Chapter 3 Solving Problems The Strategic Management of Information Technology

Systems Approach Input Output Process

Feedback and Control Systems Input Output Process Control Goal Feedback

Strategic Leverage Paradigm Competitive Position Competitive Position Nature of Conflict; Terms of Competition Strategic Leverage Objectives Strategies Tactics Change the Game Change the Game

Systems Development Lifecycle Planning Support Implementation Design Analysis Obsolete Solution Problem to be Solved Problem Understanding and Solution Requirements Acceptable Solution Statement Implemented Solution Implementation Error (bug) New, Related Problem or Requirement New implementation Alternative or Requirement

Systems Planning Elements l People – Users, Management, Information Specialists l Data – How it is captured, used, and stored l Activities – Automated and Manual – Business and Information Applications l Networks – Where data is stored and processed – How data is exchanged between different locations l Technology – hardware and software used

Information System Building Block Systems Builders Systems Designers Systems Users Systems Owners

Differentiation versus Cost Leadership T1 Sustainable Premium Quality Cost Minimum or Market-Required Quality Differentiated Player Cost Leader Technology Curve

Is Cost Leadership Sustainable? T1 Sustainable Premium Quality Cost Minimum or Market-Required Quality Differentiated Player Cost Leader Old Technology Curve T2 New Technology Curve

Industry/Company Relationships Industry Structure & Competitive Position Long-term Objectives, Strategic Direction Detailed Strategies and Tactics Freedom of Maneuver

Break-Even Point Total Revenue Profit Total Costs Fixed Costs Sales Break-Even Volume Revenue and Costs Profit Fixed Costs

Decision Trees Decision Point Probability

Efforts to Categorize the Unknown Complexity Instability Uncertainty

Barriers to Entry Sources l Economies of Scale l Economies of Scope l Product Differentiation l Capital Requirements l Cost Disadvantages – Independent of Size l Distribution Channel Access l Government Policy

Four Generic Approaches Win Lose Win/WinWin/Lose or Cooperative Equilibrium Lose/Lose Win/Lose or Cooperative Equilibrium

Lose/Lose l Total Industry Profits are Very Low, Zero, or Negative l Industry Revenues are Declining, or, at best, steady l Product Technology is at or past its peak Structure Defines the Industry War

Win/Win l Total Industry Revenues and Profits are Growing Rapidly l Numerous Players of All Sizes l Products and Services are not Standardized

Win/Lose l Total Industry Revenues and/or Profits are Constant or are Growing very Slowly l Significant Economies of Scale in Production, Distribution, and/or Promotion l Number of Firms Participating in the Industry is Limited and Stable l Individual Participants have, or can obtain, Information Regarding the Relative Positions of the Players

Structure Defines the Terms of Competition l Wasting Resources – generic advertising rather than focusing on specific market segments l Precipitating Unwanted Warfare – Causing a full-scale price war when only brand repositioning was necessary l Failing to Anticipate and Adapt to Changes – Following historical patterns – Underspending on Advertising

Structure Defines Maneuver l Standard or Dominant Product Emerges l Distribution Channels Limit Firm’s Ability to Determine which Channels to Select l Target and Market Niches Become More Difficult to Defend l Substitutes Limit Price Increases which Requires Increase in Advertising Expenditure

Project Management l Set of Principles, Methods, Tools, Techniques l For the Effective Management of Results- Oriented Work l Utilized in the Context of a Specific and Unique Organizational Environment

Variables Cost Risk Time

Goals l Critical Path/PERT Charting l Progress Presentation Reports – Clients and Management l Dependencies/Prerequisites/Linkages l Variance Analysis l Resource Assignments

MSProject Program Linkages l Suite: Lotus/Microsoft/WordPerfect – Spreadsheet – Presentation – word processing – Database – Notes – Flowcharting (AllClear or ABC) – Risk Analysis Tool

Project Management Issues l Learning Curve Requires Understandable Training Program l Drown in Data Entry l Loose Perspective in Extent of Project Captured l Management Commitment l Critical Mass l Required Rollups l Discipline in Monitoring/Using Plan

Project Management Terms l Schedule From: – Project Start Date – Project Finish Date l Duration Type: – Resource Driven – Fixed Duration l Constrain Task – Date

Project Management Terms l Priority – High – Medium – Low l Risk – High – Medium – Low

Project Management Terms l Relationship with Predecessor: – Finish-to-Start (FS) – Start-to-Start (SS) – Finish-to-Finish (FF) – Start-to-Finish (SF)

Project Management Terms l Tasks: – Noncritical – Critical – Milestone – Summary – Project Summary

MIS Risks l Creeping User Requirements80% l Excessive Schedule Pressure65% l Low Quality60% l Cost Overruns55% l Inadequate Configuration Controls50%

Systems Software Risks l Long Schedule70% l Inadequate Cost Estimating65% l Excessive Paper Work60% l Error-prone Modules50% l Canceled Projects35%

Commercial Software Risks l Inadequate User Documentation70% l Low User Satisfaction55% l Excessive Time to Market50% l Harmful Competitive Actions45% l Litigation Expenses30%

Military Software Risks l Excessive Paperwork90% l Low Productivity85% l Long Schedules75% l Creeping User Requirements70% l Unused or Unusable Software45%

Contract or Outsourced Risks l High Maintenance Costs 60% l Friction between Contractor and Client 50% l Creeping User Requirements 45% l Unanticipated Acceptance Criteria 30% l Legal Ownership of Software 20%

End-User Software Risks l Non-Transferable Applications80% l Hidden Errors65% l Unmaintainable Software60% l Redundant Applications50% l Legal Ownership of Software20% – Deliverables

Risk Prevention and Control l Creeping User Requirements l Schedule Pressure, Long Schedules, and Excessive Time to Market l Cost Overruns l Low Quality and Error-Prone Modules l High Maintenance Costs

Risk Factors Resistant to Control l Excessive Paperwork l Inadequate User Documentation l Low User Satisfaction l Friction Between Clients and Contractors l Legal Issues and Litigation Expense

Serious Software Risks l Inadequate Metrics l Inadequate Measurement l Excessive Schedule Pressure l Management Malpractice l Inaccurate Cost Estimating l Silver Bullet Syndrome l Creeping User Requirements l Low Quality l Low Productivity l Canceled Projects

Risk Factors to Define l Definition l Severity l Frequency l Occurrence l Susceptibility and Resistance l Root Causes l Associated Problems

Risk Factors to Define l Cost Impact l Methods of Prevention l Methods of Control l Product Support l Consulting Support l Education Support l Publication Support

Risk Factors to Define l Periodical Support l Standards Support