Management Issues in Systems Development

Chapter 10
Information Systems Management in Practice 8th Edition

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Todays Lecture

Introduction
Project Management

Definition, scope, best practices Change management Risk management To replace or not to? Improvement

Modernizing Legacy Systems

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Todays Lecture

Measuring systems benefits

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

Conclusion

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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

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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!)

People become confused and concerned

IT project management

Coordination (managing interdependencies)

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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

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Change Management

Beyond technical aspects of system Managing change (people side of system)

Assimilation of new systems into work processes

Resistance (organizational inertia)

ODR a methodology to manage technologytriggered change (stakeholders involved)

Sponsor Change agent Target

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Change Management contd

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

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The BOC Group

Case example: Change Management Re-engineer BOCs core processes Teams assigned different processes to improve

Understand semantics of entire process How to implement change Input into training plan Devise communication plan Vice presidents and directors ODR training workshop for sponsors
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Garnering True Executive Sponsorship

The BOC Group contd

Involving middle management

Advisory council

Upward job: give feedback on implemented changes Downward job: obtain employee buy-in

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The BOC Group contd

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 in place of paper PODD advisory council facilitated upward and downward communication Training program for drivers (less resistance) Sponsors identified and mitigated project risks
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Risk Management

Management of risks in IT projects crucial

Technical risk

Sub-performance; scope creep IT-triggered organizational change not as planned

Business risk

1. 2.

Risk management cookbook

Assess the risk Mitigate the risk Adjust project management approach
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3.

Risk Management contd

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?

Is the scope too wide? How urgent?

Scope and urgency

Gibsons plus-minus decision tree

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Risk Management contd

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Risk Management contd

2.

Mitigate the risks

Risk avoidance

Identify and eliminate source of perceived risk Implementing controls to contain potential risk effects Letting others assume risk (outsourcing)

Risk limitation

Risk transfer

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Risk Management contd

3.

Adjust project management approach

Project management style

Authoritative vs. participatory

Rigid vs. flexible Big Bang Approach (all other 3 must be positive) Improvisation Guided evolution Top-down coordination

Project budget and timeframe

Gibsons Four Approaches

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Gibsons Four Approaches to Risk Management

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Dow Corning
Case Example: Risk Management Successful ERP implementation (19951999)

How did it manage the different business risks?

Phase 0: Get Ready (assessed risks)

Leadership (high) Employee perception (high) Scope and urgency (high)

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Dow Corning contd

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)
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Dow Corning contd

Phase 3: Implement ERP worldwide

Used top-down coordination with an authoritative management style and flexible timelines

Pilots 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
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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

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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?)

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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

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Restructuring the System

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Options for Improving Legacy Systems contd

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

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Reengineering the System

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Verizon Directories
Case 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

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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 Employed reengineering tools to reuse data elements in the largest existing database to create a new production scheduling system

Reuse project

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Options for Improving Legacy Systems contd

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., FedExs package tracking system

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Options for Improving Legacy Systems contd

4.

Rejuvenate the system

Adding new functions to a reengineered system to make it more valuable Phases of rejuvenation process
1.

2.
3.

Recognize a systems potential Clean up the system and make it more efficient Establish a strategic role for the system
Add new functionalities to create business value

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

Access to Amazons 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

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Options for Improving Legacy Systems contd

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

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Toyota Motor Sales

Case 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

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Options for Improving Legacy Systems contd

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

Replace with service delivered over the Internet

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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 ($) Pay by use

Replaced with SalesForce CRM system

Equivalent to maintenance costs

Provides necessary management information

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Options for Improving Legacy Systems contd

7.

Rewrite the system

System is too far gone to rescue

Code convoluted and patched; technology antiquated Rare (usually only for very specialized systems)

Alternative to replacement

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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?

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Measuring Systems Benefits contd

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 conundrum

1. 2. 3.

Distinguish between different roles of systems Measure what is important to management Assess investments across organizational levels

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Distinguish Between the Different Roles of Systems

1.

Information systems can play three roles

Performance: Support systems to increase efficiency Business Value: Carry out a business strategy

2.

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

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Distinguish Between the Different Roles of Systems

1.

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)

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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
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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

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A Trucking Company
Case 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 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)
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Measures

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

Researchers argument

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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

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Conclusion contd

Information systems difficult to keep up-todate 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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