1. 13.1 © 2003 by Prentice Hall 13 UNDERSTANDING THE BUSINESS VALUE OF SYSTEMS AND MANAGING CHANGE Chapter

2. 13.2 © 2003 by Prentice Hall How can our company measure the business benefits of our information systems? What models should be used to measure that business value?How can our company measure the business benefits of our information systems? What models should be used to measure that business value? Why do so many system projects fail? What are the principal reasons for system failures?Why do so many system projects fail? What are the principal reasons for system failures? How should the organizational change surrounding a new system be managed to ensure success?How should the organizational change surrounding a new system be managed to ensure success? Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change OBJECTIVES

3. 13.3 © 2003 by Prentice Hall Are there any special challenges in implementing international information systems?Are there any special challenges in implementing international information systems? What strategies can our organization use to manage the system implementation process more effectively?What strategies can our organization use to manage the system implementation process more effectively? OBJECTIVES Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change

4. 13.4 © 2003 by Prentice Hall Determining benefits of a system when they are largely intangibleDetermining benefits of a system when they are largely intangible Dealing with the complexity of large-scale systems projectsDealing with the complexity of large-scale systems projects MANAGEMENT CHALLENGES Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change

5. 13.5 © 2003 by Prentice Hall Capital budgeting Process of analyzing and selecting various proposals for capital expendituresProcess of analyzing and selecting various proposals for capital expenditures UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Traditional Capital Budgeting Models

6. 13.6 © 2003 by Prentice Hall Do not express the risks and uncertainty of own cost and benefits estimatesDo not express the risks and uncertainty of own cost and benefits estimates UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Limitations of Financial Models

7. 13.7 © 2003 by Prentice Hall The Problem No automated way of tracking billable hoursNo automated way of tracking billable hours No secure method for communicationNo secure method for communication No client databaseNo client database No system to track costsNo system to track costs UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

8. 13.8 © 2003 by Prentice Hall The Solution Local area networkLocal area network Lotus Notes to handle client accounting, document management, group collaboration, and e-mailLotus Notes to handle client accounting, document management, group collaboration, and e-mail UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

9. 13.9 © 2003 by Prentice Hall UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Costs and Benefits of the Legal Information System Figure 13-1

10. 13.10 © 2003 by Prentice Hall UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Financial Models Figure 13-2

11. 13.11 © 2003 by Prentice Hall The Payback Method Measure of time required to pay back the initial investment on a projectMeasure of time required to pay back the initial investment on a project Accounting Rate of Return on Investment (ROI) Approximates the accounting income earned by the investmentApproximates the accounting income earned by the investment UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

12. 13.12 © 2003 by Prentice Hall Present value Value of a payment or stream of payments to be received in dollarsValue of a payment or stream of payments to be received in dollars Net present value Amount of money an investment is worthAmount of money an investment is worth UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

13. 13.13 © 2003 by Prentice Hall Cost-benefit ratio Calculates returns from capital expenditureCalculates returns from capital expenditure Profitability index Compares profitability of alternative investments by dividing the present value of total cash inflow by initial costCompares profitability of alternative investments by dividing the present value of total cash inflow by initial cost UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

14. 13.14 © 2003 by Prentice Hall Internal Rate of Return (IRR) Rate of return or profit an investment is expected to earnRate of return or profit an investment is expected to earn Results of the Capital Budgeting Analysis Cash flow positive over the time period and returns more benefits than it costsCash flow positive over the time period and returns more benefits than it costs UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Case Example: Primrose, Mendelson, and Hansen

15. 13.15 © 2003 by Prentice Hall Portfolio Analysis Analysis of portfolio of potential applications within a firmAnalysis of portfolio of potential applications within a firm Determines risks and benefitsDetermines risks and benefits Selects among alternatives for information systemsSelects among alternatives for information systems UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Strategic Considerations

16. 13.16 © 2003 by Prentice Hall Scoring Models Method for deciding among alternative systems based on a system of ratingsMethod for deciding among alternative systems based on a system of ratings Real Options Pricing Models Models for evaluating information technology investments with uncertain returnsModels for evaluating information technology investments with uncertain returns UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Strategic Considerations

17. 13.17 © 2003 by Prentice Hall UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change A System Portfolio Figure 13-3

18. 13.18 © 2003 by Prentice Hall Knowledge Value–Added Approach Focuses on knowledge input into a business processFocuses on knowledge input into a business process Determines costs and benefits of changes in business processes from new information systemsDetermines costs and benefits of changes in business processes from new information systems UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Strategic Considerations

19. 13.19 © 2003 by Prentice Hall Productivity Measure of firm’s efficiency in converting inputs to outputsMeasure of firm’s efficiency in converting inputs to outputs Information Technology Reduces costReduces cost Increases quality of products and servicesIncreases quality of products and services UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Information Technology Investments and Productivity

20. 13.20 © 2003 by Prentice Hall System failure Information system does not perform as expected, is not operational at a specified timeInformation system does not perform as expected, is not operational at a specified time Poor design, inaccurate data, excessive expenditure, breakdown in operationsPoor design, inaccurate data, excessive expenditure, breakdown in operations IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Information System Problem Areas

21. 13.21 © 2003 by Prentice Hall THE IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Information System Problem Areas Figure 13-4

22. 13.22 © 2003 by Prentice Hall Implementation Organizational activities working towards adoption, management, and routinization of innovationOrganizational activities working towards adoption, management, and routinization of innovation Change agent Individual acting as catalyst to ensure successful organizational adaptation to a new system or innovationIndividual acting as catalyst to ensure successful organizational adaptation to a new system or innovation IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Change Management and the Concept of Implementation

23. 13.23 © 2003 by Prentice Hall Role of users in implementation processRole of users in implementation process Degree of management support for implementation effortDegree of management support for implementation effort Level of complexity and risk of implementation projectLevel of complexity and risk of implementation project Quality of management of implementation processQuality of management of implementation process IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Causes of Implementation Success and Failure

24. 13.24 © 2003 by Prentice Hall IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Factors in Information System Success or Failure Figure 13-5

25. 13.25 © 2003 by Prentice Hall User–designer communications gap Different backgrounds, interests, and prioritiesDifferent backgrounds, interests, and priorities Impedes communication and problem solving among end users and information systems specialistsImpedes communication and problem solving among end users and information systems specialists IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change User Involvement and Influence

26. 13.26 © 2003 by Prentice Hall Project requires backing and commitment of management at various levelsProject requires backing and commitment of management at various levels Perceived positively by both users and technical information services staffPerceived positively by both users and technical information services staff IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Management Support and Commitment

27. 13.27 © 2003 by Prentice Hall Project size: Larger project has greater riskProject size: Larger project has greater risk Project structure: Clear and straightforward requirements help define outputs and processesProject structure: Clear and straightforward requirements help define outputs and processes Experience with technology: Project risk rises if project team and information system staff lack required technical expertiseExperience with technology: Project risk rises if project team and information system staff lack required technical expertise IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Level of Complexity and Risk

28. 13.28 © 2003 by Prentice Hall Improper management leads to: Cost overrunsCost overruns Unexpected time slippageUnexpected time slippage Technical shortfallsTechnical shortfalls Failure to obtain anticipated benefitsFailure to obtain anticipated benefits IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Management of the Implementation Process

29. 13.29 © 2003 by Prentice Hall IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Consequences of Poor Project Management Figure 13-6

30. 13.30 © 2003 by Prentice Hall System Challenges of Mergers and Acquisitions Integrating systemsIntegrating systems Organizational characteristicsOrganizational characteristics Information technology infrastructuresInformation technology infrastructures IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Change Management Challenges for Enterprise Applications, Business Process Reengineering (BPR), and Mergers and Acquisitions

31. 13.31 © 2003 by Prentice Hall Disparate Information Requirements and Business Processes Transborder data flow: Movement of information across international boundaries in any formTransborder data flow: Movement of information across international boundaries in any form Technology Hurdles: Lack of standards and connectivity in hardware, software, and telecommunicationsTechnology Hurdles: Lack of standards and connectivity in hardware, software, and telecommunications IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change The Challenge of Implementing Global Systems

32. 13.32 © 2003 by Prentice Hall Local User Resistance to Global Systems: Difficult to convince local managers to change their business processesLocal User Resistance to Global Systems: Difficult to convince local managers to change their business processes IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change The Challenge of Implementing Global Systems

33. 13.33 © 2003 by Prentice Hall Managing Technical Complexity: Usage of internal integration tools to ensure operation of implementation teamManaging Technical Complexity: Usage of internal integration tools to ensure operation of implementation team Formal Planning and Control Tools: Structures and sequences tasks, monitors progress towards fulfillment of goalsFormal Planning and Control Tools: Structures and sequences tasks, monitors progress towards fulfillment of goals MANAGING IMPLEMENTATION Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Controlling Risk Factors

34. 13.34 © 2003 by Prentice Hall Increasing User Involvement and Overcoming User Resistance: Linking work of implementation team to that of users at all organizational levelsIncreasing User Involvement and Overcoming User Resistance: Linking work of implementation team to that of users at all organizational levels Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Controlling Risk Factors MANAGING IMPLEMENTATION

35. 13.35 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Formal planning and control tools help to manage information systems projects successfully Figure 13-7 MANAGING IMPLEMENTATION

36. 13.36 © 2003 by Prentice Hall Allowing for the Human Factor Interaction of people and machines in work environmentInteraction of people and machines in work environment Sociotechnical Design Produces information system blending technical efficiency with sensitivity to organizational and human needsProduces information system blending technical efficiency with sensitivity to organizational and human needs Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Designing for the Organization MANAGING IMPLEMENTATION

37. 13.37 © 2003 by Prentice Hall Core systems Support functions absolutely critical to organizationSupport functions absolutely critical to organization Implementation Tactics: Cooptation Bringing opposition into process of designing and implementing a solutionBringing opposition into process of designing and implementing a solution Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Managing Global Implementations MANAGING IMPLEMENTATION

38. 13.38 © 2003 by Prentice Hall Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Figure 13-8 MANAGING IMPLEMENTATION

39. 13.39 © 2003 by Prentice Hall Creating a Global Technology Infrastructure Build international private networkBuild international private network Rely on value added network serviceRely on value added network service Use Internet technologyUse Internet technology Build global intranetsBuild global intranets Use Virtual Private NetworksUse Virtual Private Networks Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Managing Global Implementations MANAGING IMPLEMENTATION

40. 13.40 © 2003 by Prentice Hall Project planning is an enterprise-wide focusProject planning is an enterprise-wide focus Managers focus on solving problems and meeting challengesManagers focus on solving problems and meeting challenges Essentials of Management Information Systems Chapter 13 Understanding the Business Value of Systems and Managing Change Fourth-Generation Project Management MANAGING IMPLEMENTATION

41. 13.41 © 2003 by Prentice Hall 13 UNDERSTANDING THE BUSINESS VALUE OF SYSTEMS AND MANAGING CHANGE Chapter