Information Systems: the Foundation of E-Business (CIS 108)

Exploring the business of value of IS Exploring the business of value of IS and Managing Changeand Managing Change

Lecture NINE (14th March 2005)

Amare Michael Desta

LEARNING OBJECTIVES EVALUATE MODELS DETERMINING BUSINESS

VALUE OF INFORMATION SYSTEMS ANALYZE PRINCIPAL CAUSES OF

INFORMATION SYSTEM FAILURE ANALYZE REQUIREMENTS FOR BUILDING

SUCCESSFUL SYSTEMS SELECT STRATEGIES TO

MANAGE SYSTEM IMPLEMENTATION

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MANAGEMENT CHALLENGES UNDERSTANDING BUSINESS VALUE

OF INFORMATION SYSTEMS CHANGE MANAGEMENT IN

INFORMATION SYSTEM SUCCESS & FAILURE

MANAGING IMPLEMENTATION

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CAPITAL BUDGETING MODELS PORTFOLIO ANALYSIS REAL OPTIONS PRICING MODELS

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UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS

CAPITAL BUDGET:

PAYBACK METHOD: How long will it take to pay back the investment?

RETURN ON INVESTMENT: Does return during useful life of an item exceed the cost to borrow money?

COST-BENEFIT RATIO: Does the ratio of cost exceeds benefit?

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CAPITAL BUDGET:

PROFITABILITY INDEX: What is the ratio of present value of cash inflow to initial investment?

NET PRESENT VALUE: Accounting for cost, earnings & time value of money what is the investment worth?

INTERNAL RATE OF RETURN: Accounting for the time value of money, what is the return rate of an investment?

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COSTS: HARDWARE SOFTWARE SERVICES PERSONNEL

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COSTS & BENEFITS:

TANGIBLE BENEFIT: INCREASED PRODUCTIVITY LOW OPERATING COSTS REDUCED WORK FORCE LOWER COMPUTER EXPENSES LOWER VENDOR COSTS LOWER CLERICAL/PROFESSIONAL COSTS REDUCED GROWTH OF EXPENSES REDUCED FACILITY COSTS

*

COSTS & BENEFITS:

INTANGIBLE BENEFIT: IMPROVED ASSET USE; RESOURCE

CONTROL; PLANNING INCREASED FLEXIBILITY MORE TIMELY INFORMATION INCREASED LEARNING ATTAIN LEGAL REQUIREMENTS ENHANCED EMPLOYEE GOODWILL, JOB

SATISFACTION, DECISION MAKING etc…. HIGHER CLIENT SATISFACTION BETTER CORPORATE IMAGE

COSTS & BENEFITS:

LIMITATIONS: Assume all relevant alternatives

have been examined; cost & benefits can be expressed as $$

Ignore intangible benefits*

CAPITAL BUDGETING MODELS

PORTFOLIO ANALYSIS:

ANALYSIS OF POTENTIAL APPLICATIONS TO DETERMINE RISKS & BENEFITS

DETERMINE DESIRABLE FEATURES, ACCEPTABLE RISKS OF REQUIRED SYSTEM

GENERATE PORTFOLIO OF CHARACTERISTICS, RISKS FOR EACH ALTERNATIVE

SCORING MODEL*

IDENTIFY DESIRABLE FEATURES LOOK AT EACH ALTERNATIVE:

WHICH FEATURES ARE PRESENT? TO WHAT EXTENT (as an amount)? SCORE THE ALTERNATIVE

RANK-ORDER THE ALTERNATIVES SELECT HIGHEST RANKED OPTION

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SCORING MODEL:

REAL OPTIONS PRICING MODELS USEFUL UNDER UNCERTAIN

CONDITIONS INCLUDE ESTIMATES FOR

MANAGEMENT LEARNING, VALUE OF DELAYING DECISION, VOLATILITY OF COSTS & REVENUES

CHANGE MANAGEMENT

WHAT PROCESSES ARE BEST TO CHANGE:

DESIGN DATA COST OPERATIONS

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CHANGE AGENT

DURING IMPLEMENTATION, INDIVIDUAL ACTS AS CATALYST DURING CHANGE PROCESS TO ENSURE SUCCESS

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APPROACHES ADOPTION MANAGEMENT ROUTINIZATION

ACTORS' ROLE XXXX XXXX

STRATEGY XXXX

ORGANIZATIONAL XXXX XXXXFACTORS

IMPLEMENTATION STAGESIMPLEMENTATION STAGES

ALL ACTIVITIES LEADING TO ADOPTION, MANAGEMENT, ROUTINIZATION OF INNOVATION

IMPLEMENTATION

INNOVATION PROCESS

ACTOR CHARACTERISTICS & DEMOGRAPHICS

SOCIAL STATUS

EDUCATION

SOPHISTICATION

ACTOR ROLES

PRODUCT CHAMPION

BUREAUCRATIC ENTREPRENEUR

GATEKEEPER

INNOVATIVE

BEHAVIOR

ACTIONS & INDICATORS FOR SUCCESSFUL SYSTEM IMPLEMENTATION SUPPORT BY LOCAL FUNDS NEW ORGANIZATIONAL

ARRANGEMENTS STABLE SUPPLY & MAINTENANCE NEW PERSONNEL CLASSIFICATIONS CHANGES IN ORGANIZATIONAL

AUTHORITY*

Source: Yin (1981)

ACTIONS & INDICATORS FOR SUCCESSFUL SYSTEM IMPLEMENTATION INTERNALIZATION OF TRAINING

PROGRAM CONTINUAL UPDATING OF THE SYSTEM PROMOTION OF KEY PERSONNEL SURVIVAL OF SYSTEM AFTER TURNOVER ATTAINMENT OF WIDESPREAD USE

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Source: Yin (1981)

FACTORS IN IMPLEMENTATION OUTCOMECAUSES OF SUCCESS OR FAILURE:

USER INVOLVEMENT & INFLUENCE MANAGEMENT SUPPORT LEVEL OF COMPLEXITY / RISK MANAGEMENT OF

IMPLEMENTATION PROCESS*

USER-DESIGNER COMMUNICATIONS GAP

DIFFERENCES IN BACKGROUNDS, INTERESTS, PRIORITIES

IMPEDE COMMUNICATION AND PROBLEM SOLVING

AMONG END USERS AND INFORMATION SYSTEMS SPECIALISTS

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USER CONCERNS:

1. WILL SYSTEM DELIVER INFORMATION I NEED?

2. HOW QUICKLY CAN I ACCESS DATA?3. HOW EASILY CAN I RECEIVE DATA?4. HOW MUCH CLERICAL SUPPORT WILL I

NEED FOR DATA ENTRY?5. HOW WILL SYSTEM OPERATION FIT

INTO MY DAILY BUSINESS SCHEDULE?6. *

1. DESIGNER CONCERNS:

1. HOW MUCH DISK SPACE WILL MASTER FILE CONSUME?

2. HOW MANY LINES OF PROGRAM CODE WILL THIS FUNCTION TAKE?

3. HOW CAN WE REDUCE CPU TIME?4. WHAT IS THE MOST EFFICIENT WAY OF

STORING THIS DATA?5. WHAT DATABASE MANAGEMENT

SYSTEM SHOULD WE USE?6. *

LEVEL OF COMPLEXITY & RISK

PROJECT SIZE PROJECT STRUCTURE EXPERTISE WITH TECHNOLOGY

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CONTROLLING PROJECT RISK

LOW HIGH SMALL HIGH LOW HIGH LARGE VERY HIGH LOW LOW SMALL VERY LOW LOW LOW LARGE LOW HIGH HIGH SMALL MEDIUM-LOW HIGH HIGH LARGE MEDIUM HIGH LOW SMALL VERY LOW

STRUCTURE TECHNOLOGY LEVEL SIZE RISK HIGH LOW LARGE LOW

CONSEQUENCES OF POOR PROJECT MANAGEMENT

COST OVERRUNS TIME SLIPPAGE TECHNICAL SHORTFALLS FAILURE TO OBTAIN BENEFITS

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CAUSES OF POOR PROJECT MANAGEMENT

IGNORANCE & OPTIMISM MYTHICAL MAN-MONTH: Many

tasks sequentially linked, require training

FALLING BEHIND: Bad news travels slowly upward

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CHANGE MANAGEMENT CHALLENGES

ENTERPRISE SYSTEMS: High risk of failure, replacing legacy systems, myriad interconnections

BUSINESS PROCESS REENGINEERING: 70% failure rate, deeply rooted in old processes, employees often unprepared

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CHANGE MANAGEMENT CHALLENGES

MERGERS & ACQUISITIONS: Decline in shareholder value, difficult to integrate company systems, organizational change, worker morale

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MANAGING IMPLEMENTATION:

CONTROL RISK FACTORS: Gear tools, methodologies to level of risk

INTERNAL INTEGRATION TOOLS: FORMAL PLANNING TOOLS FORMAL CONTROL TOOLS

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FORMAL PLANNING TOOLSEXAMPLES:

PROGRAM EVALUATION & REVIEW TECHNIQUE: Diagram of project activities, sequential and concurrent, shows interactions of activities

GANTT CHART: Shows activities as bars along a time line, with beginning, end of each task

THESE PROVIDE SCHEDULES*

FORMAL CONTROL TOOLS:

BUDGET: Time, money, resources MONITOR PROGRESS: Completion

of tasks, fulfillment of goals CONTROL RISK FACTORS:

Cost/benefits*

EXTERNAL INTEGRATION TOOLS LINK ALL USERS THROUGHOUT

ORGANIZATION USE END USERS AS TEAM MEMBERS SHARE INFORMATION & PROGRESS INCLUDE TRAINING AVOID COUNTERIMPLEMENTATION

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ORGANIZATIONAL FACTORS JOB DESIGN STANDARDS & PERFORMANCE

MONITORING ERGONOMICS: Interaction of

people & machines; jobs, health, interface

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ORGANIZATIONAL FACTORS EMPLOYEE GRIEVANCE

RESOLUTION PROCEDURES HEALTH & SAFETY GOVERNMENT REGULATORY

COMPLIANCE*

ORGANIZATIONAL FACTORS

MONITOR PROGRESS: Completion of tasks, fulfillment of goals

CONTROL RISK FACTORS: Cost / benefits

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ORGANIZATIONAL IMPACT ANALYSIS: How will system impact structure, attitudes, decision-making, operations

SOCIOTECHNICAL DESIGN: Explore group structures, task allocation, job design for human factor

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ORGANIZATIONAL FACTORS

“FOURTH-GENERATION” PROJECT MANAGEMENT

EMERGING TECHNIQUES TO DEAL WITH COMPLEXITY

ENTERPRISE-WIDE FOCUS DRIVEN BY STRATEGIC VISION &

TECHNOLOGY MAY REQUIRE SEPARATE

PROGRAM OFFICE