Chapter 4 Identifying and Selecting Systems Development Projects

Chapter 4 Identifying and Selecting Systems Development Projects
5.1

Learning Objectives Describe the project identification and selection process Describe the corporate strategic planning and information systems planning process Explain the relationship between corporate strategic planning and information systems planning 5.2

Identifying and Selecting IS Development Projects
First activity of the first Phase (Planning) of the SDLC. Assess all possible Information systems development projects that an organization unit could undertake Those projects which yield significant organizational benefits based on given available resources, are selected for subsequent development activities.

Selection can follow Formal project selection process followed by a large organization, where a proposed project is rigorously compared to all competing projects and thus the projects are the outcomes of a larger overall planning. Informal project selection followed by a small organization, which allows the highest ranking IS manager to independently select projects or allow individual business units to decide on projects after agreeing to provide project funding

This phase has been divided in three activities Identifying Potential Development Projects Classifying and ranking projects Selecting project for development

Organizations vary as to how they identify projects. Projects are identified by Top management Steering committee User departments Development group or senior IS staff 5.6

Selection Method Characteristics Top Management Greater strategic organizational focus Largest project size Longest project duration Steering Committee Cross functional focus (diversity) Formal cost-benefit analysis Larger and riskier projects

Selection Method Characteristics User Department IS Development Group
Narrow, non strategic focus Faster development Fewer users, management layers and business functions IS Development Group Integration with existing systems focus Fewer development delays Less concern on cost benefits analysis to move the system to a new operating environment

The Process of Identifying and Selecting IS Development Projects
Top-Down Identification Senior management or steering committee Focus is on global needs of organization Bottom-up Identification Functional Managers, Business unit or IS development group Focus on a particular business need. Don’t reflect overall goals of the organization 5.9

Classifying and Ranking IS Development Projects Limited resources prevent the development of all proposed systems This is the second major activity in identifying and selecting IS project which focuses on assessing the merits of each project, followed by classification and ranking of the projects. Classification and ranking can be performed by top management, steering committee, business units of IS development group Project which are inconsistent with the overall organizational objectives, redundant in functionality to some existing system are rejected. 5.10

Evaluation Criteria Evaluation Criteria Description
Commonly used criteria for assessing projects are summarized in Table given below: Evaluation Criteria Description Value Chain Analysis Extent to which activities add value and costs when developing products and/or services Strategic Alignment Extent to which the project is viewed as helping the organization achieve its strategic objectives and long term goals

Evaluation Criteria Description Potential Benefits
Extent to which the project is viewed as improving profits, customer service and so forth and the duration of these benefits. Resource Availability Amount and type of resources the project requires and their availability

Evaluation Criteria Description Project Size/ Duration
Number of individuals and the length of time needed to complete the project. Technical Difficulty/Risks Level of technical difficulty to successfully complete the project within given time and resource constraints

Value Chain Analysis This is an important evaluation method for assessing information systems development projects. Value chain analysis is the process of analyzing an organization’s activities for making products and/or services to determine where value is added and costs are incurred for doing so.

Value Chain Analysis Once an organization gains a clear understanding of its value chain, improvements in the organization’s operations and performance can be achieved. Information systems become one of the primary ways for organizations to make changes and improvement in their value chain e.g. many organizations are using the Internet to exchange important business information with suppliers and customers, such as orders, invoice and receipts. Information systems projects providing the greatest benefit to the value chain will be given priority over those with fewer benefits.

Value Chain Analysis To conduct Value Chain Analysis in an organization, it can be thought as a big input/output processes. At one end are the inputs to the organizations, i.e. Supplies are purchased and brought into the organization. The organization integrates those supplies and resources to create products and services. At the other end are the outputs which represents the product and service that the organization markets, sells and then distribute to customers. The organization provides customer service after the sale of these products and services.

Value Chain Analysis Throughout this process, there are opportunities for people to add value to the organization by acquiring supplies in a more effective manner, improving products and selling more products.

Value Chain Analysis In value chain analysis, First draw the value chain for your organization by fleshing out each of the activities, functions and processes where value is or should be added.

Organizational Value Chain
Support activities

Inbound Logistics : involves the business activities associated with receiving and stocking raw materials, parts and products. Operations and Manufacturing: involves operations such as processing orders and/or manufacturing processes that transforms raw material and components parts into end products Outbound logistics : outbound logistics focuses on the distribution of finished products.

Marketing and Sales functional area: facilitates the presales activities of the company. These include Advertising Communicating with potential and existing customers Pricing goods and services (Promotions, Sales).

Customer Services : focuses on the post-sales activities of the company. Customers have questions and need help from a customer service representative. This way customers can help themselves. Installation. Maintenance of the products.

Support Activities Support Activities are business activities that enable the primary activities to take place. Support Activities include Infrastructure, Human resources, Technology development and procurement

Support Activities Infrastructure : It refers to the hardware and software that must be implemented to support the applications that the primary activities use. e.g. General Management ( Project Enterprise software Management software) Accounting Strategic Planning

Support Activities Human Resources involves the business activities associated with employee management, such as hiring, interview scheduling, payroll. Human resources are classified as support activity because the primary activities cannot be accomplished without the employees to perform them.

Support Activities Technology : includes the design and development of applications that support the primary business activities. Technology can involve a wide array of responsibilities such as selection of packaged software or the design and development of a customized application to meet a particular business need. Many companies are leveraging the technology business activity to build Internet, Intranet or Extranet application to meet business needs.

Support Activities Procurement refers to the activities related to purchasing of goods and services that are required as inputs to the primary activities. e.g. raw material, equipment. Procurement receives, approves and processes requests for goods and services from the primary activities and coordinates from the purchase of those items. This allows the primary activities to concentrate on running the business rather than adding to their workload.

Value Chain Analysis 3. Determine where Information Systems can help the activities to improve. 4. Determine the costs ( and the factors that drive costs or cause them to fluctuate) incurred within each of the areas in your value chain diagram Benchmark or Compare your value chain and associated costs with those of your competitors Making these comparisons, identify priorities for applying information systems projects.

Information Systems for Competitive Advantage
The Role of IS in Value Chain Analysis The use of information systems has become one of the primary ways that organizations improve their value chains. Fig. Below shows a sample value chain and some ways that information systems can be used to improve productivity within it. E.g. many organizations use the Internet to connect businesses with one another electronically so that they can exchange orders, invoices and receipts online in real time. Using Internet has become a popular method for improving the front end of the organizational value chain. Many firms use the Internet for business to business interaction. These are called Extranets.

Value chain analysis of a Leather products factory
Example Value chain analysis of a Leather products factory

What is the purpose of this factory?
It produces the leather footwear, jackets, purses and other leather products and export it’s products to other countries.

The factory existing functions are
The selection and purchase of raw materials (inbound logistics) Designing & productions of the products Selling of the finished leather products (outbound logistics) Marketing and sales of the leather products After Sales service Administration

These activities were performed manually!!!
The employees in this factory used to send mails to the other company to select and buy the raw materials Designing was done manually by the designers. Design were drawn by hand The productions was done by machines, controlled manually Marketing and sales was done by advertising on the magazines or sending catalogs with offers through mails to the people, shops. After sales service was done manually by giving the mail address with the catalogs and response the customers opinion ,complains and suggestions

Value chain analysis System development Human Resource Management
Computer aided design Computer aided manufacturing system Advertisements, Sales promotions Web site online catalogs and ordering Purchasing the raw material using e-commerce Selling of leather goods using e-commerce Customer services response system Purchase Inbound logistic Designing the products Production Out bund logistic Marketing And sales After sale service CAD&CASE Project management software decisions System development Human Resource Management General administration Financial decisions support system

How values can be added to this organization
Selection of the raw material : The leather industry can purchase the raw material using the e-commerce on Internet where the orders can be placed online and the payment can also be made using EFT (electronic Funds Transfer) technology.

Computer Aided Design system can be used which enables designers to design variety of leather product. Design can also be analyzed with a repository of previous warranty data, and call attention to the mistake. Because few manufacturers have programs like this, the application could save both time and money for the industry at large.

Computer aided manufacturing systems Once the product has been designed it needs to be manufactured. Manufacturers are increasingly using machine tools which are controlled (programmable) by the computer. It is critical to invest in CAD and Computer Aided Manufacturing (CAM) technology to be fully integrated.

Marketing and sales Web site with online product catalog and ordering to help customers all over the world to choose and buy their shoes. This web site will help the other customers who lives in other countries to buy the products , which increase the profits and attract more customers

After sale service Customer service response system known as “ASK THE EXPERT” which responses the customer queries It should also accept suggestions and opinions ,complains

Administration: System development: Computer aided software engineering must be used which is an automated computer software to help in analyzing , design, coding, documenting and maintaining software. Adopting the CASE approach to building and maintaining systems involves software tools and training for the developers who will use them.

Human resources management Project-management software should be used which is to manage the resource used in the project e.g. scheduling tasks, budgets and resources.

General administration :where most decisions approval are taken by their financial decisions support system which is like a very detailed reporting system going down to the level of a single product, a single supplier, a single day. However, these reports are normally provided to the General Manager and this decision system has great impact on the profits of the company. It forces the management to rationalize the depreciation, inventory and inflation policies. It warns the management against impending crises and problems in the company.

The final activity in the project identification and selection process is the actual selection of projects for further development Project Selection is the process of considering both short and long-term projects and selecting those most likely to achieve business objectives. 5.44

A Selection Decision requires consideration of: Perceived( Apparent) and real needs of the organization List of Potential and Ongoing projects Current business conditions Existing and available resources Evaluation criteria Perspective( view point) of decision makers

Outcomes of the decision process Project Acceptance i.e funding to conduct the next phase of the SDLC has been approved. Project Rejection i.e. the project will no longer be considered for development. Delay i.e project may also be conditionally accepted pending the approval or availability of needed resources

Outcomes of the decision process Refocus i.e. the requesters may be asked to modify and resubmit their request after making suggested changes or clarifications. End-User Development i.e. projects may also be returned to the original requesters who are told to develop or purchase the requested systems themselves. Proof of Concept i.e. the demonstration that a particularly difficult aspect of the system can be developed.

Deliverables and Outcomes Primary Deliverable from the first SDLC phase Schedule of specific IS development projects to move to the next SDLC phase i.e. project initiation and planning Outcome Assurance that careful consideration was given to project selection. Clear understanding of how each project can help the organization to reach its objectives.

Incremental Commitment A strategy in systems analysis and design in which the project is reviewed after each phase and continuation of the project is re-justified. Due to the principle of incremental commitment, a selected project does not necessarily result in a working system. After each subsequent SDLC phase, the stakeholders will reassess the project to determine whether the business conditions have changed or whether it is worth to continue with this project or not.

Knowledge of overall organizational business strategy and objectives i.e. a clear understanding of the business and the desired roles of information system in achieving organizational goals improves project selection and identification process 5.51

Corporate and Information Systems Planning
Need for planning Organizations have not traditionally used a systematic planning process when determining how to allocate IS resources in spite of numerous motivations for carefully planning the identification and selection of projects. Instead, projects have often resulted from attempts to solve isolated organizational procedural problems. 5.52

Disadvantages of an unplanned Approach: Required organizational procedures are likely to change over time as the environment changes. With the result it is necessary to again modify existing information systems. Improperly planned projects result in systems that cannot be shared across an organization In unplanned projects, as business processes change, lack of data and system integration will hamper the speed at which organization can effectively make business strategy or process changes

Planning based approaches : Projects are resulted from attempts to find out the information requirements that will satisfy the needs of the various business processes of the enterprise. Advantage : An organization’s information needs are less likely to change than its business processes. Comprehensive informational models are designed containing data that are relatively independent from the language and the programs use to access, create and update them.

Corporate Strategic Planning
In order to make effective project selection decisions, we have to understand where an organization is, its vision of where it wants to be in the future, and how to make the transition to its desired future state

CURRENT ENTERPRISE FUTURE ENTERPRISE STRATEGIC PLAN
Understand the current enterprise CURRENT ENTERPRISE STEP 1 Understand where the enterprise wants to be in future FUTURE ENTERPRISE STEP 2 STRATEGIC PLAN Plan is used to guide the transition from current to future enterprise STEP 3

The process of developing and refining models of the current and future enterprise as well as a transition strategy is referred to as Corporate Strategic Planning. Planning results in several outcomes Mission Statement Objective Statement Competitive Strategy 5.58

Mission Statement A statement that makes it clear what business a company is in Objective Statement Objective Statements refer to “broad and timeless” goals for the organization A series of statements that express an organization’s qualitative and quantitative goals for reaching a desired future position Objectives are critical success factors Objective statements do not contain statements likely to change substantially overtime. 5.59

Corporate Mission Statement
Pine Valley Furniture Corporate Mission Statement We are in the business of designing , fabricating and selling of retail stores, high –quality wood furniture for household., office and institutional use. We value quality in our products and in our relationships with customers and suppliers. We consider our employees our most critical resource.

INSTITUTIONAL MISSION STATEMENT for PSU
Prince Sultan University aims to provide the Middle East with quality education to the highest international standards. In its efforts towards successful and responsible life-long learning, PSU integrates modern technological, pedagogical and human values for the advancement of scientific research, productivity and leadership towards a more meaningful social life. PSU is committed to an effective management of institutional resources to optimize its multiple role as a catalyst for new learning opportunities, national and international partnerships, continuous studies, professional growth, community service and diversity in educational horizons for the good of humanity .

Statement of Objectives
Objective Statement Pine Valley Furniture Statement of Objectives PVF will strive to increase market share and profitability. PVF will be considered a market in customer service. PVF will be innovative in the use of technology to help bring new products to market faster than out competitors. 4. people necessary to accomplish our prime objective. PVF will create an environment that values diversity in gender, race, values, and culture among employees, suppliers and customers.

Competitive Strategy The method by which an organization attempts to achieve its mission and objectives. 5.63

Strategy Description Low-Cost Producer
This Strategy reflects competing in an industry on the basis of product or service cost to the customer. e.g. in the automobile industry, the South –Korean produced Hyundai is a product line that competes on the basis of low cost. Product Differentiation This competitive strategy reflects capitalizing on a key product criterion requested by the market (e.g. high quality, style, performance, roominess). In the automobile industry, many manufacturers are trying to differentiate their products on the basis of quality ( e.g. Mercedes, Ford, BMW etc.) Product Focus or niche This strategy is similar to low cost and differentiation strategies but with a much narrower market focus. e.g. a product focus market in the automobile industry is convertible sports car market. Within this market, some manufacturers may employ low cost strategy while others may employ a differentiation strategy on performance or style.booooooooooooooooooooo

Organizations employing different competitive strategy often have different informational needs to add decision making. e.g. a company ( e.g. Rolls Royce )having product focus strategy may build information system to collect and analyze information on customer satisfaction to help manage a key company objective. Alternatively , a company (e.g. GEO )focusing on low price may build systems to track plant and material utilization in order to manage activities related to their low cost strategy.

It is only through the clear understanding of the organizational mission, objectives and strategies that IS development projects should be identified.

Information Systems Planning (ISP)
An IS Manager is responsible for the IS plan. ISP plays a significant role in the quality of project identification and selection decisions. ISP is an organized way of assessing the information needs of an organization and defining the Information systems, databases and technologies that will best satisfy those needs ISP looks at information systems and technologies in terms of how they help business achieve its objectives defined during corporate strategic planning. ISP is a top-down process that takes into account the outside forces-industry, economic, relative size, geographic region etc. critical to the success of the firm. 5.67

Three key activities: Describe the Current Situation Describe the Target (or Future) Situation Develop a Transition Plan and Strategy

Listings of manual & automated processes
1 2 3 Current Situation : Listings of manual & automated processes Listing of manual and automated data Technology inventory human resources inventory Future Situation : blueprints of desired manual & automated processes blueprints of desired manual and automated data Desired technology blueprints Desired human resources blueprints Schedule of Projects : Electronic Commerce Payroll Maintenance Job Tracking Corporate Intranet

Describing the Current Situation The most widely used approach for describing the current organizational situation is the Top-down Planning Generic methodology that attempts to gain a broad understanding of the information system needs of the entire organization. The approach conducts an extensive analysis of the organization’s mission, objectives and strategy and determine the information requirements needed to meet each objective. This approach has active top level management involvement. 5.70

Improved Management Support
Advantage Description Broader Perspective If not viewed from the top, information systems may be implemented without first understanding the business from general management’s viewpoint. Improved Integration If not viewed from the top, totally new management information systems may be implemented, rather than planning how to evolve existing system Improved Management Support If not viewed from the top, planners may lack sufficient management acceptance of the role of information systems in helping them achieve business objectives. Better understanding If not viewed from the top, planners may lack the understanding necessary to implement information systems across the entire business rather than simply to individual operating units.

Bottom-up Planning Generic ISP methodology that identifies and defines IS development projects based upon identifying and solving operational business problems or taking advantage of some business opportunities.

1. Describing the Current Situation Select a planning team including executives responsible to model the existing situation. The team review corporate documents, interview managers, executives and customers and conduct detailed reviews of competitors, markets, products and finances.

Describing the Current Situation ( contd.) The type of information that must be collected to represent the current situation includes Identification of Organizational: Locations consisting of a list of all geographical areas in which the organization operates ( head and branch offices) Units representing a list of people or business units that operate within the organization e.g. vice-president manufacturing, sales manager, sales person and clerk. Functions representing cross organizational collection of activities used to perform day to day business operations e.g. research and development, employee development, purchasing and sales. 5.75

Processes represent a list of manual or automated procedures designed to support business functions. E.g. payroll processing, customer billing and product shipping etc. Data entities represent a list of the information items generated, updated, deleted or used within business processes. Information Systems represent automated and non automated systems used to transform data into information to support business processes.

Fig. shows a portion of the business functions, data entities and information system of PVF.

Information Systems Planning
FUNCTIONS DATA ENTITIES INFORMATION SYSTEMS business planning customer payroll processing product development product accounts payable marketing and sales vendor accounts receivable production operations raw material time card processing finance and accounting order inventory management human resources invoice equipment

Once high level information is collected, each item can typically be decomposed into smaller units as more detailed planning is performed as shown in fig.

primary Marketing functions Making sure orders are filled
Basic Marketing research ORDER FILL Making sure orders are filled DISTRIBUTION Distributing products

A series of matrices are developed to cross-reference various elements of the organization. The type of matrices typically developed include the following: Location-to-Function matrix : identifies which business functions are being performed at various organizational locations. Location-to-Unit Matrix identifies which organizational units are located in or interact with a specific business location. Unit-to-Function Matrix identifies the relationships between organizational units and each business functions Function-to-Objective Matrix identifies which functions are essential or desirable in achieving each organizational objective. 5.81

Function-to-Process Matrix identifies which processes are used to support each business function. Function-to-Data Entity Matrix identifies which business functions utilizes which data entities. Process-to-Data Entity Matrix identifies which data are captured, used, updated or deleted within each process.

Process-to-Information System Matrix identifies which information systems are used to support each process. Information System-to-Objective Matrix identifies which informational systems support each business objective as identified during organizational planning. Data Entity-to-Information System Matrix identifies which data are created, updated, accessed or deleted in each system.

Entities Business functions Customer product Vendor Raw Material Order
Work Centre Equipment Employee Invoice Work Order Marketing and Sales Marketing Research X Order fulfillment Distribution Production Operations Production Scheduling Fabrication Assembly Finishing Finance and Accounting Capital Budget Accounts Receivable Accounts Payable Human resources Recruiting Training

2. Describing the Target Situation, Trends and constraints Define the target situation reflecting the desired future of the organization in terms of locations, units, functions, processes, data and information systems. e.g. the desired future state of the organization is to have several new branch offices or a new product line situation that requires several new employees positions, functions, processes, data. 5.85

2. Describing the Target Situation, Trends and constraints Update list of organizational locations, functions, etc. to reflect this desired vision etc. Update the matrices to relate information in a manner consistent with the desired future state Focus on differences between current lists and matrices and future lists and matrices to identify projects and transition strategies.

3. Developing a Transition Strategy and Plans Once the creation of the current and target situation is complete, a detailed strategy and plan are developed by the IS planning. IS plan is a broad, comprehensive document that looks at both short and long-term organizational development needs. The components of a typical information systems plan are 5.87

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