BIG MIS FAILURES

PRESENTED TO: A.H.TOOR PRESENTED BY: FAISAL JAVAID REG #: 2113102

NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS

MIS
Short for management information system or management information services, and pronounced as separate letters, MIS refers broadly to a computer-based system that provides managers with the tools for organizing, evaluating and efficiently running their departments. In order to provide past, present and prediction information, an MIS can include software that helps in decision making, data resources such as databases, the hardware resources of a system, decision support systems, people management and project management applications, and any computerized processes that enable the department to run efficiently. Within companies and large organizations, the department responsible for computer systems is sometimes called the MIS department. Other names for MIS include IS (Information Services) and IT (Information Technology).

REASONS OF MIS FAILURES

Information technology (IT) project management is a crucial issue for organizations today. The failure rate of IT projects is astounding. A 1995 study in the USA found that 31 per cent of software projects will be canceled before completion, and more than half the projects will cost an average of 189 per cent of their original estimates. In April 1997, a survey questionnaire focusing on IT project management issues was sent to Canada's leading 1,450 public and private sector organizations. KPMG's 1997 Survey of Unsuccessful Information Technology Projects revealed that the three most common reasons for project failure are: 1. POOR PROJECT PLANNING: Specifically, inadequate risk management and a weak project plan. Risk management becomes more important as the organization gets bigger, so larger organizations need to pay more attention to this area. 2. A WEAK BUSINESS CASE: The need for the system should be justified in ways that relate directly to the organization's business needs. 3. LACK OF TOP MANAGEMENT INVOLVEMENT AND SUPPORT: This often dooms the project to failure before it starts. Securing buy-in from the top, often by a strong business case backed up with a realistic project plan, is an essential step. Some of the other main findings were: Projects fail more often because of schedule overruns than budget overruns. Many projects fail because they use new or unproven technology. Poor estimates or weak definitions of requirements at the project planning stage also contribute to project failure. Projects can run into trouble due to the vendors' inability to meet commitments. Of the failed projects, 60 per cent were planned to take less than one year to complete.

BIG MIS FAILURES

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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS

BIG MIS FAILURES

With the rapid change in the economic world due to new and innovative advances, organizations switched to computerized system (MIS) from manual system. But such conversion was not profitable for all organization. Some faced minim while others had to suffer huge losses by implementing MIs in their organizations. Various factors were involved in their demise. Here are few MIS failures involving big giants. ORGANIZATION: Budget Rent A Car Corp., Hilton Hotels, Marriott International Inc. PROJECT: Confirm reservation system for hotel and system for hotel and rental car bookings. WHAT HAPPENED: After four years and $125 million in development, the project crumbled in 1992 when it became clear that Confirm would miss its deadline by as much as two years. AMR sued its three partners for breach of contract, citing mismanagement and fickle goals. Marriott countersued, accusing AMR of botching the project and covering it up. Both suits were later settled for undisclosed terms. Confirm died and AMR took a $109 million write-off. ORGANIZATION: Snap-On Inc. PROJECT: Conversion to a new order-entry system from The Baan Co. WHAT HAPPENED: Despite three years of design and implementation, a new order-entry system installed in December 1997 costs the tools company $50 million in lost sales for the first half of 1998. Orders are delayed, inventory is miscounted. Snap-Ons operating costs soar 40%, mainly to cover costs of extra freight and temporary workers. Franchisees, frustrated because they cant operate the new software, turn to Snap-On competitors. Company profits for the period sink 22% compared to 1997. ORGANIZATION: Fox Meyer Corp. PROJECT: SAP ERP system WHAT HAPPENED: A bungled enterprise resource planning (ERP) installation in 1996 helped drive FoxMeyer into bankruptcy, the drug distributor claims in lawsuits against SAP AG, SAP America Inc. and Andersen Consulting. FoxMeyer seeks a combined $1 billion in damages, but defendants deny doing anything wrong. ORGANIZATION: W.W. Grainger Inc. PROJECT: SAP ERP system WHAT HAPPENED: Grainger spent at least $9 million on SAP software and services in 1998, but the ERP system over counted warehouse inventory and had routine crashes. During the worst six months, Grainger lost $19 million in sales and $23 million in profits. Grainger patiently worked with SAP on fixes.

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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS ORGANIZATION: Greyhound Lines Inc. PROJECT: Trips reservation and bus-dispatch system WHAT HAPPENED: Greyhound spent at least $6 million in the early 1990s building Trips. But Trips failed miserably when installed in 1993, crashing when Greyhound offered sale prices on bus fares. To avoid using the system, agents wrote tickets by hand while customers waited in line and missed busses. Ridership plunged 12% in one month. Just weeks after rolling Trips out, Greyhound disabled it in some regions while trying to trace problems. The debacle spurred a $61.4 million loss for the first half of 1994. The CEO and CFO resigned. Trips operate today but Greyhound never regained its status as a transport powerhouse. ORGANIZATIONS: Hershey Foods Corp. PROJECT: IBM-led installation and integration of SAP, Manugistics Group Inc. and Siebel Systems Inc. software WHAT HAPPENED: To meet Halloween and Christmas candy rush, Hershey compressed the rollout of a new $112 million ERP system by several months. But inaccurate inventory data and other problems caused shipment delays and incomplete orders. Hershey sales fell 12% in the quarter after the system went live down $150.5 million compared with the year before. Software and business-process fixes stretched into early next year. ORGANIZATIONS: Norflok Southern Corp. PROJECT: Systems integration with merger target Consolidated Rail Corp. WHAT HAPPENED: Norfolk Southern lost more than $113 million in business during its 1998/1999 railroad merger with Conrail. Custom logistics software wasnt tested properly and a dispatcher mistakenly fed bogus test data into the system. Norfolk Southern suffered more than a year of train backups, untrackable freight and crewscheduling mishaps. Norfolk Southern spent an extra $80 million on worker overtime pay and fix-up costs until the system was stabilized. ORGANIZATIONS: Oxford Health Plan Inc. PROJECT: New billing and claims-processing system based on Unix International and Oracle Corp. databases WHAT HAPPENED: 1996 migration to a new set of applications for health maintenance organizations operations resulted in hordes of doctors and patients angry about payment delays and errors. The system also underestimated medical costs and overestimated income. As a result, high-flying Oxford posted its first-ever quarterly loss in November 1997: $78 million. All told, Oxford overestimated revenues by $173.5 million in 1997 and $218.2 million in 1998. New York State fines the company $3 million for violating insurance laws. Oxford replaced large parts of the home-grown system with off-the-shelf modules.

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NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS ORGANIZATIONS: Tri Valley Growers PROJECT: Oracle Corp. ERP and application integration WHAT HAPPENED: A giant agricultural co-operative, Tri Valley bought at least $6 million worth of ERP software and services from Oracle in 1996. None of the software worked as promised; some of it couldnt even be installed on Tri Valleys DEC Alpha hardware, the co-op claimed in a $20 million lawsuit filed. Tri Valley stopped using the Oracle software and stopped paying the vendor. Oracle countersued for breach of contract. Tri Valley filed for bankruptcy protection. Oracle denies all claims. ORGANIZATIONS: Universal Oil Products LLC PROJECT: Software for estimating project costs and figuring engineering specifications, to be built and installed by Andersen Consulting WHAT HAPPENED: After a 1991 ERP deal with Andersen resulted in unusable systems for UOP, the industrial engineering firm cried fraud, negligence and neglect in a $100 million lawsuit in 1995. Andersen later sued UOP for libel, accusing it of leaking incriminating e-mail by its consultants in an attempt to publicly harass and humiliate Andersen. UOP hired another consultancy to implement the system.

CONCLUSION
MIS are effective tools in business. But it must be kept in mind that it is a system which is made and used by humans. Due to human errors in either its preparation or implementation the system collapses or provides wrong data which tends to put blame on the system. With proper and patience managing of the system it can be immensely beneficial for the organization.

REFERENCES

http://www.standishgroup.com
http://www.computerworld.com/computerworld/records/images/pdf/44NfailChart.pdf

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