2. Information Systems: the Foundation of E-Business (CIS 108) Exploring the business of value of IS and Managing Change Lecture NINE (14 th March 2005) Amare Michael Desta

3. 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 *

4. MANAGEMENT CHALLENGES UNDERSTANDING BUSINESS VALUE OF INFORMATION SYSTEMS CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS & FAILURE MANAGING IMPLEMENTATION *

5. CAPITAL BUDGETING MODELS PORTFOLIO ANALYSIS REAL OPTIONS PRICING MODELS * UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS

6. 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? *

7. 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? *

8. COSTS: HARDWARE SOFTWARE SERVICES PERSONNEL * COSTS & BENEFITS:

9. 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 * COSTS & BENEFITS:

10. 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 COSTS & BENEFITS:

11. LIMITATIONS: Assume all relevant alternatives have been examined; cost & benefits can be expressed as $$ Ignore intangible benefits * CAPITAL BUDGETING MODELS

12. 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 *

13. 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 * SCORING MODEL:

14. REAL OPTIONS PRICING MODELS USEFUL UNDER UNCERTAIN CONDITIONS INCLUDE ESTIMATES FOR MANAGEMENT LEARNING, VALUE OF DELAYING DECISION, VOLATILITY OF COSTS & REVENUES

15. CHANGE MANAGEMENT WHAT PROCESSES ARE BEST TO CHANGE: DESIGN DATA COST OPERATIONS *

16. CHANGE AGENT DURING IMPLEMENTATION, INDIVIDUAL ACTS AS CATALYST DURING CHANGE PROCESS TO ENSURE SUCCESS *

17. APPROACHESADOPTIONMANAGEMENT ROUTINIZATION ACTORS' ROLEXXXX STRATEGYXXXX ORGANIZATIONALXXXX FACTORS IMPLEMENTATION STAGES ALL ACTIVITIES LEADING TO ADOPTION, MANAGEMENT, ROUTINIZATION OF INNOVATION IMPLEMENTATION

18. INNOVATION PROCESS ACTOR CHARACTERISTICS & DEMOGRAPHICS SOCIAL STATUS EDUCATION SOPHISTICATION ACTOR ROLES PRODUCT CHAMPION BUREAUCRATIC ENTREPRENEUR GATEKEEPER INNOVATIVE BEHAVIOR

19. ACTIONS & INDICATORS FOR SUCCESSFUL SYSTEM IMPLEMENTATION SUPPORT BY LOCAL FUNDS NEW ORGANIZATIONAL ARRANGEMENTS STABLE SUPPLY & MAINTENANCE NEW PERSONNEL CLASSIFICATIONS CHANGES IN ORGANIZATIONAL AUTHORITY * Source: Yin (1981 )

20. 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 * Source: Yin (1981 )

21. FACTORS IN IMPLEMENTATION OUTCOME CAUSES OF SUCCESS OR FAILURE: USER INVOLVEMENT & INFLUENCE MANAGEMENT SUPPORT LEVEL OF COMPLEXITY / RISK MANAGEMENT OF IMPLEMENTATION PROCESS *

22. USER-DESIGNER COMMUNICATIONS GAP DIFFERENCES IN BACKGROUNDS, INTERESTS, PRIORITIES IMPEDE COMMUNICATION AND PROBLEM SOLVING AMONG END USERS AND INFORMATION SYSTEMS SPECIALISTS *

23. 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? 6. *

24. 1.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? 6. *

25. LEVEL OF COMPLEXITY & RISK PROJECT SIZE PROJECT STRUCTURE EXPERTISE WITH TECHNOLOGY *

26. CONTROLLING PROJECT RISK LOW HIGH SMALLHIGH LOW HIGH LARGEVERY HIGH LOW SMALLVERY LOW LOW LARGELOW HIGH SMALLMEDIUM-LOW HIGH LARGEMEDIUM HIGH LOW SMALLVERY LOW STRUCTURETECHNOLOGY LEVELSIZERISK HIGH LOW LARGELOW

27. CONSEQUENCES OF POOR PROJECT MANAGEMENT COST OVERRUNS TIME SLIPPAGE TECHNICAL SHORTFALLS FAILURE TO OBTAIN BENEFITS *

28. CAUSES OF POOR PROJECT MANAGEMENT IGNORANCE & OPTIMISM MYTHICAL MAN-MONTH: Many tasks sequentially linked, require training FALLING BEHIND: Bad news travels slowly upward *

29. 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 *

30. CHANGE MANAGEMENT CHALLENGES MERGERS & ACQUISITIONS: Decline in shareholder value, difficult to integrate company systems, organizational change, worker morale *

31. MANAGING IMPLEMENTATION: CONTROL RISK FACTORS: Gear tools, methodologies to level of risk INTERNAL INTEGRATION TOOLS: FORMAL PLANNING TOOLS FORMAL CONTROL TOOLS *

32. FORMAL PLANNING TOOLS EXAMPLES: 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 *

33. FORMAL CONTROL TOOLS: BUDGET: Time, money, resources MONITOR PROGRESS: Completion of tasks, fulfillment of goals CONTROL RISK FACTORS: Cost/benefits *

34. EXTERNAL INTEGRATION TOOLS LINK ALL USERS THROUGHOUT ORGANIZATION USE END USERS AS TEAM MEMBERS SHARE INFORMATION & PROGRESS INCLUDE TRAINING AVOID COUNTERIMPLEMENTATION *

35. ORGANIZATIONAL FACTORS JOB DESIGN STANDARDS & PERFORMANCE MONITORING ERGONOMICS: Interaction of people & machines; jobs, health, interface *

36. ORGANIZATIONAL FACTORS EMPLOYEE GRIEVANCE RESOLUTION PROCEDURES HEALTH & SAFETY GOVERNMENT REGULATORY COMPLIANCE *

37. ORGANIZATIONAL FACTORS MONITOR PROGRESS: Completion of tasks, fulfillment of goals CONTROL RISK FACTORS: Cost / benefits *

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

39. FOURTH-GENERATION PROJECT MANAGEMENT EMERGING TECHNIQUES TO DEAL WITH COMPLEXITY ENTERPRISE-WIDE FOCUS DRIVEN BY STRATEGIC VISION & TECHNOLOGY MAY REQUIRE SEPARATE PROGRAM OFFICE