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Chapter 11 Building Information Systems and Managing Projects

Student Objectives
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Identify and describe the core problem-solving steps for developing new information systems. Evaluate alternative methods for building information systems. Compare alternative methodologies for modeling and designing systems. Determine how information systems projects should be selected and evaluated. Assess requirements for successfully managing change created by new systems.

Chapter Outline
11.1 Problem Solving and Systems Development Defining and Understanding the Problem Developing Alternative Solutions Evaluating and Choosing Solutions Implementing the Solution Alternative Systems-Building Approaches Traditional Systems Development Lifecycle Prototyping End-User Development Purchasing Solutions: Application Software Packages and Outsourcing Rapid Application Development for E-Business Modeling and Designing Systems Structured Methodologies Object-Oriented Development Computer-Aided Software Engineering (CASE) Project Management Project Management Objectives Selecting Projects: Making the Business Case for a New System Managing Project Risk and System-Related Change Managing Projects on a Global Scale Hands-on MIS

11.2

11.3

11.4

11.5

Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The page number for each key term is provided.

Acceptance testing, 376 Component-based development, 385 Computer-aided software engineering (CASE), 385 Conversion, 376 Customization, 380 Data flow diagram (DFD), 382 Direct cutover, 376 Documentation, 376 End-user development, 379 Ergonomics, 392 Feasibility study, 373 Formal planning and control tools, 392 Gantt charts, 392 Implementation, 391 Information requirements, 372 Information systems plan, 388 Intangible benefits, 387 Joint application design (JAD), 382 Maintenance, 377 Object-oriented development, 384 Organizational impact analysis, 394 Parallel strategy, 376

PERT charts, 392 Phased approach, 376 Portfolio analysis, 388 Process specifications, 383 Production, 377 Project, 386 Project management, 386 Prototyping, 378 Rapid application development (RAD), 382 Request for Proposal (RFP), 380 Scope, 386 Scoring model, 390 Structure chart, 383 Structured, 382 System testing, 376 Systems analysis, 372 Systems design, 374 Systems development life cycle (SDLC), 377 Tangible benefits, 387 Test plan, 376 Testing, 376 Unit testing, 376

Teaching Suggestions
Throughout the textbook, the Laudons have stressed that information systems are sociotechnical and part of the organization. This is an important point to reiterate to your students. A new information system changes the way the organization operates. Successful organizations choose to change their structure and operations over time. They choose information systems designed to mirror the organizational change and to serve it. New systems can change organizational political arrangements and power relationships. The information systems plan is the first step to link the business plan to information systems. The information systems plan helps an organization answer the following questions: What do we need to do? Who needs the information? Who creates it? How can we create a system that will change our strategy or even the business we are in? Section 11.1, Problem Solving and Systems Development, The opening case, A New Ordering System for Girl Scout Cookies, illustrates some of the steps required to design and build new information systems. It also illustrates some of the benefits of a new system solution. The

Girl Scouts had an outdated manual paper-based system for processing cookie orders that was excessively time consuming and error-ridden. The Girl Scouts tried several alternative solutions before opting for a new ordering system using QuickBase as an application service provider. As you work through the four steps of problem solution try to devise ways to put the material into context with your students every day problems. Section 11.2, Alternative Systems-Building Approaches. The traditional systems lifecycle methodology is usually only used for very large, complex systems. The SDLC is the oldest method for building information systems. It is inflexible and does not allow easy changes at any step along the way. However, it can be effective for highly-structured systems such as accounting, payroll or complex manufacturing systems. Government defense or space systems often are mandated to use the system life cycle methodology because of the rigorous milestones generated by the method. End-user development is a hot area. You may want to note that originally, personal computers and spreadsheets were attempts by end users to provide their own end-user tools to get around application backlogs. End-user computing is difficult to manage and support. However, if managed correctly it can be an effective way to meet end-user needs. And, as usual, make sure you emphasize that whether the organization uses end-user development or some other approach, the purpose of the system is to serve the strategies of the company and the end users. Section 11.3, Modeling and Designing Systems. Both object oriented software development and Web services are very important to the changes and advancements in building information systems because they contribute significantly to faster, easier programming. You should review these terms and concepts with your students to help them see why they are important and see the trend of simplification that is growing. Web services enable firms to obtain software application components delivered over the Internet for building new systems or integrating existing systems. Web services provide a common set of standards that enable organizations to link their systems regardless of their technology platform through standard plug-and-play architecture. Businesses today are often required to build e-commerce and e-business applications very rapidly to remain competitive. New systems are likely to have more interorganizational requirements and processes than in the past. Companies are turning to rapid application design, joint application design (JAD), and reusable software components to improve the systems development process. Rapid application development (RAD) uses object-oriented software, visual programming, prototyping, and fourth-generation tools for very rapid creation of systems. Component-based development expedites application development by grouping objects into suites of software components that can be combined to create large-scale business applications. Section 11.4, Project Management, Spend some time discussing why so many information system projects fail. It is because the system wasnt built correctly or was it really how the project was managed or mismanaged that caused the failure? This section provides students with an introduction to the methodology of project management. Although some of the techniques and methods are considered older or less satisfactory, students have a good chance of seeing these methods in the workplace. It is not a good idea to engage in a lengthy, philosophical discussion of the superiority of methods. However, it is a good idea to help students understand that there is no one best method, that each method is appropriate depending upon the situation and the

requirements. You should remind students of the largest problems: It takes too long to build systems and they often do not work as intended. Of course, this is not always true, but building systems is difficult and labor intensive. The point is to familiarize students with methods, which after all, are certainly better than no formal methods at all. Change certainly should be a theme throughout the entire course. The user-designer communication gap is a good example of a common problem that can cause an information systems project to fail. The last portion of the section provides some suggestions about managing global projects. Interactive Session: People: Dorfman Pacific Rolls Out a New Wireless Warehouse Case Study Questions 1. Compare Dorfman Pacifics old and new order-picking processes. Diagram the processes. The old system: The old process relied on paper-based processes and tacit knowledge of the facility and the companys customers. The companys IT systems were spread out over various functional areas and did little to support a transparent inventory. The warehouse worker, called a picker, received a paper pick ticket from a supervisor. The picker drove a forklift to the area of the warehouse where he or she expected to find the bin that stored the product on the ticket. The worker manually picked boxes off of the shelf and then brought them to a packing area to be boxed, labeled, and loaded onto a truck. Bins were labeled manually, making them difficult to read. Sometimes the boxes held more than one product. Each picker had his or her own preferred path to performing picking duties. The companys ERP system did not integrate well with other systems. The new system: The new system banished paper. The new ERP system and the warehouse management system used software to manage the picking, packing, and shipping processes. Pickers carrying mobile devices receive data telling them where to go, what to pick, and where to bring the merchandise using the most efficient route. Pickers armed with wireless scanning devices were assured that the bar-code-labeled bins contained only one product type each. 2. What role did end users play in developing Dorfmans wireless warehouse system? What would have happened to the project if users hadnt been so involved? Explain your answer. Probably the most important characteristic of this project is that Dorfman approached the change as a business project rather than an IT project. A cross-functional team consisting of an outside consultant as project manager and managers from distribution, purchasing, customer services, and sales worked on the transformation. The IT department took responsibility for choosing hardware, installing the hardware and software for the wireless warehouse, and appointed an administrator for the new warehouse management system. The employees had to change the way they worked. Dorfman took the job of selling the new systems to its workers very seriously, convincing them that the wireless warehouse would improve their lives and their job performance. The new system could have easily failed if the employees had felt threatened by the new system. They could have sabotaged the implementation and caused work to be delayed. Because the users

were heavily involved in the systems development, they had a feeling of ownership and responsibility to ensure the success of the implementation. They were able to mold the system according to their priorities and business requirements. They were given more opportunities to control the outcome of the project. 3. What types of system-building methods and tools did Dorfman use for building its wireless warehouse system? It appears Dorfman used a system development life cycle approach in the new project. It first defined the problem, identified the causes, identified the solution objectives, and identified its information requirements. Then it identified alternative solutions. Next it evaluated the alternatives and chose the best solution. In the implementation phase it created detailed design specifications, acquired the hardware, acquired the software, tested the system, trained employees, converted the system, and the evaluated the solution. 4. How did the new system change the way Dorfman ran its business? The old paper-based system was completely eliminated. Tracking inventory became seamless. All of the companys systems were integrated. The company was able to handle twice the number of orders during peak seasons and reduced its labor costs almost 30 percent. It eliminated the need for temporary workers and overtime, thus saving the company upwards of $250,000. 5. What problems did the new system solve? Was it successful? CEO Douglass Highsmiths goals were to reduce labor costs and create the most efficient way for a streamlined warehouse staff to pick products with the smallest error rate. Apparently the problems were solved because the company eliminated temporary workers and overtime and saved the company at least $250,000. The new systems success can also be measured in employee satisfaction and acceptance of the new system. MIS In Action Use your Web-searching capabilities to answer the following questions. 1. What are some of the components of a wireless warehouse system? Data Capture: handheld devices, barcode readers, RFID tags, hardware including central data repository, and software including a database management system. Output: label printingboth stationary and mobile wireless, reports. Access points: radio frequency access points, antennas, network routers. 2. What companies manufacture these components?

Many different companies manufacture the necessary components for wireless warehouse systems. Dee Electronics, Micromaster and Apprise are just a few. The link below provides access to the Apprise Web site for further information. http://www.apprise.com/products/distribution/warehouse.asp 3. What other businesses or organizations have implemented wireless warehouses? This link provides access to an IBM Case Study about how Southern Wine & Spirits implemented a wireless warehouse system in four months. http://www-306.ibm.com/software/success/cssdb.nsf/CS/JRDS-6WGPYT? OpenDocument&Site=corp&cty=en_us 4. If you were implementing a wireless warehouse, what potential problems would worry you most? Student answers will vary based on their experiences and depth of knowledge about wireless warehouses. Interactive Session: Organizations: What Went Wrong with Maines New Medicaid System? Case Study Questions 1. How important are information systems for Maines Department of Human Services? Analyze the impact of its faulty Medicaid claims processing system. The state provides medical coverage for over 260,000 of its residents, processing over 100,000 claims per week before the overhaul project started. The Medicaid program was becoming increasingly complex as new services were added, each with codes and subcodes assigned to them. The state also wanted to provide access to patient eligibility and claim status data online so providers wouldnt have to make a telephone call to receive the information. Shortly after the new system was implemented, it rejected claims more frequently than the old system. Within two months, 300,000 claims were frozen. The number would eventually reach nearly 650,000. Some providers who werent getting paid because the system wouldnt or couldnt process their claims, were forced to turn away patients or even shut down their operations. The disaster cost the state an additional $30 million dollars. More than a year after rolling out the new system, Maine was the only state that still had not satisfied HIPAA requirements. 2. Evaluate the risks of the Medicaid claims processing system project and key risk factors. Key risk factors include the project size, project structure, and the level of technical expertise of the information systems staff and project team. Risks are also higher for systems where

information requirements are not clear and straightforward or the project team must master new technology. The states IT department decided that a completely new system would be more cost-effective and easier to maintain than upgrading the old system. The outsourcing company hired to work with the Department of Human Services IT staff had never before designed a Medicaid claims system. Although not explicitly stated in the case study, it appears as though the end-users, the health care providers, were not consulted with on any part of the project. There was a lack of regard for critical management guidelines. 3. Classify and describe the problems the Main Department of Human Services faced in implementing its new Medicaid claims processing system. What people, organization, and technology factors caused these problems? People: The CNSI contractor had never designed a Medicaid claims system before. There didnt appear to be any training for the end-users, the health-care providers. The project team had difficulty obtaining input from the Medicaid experts on staff at the Bureau of Medical Services, forcing the project team to make judgments about Medicaid rules and requirements without them. The team then had to reprogram parts of the system once the Medicaid experts became available. Sensing that they would never catch up, the team began to take shortcuts. Organization: The state and outsourcing company allowed only twelve months from inception to roll-out for a project of this magnitude. That simply wasnt enough time to constructively plan, design, and implement a system of this magnitude. Technology: When the DHS launched the new claims processing system it did not have a backup or parallel system to support the deployment because the legacy system was incompatible with the new code numbers and electronic claim forms. A parallel system was not feasible economically or technically. 4. Describe the steps you would have taken to control the risk in the Maine Medicaid project. If you were in charge of managing this project, what else would you have done differently to increase chances for success? The state should have been more concerned about hiring an outsourcer that had experience in designing and implementing these kinds of systems. Thats especially true since the state had decided to build an entirely new system rather than redesign its old one. More time should have been given to the project. Twelve months simply wasnt enough time to perform all of the steps necessary for a successful project. Had the State and the outsourcer used PERT charts and Gantt charts, they would have realized that fact. State officials should have been more insistent on obtaining input from the Medicaid experts on staff at the Bureau of Medical Services from the beginning of the project rather than waiting until much later when some of the software had to be rewritten. More effort should have gone into training end-users.

MIS In Action Visit the Office of MaineCare Services on the Web at www.maine.gov/bms/ and then answer the following questions. Information in answers to questions 1 and 2 were copied directly from the Web site. 1. What services are available through MaineCare online? The Office of MaineCare Services, formerly the Bureau of Medical Services, was created to administer the Departments major health care financing programs and health care benefits. MaineCare Services coordinates the programs and benefits, assures that they operate under consistent policy in keeping with the Departments goals and Federal mandates, and provides accountability necessary to determine that they are administered in an effective and efficient manner. The programs and health care benefits that MaineCare Services administers are: MaineCare, Maine Eye Care, Maine Rx Plus, and Drugs for the Elderly and Disabled. 2. What information is available regarding MaineCare and its compliance with HIPAA standards? The State of Maine's MeCMS Release Management Team had announced that MaineCare was ready to test ANSI X12N 4010A1 transactions (HIPAA standard). However, due to a recently discovered software defect, the MeCMS Release Management Team's ability to begin testing and to receive 4010A1 transactions has been delayed. After careful consideration, the MeCMS Release Management Team has decided to put the Trading Partner Enrollment and Migration Process on hold indefinitely. Based on the MeCMS repair timelines, the State of Maine's Electronic Data Interchange (EDI) Team is unable to provide a specific date for resuming the 837 I enrollment and testing process. The schedule that was publicized for receiving and testing files has been cancelled. The EDI Team will provide updates to this web site as new information is made available. The State of Maine's MeCMS Release Management Team apologizes for any inconvenience this delay will cause to our customers. MaineCare is currently in the process of selecting a fiscal agent vendor that will implement a Medicaid Management Information System (MMIS) for MaineCare. We are on track with a scheduled implementation of this MMIS by January 2010. It is not anticipated that any HIPAA transactions will be supported by the current MMIS system (MECMS) prior to the transition to the new Fiscal Agent. This includes the 837 HIPAA Claims: Professional, Dental, or Institutional.

We encourage you to visit our web site http://www.maine.gov/bms/provider.htm and to sign up for the OMS ListServ http://mailman.informe.org/mailman/listinfo/provider/ to receive provider updates on this topic. Thank you! 3. What information is available for providers who have had or are still having problems using MaineCares claims processing system? A host of information is available on the Web site under the MECMS page link. It gives providers and end-users a list of documents and Provider Portal Tools to help with problems or difficulties users may be having. 4. How easy is it to obtain this information? Its fairly easy to obtain the information although other links on the site were extremely outdated. Section 11.5, Hands-on MIS Achieving Operational Excellence: Designing an Employee Training and Skills Tracking System and Database: Dirt Bikes USA Software skills: Database design, querying, and reporting Business skills: Employee training and skills tracking Students will have to perform a systems analysis and then design a system solution using database software. They will need to identify information requirements and then map out entities, attributes, and relationships to guide the design of database tables. They will need to populate the database and generate queries and reports that satisfy management information requirements. This project should not be assigned unless students have the requisite database skills. Prepare a systems analysis report describing Dirt Bikes problem and a system solution that can be implemented using PC database software. Then use the database software to develop a simple system solution. Your report should include the following: 1. Description of the problem and its organizational and business impact. 2. Proposed solution and solution objectives. 3. Information requirements to be addressed by the solution. 4. Management, organization, and technology issues to be addressed by the solution, including changes in business processes. On the basis of the requirements you have identified, design the solution using database software and populate it with at least 10 records per table. Consider whether you can use or modify the existing employee database in your design. Print out the design for each table in your new application. Use the system you have created to create queries and reports that would be of most interest to management, such as which employees have college educations

or which employees have training in project management or advanced computer-aided design [CAD] tools. The example solution file represents one of many alternative database designs that would satisfy Dirt Bikess requirements. This file can be found in the Microsoft Access file named: Ess8ch11 running case solution.mdb. Improving Decision Making: Using Database Software to Design a Customer System for Auto Sales Software skills: Database design, querying, reporting, and forms Business skills: Sales lead and customer analysis Prepare a systems analysis report detailing Aces problem and a system solution that can be implemented using PC database management software. Then use database software to develop a simple system solution. Your systems analysis report should include the following: 1. Description of the problem and its organizational and business impact. 2. Proposed solution, solution objectives, and solution feasibility. 3. Costs and benefits of the solution you have selected. The company has a PC with Internet access and the full suite of Microsoft Office desktop productivity tools. 4. Information requirements to be addressed by the solution. 5. Management, organization, and technology issues to be addressed by the solution, including changes in business processes. On the basis of the requirements you have identified, design the database and populate it with at least 10 records per table. Consider whether you can use or modify the existing customer database in your design. Print out the database design. Then use the system you have created to generate queries and reports that would be of most interest to management. Create several prototype data input forms for the system and review them with your instructor. Then revise the prototypes. The example solution file represents one of many alternative database designs that would satisfy Aces requirements. This file can be found in the Microsoft Access file named: Ess7ch11 solutionfile.mdb. Achieving Operational Excellence: Analyzing Web Site Design and Information Requirements Software skills: Web browser software Business skills: Information requirements analysis, Web site design Visit the Web site of your choice and explore it thoroughly. Prepare a report analyzing the various functions provided by that Web site and its information requirements. Your report should answer these questions: What functions does the Web site perform? What data does it use? What are its inputs, outputs, and processing? What are some of its other design

specifications? Does the Web site link to any internal systems or systems of other organizations? What value does this Web site provide the firm? Web systems serve a critical role in todays business environment. As such, major firms have Web site presence and consider this technology critical to their success. The purpose of this project is to give the students experience in evaluating a Web system and thinking through how well the site design meets the requirements of the business and its customers. Once a group has selected a Web site to analyze, they should begin to develop a set of criteria they believe enables the firm to address the needs of the firm. They can also list the strengths and weaknesses of the Web site. They can do this by developing a sliding scale and allocating weights to each criteria selected. This will enable them to rank and quantify how they feel the Web site meets those criteria.

Review Questions
1. What are the core problem-solving steps for developing new information systems? List and describe the problem-solving steps for building a new system. Figure 11.1 outlines the four steps of the problem-solving process. They include: Define and understand the problem entails defining the problem and identifying its causes, solution objectives, and information requirements. Develop alternative solutions entails defining alternative solutions and most likely paths to follow given the nature of the problem. Choose the best solution entails an assessment of the technical, financial, and organizational feasibility of each alternative and selection of the best solution. Implement the solution entails finalizing design specifications, acquiring hardware and software, testing, providing training and documentation, conversion, and evaluating the system once it is in production. Define information requirements and explain why they are important for developing a system solution. Information requirements involve identifying who needs what information, where, when, and how. They define the objectives of the new or modified system and contain a detailed description of the functions the new system must perform. Gathering information requirements is perhaps the most difficult task of the systems analyst, and faulty requirements analysis is a leading cause of systems failure and high systems development costs. List the various types of design specifications required for a new information system. Systems design shows how the chosen solution should be realized. A system design is the model or blueprint for an information system solution and consists of all the specifications that will deliver the functions identified during systems analysis. These specifications should address all of the technical, organizational, and people components of the system solution. Table 11.1 lists the types of specifications that would be produced during system design. They

include: Output, input, user interface, database, processing, manual procedures, security and controls, conversion, training and documentation, and organizational changes. Explain why the testing stage of systems development is so important. Name and describe the three stages of testing for an information system. Testing is critical to the success of a system because it is the only way to ascertain whether the system will produce the right results. Three stages of information system testing are: Unit testing refers to separately testing or checking the individual programs. System testing the entire system as a whole is tested to determine whether program modules are interacting as planned. Acceptance testing - the system undergoes final certification by end users to ensure that it is ready for installation. Describe the roles documentation, conversion, production, and maintenance play in systems development. Documentation shows how the system works from both a technical and end-user standpoint. Conversion is the process of changing from the old system to the new system. Production is the operation of the system once it has been installed and conversion is complete. The system will be reviewed during production by both users and technical specialists to determine how well it has met its original objectives and to decide whether any revisions or modifications are needed. Maintenance is modifications to hardware, software, documentation, or procedures to a production system to correct errors, meet new requirements, and improve processing efficiency. 2. What are the alternative methods for building information systems? Define the traditional systems lifecycle and describe its advantages and disadvantages for systems building. The traditional systems lifecycle is a formal methodology for managing the development of systems and is still the principal methodology for medium and large projects. The overall development process is partitioned into distinct stages, each of which consists of activities that must be performed to fashion and implement an information system. The stages are usually gone through sequentially with formal sign-off agreements among end users and data processing specialists to validate that each stage has been completed. Users, managers, and data processing staff have specified responsibilities in each stage. The approach is slow, expensive, inflexible, and is not appropriate for many small desktop systems. The systems lifecycle consists of systems analysis, systems design, programming, testing, conversion, and production and maintenance. Systems analysis is the phase where the problem that the organization is trying to solve is analyzed. Technical specialists identify the problem,

gather information requirements, develop alternative solutions, and establish a project management plan. Business users provide information requirements, establish financial or operational constraints, and select the solution. During systems design, technical specialists model and document design specifications and select the hardware and software technologies for the solution. Business users approve the specifications. During the programming phase, technical specialists translate the design specifications into software for the computer. During the testing phase, technical specialists develop test plans and conduct unit, system, and acceptance tests. Business users provide test data and scenarios and validate test results. During the conversion phase, technical specialists prepare a conversion plan and supervise conversion. Business users evaluate the new system and decide when the new system can be put into production. During the production and maintenance phase, technical specialists evaluate the technical performance and perform maintenance. Business users use the system and evaluate its functional performance. The advantages of using this method for building information systems include that it is highly structured; it has a rigorous and formal approach to requirements and specifications and tight controls over the system building process; it is appropriate for building large transaction processing and management information systems and for building complex technical systems. The disadvantages include: it is very costly and time-consuming; it is inflexible and discourages change even though requirements will change during the project due to the long time this method requires; it is ill-suited to decision-oriented applications that can be rather unstructured and for which requirements are difficult to define. Define information system prototyping and describe its benefits and limitations. List and describe the steps in the prototyping process. Information system prototyping is an explicitly interactive system design methodology that builds an experimental model of a system as a means of determining information requirements. Prototyping builds an experimental system quickly and inexpensively for demonstration and evaluation so that users can better determine information requirements. A preliminary model of a system or important parts of the system is built rapidly for users to experiment with. The prototype is modified and refined until it conforms precisely to what users want. Information requirements and design are determined dynamically as users interact with and evaluate the prototype. Prototyping is most valuable when requirements are uncertain and cannot be entirely prespecified or when the appropriate design solution is unclear. Prototyping is especially helpful for designing end-user interfaces (screens and reports) and for determining elusive requirements of decision-support type applications. Prototyping can help reduce implementation costs by capturing requirements more accurately at an earlier point in the implementation process. It is not so useful for a very structured, well-understood, or routine problem. It is best suited for smaller applications oriented toward simple data manipulation. Large

systems with complex processing may only be able to have limited features prototyped. The prototype may be built so rapidly that design is not well thought out or must be reworked for a production environment. The problem arises when the prototype is adopted as the production version of the system without careful analysis and validation. Prototypes are built so rapidly that documentation and testing are glossed over. The system is so easily changed that documentation may not be kept up-to-date. The steps in prototyping include identifying the users basic requirements; developing a working prototype of the system outlined in the basic requirements, using the prototype, and revising and enhancing the prototype based on the users reaction. The third and fourth steps are repeated until users are satisfied with the prototype. Define end-user development and explain its advantages and disadvantages. End-user development refers to the development of information systems by end users with minimal or no assistance from professional systems analysts or programmers. This is accomplished through sophisticated user-friendly software tools and gives end users direct control over their own computing. Advantages include improved requirements determination, realizing large productivity gains when developing certain types of applications, enabling end users to take a more active role in the systems development process, many can be used for prototyping, and some have new functions such as graphics, modeling, and ad-hoc information retrieval. Disadvantages include not being suited for large transaction-oriented applications or applications with complex updating requirements, standards for testing and quality assurance may not be applied, and proliferation of uncontrolled data and private information systems. End-user development is suited to solving some of the backlog problem because the end users can develop their needed applications themselves. It is suited to developing low-transaction systems. End-user development is valuable for creating systems that access data for such purposes as analysis (including the use of graphics in that analysis) and reporting. It can also be used for developing simple data-entry applications. Policies and procedures to manage end-user development include the following: The organization must establish sufficient support facilities for end-user computing: information centers or distributed end-user computing centers. Training and support should be targeted to the specific needs of those being trained. End-user application development should not be allowed to be undertaken randomly but should be incorporated into the organizations strategic plan. Management should develop controls over end-user computing in the following areas: Cost justification of end-user information system project Hardware and software standards for user-developed applications Company-wide standards for microcomputers, word processing software, database management systems, graphics software, and query and reporting tools

Quality assurance reviews that specify whether the end-user systems must be reviewed by information systems and internal audit specialists Control for end-user developed applications covering testing, documentation, accuracy, and completeness of input and update, backup, recovery, and supervision Critical applications that supply data to other important systems should be flagged and subjected to more rigorous standards Describe the advantages and disadvantages of developing information systems based on application software packages. Software packages provide several advantages: (1) the vendor has already established most of the design that may easily consume up to 50 percent of development time; (2) programs are pretested, cutting down testing time and technical problems; (3) the vendor often installs or assists in the installation of the package; (4) periodic enhancement or updates are supplied by the vendor; (5) vendors also maintain a permanent support staff well versed in the package, reducing the need for individual organizations to maintain such expertise in-house, and (6) the vendor supplies documentation. The usage of software packages has several disadvantages: (1) there are high conversion costs for systems that are sophisticated and already automated; (2) packages may require extensive customization or reprogramming if they cannot easily meet unique requirements, and (3) a system may not be able to perform many functions well in one package alone. Define outsourcing. Describe the circumstances in which it should be used for building information systems. What are the hidden costs of offshore software outsourcing? Outsourcing is the process of turning over an organizations computer center operations, telecommunications networks, or applications development to external vendors who provide these services. Outsourcing is an option often considered when the cost of information systems technology has risen too high. Outsourcing is seen as a way to control costs or to develop applications when the firm lacks its own technology resources to do this on its own. It is seldom used for a system that is strategically important. How can businesses rapidly develop e-business applications? RAD is a process for developing systems in a very short time period by using prototyping, fourth-generation tools, and close teamwork among users and systems specialists. RAD allows the creation of working software in a very short time through objects and automation of much of the code generation. Usually they depend on interfaces to databases. 3. What are the principal methodologies for modeling and designing systems? Compare object-oriented and traditional structured approaches for modeling and designing systems.

The traditional structured methodology focuses on what the new system is intended to do and then develops the procedures and data to do it. Object-oriented development de-emphasizes system procedures and instead creates a model of a system composed of individual objects that combine data and procedures. The objects are independent of any specific system. These objects can then be placed into any system being built that needs to make use of the data and functions. In addition, in traditional structured methodologies all work is done serially, with work on each phase begun only when the previous phase is completed. Object-oriented development theoretically allows simultaneous work on design and programming. These systems usually are easier to build and more flexible. Moreover, any objects created this way are reusable for other programs. 4. How should information systems projects be selected and evaluated? Explain the difference between tangible and intangible benefits? Tangible benefits can be quantified and assigned a monetary value. Intangible benefits are classified as nonquantifiable and cannot be assigned a monetary value. List six tangible benefits and six intangible benefits. Students can use Table 11.3 to answer this question. Tangible benefits include: increased productivity, lower operational costs, reduced workforce, lower computer expenses, lower outside vendor costs, lower clerical and professional costs, reduced rate of growth in expenses, reduced facility costs, and increased sales. Intangible benefits include: improved asset utilization, improved resource control, improved organizational planning, increased organizational planning, increased organizational flexibility, more timely information, more information, increased organizational learning, legal requirements attained, enhanced employee goodwill, increased job satisfaction, improved decision making, improved operations, higher client satisfaction, and better corporate image. List and describe the major components of an information systems plan. Students can use Table 11.4 to answer this question. Major components of an information systems plan include: (1) Purpose of the Plan, (2) Strategic Business Plan Rationale, (3) Current Systems, (4) New Developments, (5) Management Strategy, (6) Implementation of the Plan, and (7) Budget Requirements. Describe how portfolio analysis and scoring models can be used to establish the worth of systems. Portfolio analysis and scoring models can be used to evaluate alternative information systems projects. Portfolio analysis is used to help in evaluating alternative system projects. Portfolio analysis inventories all of the firms information systems projects and assets, including infrastructure, outsourcing contracts, and licenses. Firms try to improve the return on their information system portfolios by balancing the risk and return from their systems investments.

By using portfolio analysis, management can determine the optimal mix of investment risk and reward for their firms, balancing riskier, high-reward projects with safer, lower-reward ones. Scoring models give alternative systems a single score based on the extent to which they meet selected objectives. Table 11.5 can be used to explain how a simple scoring system works. 5. How should information systems projects be managed? Explain the importance of implementation for managing the organizational change surrounding a new information system. The term implementation refers to the entire process of organizational change surrounding the introduction of a new information system. Information systems design and the entire implementation process should be managed as planned organizational change using an organizational impact analysis. A very large percentage of information systems fail to deliver benefits or solve the problems for which they were intended because the process or organizational change surrounding system building was not properly addressed. The principal causes of information system failure are (1) insufficient or improper user participation in the systems development process, (2) lack of management support, (3) high levels of complexity and risk, and (4) poor project management. Define the user-designer communication gap and explain the kinds of implementation problems it creates. The user-designer communication gap deals with the relationship that exists between end users and information systems specialists. These two groups have different backgrounds, interests, and priorities and has traditionally been a problem for information systems implementation efforts. These differences create user-designer communications gaps. Information systems specialists often have a highly technical orientation to problem solving, focusing on technical solutions in which hardware and software efficiency is optimized at the expense of ease of use or organizational effectiveness. End users prefer systems that are oriented toward solving business problems or facilitating organizational tasks. List and describe the factors that influence project risk and describe strategies for minimizing project risks. Strategies you can follow to increase the chances of a successful system include: New systems that involve challenging and complex technology can be helped by recruiting project leaders with strong technical and administrative experience. If the firm does not have staff with the required technical skills or expertise, outsourcing or using external consultants are options that may be pursued. Using formal planning and control tools, such as Program Evaluation and Review Technique (PERT) or Gantt charts improve project management by listing the specific activities that make up a project, their duration, and the sequence and timing of task.

Promote user participation by making user education and training easily available, and by providing better incentives for users who cooperate. Exercise sensitivity to ergonomic issues. Solve organizational problems prior to introducing new systems. Describe tactics for managing global projects. Project management challenges for global systems are complicated by the international environment. User information requirements, business processes, and work cultures differ from country to country. It is difficult to convince local managers anywhere to change their business processes and ways of working to align with units in other countries, especially if this might interfere with their local performance. Tactics for managing global projects include: Involve people in change Permit each country unit to develop one transnational application first in its home territory and then throughout the world. Develop new transnational centers of excellence, or a single center of excellence.

Discussion Questions
1.

Discuss the role of business end users and information system professionals in developing a system solution. How do both roles differ when the solution is developed using prototyping or end-user development? Business end users are the people who actually use the system. It is critical that these individuals play a role in any systems development efforts. Their input greatly enhances the whole systems development process. Business end users who are involved in systems development projects feel more ownership towards it, and will strive harder to ensure that the system is successful. Point out to students that no matter how well a system is designed, without user acceptance it will suffer major consequences, and many actually fail. The role of the information system professional is to design a system that meets both the needs of the organization and its end users. The role of an information system professional is to clearly understand the needs of the organization and those of the people who will ultimately be the users of the system. By keeping communication lines open and have involvement of different levels of personnel, a common goal can be achieved. When a solution is developed using prototyping, the system is rapidly and inexpensively developed for end users to interact with and evaluate. The prototype is refined and enhanced until users are satisfied that it includes all of their requirements and can be used as a template to create the final system. Prototyping encourages end-user involvement in systems

development and iteration of design until specifications are captured accurately. The rapid creation of prototypes can result in systems that have not been completely tested or documented or that are technically inadequate for a production environment. 2.It has been said that systems fail when systems builders ignore people problems. Why might this be so? System building efforts often fail because there is too much emphasis on the technology and not enough attention to changes in organizational structure, job design, workflows, and reporting relationships. Inattention to these issues often breeds resistance to a new system and may also produce a system that is incompatible with the organization. Conflicts between the technical orientation of system designers and the business orientation of end users must also be resolved for successful implementation of systems. The success or failure of organizational change can be determined by how well information systems specialists, end users, and decision makers deal with key issues at various stages of implementation.

Video Case Questions


You will find a video case illustrating some of the concepts in this chapter on the Laudon Web site at www.prenhall.com/laudon along with questions to help you analyze the case.

Teamwork: Analyzing Web Site Requirements


With three or four of your classmates, visit the Web site of iTunes, MP3.com, the Internet Movie Database, or a company described in this text that uses the Web. Review the Web site for the company you select. Use what you have learned from the Web site and this chapter to prepare a report describing the functions of that Web site and some of its design specifications. If possible, use electronic presentation software to present your findings to the class. Because Web systems play such a central role in todays information systems world, the purpose of this project is to give the students experience in evaluating a Web system and think through what it takes to develop a good Web site. After selecting the Web system, the groups should begin this project by developing a set of functions that they feel are critical factors to its success. They may also develop a table outlining what they believe are critical (ease of use, well laid out, good colors, fast loading, informative, click options, etc.).

Business Problem-Solving Case: Citizens National Bank Searches for a System


Solution Case Study Questions

1. What was the initial problem that Mark Singleton was trying to solve at Citizens National? How well did he apply the four steps of problem solving? A major part of Citizen Nationals strategy for continuing growth was to implement customer relationship management (CRM) software. The CRM strategy targeted the banks two main contact points with customers: the banks call center and its sales force. The main goal for the implementation was to increase sales by raising the number of contacts relationship bankers were making and improving the tracking of these activities so the bank could learn more from them. The four steps of problem solving include: Define and understand the problem: it appears that Singleton defined and understood the problem of trying to get more information and use it more efficiently to expand sales Develop alternative solutions: it doesnt appear as though Singleton or the outsourcer fulfilled this step very well. They only considered one CRM system and didnt evaluate it well against organizational goals Choose the best solution: Obviously, if the previous step failed, so did this one. The union of old-fashioned business sensibility with powerful enterprise software was a mismatch almost immediately. The Siebel software was simply too rich in features. The bank spent an inordinate amount of time switching off features that hindered productivity. Implement the solution: Several things went wrong: Employees found the software to be too complicated. The extra navigation was confusing and inefficient. The users resisted the new system. It didnt make sense for them to change their tried-and-true methods simply because new software required change. This points directly to the user-designer communication gap issue. The bank also experienced compatibility issues between database formats. The bank spent three years trying to make the implementation work. They finally gave up and switched to another system. 2. What was the business case for implementing a new system? What were some of the tangible benefits? What were some of the intangible benefits? Citizens National Bank of Texas wanted to continue increasing its market share to at least 50 percent in eight counties in the state. It planned to use customer relationship management software to help improve its call center and sales force. It targeted its relationship bankers that drive most of its business and increase loan sales and deposits. The main goal for the implementation was to increase sales by raising the number of contacts the relationship bankers were making and improve the tracking of these activities so that the bank could learn more from them. Tangible benefits: approve credit and loan applications more quickly; store interactions between relationship bankers and customer electronically.

Intangible benefits: the old paper system allowed salespeople who left the organization to take their customer records with them. The new system would prevent that. The paper system also created too much information for the CEO and managers to process effectively. 3. Why didnt the implementation of the Siebel CRM solution work out for Citizens National? What were the biggest factors? How would you classify these factors in terms of organization, technology, and people issues? The business was too small to effectively use a system designed for larger organizations. The union of old-fashioned business sensibility with powerful enterprise software was a mismatch almost immediately. Organization: The approach of Citizens National toward nearly all business functions, from tracking customer leads to generating reports about them, was very basic. The new software was simply too rich in features. Technology: The software had more functions than necessary or manageable. Employees found the software to be too complicated. Bankers were not able to view multiple relationships between a customer and the bank on the same screen. The extra navigation was confusing and inefficient. Compatibility issues between the database formats in Siebel and those used by the banks core applications created problems for employees. People: The relationship bankers resisted the new system. It didnt make sense for them to change their methods because of the software. The users did not have an incentive to use the new system because their compensation was based on sales, and sales had become harder to make. 4. Was QuickBase a better solution for Citizens National? If so, why? What factors suggest that the bank ended up with the right approach and the right choice of product? Quickbase was a much better solution for the bank because it was a smaller application program. It included modules for databases, spreadsheets, and sales management, all of which could be easily manipulated for the banks business functions. It is designed to organize, track, and share information among team members in the workplace. Employees can customize the package themselves. The business can modify its database structure to meet specific business function. The cost of ownership and maintenance fees were much lowers. The bankers were able to use the software anywhere they had access to a browser. The bank implemented QuickBase using a phased rollout to make it easier on employees. Quickbase was integrated with the banks core applications. 5. Based on this case study, what kind of organization do you think would benefit from using the Siebel CRM package? Give an example of such an organization and justify your choice. You may use the Web to research your answer, including Oracles Web site. Answers will vary to the first part of this question.

Using Oracles Web site, the type of companies using the Siebel CRM package runs the gamut, including Alaska Airlines, the City of New York, CompUSA (a national retail chain) Horizon Healthcare, and Virgin Mobile USA (a telecommunications company). 6. Could Citizens National have made a better choice of software for its CRM system the first time around? Explain your answer. Since the banks first choice of a software solution didnt work out, its obvious the organization could have made a better choice. For the most part, not matching the software to the core competencies in the organization was the biggest problem in this case study.

Chapter Summary
Section 11.1: Problem Solving and Systems Development The core problem-solving steps for developing new information systems are: (1) define and understand the problem, (2) develop alternative solutions, (3) evaluate and choose the solutions, and (4) implement the solution. The first step entails defining the problem and identifying its causes, solution objectives, and information requirements. The second step identifies alternative solutions to the problem. The third step entails an assessment of the technical, financial, and organizational feasibility of each alternative and selection of the best solution. The fourth step entails finalizing design specifications, acquiring hardware and software, testing, providing training and documentation, conversion, and evaluating the system once it is in production. Section 11.2: Alternative Systems-Building Approaches. There are a number of alternative methods for building information systems, each suited to different types of problems. The oldest method for building systems is the systems lifecycle, which requires that information systems be developed in formal stages. The stages must proceed sequentially and have defined outputs; each requires formal approval before the next stage can commence. The system lifecycle is rigid and costly, but nevertheless useful for large projects that need formal specifications and tight management control over each stage of systems building. Prototyping consists of building an experimental system rapidly and inexpensively for end users to interact with and evaluate. The prototype is refined and enhanced until users are satisfied that it includes all of their requirements and can be used as a template to create the final system. Prototyping encourages end-user involvement in systems development and iteration of design until specifications are captured accurately. The rapid creation of prototypes can result in systems that have not been completely tested or documented or that are technically inadequate for a production environment. End-user development is the development of information systems by end users, either alone or with minimal assistance from information systems specialists. End-user-developed systems can be created rapidly and informally using fourth-generation software tools. The primary benefits of end-user development are improved requirements determination; reduced application backlog; and increased end-user participation in, and control of, the systems development process. However, end-user development, in conjunction with distributed computing, has introduced new

organizational risks by propagating information systems and data resources that do not necessarily meet quality assurance standards and that are not easily controlled. Firms can also build systems by purchasing software or software services from outside vendors. One alternative is to purchase an application software package, which eliminates the need for writing software programs when developing an information system. Application software packages are helpful if a firm does not have the internal information systems staff or financial resources to custom develop a system. Another alternative is to outsource systems development work. Outsourcing consists of using an external vendor to build (or operate) a firms information systems. The work is done by the domestic or offshore vendor rather than by the organizations internal information systems staff. If it is properly managed, outsourcing can save application development costs or enable firms to develop applications without an internal information systems staff. However, firms risk losing control of their information systems and becoming too dependent on external vendors. Businesses today are often required to build e-commerce and e-business applications very rapidly to remain competitive. Companies are turning to rapid application design, joint application design (JAD), and reusable software components (including Web services) to speed up the systems development process. Section 11.3: Modeling and Designing Systems. The two principal methodologies for modeling and designing information systems are structured methodologies and object-oriented development. Structured methodologies focus on modeling processes and data separately. The data flow diagram is the principal tool for structured analysis, and the structure chart is the principal tool for presenting structured software design. Objectoriented development models a system as a collection of objects that combine processes and data. Companies are turning to rapid application design (RAD), joint application design (JAD), and reusable software components to improve the systems development process. Section 11.4: Project Management. To determine whether an information system is a good investment for the company, one must calculate its costs and benefits. Tangible benefits are quantifiable, and intangible benefits cannot be immediately quantified but may provide quantifiable benefits in the future. Benefits that exceed costs should then be analyzed using capital budgeting methods, such as net present value (NPV), to make sure they represent a good return on the firms invested capital. Other models for evaluating information systems investments involve nonfinancial and strategic considerations. Organizations should develop information systems that describe how information technology supports the companys overall business plan and strategy. Portfolio analysis and scoring models can be used to evaluate alternative information systems projects. A very large percentage of information systems fail to deliver benefits or solve the problems for which they were intended because the process or organizational change surrounding system building was not properly addressed. The inherent user-designer communications gap warrants close attention by everyone involved in a project.

The term implementation refers to the entire process of organizational change surrounding the introduction of a new information system. Information systems design and the entire implementation process should be managed as a planned organizational change using an organizational impact analysis. Management support and control of the implementation process are essential, as are mechanisms for dealing with the level of risk in each new systems project. Formal planning and control tools track the resource allocations and specific project activities. Users can be encouraged to take active roles in systems development and become involved in installation and training. There are two tactics for managing projects on a global scale: 1) permit each country unit in a global corporation to develop one transnational application first in its home territory, and then throughout the world. 2) develop new transnational centers of excellence, or a single center of excellence.