© 2009 Pearson Education, Inc. Publishing as Prentice Hall Management Issues in Systems Development Chapter 10 Information Systems Management in Practice

© 2009 Pearson Education, Inc. Publishing as Prentice Hall

Management Issues in Systems Development

Chapter 10Information Systems

Management in Practice 8th Edition

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 10-2

Today’s Lecture Introduction Project Management

Definition, scope, best practices Change management Risk management

Modernizing Legacy Systems To replace or not to? Improvement


Today’s Lecture Measuring systems benefits

Differentiating systems roles IT investment assessments Return on (IT) Investments

Conclusion


Introduction What are the management issues

surrounding systems development? IS as three separate businesses (lens)

Infrastructure management (operations) Customer relationship (helpdesk) Product innovation (systems development)

Project management is most sought-after skill in systems development today


Introduction IS as three separate businesses (lens)

Infrastructure management (operations) Goal: reduce cost

Customer relationship (helpdesk) Goal: Service Often outsourced Customer is the king

Product innovation (systems development) Goal: Speed Developer is the king


Project Management Project is a collection of related tasks and

activities undertaken to achieve a specific goal within a finite time period (temporal)

IT projects are similar to other forms but arguably more difficult Intangibility (you cannot see it or feel it!)

IT project management Coordination (managing interdependencies of

numerous tasks)


Project Management cont’d PMI (Project management Institute)

Established the standard for project management The leading association in educating project

managers in all fields Certificate: PMP (Project Management

Professional) Book: A Guide to the Project Management Body of

Knowledge (PMBOK) Five processes: Initiation, planning, executing,

controlling, and closing


Scope: Job of a Project Manager Getting the project started Managing the schedule Managing the budget Managing the benefits Managing the risks, opportunities and issues Soliciting feedback and formative evaluation


Scope: Job of a Project Manager cont’d Risk: A potential threat or something that can o

wrong that may prevent the project from achieving its business benefits Risk Register (Risk Log) Risk has potential to be happened

Opportunity: A project going better than planned Issue: Something that threatens the success of the

project Issue log (Issue list) Issue is already happened


A Day In the Life of an IT Project Manager Larry Cone is VP Software Development Cone began a highly informative and

entertaining blog about his day-to-day experience September 16, 2007: Learning from Failure May 24, 2007: Everything You Need to Know about

Software Architecture in kindergarten October 10, 2006: To the user, definitions are the key September 5, 2006: Don’t do the Wrong System


Change Management Managing change (people side of system)

Assimilation of new systems into work processes Resistance (organizational inertia)

ODR offers a methodology to manage technology change (stakeholders involved) Sponsor:

Person or group that legitimize the change Change agent:

Person or group who causes the change to happen Target:

Person or group who is being expected to change


Change Management cont’d Discussed in earlier chapters Early 1990s architecture

More flexibility than mainframe systems Workload (processing) split between client and

server Integration of pizzazz of the PC world with

the necessary back-end production strengths of the mainframe world


The BOC GroupCase example: Change Management Re-engineer BOC’s core processes Teams assigned different processes to improve

Understand semantics of entire process How to implement change Input into training plan Devise communication plan

Garnering True Executive Sponsorship Vice presidents and directors ODR training workshop for sponsors


The BOC Group cont’d Involving middle management

Advisory council Upward job: give feedback on implemented

changes Downward job: obtain employee buy-in


The BOC Group cont’d One successful change project

Team studied existing paperwork processing for delivering gas products and invoicing customers

Synergy established among IM and business staff Unexpected positive change dynamics (IT triggered)

Implemented PODD (Point-of-Delivery handheld Device) in place of paper

PODD advisory council facilitated upward and downward communication

Training program for drivers (less resistance) Sponsors identified and mitigated project risks


Risk Management Management of risks in IT projects crucial

Technical risk Sub-performance; scope creep

Business risk IT-triggered organizational change not as planned

Risk management “cookbook”1. Assess the risk2. Mitigate the risk3. Adjust project management approach


Risk Management cont’d

1. Assess change risks (predominant factors) Leadership

Project leader should be business executive How does project leadership affect outcome?

Employees’ perspective How would they react and why?

Scope and urgency Is the scope too wide? How urgent?

Gibson’s “plus-minus” decision tree





2. Mitigate the risks Risk avoidance

Identify and eliminate source of perceived risk Risk limitation

Implementing controls to contain potential risk effects Risk transfer

Letting others assume risk (outsourcing)


Risk Management cont’d3. Adjust project management approach

Project management style Authoritative vs. participatory

Project budget and timeframe Rigid vs. flexible

Gibson’s Four Approaches Big Bang Approach (all other 3 must be positive) Improvisation Guided evolution Top-down coordination


Gibson’s Four Approaches to Risk Management


Dow Corning

Case Example: Risk Management Successful ERP implementation (1995-

1999) How did it manage the different business risks?

Phase 0: Get Ready (assessed risks) Leadership (high) Employee perception (high) Scope and urgency (high)


Dow Corning cont’d Phase 1: Understand the new system

Used improvisation approach of participatory management and flexible deadlines Emphasized building employee commitment

Phase 2: Redesign work processes Used guided evolution approach of participatory

management and fixed deadlines Achieving employee commitment did little to get work

processes redesigned Continued through the pilot (ERP cutover in new

European subsidiaries)


Dow Corning cont’d Phase 3: Implement ERP worldwide

Used top-down coordination with an authoritative management style and flexible timelines Pilot’s success demonstrated managers’ resolve and

shifted employee perception to the positive “Company wide” scope created negative shift

Phase 4: Complete implementation Used the Big Bang approach of authoritative

management and firm deadlines ERP implemented in most sites by 1998, so all risk

factors turned positive


Fast Tips: Good IS Management Establish the ground rules Foster discipline, planning, documentation and

management Obtain and document “final” user requirements Obtain tenders from all appropriate potential

vendors Include vendors in decision making Convert existing data Follow through after implementation


Modernizing Legacy Systems BCG study: Replace or not?

About 40% of replacement projects fail Seduction of “new toys” Upgrading is a better option

BCG three analyses (replace or not) Costs-benefits of system Fit between new system and business needs IS staff capabilities (Can they do the job?)


Options for Improving Legacy Systems

1. Restructuring the system Getting system ready for reengineering e.g., An application working fine but not running

efficiently needs restructuring 7 steps involved in the process


Restructuring the System


Options for Improving Legacy Systems cont’d

2. Reengineering the system (not BPR) Reverse Engineering

Extracting and converting data elements from existing systems and formats

Forward Engineering Moving them to new hardware platforms and creating

new applications


Reengineering the System


Verizon DirectoriesCase Example: Reverse Engineering Produced, marketed and distributed

telephone directories Directory publishing system

Four main databases, designed application by application Data elements difficult to change, enhance and reuse

Acquired reengineering tools to improve databases


Verizon Directories Blueprint project

Used a graphical tool to “reverse engineer” a poorly designed database from its physical to its data model, and designed a new data model (blueprint) that is more flexible

Reuse project Employed reengineering tools to reuse data

elements in the largest existing database to create a new production scheduling system



3. Refurbishing the system Add new extensions to a “good working” old

system Some examples of legacy system extensions

Supply input in a new manner Make new uses of input Allow programs to deal more comprehensively with

data Add a Web interface around a “blackbox”

e.g., FedEx’s package tracking system



4. Rejuvenate the system Adding new functions to a reengineered system

to make it more valuable Phases of rejuvenation process

1. Recognize a system’s potential2. Clean up the system and make it more efficient3. Establish a strategic role for the system

Add new functionalities to create business value


Amazon.comCase Example: System Rejuvenation Initiated Web Services program (2002)

Access to Amazon’s state-of-art Web technology platform (pay for what you use)

No control over how subscribers use its system, but in return, others are creating gadgets, links, services, and software that Amazon.com cannot accomplish on its own

Diversify into e-commerce platform business Used Web Services to rejuvenate its internal

system by giving it a strategic role via XML



5. Rearchitect the system Involves having an architecture for new systems,

and then using that design to upgrade legacy systems

CTOs now devising enterprise level IT architecture

How systems are interconnected One-system-at-a-time migration strategy


Toyota Motor SalesCase Example: Rearchitect the System Created global reference IT architecture

Standard and integrated application development environment

Mapping of business requirement to IT strategies New architecture enabled the company to

Remediate legacy systems Keep systems designs robust Deliver application faster Permit future flexibility



6. Replace with a package or service Replace a legacy system with a commercial

package Commercial packages have many options and

features that can be customized Replace with service delivered over the Internet

Quick availability Outsource IS responsibility to vendors Cost can be expensed (tax benefits)


Wachovia

Case Example: Replace with a service Legacy contact management system

Incompatible with new systems and not adaptable for new business needs

Maintained by consultants ($) Replaced with SalesForce CRM system

Pay by use Equivalent to maintenance costs

Provides necessary management information



7. Rewrite the system System is “too far gone” to rescue

Code convoluted and patched; technology antiquated

Alternative to replacement Rare (usually only for very specialized systems)


Measuring Systems Benefits Measuring the value of information systems

is an ongoing task for IS managers (justify) Constant evolution of technology

Top executives demand specific links between new systems and corporate financial measures (e.g., ROA, revenue) Is this reasonable?


Measuring Systems Benefits cont’d Difficult task because IT itself is only one of many

factors that contribute to successful use of systems IT can trigger a series of events toward a goal, but those

events are very much dependent on organizational context Can you measure the value of decision support systems or

data warehouses? Can you calculate the ROI of e-commerce systems?

Three suggestions to alleviate this conundrum1. Distinguish between different roles of systems2. Measure what is important to management3. Assess investments across organizational levels


Distinguish Between the Different Roles of Systems Information systems can play three roles

1. Performance: “Support systems” to increase efficiency

2. Business Value: Carry out a business strategy e.g., CAD system used to design products

3. Product or Service: Itself or as a basis for a product or service

e.g., Web-based information services


Distinguish Between the Different Roles of Systems1. Measuring organizational performance

Meeting deadlines and milestones Operating within budget Quality (efficiency, costs)

e.g., time and costs reductions

2. Measuring business value Impact on value network (relationships)

Customers, partners, suppliers

3. Measuring a product or service Can be measured as a business venture (ROI)


Measure What is Important to Management Identify all indicators management use

(besides accounting) to determine corporate performance Customer relations

e.g., satisfaction Employee morale Cycle time

In other words, devise measurements for what management considers its key success factor(s), with regard to information systems


Assess Investments Across Organizational Levels Sources of value for IT at three levels

Individual Division (or department) Corporation

Impact focus of an IT investment extends to Economic performance payoffs Organizational process payoffs Technology impacts (functionality)

Combine views to form 3 x 3 matrix


A Trucking CompanyCase Example: Assess Investment Across

Organizational Levels Refrigerated carrier business

Sustained 50% loss in market share $10 million IT investment to improve position

Satellite tracking and communication system Measures

Increased driver productivity (.5 hr/day; $59.60/mth savings)

Improved load truck matching (1% deadhead time; $49.68/mth savings)

Customers willing to pay premium for ability to communicate (unexpected revenue benefits)


Do Investors Value IT Investments? A study found that every $1 invested in computers

yielded up to $17 in stock market value (and no less than $5) vis-à-vis $1 invested in property, plant and equipment (book value)

only yielded $1 in stock market value $1 investment in other assets (inventory, liquid assets, and

accounts receivables) yielded only $0.70 Researchers’ argument

IT investment creates intangible asset value Know-how, skills, organizational structures


Conclusion Project management is cardinal but also

toughest job in IS Cannot be outsourced Managerial skills (technical and business) crucial

Mostly about managing people (stakeholders) IS project success is dependent on

Sponsor commitment understanding and exercising role

Assisting targets in making the change


Conclusion cont’d Information systems difficult to keep up-to-

date Process of justifying a new system can

uncover what is important to management Measuring benefits afterward can help

companies spot latent benefits Investors more highly value companies with

higher IT investments? What do you think?


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© 2009 Pearson Education, Inc. Publishing as Prentice Hall Management Issues in Systems Development Chapter 10 Information Systems Management in Practice