1. 9.1 CHAPTER 9. REDESIGNING THE ORGANIZATION WITH INFORMATION SYSTEMS

2. 9.2 DEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGEDEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGE EXPLAIN INFO SYSTEM DEVELOPMENT TO FIT BUSINESS PLANEXPLAIN INFO SYSTEM DEVELOPMENT TO FIT BUSINESS PLAN* LEARNING OBJECTIVES

3. 9.3 LEARNING OBJECTIVES IDENTIFY CORE ACTIVITIES IN SYSTEMS DEVELOPMENT PROCESSIDENTIFY CORE ACTIVITIES IN SYSTEMS DEVELOPMENT PROCESS ANALYZE CHANGE REQUIREMENTSANALYZE CHANGE REQUIREMENTS DESCRIBE MODELS FOR DETERMINING BUSINESS VALUE OF INFO SYSTEMSDESCRIBE MODELS FOR DETERMINING BUSINESS VALUE OF INFO SYSTEMS*

4. 9.4 MANAGEMENT CHALLENGES SYSTEMS AS PLANNED ORGANIZATIONAL CHANGESSYSTEMS AS PLANNED ORGANIZATIONAL CHANGES OVERVIEW OF SYSTEMS DEVELOPMENTOVERVIEW OF SYSTEMS DEVELOPMENT SYSTEM IMPLEMENTATION: MANAGING CHANGESYSTEM IMPLEMENTATION: MANAGING CHANGE UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMSUNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS*

5. 9.5 ROAD MAP INDICATING DIRECTION OF SYSTEM DEVELOPMENT: RATIONALERATIONALE CURRENT SITUATIONCURRENT SITUATION MANAGEMENT STRATEGYMANAGEMENT STRATEGY IMPLEMENTATION PLANIMPLEMENTATION PLAN BUDGETBUDGET* INFORMATION SYSTEMS PLAN

6. 9.6 INFORMATION SYSTEMS PLAN 1. PURPOSE OF THE PLAN: OVERVIEW OF PLAN CONTENTSOVERVIEW OF PLAN CONTENTS CHANGES IN CURRENT SITUATIONCHANGES IN CURRENT SITUATION FIRM’S STRATEGIC PLANFIRM’S STRATEGIC PLAN CURRENT ORGANIZATIONCURRENT ORGANIZATION MANAGEMENT STRATEGYMANAGEMENT STRATEGY*

7. 9.7 INFORMATION SYSTEMS PLAN 2. STRATEGIC BUSINESS PLAN: CURRENT SITUATIONCURRENT SITUATION CURRENT ORGANIZATIONCURRENT ORGANIZATION CHANGING ENVIRONMENTCHANGING ENVIRONMENT MAJOR GOALS OF PLANMAJOR GOALS OF PLAN*

8. 9.8 INFORMATION SYSTEMS PLAN 3. CURRENT SYSTEMS: MAJOR SYSTEMS SUPPORTING BUSINESS FUNCTIONSMAJOR SYSTEMS SUPPORTING BUSINESS FUNCTIONS MAJOR CURRENT CAPABILITIESMAJOR CURRENT CAPABILITIES –HARDWARE, SOFTWARE, DATABASE, TELECOMMUNICATIONS DIFFICULTIES MEETING REQUIREMENTSDIFFICULTIES MEETING REQUIREMENTS ANTICIPATED FUTURE DEMANDSANTICIPATED FUTURE DEMANDS*

9. 9.9 INFORMATION SYSTEMS PLAN 4. NEW DEVELOPMENTS: NEW SYSTEM PROJECTSNEW SYSTEM PROJECTS –PROJECT DESCRIPTIONS –BUSINESS RATIONALE NEW CAPABILITIES REQUIREDNEW CAPABILITIES REQUIRED –HARDWARE –SOFTWARE –DATABASE –TELECOMMUNICATIONS, INTERNET*

10. 9.10 INFORMATION SYSTEMS PLAN 5. MANAGEMENT STRATEGY ACQUISITION PLANSACQUISITION PLANS MILESTONES & TIMINGMILESTONES & TIMING ORGANIZATIONAL REALIGNMENTORGANIZATIONAL REALIGNMENT INTERNAL REORGANIZATIONINTERNAL REORGANIZATION MANAGEMENT CONTROLSMANAGEMENT CONTROLS MAJOR TRAINING INITIATIVESMAJOR TRAINING INITIATIVES PERSONNEL STRATEGYPERSONNEL STRATEGY*

11. 9.11 INFORMATION SYSTEMS PLAN 6. IMPLEMENTATION PLAN: ANTICIPATED DIFFICULTIESANTICIPATED DIFFICULTIES PROGRESS REPORTSPROGRESS REPORTS 7. BUDGET REQUIREMENTS: REQUIREMENTSREQUIREMENTS POTENTIAL SAVINGSPOTENTIAL SAVINGS FINANCINGFINANCING ACQUISITIONACQUISITION*

12. 9.12 ENTERPRISE ANALYSIS (BUSINESS SYSTEMS PLANNING) (BUSINESS SYSTEMS PLANNING) ORGANIZATION-WIDE INFORMATION NEEDS IN TERMS OF: ORGANIZATIONAL UNITSORGANIZATIONAL UNITS FUNCTIONSFUNCTIONS PROCESSESPROCESSES DATA ELEMENTSDATA ELEMENTS HELPS IDENTIFY KEY ENTITIES & ATTRIBUTES IN ORGANIZATION’S DATA HELPS IDENTIFY KEY ENTITIES & ATTRIBUTES IN ORGANIZATION’S DATA*

13. 9.13 CRITICAL SUCCESS FACTORS (CSFs) SMALL NUMBER, EASILY IDENTIFIABLE OPERATIONAL GOALS SHAPED BY INDUSTRY, MANAGER, ENVIRONMENT BELIEVED TO ASSURE FIRM’S SUCCESS USED TO DETERMINE ORGANIZATION’S INFORMATION REQUIREMENTS *

14. 9.14 GOALS (AUTOMOBILE INDUSTRY): Earnings per share, return on investment, market share, new productGOALS (AUTOMOBILE INDUSTRY): Earnings per share, return on investment, market share, new product CSF: Styling, quality dealer system, cost control, energy standardsCSF: Styling, quality dealer system, cost control, energy standards* CRITICAL SUCCESS FACTORS & GOALS Example: PROFIT CONCERN

15. 9.15 GOALS (HOSPITAL): Excellent health care, meeting government regulations, future health needsGOALS (HOSPITAL): Excellent health care, meeting government regulations, future health needs CSF: Regional integration with other hospitals, efficient use of resources, improved monitoring of regulationsCSF: Regional integration with other hospitals, efficient use of resources, improved monitoring of regulations* CRITICAL SUCCESS FACTORS & GOALS Example: NONPROFIT CONCERN

16. 9.16 USING CSFs TO DEVELOP SYSTEMS COLLECT MANAGERS’ CFCsCOLLECT MANAGERS’ CFCs AGGREGATE, ANALYZE INDIVIDUALS’ CSFsAGGREGATE, ANALYZE INDIVIDUALS’ CSFs DEVELOP AGREEMENT ON COMPANY CSFsDEVELOP AGREEMENT ON COMPANY CSFs DEFINE COMPANY CSFsDEFINE COMPANY CSFs USE CSFs TO DEVELOP INFORMATION SYSTEM PRIORITIESUSE CSFs TO DEVELOP INFORMATION SYSTEM PRIORITIES DEFINE DSS & DATABASESDEFINE DSS & DATABASES*

17. 9.17 SPECTRUM OF ORGANIZATIONAL CHANGE AUTOMATION: Using technology to perform tasks efficiently / effectivelyAUTOMATION: Using technology to perform tasks efficiently / effectively RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecksRATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks BUSINESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technologyBUSINESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology PARADIGM SHIFTPARADIGM SHIFT*

18. 9.18 PARADIGM SHIFT PARADIGM SHIFT PARADIGM is a complete mental model of how a complex system functionsPARADIGM is a complete mental model of how a complex system functions A PARADIGM SHIFT involves rethinking the nature of the business, the organization; a complete reconception of how the system should functionA PARADIGM SHIFT involves rethinking the nature of the business, the organization; a complete reconception of how the system should function*

19. 9.19 RISKS & REWARDS RISKS & REWARDS RISK RETURN Low LowHighHigh *

20. 9.20 IT CAPABILITIES & IMPACTS TRANSACTIONAL: Can transform unstructured processes into routinized transactionsTRANSACTIONAL: Can transform unstructured processes into routinized transactions GEOGRAPHICAL: Makes processes independent of geographyGEOGRAPHICAL: Makes processes independent of geography AUTOMATIONAL: Replaces human laborAUTOMATIONAL: Replaces human labor* Source: Davenport & Short “The New Industrial Engineering”(1990)

21. 9.21 IT CAPABILITIES & IMPACTS ANALYTICAL: Can bring complex analytical methods to bear on processANALYTICAL: Can bring complex analytical methods to bear on process INFORMATIONAL: Makes vast amounts of detailed information availableINFORMATIONAL: Makes vast amounts of detailed information available SEQUENTIAL: Enables changes in sequence, parallel tasksSEQUENTIAL: Enables changes in sequence, parallel tasks* Source: Davenport & Short “The New Industrial Engineering”(1990)

22. 9.22 IT CAPABILITIES & IMPACTS KNOWLEDGE MANAGEMENT: Allows capture, dissemination of knowledge, expertiseKNOWLEDGE MANAGEMENT: Allows capture, dissemination of knowledge, expertise TRACKING: Allows detailed tracking of task status, inputs, outputsTRACKING: Allows detailed tracking of task status, inputs, outputs DISINTERMEDIATION: Connects parties who otherwise depend on an intermediaryDISINTERMEDIATION: Connects parties who otherwise depend on an intermediary* Source: Davenport & Short “The New Industrial Engineering”(1990)

23. 9.23 BUSINESS PROCESS REENGINEERING (BPR) WORK-FLOW MANAGEMENT: Streamlining process to move documents easily, efficientlyWORK-FLOW MANAGEMENT: Streamlining process to move documents easily, efficiently REENGINEERING: Redesigning business processes to lower cost, speed developmentREENGINEERING: Redesigning business processes to lower cost, speed development*

24. 9.24 1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process * EFFECTIVE REENGINEERING STEPS: EFFECTIVE REENGINEERING STEPS:

25. 9.25 SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION SYSTEMS ANALYSIS IDENTIFY PROBLEM(S) SPECIFY SOLUTIONS ESTABLISH INFORMATION REQUIREMENTS SYSTEMS DESIGN CREATE LOGICAL DESIGN SPECS CREATE PHYSICAL DESIGN SPECS MANAGE TECHNICAL REALIZATION OF SYSTEM PROGRAMMINGTRANSLATE DESIGN SPECS INTO PROGRAM CODE

26. 9.26 SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION TESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST CONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF PRODUCTION & OPERATE SYSTEM MAINTENANCE EVALUATE SYSTEM MODIFY SYSTEM

27. 9.27 ANALYSIS OF PROBLEM TO BE SOLVED WITH AN INFORMATION SYSTEM ANALYSIS OF PROBLEM TO BE SOLVED WITH AN INFORMATION SYSTEM FEASIBILITY STUDY: Can problem be solved within constraints? FEASIBILITY STUDY: Can problem be solved within constraints?* SYSTEMS ANALYSIS

28. 9.28 FEASIBILITY TECHNICAL: Assess hardware, software, technical resourcesTECHNICAL: Assess hardware, software, technical resources ECONOMIC: Will benefits outweigh costsECONOMIC: Will benefits outweigh costs OPERATIONAL: Is solution desirable within existing conditions?OPERATIONAL: Is solution desirable within existing conditions? INFORMATION REQUIREMENTS: Detailed statement of new system needsINFORMATION REQUIREMENTS: Detailed statement of new system needs*

29. 9.29 SYSTEM DESIGN DETAILS HOW SYSTEM WILL MEET NEEDS: DETAILS HOW SYSTEM WILL MEET NEEDS: LOGICAL DESIGN: Components, data as needed by applicationsLOGICAL DESIGN: Components, data as needed by applications PHYSICAL DESIGN: Physical location of components and dataPHYSICAL DESIGN: Physical location of components and data*

30. 9.30 DESIGN SPECIFICATIONS OUTPUTOUTPUT –MEDIUM; CONTENT; TIMING INPUTINPUT –ORIGINS; FLOW; DATA ENTRY USER INTERFACEUSER INTERFACE –SIMPLICITY; EFFICIENCY; LOGIC –FEEDBACK; ERRORS DATABASE DESIGNDATABASE DESIGN –LOGICAL DATA RELATIONS –VOLUME, SPEED REQUIREMENTS –FILE ORGANIZATION & DESIGN –RECORD SPECIFICATIONS*

31. 9.31 PROCESSINGPROCESSING –COMPUTATIONS –PROGRAM MODULES –REQUIRED REPORTS –TIMING OF OUTPUTS MANUAL PROCEDURESMANUAL PROCEDURES –WHAT ACTIVITIES –WHO PERFORMS THEM –HOW –WHERE* DESIGN SPECIFICATIONS

32. 9.32 CONTROLSCONTROLS –INPUT –PROCESSING –OUTPUT –PROCEDURAL SECURITYSECURITY –ACCESS CONTROLS –CATASTROPHE PLANS –AUDIT TRAILS* DESIGN SPECIFICATIONS

33. 9.33 CONVERSIONCONVERSION –TRANSFER FILES –INITIATE NEW PROCEDURES –SELECT TESTING MODULES –CUT OVER TO NEW SYSTEM TRAININGTRAINING –SELECT TRAINING TECHNIQUES –DEVELOP TRAINING MODULES –IDENTIFY TRAINING FACILITIES ORGANIZATIONAL CHANGESORGANIZATIONAL CHANGES –TASK REDESIGN –JOB DESIGN –PROCESS DESIGN –ORGANIZATION STRUCTURE DESIGN –REPORTING RELATIONSHIPS* DESIGN SPECIFICATIONS

34. 9.34 ROLE OF END USERS USERS DRIVE SYSTEMS EFFORTUSERS DRIVE SYSTEMS EFFORT MUST HAVE SUFFICIENT CONTROL TO ENSURE SYSTEM REFLECTS BUSINESS PRIORITIES, NEEDSMUST HAVE SUFFICIENT CONTROL TO ENSURE SYSTEM REFLECTS BUSINESS PRIORITIES, NEEDS FUNCTIONAL USERS DRIVE SYSTEM NEEDSFUNCTIONAL USERS DRIVE SYSTEM NEEDS*

35. 9.35 COMPLETING SYSTEM DEVELOPMENT PROCESS PROGRAMMING: Translating needs to program codePROGRAMMING: Translating needs to program code TESTING: Does system produce desired results?TESTING: Does system produce desired results? CONVERSION: Changing from the old to the newCONVERSION: Changing from the old to the new*

36. 9.36 UNIT TESTING: Tests each unit separatelyUNIT TESTING: Tests each unit separately SYSTEM TESTING: Do modules function as planned?SYSTEM TESTING: Do modules function as planned? ACCEPTANCE TESTING: Final certificationACCEPTANCE TESTING: Final certification TEST PLAN: Preparations for tests to be performedTEST PLAN: Preparations for tests to be performed* TESTING

37. 9.37 CONVERSION PARALLEL: Old & new run same problems. Give same results?PARALLEL: Old & new run same problems. Give same results? DIRECT CUTOVER: Risky conversion to new systemDIRECT CUTOVER: Risky conversion to new system PILOT: Introduce into one area. Does it work? Yes: introduce into other areaPILOT: Introduce into one area. Does it work? Yes: introduce into other area PHASED: Introduce in stagesPHASED: Introduce in stages CONVERSION PLAN: Schedule for conversionCONVERSION PLAN: Schedule for conversion DOCUMENTATION: Description of how system worksDOCUMENTATION: Description of how system works*

38. 9.38 PRODUCTION & MAINTENANCE PRODUCTION: Constant review by users & operators. Does it meet goals?PRODUCTION: Constant review by users & operators. Does it meet goals? MAINTENANCE: Upkeep; Update; Corrections over timeMAINTENANCE: Upkeep; Update; Corrections over time*

39. 9.39 SYSTEM IMPLEMENTATION: MANAGING CHANGE COUNTERIMPLEMENTATION: Attempts to thwart implementationCOUNTERIMPLEMENTATION: Attempts to thwart implementation INTERNAL INTEGRATION TOOLS:INTERNAL INTEGRATION TOOLS: –FORMAL PLANNING TOOLS –FORMAL CONTROL TOOLS*

40. 9.40 FORMAL PLANNING TOOLS: BUDGET: TIMETIME MONEYMONEY RESOURCESRESOURCES*

41. 9.41 FORMAL CONTROL TOOLS: MONITOR PROGRESS: COMPLETION OF TASKSCOMPLETION OF TASKS FULFILLMENT OF GOALSFULFILLMENT OF GOALS CONTROL RISK FACTORS: COST / BENEFITSCOST / BENEFITS*

42. 9.42 FORMAL CONTROL TOOLS: ORGANIZATIONAL IMPACT ANALYSIS: How will system impact structure, attitudes, decision-making, operations ERGONOMICS: Interaction of people & machines; jobs, health, interface *

43. 9.43 CAPITAL BUDGETING MODELS LIMITATIONS: Assume all relevant alternatives have been examined; cost & benefits can be expressed as $$Assume all relevant alternatives have been examined; cost & benefits can be expressed as $$ Ignore intangible benefitsIgnore intangible benefits* UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS

44. 9.44 CAPITAL BUDGET: PROCESS OF ANALYZING, SELECTING CAPITAL EXPENDITURES PAYBACK METHODPAYBACK METHOD RETURN ON INVESTMENTRETURN ON INVESTMENT COST-BENEFIT RATIOCOST-BENEFIT RATIO NET PRESENT VALUENET PRESENT VALUE PROFITABILITY INDEXPROFITABILITY INDEX INTERNAL RATE OF RETURNINTERNAL RATE OF RETURN*

45. 9.45 COSTS: HARDWAREHARDWARE SOFTWARESOFTWARE SERVICESSERVICES PERSONNELPERSONNEL* COSTS & BENEFITS:

46. 9.46 TANGIBLE BENEFIT: INCREASED PRODUCTIVITYINCREASED PRODUCTIVITY LOW OPERATING COSTSLOW OPERATING COSTS REDUCED WORK FORCEREDUCED WORK FORCE LOWER COMPUTER EXPENSESLOWER COMPUTER EXPENSES LOWER VENDOR COSTSLOWER VENDOR COSTS LOWER CLERICAL/PROFESSIONAL COSTSLOWER CLERICAL/PROFESSIONAL COSTS REDUCED GROWTH OF EXPENSESREDUCED GROWTH OF EXPENSES REDUCED FACILITY COSTSREDUCED FACILITY COSTS* COSTS & BENEFITS:

47. 9.47 INTANGIBLE BENEFIT: IMPROVED ASSET USE; RESOURCE CONTROL; PLANNINGIMPROVED ASSET USE; RESOURCE CONTROL; PLANNING INCREASED FLEXIBILITYINCREASED FLEXIBILITY MORE TIMELY INFORMATIONMORE TIMELY INFORMATION INCREASED LEARNINGINCREASED LEARNING ATTAIN LEGAL REQUIREMENTSATTAIN LEGAL REQUIREMENTS ENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION, DECISION MAKING, OPERATIONSENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION, DECISION MAKING, OPERATIONS HIGHER CLIENT SATISFACTIONHIGHER CLIENT SATISFACTION BETTER CORPORATE IMAGEBETTER CORPORATE IMAGE* COSTS & BENEFITS:

48. 9.48 PORTFOLIO ANALYSIS: ANALYSIS OF POTENTIAL APPLICATIONS TO DETERMINE RISKS & BENEFITS DETERMINE DESIRABLE FEATURES, ACCEPTABLE RISKS OF REQUIRED SYSTEMDETERMINE DESIRABLE FEATURES, ACCEPTABLE RISKS OF REQUIRED SYSTEM GENERATE PORTFOLIO OF CHARACTERISTICS, RISKS FOR EACH ALTERNATIVEGENERATE PORTFOLIO OF CHARACTERISTICS, RISKS FOR EACH ALTERNATIVE SCORING MODELSCORING MODEL*

49. 9.49 IDENTIFY DESIRABLE FEATURESIDENTIFY DESIRABLE FEATURES PROVIDE WEIGHTS FOR EACH (ADD TO 1.00)PROVIDE WEIGHTS FOR EACH (ADD TO 1.00) LOOK AT EACH ALTERNATIVE:LOOK AT EACH ALTERNATIVE: –WHICH FEATURES ARE PRESENT? –TO WHAT EXTENT (as an amount)? –SCORE THE ALTERNATIVE RANK-ORDER THE ALTERNATIVESRANK-ORDER THE ALTERNATIVES SELECT HIGHEST RANKED OPTIONSELECT HIGHEST RANKED OPTION* SCORING MODEL:

50. 9.50 Connect to the INTERNET Laudon/Laudon Web site: http://www.prenhall.com/laudon Additional Internet Resources related to this chapter: http://www.outsourcing.com http://www.reengineering.com http://tools.org/EI/ICEIMT http://bprc.warwick.ac.uk http://www.cne.gmu.edu/modules/workflow http://www.cne.gmu.edu/modules/index.html http://osiris.sunderland.ac.uk/sst/casehome.html http://www.spr.com © 2001 Laudon & Laudon, Essentials of Management Information Systems 4/e

51. 9.51 CHAPTER 9. REDESIGNING THE ORGANIZATION WITH INFORMATION SYSTEMS