11.

LEARNING OBJECTIVES
DEMONSTRATE HOW BUILDING
NEW SYSTEMS CAN PRODUCE
ORGANIZATIONAL CHANGE
COMPARE ROLE OF COMPUTER IN
TOTAL QUALITY MANAGEMENT,
BUSINESS PROCESS
REENGINEERING
*
11.2

LEARNING OBJECTIVES
EXPLAIN HOW ORGANIZATION CAN
DEVELOP SUITABLE INFO SYSTEMS
IDENTIFY CORE ACTIVITIES IN
SYSTEMS DEVELOPMENT
PROCESS
EVALUATE MODELS FOR
DETERMINING BUSINESS
VALUE OF INFO SYSTEMS
11.3
*

MANAGEMENT CHALLENGES
SYSTEMS AS PLANNED
ORGANIZATIONAL CHANGES
SYSTEMS DEVELOPMENT &
ORGANIZATIONAL CHANGES
OVERVIEW OF SYSTEMS
DEVELOPMENT
UNDERSTANDING BUSINESS
VALUE OF INFO SYSTEMS
11.4
*

INFORMATION SYSTEMS PLAN

CHALLENGES:
RISKS AND UNCERTAINTIES IN SYSTEMS
DEVELOPMENT
BENEFITS LARGELY INTANGIBLE
*

11.5

INFORMATION SYSTEMS PLAN

DIRECTION OF SYSTEM DEVELOPMENT:
RATIONALE
CURRENT SITUATION
MANAGEMENT STRATEGY
IMPLEMENTATION PLAN
BUDGET
*
11.6

INFORMATION SYSTEMS PLAN

1. PURPOSE OF THE PLAN:
OVERVIEW OF PLAN CONTENTS
CHANGES IN CURRENT SITUATION
FIRMS STRATEGIC PLAN
CURRENT ORGANIZATION
MANAGEMENT STRATEGY
*
11.7

INFORMATION SYSTEMS PLAN

2. STRATEGIC BUSINESS PLAN:
CURRENT SITUATION
CURRENT ORGANIZATION
CHANGING ENVIRONMENT
MAJOR GOALS OF PLAN
*

11.8

INFORMATION SYSTEMS PLAN

3. CURRENT SYSTEMS:
MAJOR SYSTEMS SUPPORTING BUSINESS
FUNCTIONS
MAJOR CURRENT CAPABILITIES
HARDWARE
SOFTWARE
DATABASE
TELECOMMUNICATIONS
DIFFICULTIES MEETING REQUIREMENTS
ANTICIPATED FUTURE DEMANDS
11.9
*

INFORMATION SYSTEMS PLAN

4. NEW DEVELOPMENTS:
NEW SYSTEM PROJECTS
PROJECT DESCRIPTIONS
BUSINESS RATIONALE
NEW CAPABILITIES REQUIRED
HARDWARE
SOFTWARE
DATABASE
TELECOMMUNICATIONS
11.10

INFORMATION SYSTEMS PLAN

5. MANAGEMENT STRATEGY
ACQUISITION PLANS
MILESTONES & TIMING
ORGANIZATIONAL REALIGNMENT
INTERNAL REORGANIZATION
MANAGEMENT CONTROLS
MAJOR TRAINING INITIATIVES
PERSONNEL STRATEGY
*
11.11

ENTERPRISE ANALYSIS

11.12

(BUSINESS SYSTEMS PLANNING)

ORGANIZATION-WIDE INFORMATION
NEEDS IN TERMS OF:
ORGANIZATIONAL UNITS
FUNCTIONS
PROCESSES
DATA ELEMENTS
HELPS IDENTIFY KEY ENTITIES &
ATTRIBUTES IN ORGANIZATIONS DATA
*

CRITICAL SUCCESS FACTORS

(CSFs)
SMALL NUMBER, EASILY IDENTIFIABLE
OPERATIONAL GOALS
SHAPED BY INDUSTRY, MANAGER,
ENVIRONMENT
BELIEVED TO ASSURE FIRMS SUCCESS.
USED TO DETERMINE ORGANIZATIONS
INFORMATION REQUIREMENTS
*
11.13

CRITICAL SUCCESS FACTORS

& GOALS
EXAMPLE

GOALS

CSF

PROFIT

EARNINGS/SHARE

AUTOMOTIVE INDUSTRY:

CONCERN

RETURN ON INVESTMENT

STYLING

MARKET SHARE
NEW PRODUCT

QUALITY DEALER SYSTEM

COST CONTROL
ENERGY STANDARDS

NONPROFIT

EXCELLENT HEALTH CARE

REGIONAL INTEGRATION WITH

OTHER HOSPITALS

MEETING GOVERNMENT REGULATIONS

EFFICIENT USE OF RESOURCES

FUTURE HEALTH NEEDS

IMPROVED MONITORING OF
REGULATIONS

11.14

USING CSFs TO DEVELOP SYSTEMS

COLLECT MANAGERS CFCs

AGGREGATE, ANALYZE INDIVIDUALS
CSFs
DEVELOP AGREEMENT ON COMPANY
CSFs
DEFINE COMPANY CSFs
USE CSFs TO DEVELOP INFORMATION
SYSTEM PRIORITIES
DEFINE DSS & DATABASES
11.15
*

SPECTRUM OF
ORGANIZATIONAL CHANGE
AUTOMATION: Using technology to
perform tasks efficiently / effectively
RATIONALIZATION OF PROCEDURES:
Streamline SOPs; eliminate bottlenecks
BUSINESS REENGINEERING: Radical
redesign of processes to improve cost,
quality, service; maximize benefits of
technology
PARADIGM SHIFT
11.16
*

PARADIGM SHIFT
PARADIGM IS A COMPLETE
MENTAL MODEL OF HOW A
COMPLEX SYSTEM FUNCTIONS
A PARADIGM SHIFT INVOLVES
RETHINKING THE NATURE OF THE
BUSINESS, THE ORGANIZATION; A
COMPLETE RECONCEPTION OF
HOW THE SYSTEM SHOULD
FUNCTION
11.17
*

RISKS & REWARDS

High

RISK

Low
11.18

Low

RETURN

High

IT CAPABILITIES &
IMPACTS
ANALYTICAL: Can bring complex
analytical methods to bear on
process
INFORMATIONAL: Makes vast
amounts of detailed information
available
SEQUENTIAL: Enables changes in
sequence, parallel tasks
11.19
* New Industrial Engineering(1990)
Source: Davenport & Short The

IT CAPABILITIES &
IMPACTS
KNOWLEDGE MANAGEMENT:
Allows capture, dissemination of
knowledge, expertise
TRACKING: Allows detailed tracking
of task status, inputs, outputs
DISINTERMEDIATION: Connects
parties who otherwise depend on an
intermediary
11.20
* New Industrial Engineering(1990)
Source: Davenport & Short The

BUSINESS PROCESS
REENGINEERING (BPR)
WORK-FLOW MANAGEMENT:
Streamlining process to move
documents easily, efficiently
REENGINEERING
*

11.21

BUSINESS
REENGINEERING STEPS:
1. Develop business vision, process
objectives
2. Identify process to be redesigned
3. Understand, measure performance
of existing processes
4. Identify opportunities for applying
information technology
5. Build PROTOTYPE of new process
*
11.22

TOTAL QUALITY
MANAGEMENT (TQM)
RESPONSIBILITY FOR QUALITY
SHARED BY ALL PEOPLE IN
ORGANIZATION
*

11.23

CONTRIBUTIONS OF TQM
SIMPLIFY PRODUCT OR PROCESS
BENCHMARKING: Strict standards
for measuring performance
LISTEN TO CUSTOMER DEMANDS
REDUCE CYCLE TIME
IMPROVE DESIGN
INCREASE PRECISION OF
PRODUCTION
11.24
*

SYSTEM DEVELOPMENT PROCESS

SYSTEMS ANALYSIS
SYSTEM DESIGN
PROGRAMMING
TESTING
CONVERSION
PRODUCTION & MAINTENANCE
*

11.25

SYSTEMS ANALYSIS
ANALYSIS OF PROBLEM TO BE
SOLVED WITH AN INFORMATION
SYSTEM
FEASIBILITY STUDY: CAN PROBLEM
BE SOLVED WITHIN CONSTRAINTS?
*

11.26

FEASIBILITY
TECHNICAL: Assess hardware,
software, technical resources
ECONOMIC: Will benefits outweigh
costs
OPERATIONAL: Is solution desirable
within existing conditions?
INFORMATION REQUIREMENTS:
Detailed statement of new system
needs
11.27
*

SYSTEM DESIGN
DETAILS HOW SYSTEM WILL MEET NEEDS:

LOGICAL DESIGN: Components,

data as needed by applications

PHYSICAL DESIGN: Physical

location of components and data
*

11.28

DESIGN SPECIFICATIONS
OUTPUT
MEDIUM; CONTENT; TIMING
INPUT
ORIGINS; FLOW; DATA ENTRY
USER INTERFACE
SIMPLICITY; EFFICIENCY; LOGIC
FEEDBACK; ERRORS
DATABASE DESIGN
LOGICAL DATA RELATIONS
VOLUME, SPEED REQUIREMENTS
FILE ORGANIZATION & DESIGN
RECORD SPECIFICATIONS
11.29
*

DESIGN SPECIFICATIONS
PROCESSING
COMPUTATIONS
PROGRAM MODULES
REQUIRED REPORTS
TIMING OF OUTPUTS
MANUAL PROCEDURES
WHAT ACTIVITIES
WHO PERFORMS THEM
HOW
WHERE
*
11.30

DESIGN SPECIFICATIONS
CONTROLS
INPUT
PROCESSING
OUTPUT
PROCEDURAL
SECURITY
ACCESS CONTROLS
CATASTROPHE PLANS
AUDIT TRAILS

*
11.31

DESIGN SPECIFICATIONS
CONVERSION
TRANSFER FILES
INITIATE NEW PROCEDURES
SELECT TESTING MODULES
CUT OVER TO NEW SYSTEM
TRAINING
SELECT TRAINING TECHNIQUES
DEVELOP TRAINING MODULES
IDENTIFY TRAINING FACILITIES
ORGANIZATIONAL CHANGES
TASK REDESIGN
JOB DESIGN
PROCESS DESIGN
OFFICE / ORGANIZATION STRUCTURE DESIGN
REPORTING RELATIONSHIPS
11.32
*

ROLE OF END USERS

USERS DRIVE SYSTEMS EFFORT
MUST HAVE SUFFICIENT CONTROL
TO ENSURE SYSTEM REFLECTS
BUSINESS PRIORITIES, NEEDS
FUNCTIONAL USERS DRIVE
SYSTEM NEEDS

11.33

COMPLETING SYSTEM
DEVELOPMENT PROCESS
PROGRAMMING: Translating
needs to program code
TESTING: Does system produce
desired results?
*

11.34

TESTING
UNIT TESTING: Tests each unit
separately
SYSTEM TESTING: Do modules
function as planned?
ACCEPTANCE TESTING: Final
certification
TEST PLAN: Preparations for
tests to be performed
11.35
*

CONVERSION
PARALLEL: Old & new run same problems. Give
same results?
DIRECT CUTOVER: Risky conversion to new
system
PILOT: Introduce into one area. Does it work?
Yes: introduce into other area
PHASED: Introduce in stages
CONVERSION PLAN: Schedule for
conversion
DOCUMENTATION: Description of how
system works
11.36
*

PRODUCTION & MAINTENANCE

PRODUCTION: Constant review by
users & operators. Does it meet
goals?
MAINTENANCE: Upkeep; Update;
Corrections over time
*

11.37

SYSTEMS DEVELOPMENT
CORE ACTIVITY

DESCRIPTION

SYSTEMS ANALYSIS

IDENTIFY PROBLEM(S)
SPECIFY SOLUTIONS
ESTABLISH INFORMATION REQUIREMENTS

SYSTEMS DESIGN

CREATE LOGICAL DESIGN SPECS

CREATE PHYSICAL DESIGN SPECS
MANAGE TECHNICAL REALIZATION OF SYSTEM

PROGRAMMING

TRANSLATE DESIGN SPECS INTO

PROGRAM CODE

11.38

SYSTEMS DEVELOPMENT
CORE ACTIVITY

DESCRIPTION

TESTING

UNIT TEST
SYSTEMS TEST
ACCEPTANCE TEST

CONVERSION

PLAN CONVERSION
PREPARE DOCUMENTATION
TRAIN USERS & TECHNICAL STAFF

PRODUCTION &
MAINTENANCE

OPERATE SYSTEM
EVALUATE SYSTEM
MODIFY SYSTEM

11.39

UNDERSTANDING BUSINESS
VALUE OF INFO SYSTEMS
CAPITAL BUDGETING MODELS
LIMITATIONS:
Assume all relevant alternatives have
been examined; cost & benefits can
be expressed as $$
Ignore intangible benefits
*
11.40

CAPITAL BUDGET:

PROCESS OF ANALYZING, SELECTING

CAPITAL EXPENDITURES
PAYBACK METHOD
RETURN ON INVESTMENT
COST-BENEFIT RATIO
NET PRESENT VALUE
PROFITABILITY INDEX
INTERNAL RATE OF RETURN

*
11.41

COSTS & BENEFITS:

COSTS:
HARDWARE
SOFTWARE
SERVICES
PERSONNEL
*
11.42

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
*
11.43

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
11.44
*

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
*

11.45

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
*
11.46

Connect to the INTERNET

PRESS LEFT MOUSE BUTTON ON ICON TO

CONNECT TO THE LAUDON & LAUDON
WEB SITE FOR MORE INFORMATION ON
THIS CHAPTER
11.47

11.48