4564-4406 Mis11e ch14

05-02-2013
Management Information Systems

Chapter 14 Chapter 14: Managing Projects
LEARNING OBJECTIVES
• Identify and describe the objectives of project

management and why it is so essential in developing
information systems.
Managing Projects • Compare methods for selecting and evaluating
information systems projects and methods for aligning
them with the firm’s business goals.
• Describe how firms can assess the business value of
information systems projects.
• Analyze the principal risk factors in information systems
projects.
• Select appropriate strategies for managing project risk
and system implementation.
14.1 © 2010 by Prentice Hall 14.2 © 2010 by Prentice Hall
Management Information Systems Management Information Systems

Chapter 14: Managing Projects Chapter 14: Managing Projects
McKesson’s Prescription for Project Management The Importance of Project Management
• Problem: Inconsistent, fragmented data in multiple • Runaway projects and system failure
sources hampering operational efficiency and
decision making for order processing and inventory • Runaway projects: 30-40% IT projects
management • Exceed schedule, budget
• Solutions: Replace existing systems with common • Fail to perform as specified
business intelligence infrastructure with single
enterprise data warehouse • Types of system failure
• Massive project completed in under 2 years due to • Fail to capture essential business requirements
use of sound project management practices • Fail to provide organizational benefits
• Demonstrates project management’s role in • Complicated, poorly organized user interface
reducing projects costs and completion times
• Inaccurate or inconsistent data

The Importance of Project Management The Importance of Project Management
Consequences of Poor Project Management

• Project management
• Activities include planning work, assessing risk, estimating
resources required, organizing the work, assigning tasks,
controlling project execution, reporting progress, analyzing
results
• Five major variables
• Scope
• Time
• Cost
• Quality
• Risk
Without proper management, a systems development project takes longer to complete
and most often exceeds the allocated budget. The resulting information system most
likely is technically inferior and may not be able to demonstrate any benefits to the
organization.
Figure 14-1
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Managing Project Risk Selecting Projects
Kaiser Permanente Botches Its

Kidney Transplant Center Project • Management structure for information
• Read the Interactive Session: Management, and then systems projects
discuss the following questions: • Hierarchy in large firms
• Classify and describe the problems Kaiser faced in setting up • Corporate strategic planning group
the transplant center. What was the role of information • Responsible for firm’s strategic plan
systems and information management in these problems? • Information systems steering committee
• What were the management, organization, and technology • Reviews and approves plans for systems in all divisions
factors responsible for these problems? • Project management group
• What steps would you have taken to increase the project’s • Responsible for overseeing specific projects
chances for success? • Project team
• Were there any ethical problems created by this failed • Responsible for individual systems project
project? Explain your answer

Selecting Projects Selecting Projects
Management Control of Systems Projects

• Linking systems projects to the business plan
• Information systems plan: Road map indicating direction of
systems development, includes:
• Purpose of plan
• Strategic business plan rationale
• Current systems/situation
• New developments to consider
• Management strategy
• Implementation plan
• Budget
Each level of management in the hierarchy is responsible for specific aspects of systems
projects, and this structure helps give priority to the most important systems projects for
the organization.
Figure 14-2

• In order to plan effectively, firms need to inventory and • Critical success factors
document existing software, hardware, systems • Principal method:
• To develop effective information systems plan, • Interviews with 3-4 top managers to identify goals and
resulting CSFs
organization must have clear understanding of both
• Personal CSFs aggregated into small number of firm CSFs
long-term and short-term information requirements
• Systems built to deliver information on CSFs
• Strategic analysis or critical success factors (CSF) • Suitable for top management, building DSS and ESS
approach
• Disadvantages:
• Sees information requirements as determined by a small • No clear methods for aggregation of personal CSFs into firm
number of critical success factors CSFs
• Auto industry CSFs might include styling, quality, cost • Confusion between individual CSFs and organizational CSFs
• Bias towards top managers
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Using CSFs to Develop Systems

• Portfolio analysis
• Used to evaluate alternative system projects
• Inventories all of the organization’s information systems projects
and assets
• Each system has profile of risk and benefit
• High-benefit, low risk
• High-benefit, high risk
• Low-benefit, low risk
• Low-benefit, high risk
Figure 14-3 • To improve return on portfolio, balance risk and return from
The CSF approach relies on
interviews with key managers
systems investments
to identify their CSFs.
Individual CSFs are
aggregated to develop CSFs
for the entire firm. Systems
can then be built to deliver
information on these CSFs.

A System Portfolio
• Scoring models
• Used to evaluate alternative system projects, especially when
many criteria exist
• Assigns weights to various features of system and calculates
weighted totals
CRITERIA WEIGHT SYSTEM A % SYSTEM A SYSTEM B % SYSTEM B

SCORE SCORE
Online order entry 4 67 268 73 292
Customer credit check 3 66 198 59 177
Inventory check 4 72 288 81 324
Warehouse receiving 2 71 142 75 150

Companies should examine their portfolio of projects in terms of potential benefits and likely risks. Certain kinds of projects should be ETC
avoided altogether and others developed rapidly. There is no ideal mix. Companies in different industries have different profiles.
GRAND TOTALS 3128 3300
Figure 14-4

Establishing the Business Value of Information Systems Establishing the Business Value of Information Systems
• Information system costs and benefits • Capital budgeting for information systems
• Tangible benefits: • Capital budgeting models:
• Can be quantified and assigned monetary value • Measure value of investing in long-term capital investment
projects
• Systems that displace labor and save space:
• Rely on measures the firm’s
• Transaction and clerical systems
• Cash outflows
• Intangible benefits:
• Expenditures for hardware, software, labor
• Cannot be immediately quantified but may lead to quantifiable gains
• Cash inflows
in the long run
• Increased sales
• E.g., more efficient customer service or enhanced decision making
• Reduced costs
• Systems that influence decision making:
• ESS, DSS, collaborative work systems
• There are various capital budgeting models used for IT
projects: Payback method, accounting rate of return on investment,
net present value, internal rate of return (IRR)
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Establishing the Business Value of Information Systems Managing Project Risk
• Real options pricing models (ROPM) • Dimensions of project risk

• Can be used when future revenue streams of IT projects are • Level of project risk influenced by:
uncertain and up-front costs are high
• Use concept of options valuation borrowed from financial • Project size
industry • Indicated by cost, time, number of
• Gives managers flexibility to stage IT investment or test the organizational units affected
waters with small pilot projects or prototypes to gain more
knowledge about risks before investing in entire implementation • Organizational complexity also an issue
• Limitations of financial models • Project structure
• Do not take into account social and organizational dimensions • Structured, defined requirements run lower risk
that may affect costs and benefits
• Experience with technology

Managing Project Risk Managing Project Risk
• Change management • Implementation

• All organizational activities working toward adoption,
• Required for successful system building
management, and routinization of an innovation
• New information systems have powerful behavioral • Change agent: One role of systems analyst
and organizational impact
• Redefines the configurations, interactions, job activities, and
• Changes in how information is used often lead to new power relationships of organizational groups
distributions of authority and power
• Catalyst for entire change process
• Internal organizational change breeds resistance and
opposition • Responsible for ensuring that all parties involved accept
changes created by new system

• Role of end users • Management support and commitment

• With high levels of user involvement • Positive perception by both users and
• System more likely to conform to requirements technical staff
• Users more likely to accept system • Ensures sufficient funding and resources
• User-designer communication gap: • Enforcement of required organizational
• Users and information systems specialists changes
• Different backgrounds, interests, and priorities
• Different loyalties, priorities, vocabularies
• Different concerns regarding a new system
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• Very high failure rate among enterprise application • Controlling risk factors
and BPR projects (up to 70% for BPR) • First step in managing project risk involves identifying nature
• Poor implementation and change management practices and level of risk of project
• Employee’s concerns about change • Each project can then be managed with tools and risk-
• Resistance by key managers management approaches geared to level of risk
• Changing job functions, career paths, recruitment practices • Managing technical complexity
• Mergers and acquisitions • Internal integration tools
• Similarly high failure rate of integration projects • Project leaders with technical and administrative experience
• Merging of systems of two companies requires: • Highly experienced team members
• Considerable organizational change • Frequent team meetings
• Complex systems projects • Securing of technical experience outside firm if necessary

A Gantt Chart
• Formal planning and control tools
• Document and monitor project plans
• Help identify bottlenecks and determine impact of problems on
project completion times
• Chart progress of project against budgets and target dates
• Gantt chart
• Lists project activities and corresponding start and completion dates
• Visual representation of timing of tasks and resources required
• PERT chart
• Portrays project as network diagram
• Nodes represent tasks
The Gantt chart in this figure shows the task, person-days, and initials of each responsible person, as well as the start and finish
• Arrows depict task dependencies dates for each task. The resource summary provides a good manager with the total person-days for each month and for each
person working on the project to manage the project successfully. The project described here is a data administration project.
Figure 14-5A

A Gantt Chart (cont.) A Gantt Chart (cont.)
Figure 14-5B Figure 14-5C

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A PERT Chart
• Increasing user involvement and overcoming user
resistance
• External integration tools consist of ways to link work of
implementation team to users at all organizational levels
• Active involvement of users
• Implementation team’s responsiveness to users
• User resistance to organizational change
• Users may believe change is detrimental to their interests
• Counterimplementation: Deliberate strategy to thwart
implementation of an information system or an innovation in an
organization
• E.g., increased error rates, disruptions, turnover, sabotage
This is a simplified PERT chart for creating a small Web site. It shows the ordering of project tasks and the
relationship of a task with preceding and succeeding tasks.
Figure 14-6

Why Can’t BioSense Take Off?

• Strategies to overcome user resistance
• Read the Interactive Session: Organizations, and
• User participation then discuss the following questions:
• User education and training • Identify the risks in the BioSense project.
• Management edicts and policies • What management, organization, and technology factors
explain why this project has been difficult to implement.
• Incentives for cooperation
• Is the CDC’s new approach to improving pandemic
• Improvement of end-user interface warnings a viable solution? Why or why not?
• Resolution of organizational problems prior to
introduction of new system

• Designing for the organization • Organizational impact analysis

• Information system projects must address ways in which • How system will affect organizational structure, attitudes,
organization changes when new system installed
decision making, operations
• Procedural changes
• Job functions • Sociotechnical design
• Organizational structure
• Addresses human and organizational issues
• Power relationships
• Work structure • Separate sets of technical and social design solutions
• Ergonomics: Interaction of people and machines in work • Final design is solution that best meets both technical
environment and social objectives
• Design of jobs
• Health issues
• End-user interfaces
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05-02-2013
Management Information Systems

Chapter 14: Managing Projects
Managing Project Risk
• Project management software

• Can automate many aspects of project management
• Capabilities for
• Defining, ordering, editing tasks
• Assigning resources to tasks
• Tracking progress
• Microsoft Project All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
• Most widely used project management software mechanical, photocopying, recording, or otherwise, without the prior written
• PERT, Gantt charts permission of the publisher. Printed in the United States of America.
• Critical path analysis

• Product Guide wizards Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
• Enterprise Project Management Solution version

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05-02-2013

Management Information Systems

• Identify and describe the objectives of project

Management Information Systems Management Information Systems

McKesson’s Prescription for Project Management The Importance of Project Management

14.3 © 2010 by Prentice Hall 14.4 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

The Importance of Project Management The Importance of Project Management

Consequences of Poor Project Management

Management Information Systems Management Information Systems

Managing Project Risk Selecting Projects

Kaiser Permanente Botches Its

14.7 © 2010 by Prentice Hall 14.8 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Selecting Projects Selecting Projects

Management Control of Systems Projects

Management Information Systems Management Information Systems

Selecting Projects Selecting Projects

14.11 © 2010 by Prentice Hall 14.12 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Selecting Projects Selecting Projects

Using CSFs to Develop Systems

14.13 © 2010 by Prentice Hall 14.14 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Selecting Projects Selecting Projects

CRITERIA WEIGHT SYSTEM A % SYSTEM A SYSTEM B % SYSTEM B

Customer credit check 3 66 198 59 177

Inventory check 4 72 288 81 324

Warehouse receiving 2 71 142 75 150

Management Information Systems Management Information Systems

14.17 © 2010 by Prentice Hall 14.18 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Establishing the Business Value of Information Systems Managing Project Risk

• Real options pricing models (ROPM) • Dimensions of project risk

14.19 © 2010 by Prentice Hall 14.20 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

• Change management • Implementation

14.21 © 2010 by Prentice Hall 14.22 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

• Role of end users • Management support and commitment

14.23 © 2010 by Prentice Hall 14.24 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

14.25 © 2010 by Prentice Hall 14.26 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

A Gantt Chart (cont.) A Gantt Chart (cont.)

Figure 14-5B Figure 14-5C

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

Why Can’t BioSense Take Off?

14.33 © 2010 by Prentice Hall 14.34 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

• Designing for the organization • Organizational impact analysis

14.35 © 2010 by Prentice Hall 14.36 © 2010 by Prentice Hall

Management Information Systems