Transcript Leveraging Information Systems for Competition

Managing Information
Systems Projects
Feasibility, Risks, and Methods
Eric Santanen, Ph.D.
ILTM 2006
Overview
Information systems projects can be
extremely beneficial to organizations;
however,
Poorly managed projects can kill an
organization…
Look at how IS and management practices
fit together.
Agenda for Today
The changing business environment
IS project feasibility analysis
Managing Expectations
IS design methodologies – time permitting
But first, an illustration…
Organization
Organization
Organizational
Objective
Organization
Organizational
Use of
Technology
Organizational
Objective
Information Systems
Collects, processes, stores, analyzes, &
disseminates information
– Automatically or with human intervention
What are some business functions
performed by IS?
What benefits are offered by IS?
– How might they be classified?
Understanding Your Organization
Think of a typical large organization
What are its characteristics?
– Think of: longevity, structure, mergers, reward
structure, culture, attitudes of upper
management, propensity for risk,
– What are implicit assumptions of above?
Are the above advantages or disadvantages
when it comes to new projects?
Understanding Your Environment
What has changed since many of these
large companies have begun?
– In the marketplace?
– With technology?
– In society?
Market Pressures
 Globalization & Competition
– NAFTA, EU
– What special requirements do these create?
 Real-Time Operations
– Today’s business doesn’t wait for old data
 Changes in the workforce
– Telecommuters, flexible hours, etc
 Powerful customers
– Know more than ever before (how?)
– Want customized products (like what?)
Technology Pressures
Obsolescence of today’s products
– Moore’s Law
– Gateway commercial for the G5
– Fairchild Semiconductor: replace a $1.05
television vacuum tube with $100 transistor
Substitute products and services
– If you don’t jump on today’s technology…
Moore’s Law Illustrated
Societal Pressures
Major areas of Societal Pressure
–
–
–
–
Social Responsibility
Government De/Regulations
Homeland Security
Information Ethics
Social Responsibility…
Lets Look at the Cases:
Sports-for-All
– What is the current business situation?
– Why won’t advertising work here?
– Why doesn’t Jim like David’s proposal?
Quantas Airlines
– What is their business situation?
– Which pressures are evident?
– What are the benefits of e-commerce?
The Technology Playground
“Business as Usual” No
Longer Exists!
Those that think so will
ultimately Fail…
Categories of IS Projects
Problems
Opportunities
Directives
Which categories get funding first?
Which categories have the greatest
potential to return value?
Any problems here?
IS Project Management
 1995 survey, 352 orgs, 8000 IS projects
– What percentage were on-time & on-budget?
– What percentage simply failed?
– The remainder
• Are over budget by 189%
• Behind schedule by 222%
 Why do these problems occur?
 What can be done to turn failures into successes?
Why Software Development Fails
Another
Illustrated
Example…
Analysis of the Swing
Why does this problem happen so often?
What can be done to prevent this sequence
of events?
How about a break?!?
Preventing the Failures
Feasibility Analysis
Threats to Feasibility
IS Project Feasibility:
How do you determine if an IS project is
feasible?
– What does “feasible” really mean?
IS Project Feasibility:
Operational
Technical
Schedule
Economic
Operational Feasibility, I
Does management support this system?
– Attitude of executive management
•
•
•
•
Overall budget rule-of-thumb…
‘Enabler’ budget…
‘Inhibitor’ budget…
Sports-for-All vs. Quantas…
– Location of IS on the org chart…
– What is the organization’s primary business…
Operational Feasibility, II
How do users feel about their new and
changing role?
Is resistance a real threat?
Will the working environment change?
– For the better? For the worse? Influences on
resistance
Technical Feasibility
Is the proposed technology practical?
– Is the technology available? To us…
– Is it mature enough to apply?
– Will it work with our current technology?
And the often forgotten ones:
– Do our people have necessary skills? (mouse)
– What are Training / Hiring needs?
– Both Tech staff and “regular” employees
Schedule Feasibility
Are the project deadlines reasonable?
– Are they mandatory or simply desired?
– What is the penalty for missing a deadline?
– Watch out for Parkinson’s Law!
Useful Methods:
– (Optimisitic + 4 * Likely + Pessimistic) / 6
– Function Points Analysis
Function Points Analysis
Application Item Count
Simple Average
Complex
# Inputs
3
4
6
# Outputs
4
5
7
# Programmed Inquiries
3
4
8
# Files / Relations
7
10
15
# Application Interfaces
5
7
10
Function Points Questions
 Complexity Adjustments (Scale from 0 to 5)
–
–
–
–
Is backup/recovery required?
Is data communication required?
Are any functions distributed?
Is performance critical… (there are 10 more criteria)
 Function Points = total weighted count * (0.65 + (0.1*Σ
(complexity adjustments)))
 Roger Pressman, Software Engineering: A practitioners
approach, 3rd ed, McGraw-Hill, 1992, p50.
Schedule Feasibility
An “old” saying:
– It is better to deliver a correctly functioning
system late than to deliver garbage on time!
Economic Feasibility
How can you measure economics of IS?
– There are several techniques...
What is wrong with these approaches to
feasibility analysis?
– How well do they work?
– Consider our cases…
– Think in terms of information availability
Economic Feasibility
 Intangible Benefits: difficult to quantify
– Still important to identify
– Without these, many projects would be infeasible...
 Examples on intangible benefits
–
–
–
–
Improved employee morale
Increased customer loyalty
Better decision making capability
Any others?
The Intangible: Cust Loyalty
 There is a chance (.50) that a customer may send
a few orders (.10) to competitors
 There is a chance (.20) that a customer will send
more orders (.50) to competitors, especially if
orders are slow
 There is a chance (.10) that a cust will send an
order to competitor only as a last resort, reducing
business by (.90)
 There is a chance (.05) that a cust will not do
business with us at all, 100% loss
Customer Loyalty
 Calculate the estimated business loss
Loss = .50 * (.10 loss of business) +
.20 * (.50 loss of business) +
.10 * (.90 loss of business) +
.05 * (1.00 loss of business)
Loss = 0.29 or 29% estimated loss of business
 If avg customer places $100K in annual orders
we will lose $29K for each customer
 If we have 100 customers, we will lose $2.9M
each year!
Economic Feasibility
Another “old saying”
– It is better to count gold imprecisely than to
count pennies precisely
Feasibility Dangers
A project that was once feasible may not
remain so - why not?
Feasibilities can often conflict!
– Best solution can often be the most expensive
– good operational feasibility
– poor economic feasibility
What can you do if the project is not
feasible on all levels?
Managing Expectations
Often most difficult aspect of a project
Tool for balancing priorities
Rows in matrix are project dimensions:
– Cost
– Schedule
– Scope / Quality
Managing Expectations
Columns in matrix are the priorities:
– Max or Min: most important
– Constrain: median importance
– Accept: lowest importance
Impossible to optimize all simultaneously!
Rule: 1 check per row & column
Expectation Management
Priorities
Max or Min
Constrain
X
Cost: $20B
Schedule:
Deadline 12/1969
Scope / Quality:
Man on the moon,
return safely
Accept
X
X
Making Development a Success
Primarily focused on SW development
Most hardware has a significant SW
component
Three primary methodologies
– Waterfall, Prototype, None
– Which do you think is most common?
Software Development
Sequential Methodologies “Waterfall”
1
Survey,
Study,
Define,
Target,
Design,
Construct,
Deliver
2
…
n-1
n
Software Development
Iterative Methodologies “Prototyping”
5
1
4
2
3
Require,
Design,
Code,
Test,
Feedback
SW Development Tools
What is the value of dev methodologies?
How can you coordinate team efforts?
– Who works on what?
– At what times?
– From what locations?
What is the single difference between:
– IBM vs. Apple, DVD vs. DivX, Windows vs.
Linuix
Frequent Causes of Failures
Taking shortcuts with methodology
– when/why do these occur?
Cost of fixing errors, finding an error in:
–
–
–
–
–
Requirements: $1,000
Design: $2,500
Coding: $6,000
Testing: $25,000
Implementation: $75,000
Frequent Causes of Failures
Scope & Feature Creep
– can be both good and bad, how?
– are mgmt intentions clear?
Brief Summary
IS Projects present new challenges
Need to carefully consider new criteria
New methodologies exist to help
Lets reduce % of failed projects!!
And the stuff that we didn’t get to…
Investment Strategy Analysis
General IS application areas
– Institutional, professional, physical
automation, external, infrastructure
Map these against functional components
or user groups
– R&D, QA, manufacturing, marketing, finance
What do we learn from this?
What comparisons can we make?
Waves of Tech Adoption
of 100 Million US households…
1/2 million are the actual Innovators
5 million are the Early Adopters
30-35 million are Early Majority
40-50 million are Late Majority
10-15 million are Technology Averse
Waves of Adoption, I
The Innovators
– On the cutting edge of technology
– Most people don’t understand anything about
these folks
Management’s Approach
– Support them with funding & learn from them
– What are advantages? Drawbacks?
– How much funding should they get?
Waves of Adoption, II
 Early Adopters: The First Consumers
– Risk Takers: Owned BetaMax, 8-tracks, DivX
– Wait at midnight for releases on Win95, etc.
– “Gotta Have It!!!!” mentality
 Management’s Approach
– Significant opportunities can be missed if these people
are ignored
– Need guidance of IS dept to prevent overwhelming
resources
– How do we manage this group?
Waves of Adoption, III
 The Early Majority: First Big Wave
– Open to new technology but need help
– Confused by terminology, new standards, no time to
learn
– Hold important positions in organizations, can make
or break technology use: must see direct benefits
 Management’s Approach
– Lots of training! If needs are unmet, will be rejected
– IS must know the business, non-tech products &
services
Waves of Adoption, IV
Late Majority: Technology Skeptics
– Not afraid of technology, have concerns about
cost, risk, security, compatibility, time, learning
curves for decision making
– Face severe budget pressures
– Will my client really benefit from this?
Management’s Perspective
– Address risks, costs as well as opportunities
– Address technology concerns (security) at level of
the audience
Waves of Adoption, V
Technologically Averse
– Not even considering a computer
– Concerned about privacy, security, control
– Real estate & Publishing: web pages bypass sunk
costs in infrastructure
Management’s Perspective
– Need to be aware of justifiable business fears
– These people need the most time & education
Summary
Range of organizational problems
– Many have happened inadvertently
– Many can be addressed by IS
IS alone is not a sufficient solution to any
problem
Proper management is essential
Questions??