2. Chapter 1: Introduction
Information System Projects
Systems
Critical Success Factors

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. 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. What is a project? definable purpose cut across organizational lines
unique
ad hoc
projects come in a wide variety of forms
dams: Boulder Dam, Hoover Dam, Three Gorges Dam
Buildings
Monuments
Meetings are projects as well
so 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 something
road, dam, building
can be organizing something
a meeting, an election campaign, a symphony, a movie
GETTING A NEW, COMPLEX ACTIVITY DONE
Even 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 involve
high levels of uncertainty and risk
difficult to estimate resources required
difficult to estimate time required
Temporary activities by ad hoc organizations
Projects by their nature
involve high levels of risk
are difficult to plan in terms of resources, time, budget
Project 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 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
Projects 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 implementation
organization auditing
plant construction
multiorganization space shuttle
wars
a spectrum of group size

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
This 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 costs
The competitive climate is very severe, nationally and internationally
Specific resources often are short
Many interest groups interact world-wide
Computer 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 operations
market and technology much less predictable
greater uncertainty of outcomes
more parties or organizations involved
DYNAMIC environment
Projects 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 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;
Information systems and information technology have always involved a rapid pace of development.
Some examples are shown.

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
Viewing 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 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
The three fundamental metrics of project success:
COST
TIME
PERFORMANCE (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. Adages
Brooks’s Law
Adding manpower to a late software project makes it later.
Throwing money at a project doesn’t solve the problem
Taking resources away from a project doesn’t always make it easier either
A traditional saws in information systems project management
There 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 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
Important information system project components

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. Large drug distributor, wanted to implement ERP
FoxMeyer Drug
Large drug distributor, wanted to implement ERP
This 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 sourcing
integrate decision making
coordinates 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 PeopleSoft
Baan J.D. Edwards Oracle
top tier growth 61%/year, have 64% of market
SAP $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 share
PRODUCTS: R/2 (mainframe; 11 modules)
R/3 (client/server ; now > 1 million users
over 9000 customers in 90 countries

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. FoxMeyer Long-term strategies:
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. 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. 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. 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. 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. 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. 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. Outcomes Warehouse system consistently failed
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. McKesson Bought FoxMeyer operation Made ERP work On time Within budget
Full functionality

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. Project Champion Top level executive Powerful, with access to top
Don’t need to have authority
Enthusiastic support leading to adoption
Continued support key to project continuance
Even if project should be cancelled

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