1. Chapter 14
Project Management: Establishing the Business Value of Systems and Managing Change

2. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
LEARNING OBJECTIVES
Identify and describe the objectives of project management and why it is so essential in developing information systems.
Compare models for selecting and evaluating information systems projects and methods for aligning IS projects with the firm’s business goals.
Evaluate models for assessing the business value of information systems.

3. Management Information Systems LEARNING OBJECTIVES (cont’d)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
LEARNING OBJECTIVES (cont’d)
Analyze the principal risk factors in information systems projects.
Select appropriate strategies for managing project risk and system implementation.

4. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
A.G. Edwards Turns Around Its Project Management
Problem: Competitive, information-intensive industry.
Solutions: Identify important projects and plan and monitor them appropriately to reduce costs and increase revenue.
Primavera project management software increases success rate of IS projects.
Demonstrates IT’s role in reducing projects costs and completion times.
Illustrates digital technology as a key to assessing the business value of building new systems and managing the changes that result from new technology.

5. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
There is a very high failure rate among information systems projects
The development of a new system must be carefully managed
The way a project is executed is likely to be the most important factor influencing its outcome.

6. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Runaway projects and system failure
How badly are projects managed ?
Private sector projects are underestimated by one-half in terms of budget and time required to deliver the complete system promised in the system plan.
Delivered with missing functionality
Only 29% of all technology investments were completed on time, on budget, and with all features and functions originally specified
Between 30-40% of all software projects are “runaway projects” that far exceed the original schedule and budget projections and fail to perform as originally specified.

7. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
The system 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 system work.
A system may be designed with a poor user interface
User interface : is the part of the system with which end users interact.
For example: as online input form or data entry screen may be so poorly arranged that no one wants to submit data or request information. System outputs may be displayed in a format that is too difficult to comprehend

8. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Web site may discourage visitors from exploring further if:
Web pages are cluttered and poorly arranged
Users cannot easily find the information they are seeking, or if it takes too long to access and display the Web page on the user’s computer.
Data in the system may have a high level of inaccuracy or inconsistency.
The information in certain fields may be erroneous or ambiguous, or it may be organized properly for business purposes.
Information required for a specific business function may be inaccesible because the data is incomplete.

9. Consequences of Poor Project Management
Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Consequences of Poor Project Management
Figure 14-1
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. Great ideas for systems often flounder on the rocks of implementation.

10. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Project management objectives
Project : a plan series of related activities for achieving a specific business objective.
Information system projects include:
The development of new IS
Enhancement of existing systems
Upgrade or replacement of the firm’s IT infrastructure

11. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Project management objectives
Project management refers to application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints.
Five major variables in project management
1. Scope
2. Time
3. Cost
4. Quality
5. Risk

12. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Five major variables in project management
1. Scope
defines what work is or is not included in a project.
2. Time
the amount of time required to complete the project.
3. Cost
is based on the time to complete a project multiplied by the cost of human resources required to complete a project. IS project costs include the cost of hardware, software, and work space. PM develop a budget for the project and monitor ongoing project expenses.

13. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Five major variables in project management
4. Quality
an indicator of how well the end of result of a project satisfies the objectives specified by management.
The quality of IS projects usually boils down to improved organizational performance and decision making.
5. Risk
potential problems that would threaten the success of a project.

14. Management Information Systems The Importance of Project Management
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
The Importance of Project Management
Project management activities:
Planning the work
Accessing risk
Estimating resources required to accomplish the work
Organizing the work
Acquiring human and material resources
Assigning tasks
Directing activities
Controlling project execution
Reporting progress
Analyzing the results

15. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Management structure for information systems projects
Corporate strategic planning group
IS steering committee
Project management
Project team

16. Management Information Systems Management Control of Systems Projects
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Management Control of Systems Projects
Figure 14-2
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.

17. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Management structure for IS projects
Corporate strategic planning group
responsible for developing the firm’s strategic plan, which may require the development of new systems.
IS steering committee
The senior management group with responsibility for system development and operation.
Composed of department heads from both end-user and IS area.
Review and approve plans for systems in all divisions
Seeks to coordinate and integrate systems
Involved in selecting specific IS projects.

18. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Management structure for IS projects (cont.)
Project management
Composed of IS managers and end-user managers responsible for overseeing several specific IS projects.
Project team
Responsible for individual system projects
Consists of system analysts, specialists from the relevant end-user business areas, application programmers, and database specialists.

19. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Management structure for information systems projects
Linking systems projects to the business plan
Enterprise analysis and critical success factors
Portfolio analysis
Scoring models

20. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Selecting Projects
Linking systems projects to the business plan
IS plan : 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 system development (the purpose of the plan), the rationale, the current systems/situation, new developments to consider, the management strategy, the implementation plan, and the budget.
The plan contains a statement of corporate goals and specifies how IT will support the attainment of those goals.

21. Management Information Systems INFORMATION SYSTEMS PLAN
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
INFORMATION SYSTEMS PLAN
Purpose of the Plan
Overview of plan contents
Current business organization and future organization
Key business processes
Management strategy
Strategic Business Plan Rationale
Current situation
Current business organization’
Changing environments
Major goals of the business plan
Firm’s strategic plan

22. Management Information Systems INFORMATION SYSTEMS PLAN (cont.)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
INFORMATION SYSTEMS PLAN (cont.)
Current systems
Major systems supporting business functions and processes
Current infrastructure capabilities: hardware, software, database, telecommunication and Internet
Difficulties meeting business requirements
Anticipated future demands
New developments
New system projects: project descriptions, business rationale, applications’ role in strategy
New infrastructure capabilities required: hardware, software, database, telecommunication, and Internet

23. Management Information Systems INFORMATION SYSTEMS PLAN (cont.)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
INFORMATION SYSTEMS PLAN (cont.)
Management strategy
Acquisition plans
Milestones and timing
Organizational realignment
Internal reorganization
Management controls
Major training initiatives
Personnel strategy
Implementation Plan
Anticipated difficulties in implementation
Progress reports

24. Management Information Systems INFORMATION SYSTEMS PLAN (cont.)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
INFORMATION SYSTEMS PLAN (cont.)
Budget requirements
Requirements
Potential savings
Financing
Acquisition cycle

25. Management Information Systems CRITICAL SUCCESS FACTORS (CSFs)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
CRITICAL SUCCESS FACTORS (CSFs)
To develop an effective IS plan, organization must have a clear understanding of both its long and short term information requirements.
CSF analysis are shaped by the industry, the firm, the manager, and the broader environment.
For example, CSFs for automobile industry might include styling, quality, and cost to meet the goals of increasing market share and raising profits.
New IS should focus on providing information that helps the firm meet these goals.
The principal method used in CSF analysis is personal interviews – three or four – with a number of top managers identifying their goals and the resulting CSFs.

26. Management Information Systems CRITICAL SUCCESS FACTORS (CSFs)
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
CRITICAL SUCCESS FACTORS (CSFs)
The principal method used in CSF analysis is :
personal interviews – three or four – with a number of top managers identifying their goals and the resulting CSFs.
Focuses organizational attention on how information should be handled.
The method’s primary weakness is:
There is no particularly rigorous way in which individual CSFs can be aggregated into a clear company pattern.
Interviewees (and interviewers) often confused when distinguishing between individuals and organizational CSFs.
This method is clearly biased toward top managers, although it could be extended to elicit ideas for promising new systems from lower level members of the organization.

27. Management Information Systems Using CSFs to Develop Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Using CSFs to Develop Systems
The CSFs approach relies on interviews with key managers to identify their CSFs. Individual CSFs are aggregated to developed CSFs for the entire firm. Systems can then be built to deliver information on these CSFs.
Figure 14-3

28. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
PORTFOLIO ANALYSIS
Portfolio analysis can be used to evaluate alternative system projects
Portfolio analysis inventories all of the organization’s information system projects and assets, including:
Infrastructure
Outsourcing contracts
Licenses.
Information-intensive industries  few high-risk, high benefits projects, to ensure they stay current with technology
Non-information-intensive industries  low-risk, high benefits projects.

29. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
PORTFOLIO ANALYSIS
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 14-5

30. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
SCORING MODELS
Scoring model : is used for selecting projects where many criteria must be considered.
It assign weights to various features of a system and then calculated the weighted totals.
Look at Table 14.2
It shows that this particular company attaches the most importance to capabilities for sales order processing, inventory management, and warehousing.

31. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
EXAMPLE OF A SCORING MODEL FOR AN ERP SYSTEM

32. Information system costs and benefits
Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Establishing the Business Value of Information Systems
Information system costs and benefits
Capital budgeting for information systems
Case example: Capital budgeting for a new supply chain management system
The payback method
Accounting rate of return on investment (ROI)
Net present value
Internal rate of return (IRR)
Results of the capital budgeting analysis

33. Management Information Systems Cost & Benefits of Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Cost & Benefits of Information Systems
Costs:
Hardware
Telecommunications
Software
Services
Personnel

34. Tangible benefits (cost savings):
Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Cost & Benefits of Information Systems (cont.)
Tangible benefits (cost savings):
Increased productivity
Lower operational costs
Reduced workforce
Lower computer expenses
Lower outside vendor costs
Lower clerical and professional costs
Reduced rate of growth in expenses
Reduced facility costs

35. Intangible benefits : Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Cost & Benefits of Information Systems (cont.)
Intangible benefits :
Improved asset utilization
Improved resource control
Improved organizational planning
Increased organizational flexibility
More timely information
More information
Increased organizational learning
Legal requirements attained
Enhanced employee goodwill
Increased job satisfaction
Improved decision making
Improved operation
Higher client satisfaction
Better corporate image

36. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Managing Project Risk
Dimensions of project risk
Change management and the concept of implementation
The concept of implementation
The role of end users
Management support and commitment
Change management challenges for business process reengineering, enterprise applications, and mergers and acquisitions

37. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Managing Project Risk
Controlling risk factors
Managing technical complexity
Formal planning and control tools
Increasing user involvement and overcoming user resistance
Designing for the organization
Sociotechnical design
Project management software tools

38. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Figure 14-8
A GANTT CHART

39. Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Managing Project Risk
A PERT Chart
Figure 14-9
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.

40. Managing IT in the Merger and Acquisition Game
Management Information Systems
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Managing Project Risk
Managing IT in the Merger and Acquisition Game
Read the Interactive Session: Management, and then discuss the following questions:
What are some of the risks involved when one firm acquires another firm’s IT infrastructure?
Why do firms often fail to take the target firm’s information systems and IT infrastructure into account when purchasing other firms?
How would you go about assessing the value of another firm’s IT infrastructure and operational capabilities? What questions would you ask?

41. Management Information Systems Getting Buy-In and ROI for CRM
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
Managing Project Risk
Getting Buy-In and ROI for CRM
Read the Interactive Session: Organizations, and then discuss the following questions:
Why was the director of IT assigned the job of implementing a CRM system? Would this job be better performed by the sales manager?
Why were sales reps reluctant to share customer information with other sales reps? What strategies did Kirstin Johnson use to overcome user resistance? How would you recommend the firm overcome this problem?
What do you think the metrics for CRM success should be in a firm like this? How would you change the sales rep compensation plan to support more effective use of the CRM system?