared mental models, and self-managing teams.

In the second phase, while expanding market

share expansion, the emphasis shifts towards release

content instead of evolving release plan. The social

changes necessary for advanced constructs of Agile

methodology further increase the complexity.

The TCO reduction changes comprised retaining

resources in the department, using automation to

reduce the data setup activities (or preparation time)

and the application setup time, and depicted in Tables

2 and 3. They extended automation for testing and

continuous integration with Selenium

and Jenkins,

respectively. This orchestration enabled them to

automate repetitive tasks, reduce turnaround time and

restrict manual intervention to monitor and raise

alarms and address exceptions.

Table 1: Platforms Product Components and the phases.

Phase Components Remarks

First user experience,

reports, and

integrations

User experience for

mobile and web, while

integrations are for

external products

Second workflow

automation,

configuration/

customization, Big

Data, and analytics

It requires equal

consideration of technical

and marketing inputs.

Selenium is used to automate web applications testing and web-

based administration tasks.

Jenkins is an open-source continuous integration tool written in

Java.

HRMS (Human Resource Management System).

Figure 3: A diagrammatic sketch of the application &

multitenant database architecture.

Table 2: Key business unit contributions for $ 1 cost.

Business Unit % # of

people

Remarks

Operations 0.38 400

Perform managed

services include setup

and migration.

Sales &

Product

Management

0.2 30

Sales; solutions to

customer problems

Technology 0.13 80

Develop products,

change requests, and

corrections

Real Estate 0.13 10 Administration

Infrastructure

0.10 10

Network and other

activities

EBIT 0.06

Table 3: Software Applications and preparation time.

Application

(preparation time)

Time in days

Config Migrate

Payroll (20-30) 10-15 10-15

HRMS

(35-45) 15-20 20-25

PMS

and LMS

(10-15) 5-7 5-8

L&A

and T&A

(30-35) 15-20 10-15

Exit Management (10-15) 4-7 6-8

PMS (Performance Management System)

LMS (Learning Management System)

L & A (Leave and Attendance).

T & A (Time and Attendance)

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6 DISCUSSIONS

Organizations face external pressures and reasons for

transitions. With the advent of cloud infrastructure

services, on-premises organizations weigh their

transition options. The options are the cost of

acquisition, existing customer base, prospective

customers they foresee, and the architectural

components. The aspect porting of their existing data

and applications and resilience displayed by their new

application like its predecessor further challenge their

transitions. We can use MLP to conceptualize the

transitions and analyze challenges and the resulting

agility. It requires examining the shaping and

selection logics followed at the meso and micro-

levels, this paper's focus. The paper's scope examined

the challenges when an SME wants to modify its

application and its development according to the

shaping and selection logic.

Acquiring applications and venturing into a new

business or customer segment is a strategy widely

followed by organizations. Nevertheless, to continue

meeting customer wants-and-needs and achieving the

desired agility and TCO reduction, organizations

must include the entire value-chain in their shaping

and selection logic. The value chain involves

upstream and downstream processes and specific to

organizations. For example, multiple providers' cloud

infrastructure requires new computing architectures

and changes to data center centralization and services

if applications adopt cloud systems on the multi-

layered framework of current security technologies

(Chang et al., 2016). Organizations need to reconcile

their shaping and selection logic with their transition

timelines which are, invariably, of long duration. The

reconciliation involves retaining market share,

accommodating scope changes and associated

roadmap changes. One approach is continuous or

'block planning.'

Before this transition, COMP-XLL never

performed any transition of magnitude and scale

presented in this paper. So, they worked out a phased

approach (or roadmap). The first phase considered the

duration required to internalize the organization's

changes and prioritize components that are

prerequisites for the subsequent phases. It aimed to

harness the fallout agility of its first phase in the

subsequent phases. As presented in this paper, the

debt need not be technical alone and involves social

and influences shaping and selection logic. So, if

organizations do not respond to external pressures

and the debt, they can accumulate debt, which results

in reduced agility and impacts their roadmap. COMP-

XLL, in its subsequent phases, wants to combine

product lines with MDPD. It may also necessitate

'block planning' and develop a roadmap based on

external pressures, frequently refactor debt, and value

chain activities. The frequent refactoring of plans and

changes with appropriate shaping and selection logic

decides an organization's agility or the extent to

which they dynamically adapt to external pressures.

This study contributes to the transition theory by

examining the meso-level activities that contribute to

organizational agility. It considered both the upstream

and downstream processes with associated social and

technical changes.

7 CONCLUSION

This paper examined an SME's meso-level responses,

especially information systems development, to

obtain insights into its transition and shaping and

selection logic. It uses on-premises applications and

competes with cloud-based organizations. It devised

a phased transition. In doing so, they attempted agility

by prioritizing upstream and downstream activities of

its entire value-chain and devised social and technical

changes. We can construe its shaping and selection

logic of addressing debt and harness its first phase's

fallout agility in subsequent phases. Along with

external pressures, it is essential to continuously

manage debt if it wants to further leverage its agility

and transition. The findings assist transitions of both

on-premises and cloud-based application

development organizations.

Since this paper used a single case study, there are

limitations in the generalization of results, i.e., similar

organizations. The author did not verify the cost

implications (cost per payslip) that the COMP-XLL's

leadership team envisaged for their managed services

and self-managed products. By examining the cloud

infrastructure provider's cost calculations, we can get

further insights on making changes to existing

applications or migrate to the cloud. This paper

examined changes with Agile methodology and

MDPD and did not test it in different contexts and

diverse organizations. After changing the processes

and architecture, it did not consider feedback from

respondents. It did not examine the extent to which

the changes assisted in dynamically adapting to

external pressures. All these can add further insights

to the findings.

Transitions in Information Systems Development: SME’s Issues and Challenges

419

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