c h a p t e r

1
1
UNDERSTANDING
THE BUSINESS
VALUE OF
SYSTEMS AND
MANAGING
11.1 CHANGE 2002 by Prentice Hall
 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
*

11.2 2002 by Prentice Hall

 MANAGEMENT CHALLENGES

UNDERSTANDING BUSINESS VALUE

OF INFORMATION SYSTEMS
CHANGE MANAGEMENT IN
INFORMATION SYSTEM SUCCESS
& FAILURE
MANAGING IMPLEMENTATION
*

11.3 2002 by Prentice Hall

 UNDERSTANDING BUSINESS
VALUE OF INFO SYSTEMS

CAPITAL BUDGETING MODELS

PORTFOLIO ANALYSIS
REAL OPTIONS PRICING MODELS
*

11.4 2002 by Prentice Hall

 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
benefit versus cost exceed 1?
*

11.5 2002 by Prentice Hall

 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?
*

11.6 2002 by Prentice Hall

 COSTS & BENEFITS:

COSTS:
HARDWARE
SOFTWARE
SERVICES
PERSONNEL
*

11.7 2002 by Prentice Hall

 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
*

11.8 2002 by Prentice Hall

 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, OPERATIONS
HIGHER CLIENT SATISFACTION
BETTER CORPORATE IMAGE
*

11.9 2002 by Prentice Hall

 CAPITAL BUDGETING
MODELS

LIMITATIONS:
Assume all relevant alternatives have
been examined; cost & benefits can
be expressed as $$
Ignore intangible benefits
*

11.10 2002 by Prentice Hall

 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
*

11.11 2002 by Prentice Hall

 SCORING MODEL:
IDENTIFY DESIRABLE FEATURES
PROVIDE WEIGHTS FOR EACH (ADD TO 1.00)
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
*

11.12 2002 by Prentice Hall

 REAL OPTIONS PRICING
MODELS
USEFUL UNDER UNCERTAIN
CONDITIONS
INCLUDE ESTIMATES FOR
MANAGEMENT LEARNING, VALUE
OF DELAYING DECISION,
VOLATILITY OF COSTS &
REVENUES

11.13 2002 by Prentice Hall

 CHANGE MANAGEMENT

WHAT PROCESSES ARE BEST TO

CHANGE:
DESIGN
DATA
COST
OPERATIONS
*
11.14 2002 by Prentice Hall
 CHANGE AGENT

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

11.15 2002 by Prentice Hall

 IMPLEMENTATION
ALL ACTIVITIES LEADING TO ADOPTION, MANAGEMENT,
ROUTINIZATION OF INNOVATION

IMPLEMENTATION STAGES
APPROACHES ADOPTION MANAGEMENT ROUTINIZATION

ACTORS' ROLE XXXX XXXX

STRATEGY XXXX

ORGANIZATIONAL XXXX XXXX

FACTORS

11.16 2002 by Prentice Hall

 INNOVATION PROCESS
ACTOR CHARACTERISTICS &
DEMOGRAPHICS
SOCIAL STATUS
EDUCATION
SOPHISTICATION
INNOVATIVE
BEHAVIOR

ACTOR ROLES
PRODUCT CHAMPION
BUREAUCRATIC ENTREPRENEUR
GATEKEEPER

11.17 2002 by Prentice Hall

 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)

11.18 2002 by Prentice Hall
 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
*

Source: Yin (1981)

11.19 2002 by Prentice Hall
 FACTORS IN IMPLEMENTATION
OUTCOME
CAUSES OF SUCCESS OR FAILURE:

USER INVOLVEMENT & INFLUENCE

MANAGEMENT SUPPORT
LEVEL OF COMPLEXITY / RISK
MANAGEMENT OF
IMPLEMENTATION PROCESS
*

11.20 2002 by Prentice Hall

 USER-DESIGNER
COMMUNICATIONS GAP

DIFFERENCES IN BACKGROUNDS,
INTERESTS, PRIORITIES
IMPEDE COMMUNICATION AND PROBLEM
SOLVING
AMONG END USERS AND INFORMATION
SYSTEMS SPECIALISTS
*

11.21 2002 by Prentice Hall

 USER CONCERNS:

WILL SYSTEM DELIVER INFORMATION I

NEED?
HOW QUICKLY CAN I ACCESS DATA?
HOW EASILY CAN I RECEIVE DATA?
HOW MUCH CLERICAL SUPPORT WILL I
NEED FOR DATA ENTRY?
HOW WILL SYSTEM OPERATION FIT INTO MY
DAILY BUSINESS SCHEDULE?
*

11.22 2002 by Prentice Hall

 DESIGNER CONCERNS:
HOW MUCH DISK SPACE WILL MASTER FILE
CONSUME?
HOW MANY LINES OF PROGRAM CODE WILL
THIS FUNCTION TAKE?
HOW CAN WE REDUCE CPU TIME?
WHAT IS THE MOST EFFICIENT WAY OF STORING
THIS DATA?
WHAT DATABASE MANAGEMENT SYSTEM
SHOULD WE USE?
*

11.23 2002 by Prentice Hall

 LEVEL OF COMPLEXITY & RISK

PROJECT SIZE
PROJECT STRUCTURE
EXPERTISE WITH TECHNOLOGY
*

11.24 2002 by Prentice Hall

 CONTROLLING PROJECT RISK

STRUCTURE TECHNOLOGY LEVEL SIZE RISK

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

11.25 2002 by Prentice Hall

 CONSEQUENCES OF POOR
PROJECT MANAGEMENT

COST OVERRUNS
TIME SLIPPAGE
TECHNICAL SHORTFALLS
FAILURE TO OBTAIN BENEFITS
*

11.26 2002 by Prentice Hall

 CAUSES OF POOR PROJECT
MANAGEMENT

IGNORANCE & OPTIMISM

MYTHICAL MAN-MONTH: Many tasks
sequentially linked, require training
FALLING BEHIND: Bad news travels
slowly upward
*

11.27 2002 by Prentice Hall

 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
*

11.28 2002 by Prentice Hall

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

11.29 2002 by Prentice Hall

 MANAGING
IMPLEMENTATION:
CONTROL RISK FACTORS: Gear tools,
methodologies to level of risk
INTERNAL INTEGRATION TOOLS:
FORMAL PLANNING TOOLS
FORMAL CONTROL TOOLS
*

11.30 2002 by Prentice Hall

 FORMAL PLANNING TOOLS
EXAMPLES:

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
*

11.31 2002 by Prentice Hall

 FORMAL CONTROL TOOLS:

BUDGET: Time, money, resources

MONITOR PROGRESS: Completion
of tasks, fulfillment of goals
CONTROL RISK FACTORS:
Cost/benefits
*

11.32 2002 by Prentice Hall

 EXTERNAL INTEGRATION
TOOLS
LINK ALL USERS THROUGHOUT
ORGANIZATION
USE END USERS AS TEAM MEMBERS
SHARE INFORMATION & PROGRESS
INCLUDE TRAINING
AVOID COUNTERIMPLEMENTATION
*

11.33 2002 by Prentice Hall

 ORGANIZATIONAL
FACTORS
JOB DESIGN
STANDARDS & PERFORMANCE
MONITORING
ERGONOMICS: Interaction of people
& machines; jobs, health, interface
*

11.34 2002 by Prentice Hall

 ORGANIZATIONAL
FACTORS
EMPLOYEE GRIEVANCE
RESOLUTION PROCEDURES
HEALTH & SAFETY
GOVERNMENT REGULATORY
COMPLIANCE
*

11.35 2002 by Prentice Hall

 ORGANIZATIONAL
FACTORS
MONITOR PROGRESS: Completion of
tasks, fulfillment of goals
CONTROL RISK FACTORS: Cost /
benefits
*

11.36 2002 by Prentice Hall

 ORGANIZATIONAL
FACTORS
ORGANIZATIONAL IMPACT ANALYSIS:
How will system impact structure,
attitudes, decision-making, operations
SOCIOTECHNICAL DESIGN: Explore
group structures, task allocation, job
design for human factor
*

11.37 2002 by Prentice Hall

 FOURTH-GENERATION
PROJECT MANAGEMENT
EMERGING TECHNIQUES TO DEAL
WITH COMPLEXITY
ENTERPRISE-WIDE FOCUS
DRIVEN BY STRATEGIC VISION &
TECHNOLOGY
MAY REQUIRE SEPARATE PROGRAM
OFFICE
*
11.38 2002 by Prentice Hall
 c h a p t e r

1
1
UNDERSTANDING
THE BUSINESS
VALUE OF
SYSTEMS AND
MANAGING
11.39 CHANGE 2002 by Prentice Hall