2 Chapter 1: Introduction Information System ProjectsSystemsCritical Success Factors
3 Denver International Airport Bozman ; Zetlin ; Montealegre & Keil  Designed as largest US airportCostEstimate $1.7 billion (to be done Oct 1993)Pre-construction budget $2.08 billionAug 1994 spent $3.2 billionFinal 16 months late, $2 billion over budget
4 Denver International AP FunctionalityMalfunctioning computerized baggage systemCost $193 million55 networked computers, 56 barcode scannersSometimes bags on wrong flightsMajor effortMany problemsFunctioning airportTypical project
5 What is a project? definable purpose cut across organizational lines uniquead hocprojects come in a wide variety of formsdams: Boulder Dam, Hoover Dam, Three Gorges DamBuildingsMonumentsMeetings are projects as wellso are marketing campaigns, product engineering and design, training programs
6 What is a project? everything done the first time is a project can be constructing somethingroad, dam, buildingcan be organizing somethinga meeting, an election campaign, a symphony, a movieGETTING A NEW, COMPLEX ACTIVITY DONEEven building an assembly line operation is a project (building is a project - operating an assembly line is the reverse)Projects require getting a new, complex activity done.
7 Project Characteristics Because projects are new (not at the repetitive operations stage), they typically involvehigh levels of uncertainty and riskdifficult to estimate resources requireddifficult to estimate time requiredTemporary activities by ad hoc organizationsProjects by their natureinvolve high levels of riskare difficult to plan in terms of resources, time, budgetProject organizations are temporary, with people brought in with diverse skills at diverse times. Project members need to learn to work with many other people.
8 Dimensions of Complexity magnitude of effortnumber of groups and organizations to be coordinateddiversity in skills or expertise neededusually the MORE COMPLEX, the more time and resources requiredProjects come in a wide variety of complexity levels.The simplest projects can be done by one person, and involve little coordination.Space shuttle projects require massive organization and planning.Installing enterprise resource planning systems also have massive impact, and affect many people.
9 Group Size Dimension individual term paper group wedding system implementationorganization auditingplant constructionmultiorganization space shuttlewarsa spectrum of group size
10 Challenges of Modern Environments high levels of risk and uncertainty from many interacting forces and variablesrapidly changing technologyrising costsincreased competitionfrequent resource shortagesmany opposing interest groupsThis high level of change introduces much higher levels of risk in business operations.Technology is rapidly changing.Inflation has been under control, but there are constantly better methods developed at slightly higher costsThe competitive climate is very severe, nationally and internationallySpecific resources often are shortMany interest groups interact world-wideComputer systems are not only useful, they are mandatory to succeed in contemporary business. Computer technology involves much greater rates of change than other aspects of society and business.
11 Project Management Features differs from repetitive operationsmarket and technology much less predictablegreater uncertainty of outcomesmore parties or organizations involvedDYNAMIC environmentProjects involve much greater risk and change than other types of operations (at an extreme, assembly line operations).Information system projects are usually short term (less than 9 months), because there is a risk that longer terms will find technological change outdating planned systems.
12 IS Project Features technological explosion 286; 386; 486; Pentium; ?CASE tools; C++; GUI;highly volatile & expanding marketCAD/CAM; EDI; laptops; Internetuncertaintyis what requester wants feasible?how long will it take to program?will there be any bugs?many people involveduser group; systems designers; programmers; end users;Information systems and information technology have always involved a rapid pace of development.Some examples are shown.
13 the Systems Approachrecognize that organizations are made up of interrelated unitsneed coordinated goalsintegration benefits global objective attainmentall pull towards same goalPROJECTS are system of interrelated tasks and work unitsPROJECT MANAGEMENT unifies planning and work efforts to accomplish multiple goalsViewing projects as systems is useful, because it focuses on the purpose of the project, the contribution of each system unit towards attaining project purpose, and the planning and control system required to make the project system successful.
14 Project Goal Dimensions INTERRELATED DIMENSIONSCoststay within budgetTimestay within time schedule specifiedPerformanceend product performs to specificationsMaintain focus on all 3, control trade-offsThe three fundamental metrics of project success:COSTTIMEPERFORMANCE (quality, meeting specifications)There are typically tradeoffs in that it is very difficult to attain optimal performance on all three. Should problems be encountered in the project, usually at least one of the three will have to involve some sacrifice.
15 AdagesBrooks’s LawAdding manpower to a late software project makes it later.Throwing money at a project doesn’t solve the problemTaking resources away from a project doesn’t always make it easier eitherA traditional saws in information systems project managementThere is a great deal of merit in Brooks's law, but it depends on the degree of interaction in the project. In order to succeed, sufficient resources need to be provided.
16 Project Entities Project Manager Project Team coordinates efforts across functional areas;integrates planning & controls costs;schedules, assigns tasksProject Teamgroup of people doing what needs to be doneoften from different functions, organizationsProject Management Systemorganizational structure, information processing, procedures permitting integration of tasks and those who accomplish themImportant information system project components
17 IS Project Environment RiskyStandish Group reports:>30% cancelledAbout 40% lack designed functionalityOnly 13% rated successful by sponsorsExamplesBank of America projectAmerican Airlines subsidiary travel reservation
18 Large drug distributor, wanted to implement ERP FoxMeyer DrugLarge drug distributor, wanted to implement ERPThis PPT describes implementation of an ERP by FoxMeyer Drug. It is a student project done by Jason Donalson, June Seibold, Matthew Welch, and Sok Woo Yoon in the INFO Department, Texas A&M University, Spring 1999.
19 ERP Integrate financial, logistics, marketing can handle multiple sites worldwide, with global sourcingintegrate decision makingcoordinates all functions (makes them use same computer software)
20 ERP Market Compound annual growth of 37% 1997-2002 (AMR Research) Top tier vendors: SAP AG PeopleSoftBaan J.D. Edwards Oracletop tier growth 61%/year, have 64% of marketSAP $5 billion, rest near $1 billion
21 SAP Systems, Applications & Products in Data Processing founded 1972, Walldorf, Germany#1 vendor of standard business-application software in the world - 32% market sharePRODUCTS: R/2 (mainframe; 11 modules)R/3 (client/server ; now > 1 million usersover 9000 customers in 90 countries
22 FoxMeyer Corp Holding company in health care services wholesale distribution of drugs & beauty aidsserved drug stores, chains, hospitals, care facilitiesUS: 23 distribution centersSought market niches, such as home health care
23 FoxMeyer Long-term strategies: Due to aging population & growth in health care, expected high growthMarket had extreme price competition, threatening marginsLong-term strategies:efficiently manage inventorylower operating expensesstrengthen sales & marketingexpand services
24 Prior FoxMeyer IS 3 data processing centers, linked included electronic order entry, invoice preparation, inventory tracking1992 began migration of core systemsBenefits not realized until system fully integrated
25 FoxMeyer Process Customer fills out electronic order Order sent to 1 of the 3 data processing centersOrders sent to the appropriate distribution center (within 24 hours)Orders filled manually and packagedHad just completed national distribution center with multiple carousels & automated pickingCould track inventory to secondary locations
26 New SystemNeeded new distribution processes & IS to capitalize on growthWanted to be able to undercut competitorsReplacing aging IS keyPROJECT: hoped to save $40 million annually (estimated cost $65 million)complete ERP installation & warehouse automation system (another $18 million)
27 FoxMeyer Project Select ERP hundreds of thousands of transactions meet DEA & FDA regulationsbenchmarked & tested for monthspicked SAP R/3hired Andersen Consulting to integratehired Pinnacle Automation for warehouse automation system
28 OperationsFoxMeyer expected the new systems to improve operational efficiencySigned several giant contractscounted on savings, underbid competitorsCounted on being up and running in 18 months
29 Problems SAP & warehouse automation system integration two sources, two installers - coordination problemsNew contracts forced change in system requirements after testing & development underwayLate, Over budgetSAP successfully implemented
30 Outcomes Warehouse system consistently failed Lost key customer - 15% of salesTo recoup, signed new customer, expected $40 million benefit from ERP immediately - pushed ERP project deadline ahead 90 days, no time to reengineerWarehouse system consistently failedlate orders, incorrect shipment, lost shipmentslosses of over $15 millionAugust 1996 filed for Chapter 11McKesson bought
31 McKesson Bought FoxMeyer operation Made ERP work On time Within budget Full functionality
33 Project Champion Top level executive Powerful, with access to top Don’t need to have authorityEnthusiastic support leading to adoptionContinued support key to project continuanceEven if project should be cancelled
34 Summary All projects are complex IS projects even more soGet diverse people to work togetherTimeCostFunctionalitySystems view helps understand projectsCritical Success FactorsTop management supportClearly stated objectivesEnd user involvement