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© McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-2 Chapter 1: Introduction Information System Projects Systems Critical Success.

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Presentation on theme: "© McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-2 Chapter 1: Introduction Information System Projects Systems Critical Success."— Presentation transcript:

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2 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-2 Chapter 1: Introduction Information System Projects Systems Critical Success Factors

3 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-3 Denver International Airport Bozman [1994]; Zetlin [1996]; Montealegre & Keil [2000] Designed as largest US airport Cost –Estimate $1.7 billion (to be done Oct 1993) –Pre-construction budget $2.08 billion –Aug 1994 spent $3.2 billion –Final 16 months late, $2 billion over budget

4 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-4 Denver International AP Functionality –Malfunctioning computerized baggage system Cost $193 million 55 networked computers, 56 barcode scanners Sometimes bags on wrong flights Major effort –Many problems –Functioning airport –Typical project

5 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-5 What is a project? –definable purpose –cut across organizational lines –unique –ad hoc

6 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-6 What is a project? everything done the first time is a project can be constructing something –road, dam, building can be organizing something –a meeting, an election campaign, a symphony, a movie GETTING A NEW, COMPLEX ACTIVITY DONE

7 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-7 Project Characteristics Because projects are new (not at the repetitive operations stage), they typically involve –high levels of uncertainty and risk –difficult to estimate resources required –difficult to estimate time required Temporary activities by ad hoc organizations

8 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-8 Dimensions of Complexity magnitude of effort number of groups and organizations to be coordinated diversity in skills or expertise needed usually the MORE COMPLEX, the more time and resources required

9 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-9 Group Size Dimension individualterm paper groupwedding system implementation organizationauditing plant construction multiorganizationspace shuttle wars

10 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-10 Challenges of Modern Environments high levels of risk and uncertainty from many interacting forces and variables rapidly changing technology rising costs increased competition frequent resource shortages many opposing interest groups

11 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-11 Project Management Features differs from repetitive operations –market and technology much less predictable –greater uncertainty of outcomes –more parties or organizations involved –DYNAMIC environment

12 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-12 IS Project Features technological explosion –286; 386; 486; Pentium; ? –CASE tools; C++; GUI; highly volatile & expanding market –CAD/CAM; EDI; laptops; Internet uncertainty –is what requester wants feasible? –how long will it take to program? –will there be any bugs? many people involved –user group; systems designers; programmers; end users;

13 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-13 the Systems Approach recognize that organizations are made up of interrelated units need coordinated goals integration benefits global objective attainment –all pull towards same goal PROJECTS are system of interrelated tasks and work units PROJECT MANAGEMENT unifies planning and work efforts to accomplish multiple goals

14 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-14 Project Goal Dimensions INTERRELATED DIMENSIONS Cost –stay within budget Time –stay within time schedule specified Performance –end product performs to specifications Maintain focus on all 3, control trade-offs

15 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-15 Adages Brookss Law Adding manpower to a late software project makes it later. Throwing money at a project doesnt solve the problem Taking resources away from a project doesnt always make it easier either

16 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-16 Project Entities Project Manager –coordinates efforts across functional areas; – integrates planning & controls costs; –schedules, assigns tasks Project Team –group of people doing what needs to be done –often from different functions, organizations Project Management System –organizational structure, information processing, procedures permitting integration of tasks and those who accomplish them

17 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-17 IS Project Environment Risky –Standish Group reports: >30% cancelled About 40% lack designed functionality Only 13% rated successful by sponsors –Examples Bank of America project American Airlines subsidiary travel reservation

18 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-18 FoxMeyer Drug Large drug distributor, wanted to implement ERP

19 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-19 ERP Integrate financial, logistics, marketing can handle multiple sites worldwide, with global sourcing integrate decision making coordinates all functions (makes them use same computer software)

20 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-20 ERP Market Compound annual growth of 37% (AMR Research) Top tier vendors:SAP AGPeopleSoft BaanJ.D. EdwardsOracle top tier growth 61%/year, have 64% of market SAP $5 billion, rest near $1 billion

21 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-21 SAP Systems, Applications & Products in Data Processing founded 1972, Walldorf, Germany #1 vendor of standard business-application software in the world - 32% market share PRODUCTS: R/2 (mainframe; 11 modules) R/3 (client/server ; now > 1 million users over 9000 customers in 90 countries

22 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-22 FoxMeyer Corp Holding company in health care services wholesale distribution of drugs & beauty aids served drug stores, chains, hospitals, care facilities US: 23 distribution centers Sought market niches, such as home health care

23 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-23 FoxMeyer Due to aging population & growth in health care, expected high growth Market had extreme price competition, threatening margins Long-term strategies: –efficiently manage inventory –lower operating expenses –strengthen sales & marketing –expand services

24 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-24 Prior FoxMeyer IS 3 data processing centers, linked included electronic order entry, invoice preparation, inventory tracking 1992 began migration of core systems Benefits not realized until system fully integrated

25 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-25 FoxMeyer Process Customer fills out electronic order Order sent to 1 of the 3 data processing centers Orders sent to the appropriate distribution center (within 24 hours) Orders filled manually and packaged Had just completed national distribution center with multiple carousels & automated picking Could track inventory to secondary locations

26 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-26 New System Needed new distribution processes & IS to capitalize on growth Wanted to be able to undercut competitors Replacing aging IS key PROJECT: hoped to save $40 million annually (estimated cost $65 million) –complete ERP installation & warehouse automation system (another $18 million)

27 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-27 FoxMeyer Project Select ERP –hundreds of thousands of transactions –meet DEA & FDA regulations –benchmarked & tested for months –picked SAP R/3 –hired Andersen Consulting to integrate –hired Pinnacle Automation for warehouse automation system

28 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-28 Operations FoxMeyer expected the new systems to improve operational efficiency Signed several giant contracts –counted on savings, underbid competitors Counted on being up and running in 18 months

29 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-29 Problems SAP & warehouse automation system integration –two sources, two installers - coordination problems New contracts forced change in system requirements after testing & development underway Late, Over budget –SAP successfully implemented

30 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-30 Outcomes Lost key customer - 15% of sales To recoup, signed new customer, expected $40 million benefit from ERP immediately - pushed ERP project deadline ahead 90 days, no time to reengineer Warehouse system consistently failed –late orders, incorrect shipment, lost shipments –losses of over $15 million August 1996 filed for Chapter 11 –McKesson bought

31 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-31 McKesson Bought FoxMeyer operation Made ERP work –On time –Within budget –Full functionality

32 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-32 Project Critical Success Factors Belassi & Tukel [1996] Goal Definition –Define goals, scope, requirements Top Management Support –Continued involvement User Involvement Project Manager –Competent; on-site Others –Project team, manpower, accurate estimates, test & train

33 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-33 Project Champion Top level executive –Powerful, with access to top Dont need to have authority –Enthusiastic support leading to adoption –Continued support key to project continuance Even if project should be cancelled

34 © McGraw-Hill/Irwin 2004 Information Systems Project ManagementDavid Olson 1-34 Summary All projects are complex –IS projects even more so –Get diverse people to work together Time Cost Functionality Systems view helps understand projects Critical Success Factors Top management support Clearly stated objectives End user involvement


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