Managing Information Systems
Seventh Canadian Edition
Laudon, Laudon and Brabston
CHAPTER 14
Project Management, Business Value,
and Managing Change
Copyright © 2015 Pearson Canada Inc.
14-1
Project Management
1. What are the objectives of project management,
and why it is so essential in developing information
systems?
2. What methods can be used for selecting and
evaluating information systems projects and
aligning them with the firm’s business goals?
3. How can firms assess the business value of
information systems projects?
Continued …
Copyright © 2015 Pearson Canada Inc.
14-2
Project management (continued)
4. What are the principal risk factors in information
systems projects?
5. What strategies are useful for managing project
risk and system implementation?
Managing information systems as a critical
resource; managers need to understand in order to
interact with IS department (critical service provider
to other departments); managing personnel who
develop systems and the systems developed
Copyright © 2015 Pearson Canada Inc.
14-3
Runaway Projects and System Failure
• Runaway projects
– Fail to perform as specified; exceed schedule,
budget
• Types of system failure
– Fail to capture essential business requirements
– Fail to provide organizational benefits
– Complicated, poorly organized user interface
– Inaccurate or inconsistent data
Copyright © 2015 Pearson Canada Inc.
14-4
[INSERT FIGURE 14.1]
Copyright © 2015 Pearson Canada Inc.
14-5
Project Management
Activities include planning work, assessing risk,
estimating resources required, organizing the work,
assigning tasks, controlling project execution, reporting
progress, analyzing results
Includes scope, time, cost, quality, risk
Budget for IS department and for strategic, tactical and
operational level systems; justify financial investment
Copyright © 2015 Pearson Canada Inc.
14-6
Managing in the Merger and Acquisition Game
1. What are some of the risks involved when one firm acquires
another firm’s IT infrastructure?
2. Why do firms often fail to take the target firm’s information
systems and IT infrastructure into account when purchasing
other firms?
3. How would you go about assessing the value of another
firm’s IT infrastructure and operational capabilities? What
questions would you ask?
Copyright © 2015 Pearson Canada Inc.
14-7
Management Structure for Information
Systems Projects
Hierarchy in large firms
• Corporate strategic planning group
–Responsible for firm’s strategic plan
• Information systems steering committee
–Reviews and approves plans for systems in all
divisions
• Project management group
–Responsible for overseeing specific projects
• Project team
–Responsible for individual systems project
Copyright © 2015 Pearson Canada Inc.
14-8
[INSERT FIGURE 14.2]
Copyright © 2015 Pearson Canada Inc.
14-9
Linking Systems Projects to the Business Plan
Information Systems Plan
• Identifies systems projects that will deliver most
business value, links development to business
plan, goals
includes:
–
–
–
–
Rationale and direction of systems development
Management strategy and implementation plan
Budget
Organizational challenges
• Enterprise analysis: examine organization in terms
of units, functions, processes and data; identify key
entities and attributes in organization’s data
Copyright © 2015 Pearson Canada Inc.
14-10
Information Requirements and Key
Performance Indicators; Portfolio Analysis
• To develop effective information systems plan,
organization must have clear understanding of both
long-term and short-term information requirements
• Strategic analysis
– Key Performance Indicators (KPI): sees information
requirements as determined by a small number of
KPIs, believed to assure success of organization
Portfolio analysis: based on inventory of all
information systems projects and assets, assign risk
and benefit profiles to IS investments
Copyright © 2015 Pearson Canada Inc.
14-11
[INSERT FIGURE 14.3]
Copyright © 2015 Pearson Canada Inc.
14-12
Scoring Models
• Used to evaluate alternative system projects,
especially when many criteria exist
• Assigns weights to various features of system and
calculates weighted totals; involves qualitative
judgments made by experts; important to agree on
criteria used to judge a system; may cycle through to
final model, adjusting criteria and weights
Copyright © 2015 Pearson Canada Inc.
14-13
Information Systems Costs and Benefits
• Tangible benefits:
– Can be quantified and assigned monetary value
– Systems that displace labour and save space:
• Intangible benefits:
– Cannot be immediately quantified but may lead to
quantifiable gains in the long run
• E.g., more efficient customer service, enhanced
decision making
Copyright © 2015 Pearson Canada Inc.
14-14
Capital Budgeting for Information Systems
• Measure value of investing in long-term capital
investment projects; analyze and select various
proposals
• Rely on measures the firm’s cash inflows and
outflows
Copyright © 2015 Pearson Canada Inc.
14-15
Real Options Pricing Models (ROPM)
• Can be used when future revenue streams of IT
projects are uncertain and up-front costs are high
• Use concept of options valuation borrowed from
financial industry: option is the right, but not
obligation to act at a future date
• Gives managers flexibility to stage IT investment or
test the waters with small pilot projects or prototypes
to gain more knowledge about risks before investing
in entire implementation
Copyright © 2015 Pearson Canada Inc.
14-16
Limitations of Financial Models
• Do not take into account social and organizational
dimensions that may affect costs and benefits
• Factors include management support, user
involvement and influence, level of complexity,
management of the implementation process
Copyright © 2015 Pearson Canada Inc.
14-17
Dimensions of Project Risk
Level of project risk influenced by:
• Project size
• Indicated by cost, time, number of
organizational units affected
• Organizational complexity also an issue
• Project structure
• Structured, defined requirements run lower
risk
• Experience with technology
Copyright © 2015 Pearson Canada Inc.
14-18
Change Management and the Concept of
Implementation
• Required for successful system building
• New information systems have powerful behavioral
and organizational impact
• Changes in how information is used often lead to
new distributions of authority and power
• Internal organizational change breeds resistance
and opposition
Copyright © 2015 Pearson Canada Inc.
14-19
Management Support and Commitment
• Positive perception by both users and technical staff
• Ensures sufficient funding and resources
• Enforcement of required organizational changes
Copyright © 2015 Pearson Canada Inc.
14-20
Controlling Risk Factors
• First step in managing project risk involves
identifying nature and level of risk of project
• Each project can then be managed with tools and
risk-management approaches geared to level of risk
• Managing technical complexity; formal planning and
control tools; increasing user involvement and
overcoming user resistance
• Designing for the organization
Copyright © 2015 Pearson Canada Inc.
14-21
Managing Technical Complexity
• Internal integration tools
• Project leaders with technical and
administrative experience
• Highly experienced team members
• Frequent team meetings
• Securing of technical experience outside firm if
necessary
• Formal planning tools
Copyright © 2015 Pearson Canada Inc.
14-22
[INSERT FIGURE 14.5]
Copyright © 2015 Pearson Canada Inc.
14-23
Management Challenges Summary
• Determining system benefits and costs when they
are difficult to quantify
• Dealing with complexity of large-scale projects
• Guidelines:
– Obtain more value from IT investments:
documentation of firm’s applications and IT
infrastructure, with periodic review of IT portfolio
– Use appropriate metrics to monitor outcomes
– Consider new approaches to project management
Copyright © 2015 Pearson Canada Inc.
14-24
Managing Information Systems
Seventh Canadian Edition
Laudon, Laudon and Brabston
CHAPTER 14
Project Management, Business Value,
and Managing Change
Copyright © 2015 Pearson Canada Inc.
14-25