ISM/U4 Topic 2 Managing Projects – Business Value of Information Systems, managing Projects risk
A systems development project without proper management will most likely suffer these consequences:
- Costs that vastly exceed budgets
- Unexpected time slippage
- Technical performance that is less than expected
- Failure to obtain anticipated benefits
The systems produced by failed information projects are often not used in the way they were intended, or they are not used at all. Users often have to develop parallel manual systems to make these systems work.
Project Management Objectives
A project is a planned series of related activities for achieving a specific business objective. Project management refers to the application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints. Scope defines what work is or is not included in a project.
Management Structure For Information Systems Projects
The following figure shows the elements of a management structure for information systems projects in a large corporation. It helps ensure that the most important projects are given priority. At the apex of this structure is the corporate strategic planning group and the information system steering committee.
Fig. Management Control of Systems Projects
Linking Systems Projects To The Business Plan
In order to identify the information systems projects that will deliver the most business value, organizations need to develop an information systems plan that supports their overall business plan and in which strategic systems are incorporated into top-level planning. The plan serves as a road map indicating the direction of systems development (the purpose of the plan), the rationale, the current system/situation, new developments to consider, the management strategy, the implementation plan, and the budget.
Critical Success Factors
To develop an effective information systems plan, the organization must have a clear understanding of both its long- and short-term information requirements. The strategic analysis, or critical success factors, approach argues that an organization’s information requirements are determined by a small number of critical success factors (CSFs) of managers. CSFs are shaped by the industry, the firm, the manager, and the broader environment.
Once strategic analyses have determined the overall direction of systems development, portfolio analysis can be used to evaluate alternative system projects. Portfolio analysis inventories all of the organization’s information systems projects and assets, including infrastructure, outsourcing contracts and licenses. Its investments can be described as having a certain profile of risk and benefit to the firm.
Fig. Using CSFs to Develop Systems
A scoring model is useful for selecting projects where many criteria must be considered. It assigns weights to various features of a system and then calculates the weighted totals.
Establishing The Business Value of Information Systems
Even if a system project supports a firm’s strategic goals and meets user information requirements, it needs to be a good investment for the firm. The value of systems from a financial perspective essentially revolves around the issue of return on invested capital.
Information System Costs and Benefits
Tangible benefits can be quantified and assigned a monetary value. Intangible benefits, such as more efficient customer service or enhanced decision making, cannot be immediately quantified but may lead to quantifiable gains in the long run.
Capital Budgeting for Information Systems
To determine the benefits of a particular project, you’ll need to calculate all of its costs and all of its benefits. Capital budgeting models are one of several techniques used to measure the value of investing in long-term capital investment projects.
Real Options Pricing Models
Real options pricing models (ROPMs) use the concept of options valuation borrowed from the financial industry. An option is essentially the right, but not the obligation, to act at some future date. ROPMs value information systems projects similar to stock options, where an initial expenditure on technology creates the right, but not the obligation, to obtain the benefits associated with further development and deployment of the technology as long as management has the freedom to cancel, defer, restart, or expand the project.
Limitations of Financial Models
Many companies’ information systems investment decisions do not adequately consider costs from organizational disruptions created by a new system, such as the cost to train end users, the impact that users’ learning curves for a new system have on productivity, or the time managers need to spend overseeing new system-related changes. These are overlooked in a traditional financial analysis.
Change Management and The Concept Of Implementation
A very large percentage of information systems projects stumble because the process of organizational change surrounding system building was not properly addressed. Successful system building requires careful change management.
The Concept of Implementation
Implementation refers to all organizational activities working toward the adoption, management, and routinization of an innovation, such as a new information system. In the implementation process, the systems analyst is a change agent.
The Role of End Users
The relationship between users and information systems specialists has traditionally been a problem area for information systems implementation grounds, interests and priorities. This referred to as the user-designer communications gap. These differences lead to divergent organizational loyalties, approaches to problem solving, and vocabularies.
Management Support and Commitment
If an information systems project has the backing and commitment of management at various levels, it is more likely to be perceived positively by both users and the technical information services staff.
Change Management Challenges for Business Process Reengineering, Enterprise Applications, and Mergers and Acquisitions
A number of studies have indicated that 70 percent of all business process reengineering project fail to deliver promised benefits. A high percentage of enterprise applications fail to be fully implemented or to meet the goals of their users even after three years of work. Projects related to mergers and acquisitions are deeply affected by the organizational characteristics of the merging companies as well as by their IT infrastructures.
Controlling Risk Factors
The first step in managing project risk involves identifying the nature and level of risk confronting the project. Implementers can then handle each project with the tools and risk-managment approaches geared to its level of risk.
Managing Technical Complexity
Projects with challenging and complex technology for users to master benefit from internal integration tools. The success of such projects depends on how well their technical complexity can be managed. Project leaders need both heavy technical and administrative experience. Team meetings should take place frequently. Essential technical skills or expertise not available internally should be secured from outside the organization.
Formal Planning and Control Tools
Large projects benefit from appropriate use of formal planning tools and formal control tools for documenting and monitoring project plans. A Gantt chart lists project activities and their corresponding start and completion dates. Program Evaluation and Review Technique (PERT) chart lists the specific activities that make up a project and the activities that must be completed before a specific activity can start.
Increasing User Involvement and Overcoming User Resistance
External integration tools consist of ways to link the work of the implementation team to users at all organizational levels. Participation in implementation activities may not be enough to overcome the problem of user resistance to organizational change. Different users may be affected by the system in different ways. Counter implementation is a deliberate strategy to thwart the implementation of an information system or an innovation in an organization.
Designing For The Organization
Because the purpose of a new system is to improve the organization’s performance, information systems projects must explicitly address the ways in which the organization will change when the new system is installed. Ergonomics refers to the interaction of people and machines in the work environment. An organizational impact analysis explains how a proposed system will affect organizational structure, attitudes, decision making, and operations.
The social design plans explore different work group structures, allocation of tasks, and the design of individual jobs. The resulting sociotechnical design is expected to produce an information system that blends technical efficiency with sensitivity to organizational and human needs, leading to higher job satisfaction and productivity.
Fig. Socio technical Model