Advanced Management Information Systems Essay

Management Information Systems
Chapter 14: Managing Projects
LEARNING OBJECTIVES

• Identify and describe the objectives of project
management and why it is so essential in developing
information systems.
• 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.

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• Select appropriate strategies for managing project risk
and system implementation.
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
McKesson’s Prescription for Project Management

• Problem: Inconsistent, fragmented data in multiple

sources hampering operational efficiency and
decision making for order processing and inventory
management
• Solutions: Replace existing systems with common
business intelligence infrastructure with single
enterprise data warehouse
• Massive project completed in under 2 years due to
use of sound project management practices
• Demonstrates project management’s role in
reducing projects costs and completion times
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
The Importance of Project Management

• Runaway projects and system failure
• Runaway projects: 30-40% IT projects
• Exceed schedule, budget
• Fail to perform as specified

• Types of system failure
• Fail to capture essential business requirements
• Fail to provide organizational benefits
• Complicated, poorly organized user interface
• Inaccurate or inconsistent data
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
The Importance of Project Management

Consequences of Poor Project Management

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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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
The Importance of 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

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

Kaiser Permanente Botches Its
Kidney Transplant Center Project
• Read the Interactive Session: Management, and then
discuss the following questions:
• Classify and describe the problems Kaiser faced in setting up the transplant center. What was the role of information
systems and information management in these problems?
• What were the management, organization, and technology
factors responsible for these problems?
• What steps would you have taken to increase the project’s chances for success?
• Were there any ethical problems created by this failed
project? Explain your answer
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• Management structure for information
systems projects
• Hierarchy in large firms
• Corporate strategic planning group
• Responsible for firm’s strategic plan

• Information systems steering committee
• Reviews and approves plans for systems in all divisions

• Project management group
• Responsible for overseeing specific projects

• Project team
• Responsible for individual systems project

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

Management Control of Systems Projects

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
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• Linking systems projects to the business plan
• Information systems plan: Road map indicating direction of systems development, includes:
• Purpose of plan






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Strategic business plan rationale
Current systems/situation
New developments to consider
Management strategy
Implementation plan
Budget

© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• In order to plan effectively, firms need to inventory and document existing software, hardware, systems
• To develop effective information systems plan,
organization must have clear understanding of both
long-term and short-term information requirements
• Strategic analysis or critical success factors (CSF)
approach
• Sees information requirements as determined by a small
number of critical success factors

• Auto industry CSFs might include styling, quality, cost
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• Critical success factors
• Principal method:
• Interviews with 3-4 top managers to identify goals and
resulting CSFs
• Personal CSFs aggregated into small number of firm CSFs
• Systems built to deliver information on CSFs

• Suitable for top management, building DSS and ESS

• Disadvantages:
• No clear methods for aggregation of personal CSFs into firm CSFs
• Confusion between individual CSFs and organizational CSFs • Bias towards top managers
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

Using CSFs to Develop Systems

Figure 14-3
The CSF approach relies on
interviews with key managers
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.

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• 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

• To improve return on portfolio, balance risk and return from systems investments

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

A System Portfolio

Companies should examine their portfolio of projects in terms of potential benefits and likely risks. Certain kinds of projects should be avoided altogether and others developed rapidly. There is no ideal mix. Companies in different industries have different profiles.

Figure 14-4
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Selecting Projects

• 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
SCORE

SYSTEM B %

SYSTEM B
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

ETC
GRAND TOTALS

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3128

3300

© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Establishing the Business Value of Information Systems

• Information system costs and benefits
• Tangible benefits:
• Can be quantified and assigned monetary value
• Systems that displace labor and save space:
• Transaction and clerical systems

• Intangible benefits:
• Cannot be immediately quantified but may lead to quantifiable gains in the long run
• E.g., more efficient customer service or enhanced decision making

• Systems that influence decision making:
• ESS, DSS, collaborative work systems

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Establishing the Business Value of Information Systems

• Capital budgeting for information systems
• Capital budgeting models:
• Measure value of investing in long-term capital investment projects
• Rely on measures the firm’s
• Cash outflows
• Expenditures for hardware, software, labor
• Cash inflows
• Increased sales
• Reduced costs
• 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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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Establishing the Business Value of Information Systems

• Real options pricing models (ROPM)
• Can be used when future revenue streams of IT projects are uncertain and up-front costs are high
• Use concept of options valuation borrowed from financial industry
• Gives managers flexibility to stage IT investment or test the waters with small pilot projects or prototypes to gain more
knowledge about risks before investing in entire implementation

• Limitations of financial models
• Do not take into account social and organizational dimensions that may affect costs and benefits

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Dimensions of project risk
• Level of project risk influenced by:
• Project size
• Indicated by cost, time, number of
organizational units affected
• Organizational complexity also an issue
• Project structure
• Structured, defined requirements run lower risk

• Experience with technology
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Change management
• Required for successful system building
• New information systems have powerful behavioral
and organizational impact
• Changes in how information is used often lead to new
distributions of authority and power
• Internal organizational change breeds resistance and
opposition

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Implementation
• All organizational activities working toward adoption,
management, and routinization of an innovation

• Change agent: One role of systems analyst
• Redefines the configurations, interactions, job activities, and power relationships of organizational groups

• Catalyst for entire change process
• Responsible for ensuring that all parties involved accept changes created by new system

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Role of end users
• With high levels of user involvement
• System more likely to conform to requirements
• Users more likely to accept system

• User-designer communication gap:
• Users and information systems specialists
• Different backgrounds, interests, and priorities
• Different loyalties, priorities, vocabularies

• Different concerns regarding a new system
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Management support and commitment
• Positive perception by both users and
technical staff
• Ensures sufficient funding and resources
• Enforcement of required organizational
changes

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Very high failure rate among enterprise application
and BPR projects (up to 70% for BPR)
• Poor implementation and change management practices
• Employee’s concerns about change
• Resistance by key managers
• Changing job functions, career paths, recruitment practices

• Mergers and acquisitions
• Similarly high failure rate of integration projects
• Merging of systems of two companies requires:
• Considerable organizational change
• Complex systems projects
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Controlling risk factors
• First step in managing project risk involves identifying nature and level of risk of project
• Each project can then be managed with tools and riskmanagement approaches geared to level of risk • Managing technical complexity
• Internal integration tools
• Project leaders with technical and administrative experience • Highly experienced team members
• Frequent team meetings
• Securing of technical experience outside firm if necessary 14.26

© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• 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

• Arrows depict task dependencies

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

A Gantt Chart

The Gantt chart in this figure shows the task, person-days, and initials of each responsible person, as well as the start and finish 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
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

A Gantt Chart (cont.)

Figure 14-5B
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

A Gantt Chart (cont.)

Figure 14-5C
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

A PERT Chart

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
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• 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

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Strategies to overcome user resistance
• User participation
• User education and training
• Management edicts and policies
• Incentives for cooperation
• Improvement of end-user interface
• Resolution of organizational problems prior to
introduction of new system
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

Why Can’t BioSense Take Off?

• Read the Interactive Session: Organizations, and
then discuss the following questions:
• Identify the risks in the BioSense project.
• What management, organization, and technology factors
explain why this project has been difficult to implement.
• Is the CDC’s new approach to improving pandemic
warnings a viable solution? Why or why not?

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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Designing for the organization
• Information system projects must address ways in which
organization changes when new system installed
• Procedural changes




Job functions
Organizational structure
Power relationships
Work structure

• Ergonomics: Interaction of people and machines in work
environment
• Design of jobs
• Health issues
• End-user interfaces
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© 2010 by Prentice Hall

Management Information Systems
Chapter 14: Managing Projects
Managing Project Risk

• Organizational impact analysis
• How system will affect organizational structure, attitudes, decision making, operations

• Sociotechnical design
• Addresses human and organizational issues
• Separate sets of technical and social design solutions
• Final design is solution that best meets both technical
and social objectives

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© 2010 by Prentice Hall

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
• Most widely used project management software
• PERT, Gantt charts
• Critical path analysis
• Product Guide wizards
• Enterprise Project Management Solution version
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© 2010 by Prentice Hall

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, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall

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© 2010 by Prentice Hall

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