Information Systems: the Foundation of E-Business (CIS 108)

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Information Systems the Foundation of E-Business
(CIS 108)

• Exploring the business of value of IS and
  Managing Change
• Lecture NINE (14th March 2005)
• Amare Michael Desta

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LEARNING OBJECTIVES

• EVALUATE MODELS DETERMINING BUSINESS VALUE OF
  INFORMATION SYSTEMS
• ANALYZE PRINCIPAL CAUSES OF INFORMATION SYSTEM
  FAILURE
• ANALYZE REQUIREMENTS FOR BUILDING SUCCESSFUL
  SYSTEMS
• SELECT STRATEGIES TO MANAGE SYSTEM
  IMPLEMENTATION

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MANAGEMENT CHALLENGES

• UNDERSTANDING BUSINESS VALUE OF INFORMATION
  SYSTEMS
• CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS
  FAILURE
• MANAGING IMPLEMENTATION

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UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS

• CAPITAL BUDGETING MODELS
• PORTFOLIO ANALYSIS
• REAL OPTIONS PRICING MODELS

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CAPITAL BUDGET

• PAYBACK METHOD How long will it take to pay back
  the investment?
• RETURN ON INVESTMENT Does return during useful
  life of an item exceed the cost to borrow money?
• COST-BENEFIT RATIO Does the ratio of cost
  exceeds benefit?

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CAPITAL BUDGET

• PROFITABILITY INDEX What is the ratio of present
  value of cash inflow to initial investment?
• NET PRESENT VALUE Accounting for cost, earnings
  time value of money what is the investment
  worth?
• INTERNAL RATE OF RETURN Accounting for the time
  value of money, what is the return rate of an
  investment?

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COSTS BENEFITS

• COSTS
• HARDWARE
• SOFTWARE
• SERVICES
• PERSONNEL

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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

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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 etc.
• HIGHER CLIENT SATISFACTION
• BETTER CORPORATE IMAGE

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CAPITAL BUDGETING MODELS

• LIMITATIONS
• Assume all relevant alternatives have been
  examined cost benefits can be expressed as
• Ignore intangible benefits

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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

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SCORING MODEL

• IDENTIFY DESIRABLE FEATURES
• 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

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REAL OPTIONS PRICING MODELS

• USEFUL UNDER UNCERTAIN CONDITIONS
• INCLUDE ESTIMATES FOR MANAGEMENT LEARNING, VALUE
  OF DELAYING DECISION, VOLATILITY OF COSTS
  REVENUES

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CHANGE MANAGEMENT

• WHAT PROCESSES ARE BEST TO CHANGE
• DESIGN
• DATA
• COST
• OPERATIONS

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CHANGE AGENT

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

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IMPLEMENTATION

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

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INNOVATION PROCESS
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ACTIONS INDICATORS FOR SUCCESSFUL SYSTEM
IMPLEMENTATION

• SUPPORT BY LOCAL FUNDS
• NEW ORGANIZATIONAL ARRANGEMENTS
• STABLE SUPPLY MAINTENANCE
• NEW PERSONNEL CLASSIFICATIONS
• CHANGES IN ORGANIZATIONAL AUTHORITY

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ACTIONS INDICATORS FOR SUCCESSFUL SYSTEM
IMPLEMENTATION

• INTERNALIZATION OF TRAINING PROGRAM
• CONTINUAL UPDATING OF THE SYSTEM
• PROMOTION OF KEY PERSONNEL
• SURVIVAL OF SYSTEM AFTER TURNOVER
• ATTAINMENT OF WIDESPREAD USE

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FACTORS IN IMPLEMENTATION OUTCOMECAUSES OF
SUCCESS OR FAILURE

• USER INVOLVEMENT INFLUENCE
• MANAGEMENT SUPPORT
• LEVEL OF COMPLEXITY / RISK
• MANAGEMENT OF IMPLEMENTATION PROCESS

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USER-DESIGNER COMMUNICATIONS GAP

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

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USER CONCERNS

1. WILL SYSTEM DELIVER INFORMATION I NEED?
2. HOW QUICKLY CAN I ACCESS DATA?
3. HOW EASILY CAN I RECEIVE DATA?
4. HOW MUCH CLERICAL SUPPORT WILL I NEED FOR
   DATA ENTRY?
5. HOW WILL SYSTEM OPERATION FIT INTO MY DAILY
   BUSINESS SCHEDULE?

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DESIGNER CONCERNS

1. HOW MUCH DISK SPACE WILL MASTER FILE CONSUME?
2. HOW MANY LINES OF PROGRAM CODE WILL THIS FUNCTION
   TAKE?
3. HOW CAN WE REDUCE CPU TIME?
4. WHAT IS THE MOST EFFICIENT WAY OF STORING THIS
   DATA?
5. WHAT DATABASE MANAGEMENT SYSTEM SHOULD WE USE?

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LEVEL OF COMPLEXITY RISK

• PROJECT SIZE
• PROJECT STRUCTURE
• EXPERTISE WITH TECHNOLOGY

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CONTROLLING PROJECT RISK
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CONSEQUENCES OF POOR PROJECT MANAGEMENT

• COST OVERRUNS
• TIME SLIPPAGE
• TECHNICAL SHORTFALLS
• FAILURE TO OBTAIN BENEFITS

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CAUSES OF POOR PROJECT MANAGEMENT

• IGNORANCE OPTIMISM
• MYTHICAL MAN-MONTH Many tasks sequentially
  linked, require training
• FALLING BEHIND Bad news travels slowly upward

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CHANGE MANAGEMENT CHALLENGES

• ENTERPRISE SYSTEMS High risk of failure,
  replacing legacy systems, myriad interconnections
• BUSINESS PROCESS REENGINEERING 70 failure rate,
  deeply rooted in old processes, employees often
  unprepared

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CHANGE MANAGEMENT CHALLENGES

• MERGERS ACQUISITIONS Decline in shareholder
  value, difficult to integrate company systems,
  organizational change, worker morale

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MANAGING IMPLEMENTATION

• CONTROL RISK FACTORS Gear tools, methodologies
  to level of risk
• INTERNAL INTEGRATION TOOLS
• FORMAL PLANNING TOOLS
• FORMAL CONTROL TOOLS

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FORMAL PLANNING TOOLSEXAMPLES

• PROGRAM EVALUATION REVIEW TECHNIQUE Diagram of
  project activities, sequential and concurrent,
  shows interactions of activities
• GANTT CHART Shows activities as bars along a
  time line, with beginning, end of each task
• THESE PROVIDE SCHEDULES

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FORMAL CONTROL TOOLS

• BUDGET Time, money, resources
• MONITOR PROGRESS Completion of tasks,
  fulfillment of goals
• CONTROL RISK FACTORS Cost/benefits

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EXTERNAL INTEGRATION TOOLS

• LINK ALL USERS THROUGHOUT ORGANIZATION
• USE END USERS AS TEAM MEMBERS
• SHARE INFORMATION PROGRESS
• INCLUDE TRAINING
• AVOID COUNTERIMPLEMENTATION

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ORGANIZATIONAL FACTORS

• JOB DESIGN
• STANDARDS PERFORMANCE MONITORING
• ERGONOMICS Interaction of people machines
  jobs, health, interface

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ORGANIZATIONAL FACTORS

• EMPLOYEE GRIEVANCE RESOLUTION PROCEDURES
• HEALTH SAFETY
• GOVERNMENT REGULATORY COMPLIANCE

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ORGANIZATIONAL FACTORS

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

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ORGANIZATIONAL FACTORS

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

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FOURTH-GENERATION PROJECT MANAGEMENT

• EMERGING TECHNIQUES TO DEAL WITH COMPLEXITY
• ENTERPRISE-WIDE FOCUS
• DRIVEN BY STRATEGIC VISION TECHNOLOGY
• MAY REQUIRE SEPARATE PROGRAM OFFICE