14.1 © 2007 by Prentice Hall 14 Chapter Project Management: Establishing the Business Value of Systems and Managing Change

14.1 © 2007 by Prentice Hall

1414ChapterChapter

Project Management: Project Management: Establishing the Establishing the

Business Value of Business Value of Systems and Systems and

Managing ChangeManaging Change

Project Management: Project Management: Establishing the Establishing the

Business Value of Business Value of Systems and Systems and

Managing ChangeManaging Change


LEARNING OBJECTIVES

Management Information SystemsManagement Information SystemsChapter 14 Project Management: Establishing the Business Value of Chapter 14 Project Management: Establishing the Business Value of

Systems and Managing ChangeSystems and Managing Change

• Identify and describe the objectives of project management and why it is so essential in developing information systems.

• Compare models for selecting and evaluating information systems projects and methods for aligning IS projects with the firm’s business goals.

• Evaluate models for assessing the business value of information systems.


LEARNING OBJECTIVES (cont’d)



• Analyze the principal risk factors in information systems projects.

• Select appropriate strategies for managing project risk and system implementation.


A.G. Edwards Turns Around Its Project Management

• Problem: Competitive, information-intensive industry.• Solutions: Identify important projects and plan and

monitor them appropriately to reduce costs and increase revenue.

• Primavera project management software increases success rate of IS projects.

• Demonstrates IT’s role in reducing projects costs and completion times.

• Illustrates digital technology as a key to assessing the business value of building new systems and managing the changes that result from new technology.




The Importance of Project Management

• There is a very high failure rate among information systems projects

• The development of a new system must be carefully managed

• The way a project is executed is likely to be the most important factor influencing its outcome.





• Runaway projects and system failure

• How badly are projects managed ?

Private sector projects are underestimated by one-half in terms of budget and time required to deliver the complete system promised in the system plan.

Delivered with missing functionality

Only 29% of all technology investments were completed on time, on budget, and with all features and functions originally specified

Between 30-40% of all software projects are “runaway projects” that far exceed the original schedule and budget projections and fail to perform as originally specified.





• The system produced by failed information projects are often not used in the way they were intended, or they are not used at all.

• Users often have to develop parallel manual systems to make these system work.

• A system may be designed with a poor user interface

• User interface : is the part of the system with which end users interact.

• For example: as online input form or data entry screen may be so poorly arranged that no one wants to submit data or request information. System outputs may be displayed in a format that is too difficult to comprehend





• Web site may discourage visitors from exploring further if:

• Web pages are cluttered and poorly arranged

• Users cannot easily find the information they are seeking, or if it takes too long to access and display the Web page on the user’s computer.

• Data in the system may have a high level of inaccuracy or inconsistency.

• The information in certain fields may be erroneous or ambiguous, or it may be organized properly for business purposes.

• Information required for a specific business function may be inaccesible because the data is incomplete.







Consequences of Poor Project ManagementConsequences of Poor Project Management

Figure 14-1

Without proper management, a systems development project takes longer to complete and most often exceeds the allocated budget. The resulting information system most likely is technically inferior and may not be able to demonstrate any benefits to the organization. Great ideas for systems often flounder on the rocks of implementation.



• Project management objectives

• Project : a plan series of related activities for achieving a specific business objective.

• Information system projects include:

The development of new IS

Enhancement of existing systems

Upgrade or replacement of the firm’s IT infrastructure





• Project management objectives

• Project management refers to application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints.

• Five major variables in project management

1. Scope

2. Time

3. Cost

4. Quality

5. Risk






1. Scope

defines what work is or is not included in a project.

2. Time

the amount of time required to complete the project.

3. Cost

is based on the time to complete a project multiplied by the cost of human resources required to complete a project. IS project costs include the cost of hardware, software, and

work space. PM develop a budget for the project and monitor ongoing project expenses.






4. Quality

an indicator of how well the end of result of a project satisfies the objectives specified by management.

The quality of IS projects usually boils down to improved organizational performance and decision making.

5. Risk

potential problems that would threaten the success of a project.





• Project management activities:

Planning the work

Accessing risk

Estimating resources required to accomplish the work

Organizing the work

Acquiring human and material resources

Assigning tasks

Directing activities

Controlling project execution

Reporting progress

Analyzing the results




Selecting Projects

• Management structure for information systems projects

1. Corporate strategic planning group

2. IS steering committee

3. Project management

4. Project team




Management Control of Systems ProjectsManagement Control of Systems Projects

Figure 14-2 Each level of management in the hierarchy is responsible for specific aspects of systems projects, and this structure helps give priority to the most important systems projects for the organization.

Selecting Projects




Selecting Projects

• Management structure for IS projects

1. Corporate strategic planning group

responsible for developing the firm’s strategic plan, which may require the development of new systems.

2. IS steering committee

The senior management group with responsibility for system development and operation.

Composed of department heads from both end-user and IS area.

Review and approve plans for systems in all divisions

Seeks to coordinate and integrate systems

Involved in selecting specific IS projects.




Selecting Projects

Management structure for IS projects (cont.)

3. Project management

Composed of IS managers and end-user managers responsible for overseeing several specific IS projects.

4. Project team

Responsible for individual system projects

Consists of system analysts, specialists from the relevant end-user business areas, application programmers, and database specialists.




Selecting Projects

Management structure for information systems projects

Linking systems projects to the business plan

Enterprise analysis and critical success factors

Portfolio analysis

Scoring models




Selecting Projects

• Linking systems projects to the business plan

IS plan : supports their overall business plan and in which strategic systems are incorporated into top-level planning.

The plan serves as a road map indicating the direction of system development (the purpose of the plan), the rationale, the current systems/situation, new developments to consider, the management strategy, the implementation plan, and the budget.

The plan contains a statement of corporate goals and specifies how IT will support the attainment of those goals.




INFORMATION SYSTEMS PLAN

1. Purpose of the Plan

Overview of plan contents

Current business organization and future organization

Key business processes

Management strategy

2. Strategic Business Plan Rationale

Current situation

Current business organization’

Changing environments

Major goals of the business plan

Firm’s strategic plan




INFORMATION SYSTEMS PLAN (cont.)

3. Current systems

Major systems supporting business functions and processes

Current infrastructure capabilities: hardware, software, database, telecommunication and Internet

Difficulties meeting business requirements

Anticipated future demands

4. New developments

New system projects: project descriptions, business rationale, applications’ role in strategy

New infrastructure capabilities required: hardware, software, database, telecommunication, and Internet





5. Management strategy

Acquisition plans

Milestones and timing

Organizational realignment

Internal reorganization

Management controls

Major training initiatives

Personnel strategy

6. Implementation Plan

Anticipated difficulties in implementation

Progress reports





7. Budget requirements

Requirements

Potential savings

Financing

Acquisition cycle




CRITICAL SUCCESS FACTORS (CSFs)

• To develop an effective IS plan, organization must have a clear understanding of both its long and short term information requirements.

• CSF analysis are shaped by the industry, the firm, the manager, and the broader environment.

• For example, CSFs for automobile industry might include styling, quality, and cost to meet the goals of increasing market share and raising profits.

• New IS should focus on providing information that helps the firm meet these goals.

• The principal method used in CSF analysis is personal interviews – three or four – with a number of top managers identifying their goals and the resulting CSFs.




CRITICAL SUCCESS FACTORS (CSFs)

• The principal method used in CSF analysis is :

personal interviews – three or four – with a number of top managers identifying their goals and the resulting CSFs.

Focuses organizational attention on how information should be handled.

The method’s primary weakness is:

There is no particularly rigorous way in which individual CSFs can be aggregated into a clear company pattern.

Interviewees (and interviewers) often confused when distinguishing between individuals and organizational CSFs.

This method is clearly biased toward top managers, although it could be extended to elicit ideas for promising new systems from lower level members of the organization.




Figure 14-3The CSFs approach relies on interviews with key managers to identify their CSFs. Individual CSFs are aggregated to developed CSFs for the entire firm. Systems can then be built to deliver information on these CSFs.

Using CSFs to Develop SystemsUsing CSFs to Develop Systems




PORTFOLIO ANALYSIS

• Portfolio analysis can be used to evaluate alternative system projects

• Portfolio analysis inventories all of the organization’s information system projects and assets, including:

Infrastructure

Outsourcing contracts

Licenses.

• Information-intensive industries few high-risk, high benefits projects, to ensure they stay current with technology

• Non-information-intensive industries low-risk, high benefits projects.




A System PortfolioA System Portfolio

Figure 14-5

Companies should examine their portfolio of projects in terms of potential benefits and likely risks. Certain kinds of projects should be avoided altogether and others developed rapidly. There is no ideal mix. Companies in different industries have different profiles.

PORTFOLIO ANALYSIS




SCORING MODELS

• Scoring model : is used for selecting projects where many criteria must be considered.

• It assign weights to various features of a system and then calculated the weighted totals.

• Look at Table 14.2

• It shows that this particular company attaches the most importance to capabilities for sales order processing, inventory management, and warehousing.




EXAMPLE OF A SCORING MODEL FOR AN ERP SYSTEM




Establishing the Business Value of Information Systems

• Information system costs and benefits

• Capital budgeting for information systems

• Case example: Capital budgeting for a new supply chain management system

• The payback method

• Accounting rate of return on investment (ROI)

• Net present value

• Internal rate of return (IRR)

• Results of the capital budgeting analysis




Cost & Benefits of Information Systems

• Costs:

Hardware

Telecommunications

Software

Services

Personnel




Cost & Benefits of Information Systems (cont.)

• Tangible benefits (cost savings):

Increased productivity

Lower operational costs

Reduced workforce

Lower computer expenses

Lower outside vendor costs

Lower clerical and professional costs

Reduced rate of growth in expenses

Reduced facility costs




Cost & Benefits of Information Systems (cont.)

• Intangible benefits : Improved asset utilization

Improved resource control

Improved organizational planning

Increased organizational flexibility

More timely information

More information

Increased organizational learning

Legal requirements attained

Enhanced employee goodwill

Increased job satisfaction



Improved decision making

Improved operation

Higher client satisfaction

Better corporate image


• Dimensions of project risk

• Change management and the concept of

implementation

• The concept of implementation

• The role of end users

• Management support and commitment

• Change management challenges for business process

reengineering, enterprise applications, and mergers and

acquisitions

Managing Project Risk




• Controlling risk factors

• Managing technical complexity

• Formal planning and control tools

• Increasing user involvement and overcoming user resistance

• Designing for the organization

• Sociotechnical design

• Project management software tools





Figure 14-8A GANTT CHART




Figure 14-9 This is a simplified PERT chart for creating a small Web site. It shows the ordering of project tasks and the relationship of a task with preceding and succeeding tasks.




A PERT ChartA PERT Chart


• Read the Interactive Session: Management, and then discuss the following questions:

• What are some of the risks involved when one firm acquires another firm’s IT infrastructure?

• Why do firms often fail to take the target firm’s information systems and IT infrastructure into account when purchasing other firms?

• How would you go about assessing the value of another firm’s IT infrastructure and operational capabilities? What questions would you ask?

Managing IT in the Merger and Acquisition Game





• Read the Interactive Session: Organizations, and then discuss the following questions:

• Why was the director of IT assigned the job of implementing a CRM

system? Would this job be better performed by the sales manager?

• Why were sales reps reluctant to share customer information with

other sales reps? What strategies did Kirstin Johnson use to

overcome user resistance? How would you recommend the firm

overcome this problem?

• What do you think the metrics for CRM success should be in a firm

like this? How would you change the sales rep compensation plan to

support more effective use of the CRM system?

Getting Buy-In and ROI for CRM




Documents

14.1 © 2007 by Prentice Hall 14 Chapter Project Management: Establishing the Business Value of Systems and Managing Change