Lecture 4

Management Information Systems:
Managing the Digital Firm

Seventeenth Edition, Global Edition
Chapter 13
Building Information Systems
Copyright © 2022, 2020, 2018 Pearson Education, Ltd. All Rights Reserved
Learning Objectives
13.1 How does building new systems produce organizational change?
13.2 What are the core activities in the systems development process?
13.3 What are the principal methodologies for modeling and designing
systems?
13.4 What are alternative methods for building information systems?
13.5 What are new approaches for system building in the digital firm era?
13.6 How will MIS help my career?
Systems Development and
Organizational Change (1 of 2)
• IT-enabled organizational change
• Automation
– Increases efficiency
– Replaces manual tasks
• Rationalization of procedures
– Streamlines standard operating procedures
– Often found in programs for making continuous quality improvements
▪ Total quality management (TQM)
▪ Six Sigma
Systems Development and
Organizational Change (2 of 2)
• Business process redesign
– Analyze, simplify, and redesign business processes
– Reorganize workflow, combine steps, eliminate repetition
• Paradigm shifts
– Rethink nature of business
– Define new business model
– Change nature of organization
Figure 13.1 Organizational Change Carries
Risks and Rewards
Interactive Session: Organizations: Business Process
Redesign at DP World
• Class discussion
– How did DP World’s previous processes affect its
operations?
– Describe the role of AI and IoT in improving how DP World
handles cargo.
– How would business process redesign enable digitized
global trade?
Business Process Redesign
• Business process management (BPM)
– Variety of tools, methodologies to analyze, design, optimize
processes
– Used by firms to manage business process redesign
• Steps in BPM
1. Identify processes for change
2. Analyze existing processes
3. Design the new process
4. Implement the new process
5. Continuous measurement
Figure 13.2 As-is Business Process for
Purchasing a Book from a Physical
Bookstore
Figure 13.3 Redesigned Process for
Purchasing a Book Online
Tools for Business Process Management
• Identify and document existing processes
– Identify inefficiencies
• Create models of improved processes
• Capture and enforce business rules for performing, automating
processes
• Integrate existing systems to support process improvements
• Verify that new processes have improved
• Measure impact of process changes on key business performance
indicators
Systems Development
• Activities that go into producing an information system
solution to an organizational problem or opportunity
– Systems analysis
– Systems design
– Programming
– Testing
– Conversion
– Production and maintenance
Figure 13.4 The Systems Development
Process
Systems Analysis
• Analysis of problem to be solved by new system
– Defining the problem
– Identifying causes
– Specifying solutions
– Identifying information requirements
• Feasibility study
• Systems proposal report
• Information requirements
– Faulty requirements analysis is a leading cause of systems failure and
high systems development costs
Systems Design
• Describes system specifications that will deliver functions identified
during systems analysis
• Should address all managerial, organizational, and technological
components of system solution
• Role of end users
– User information requirements drive system building
– Users must have sufficient control over design process to ensure
system reflects their business priorities and information needs
– Insufficient user involvement in design effort is major cause of
system failure
Table 13.1 System Design Specifications (1 of 2)
Category Specifications
Output Medium, Content, Timing
Input Origins, Flow, Data entry
User Interface Simplicity, Efficiency, Logic, Feedback, Errors
Database Design Logical data model, Volume and speed requirements, File organization
and design, Record specifications
Processing Computations, Program modules, Required reports, Timing of outputs
Manual Procedures What activities, Who performs them, When, How, Where
Controls Input controls (characters, limit, reasonableness), Processing controls

(consistency, record counts), Output controls (totals, samples of
output), Procedural controls (passwords, special forms)
Table 13.1 System Design Specifications (2 of 2)
Category Specifications
Security Access controls, Catastrophe plans, Audit trails

Documentation Operations documentation, Systems documents, User
documentation
Conversion Transfer files, Initiate new procedures, Select testing method
Cut over to new system
Training Select training techniques, Develop training modules, Identify
training facilities
Organizational Changes Task redesign, Job redesign, Process design, Organization
structure design, Reporting relationships
Completing the Systems Development
Process (1 of 3)
• Programming
– System specifications from design stage are translated into software
program code
• Testing
– Ensures system produces right results
– Unit testing: Tests each program in system separately
– System testing: Test functioning of system as a whole
– Acceptance testing: Makes sure system is ready to be used in production
setting
– Test plan: All preparations for series of tests
Figure 13.5 A Sample Test Plan to Test a
Record Change
Process (2 of 3)
• Conversion
– Process of changing from old system to new system
– Four main strategies
▪ Parallel strategy
▪ Direct cutover
▪ Pilot study
▪ Phased approach
– Requires end-user training
– Finalization of detailed documentation showing how system works from
technical and end-user standpoint
Process (3 of 3)
• Production and maintenance
– System reviewed to determine if revisions needed
– May include post-implementation audit document
– Maintenance
▪ Changes in hardware, software, documentation, or
procedures to a production system to correct errors,
meet new requirements, or improve processing
efficiency
Table 13.2 Systems Development
Core Activity Core Activity
Systems analysis Identify problem(s), Specify solutions, Establish information

requirements
Systems design Create design specifications
Programming Translate design specifications into program code
Testing Perform unit testing, Perform systems testing, Perform
acceptance testing
Conversion Plan conversion, Prepare documentation, Train users and
technical staff
Production and Operate the system, Evaluate the system, Modify the system
maintenance
Structured Methodologies (1 of 3)
• Structured: Techniques are step-by-step, progressive
• Process-oriented: Focusing on modeling processes or
actions that manipulate data
• Separate data from processes
• Data flow diagram
– Represents system’s component processes and flow of data
between them
– Logical graphic model of information flow
• Data dictionary
– Defines contents of data flows and data stores
Figure 13.6 Data Flow Diagram for Mail-in
University Registration System
• Process specifications
– Describe transformation occurring within lowest level of data
flow diagrams
• Structure chart
– Top-down chart, showing each level of design, relationship
to other levels, and place in overall design structure
Figure 13.7 High-level Structure Chart for
a Payroll System
Object-Oriented Development (1 of 2)
• Object
– Basic unit of systems analysis and design
– Combines data and the processes that operate on those data
– Data in object can be accessed only by operations associated with
that object
• Object-oriented modeling
– Based on concepts of class and inheritance
– Objects belong to a certain class and have features of that class
– May inherit structures and behaviors of a more general, ancestor
class
Figure 13.8 Class and Inheritance
Object-Oriented Development (2 of 2)
• More iterative and incremental than traditional structured development
– Systems analysis: Interactions between system and users
analyzed to identify objects
– Design phase: Describes how objects will behave and interact;
grouped into classes, subclasses, and hierarchies
– Implementation: Some classes may be reused from existing library
of classes, others created or inherited
• Objects are reusable
– Object-oriented development can potentially reduce time and cost
of development
Traditional Systems Life Cycle
• Oldest method for building information systems
• Phased approach
– Development divided into formal stages
– “Waterfall” approach: One stage finishes before next stage begins
• Formal division of labor between end users and information systems
specialists
• Emphasizes formal specifications and paperwork
• Still used for building large complex systems
• Can be costly, time-consuming, and inflexible
Figure 13.9 The Traditional Systems
Development Life Cycle
Prototyping (1 of 2)
• Building experimental system rapidly and inexpensively for end users
to evaluate
• Prototype: Working but preliminary version of information system
– Approved prototype serves as template for final system
• Steps in prototyping
– Identify user requirements
– Develop initial prototype
– Use prototype
– Revise and enhance prototype
Figure 13.10 The Prototyping Process
Prototyping (2 of 2)
• Advantages of prototyping
– Useful if some uncertainty in requirements or design solutions
– Often used for end-user interface design
– More likely to fulfill end-user requirements
• Disadvantages
– May gloss over essential steps
– May not accommodate large quantities of data or large number of
users
▪ May not undergo full testing or documentation
Application Software Packages, Software
Services, and Outsourcing (1 of 3)
• Application software packages and software services
– Save time and money
– Many packages offer customization features
• Evaluation criteria for systems analysis include:

– Functions provided, flexibility, user friendliness, required resources,
database requirements, installation and maintenance efforts,
documentation, vendor quality, and cost
• Request for Proposal (RFP)

– Detailed list of questions submitted to software vendors
– Used to evaluate alternative software packages and cloud software
services
• Outsourcing: several types
– Cloud and SaaS providers: subscribing companies use
software and hardware provided by vendors
– External vendors
▪ Hired to design, create software
▪ Domestic outsourcing
– Driven by firm’s need for additional skills, resources,
assets
▪ Offshore outsourcing
– Driven by cost-savings
• Outsourcing Advantages/Disadvantages
– Advantages: Allows organization flexibility in IT needs
– Disadvantages
▪ Hidden costs, for example:
– Identifying and selecting vendor
– Transitioning to vendor
▪ Opening up proprietary business processes to third party
Figure 13.11 Total Cost of Offshore
Outsourcing
Rapid Application Development (RAD),
Agile Development, Automated Software
Testing, and DevOps (1 of 3)
• Rapid application development (RAD)
– Process of creating workable systems in a very short
period of time
• Joint application design (JAD)
– Used to accelerate generation of information
requirements and to develop initial systems design
Rapid Application Development (RAD), Agile
Development, Automated Software Testing,
and DevOps (2 of 3)
• Agile development
– Focuses on rapid delivery of working software by breaking large project
into subprojects that can be completed in short periods of time
• Automated software testing

– Tools to perform examinations of software, report outcomes, compare
results with earlier test runs
• DevOps
– Builds on agile development principles as an organizational strategy
Rapid Application Development (RAD),
Agile Development, Automated Software
Testing, and DevOps (3 of 3)
• Low-code development
– Enables faster development of applications, with minimal hand-coding,
using visual modelling in a graphical interface
• No-code development
– Includes built-in tools that enable user to create apps without any coding
– Some disadvantages
▪ Have limited functionality
▪ Users can create applications without proper management oversight
Mobile Application Development
• Mobile websites
• Mobile web apps
• Native apps
• Special requirements for mobile platform
– Smaller screens, keyboards, multitouch gestures, saving
resources (memory, processing)
• Responsive web design
– Websites programmed so that layouts change automatically
according to user’s computing device
Management Information Systems:
Managing the Digital Firm
Seventeenth Edition, Global Edition
Chapter 14
Making the Business Case for
Information Systems and Managing
Projects
Learning Objectives
14.1 How should managers build a business case for the acquisition and
development of new information systems?
14.2 What are the objectives of project management, and why is it so
essential in developing information systems?
14.3 What are the principal risk factors in information systems projects?
14.4 How can project risk be managed?
14.5 How will MIS help my career?
Building a Business Case for the Acquisition and
Development of a New Information System
• Important elements of a business case
– Describes problem facing the organization
– Provides analysis of costs, benefits, and risks
– Describes rationale for proceeding with investment
– Shows how investment supports firm’s strategic goals
– Provides information necessary to make informed decision
– Explains how investment will provide value for business
– Identifies risks and alternative solutions
– Describes how solution may require changes in organizational
culture, systems, processes, jobs
Figure 14.1 Factors to Consider in Making the Business
Case
Information Systems Plan (1 of 2)
• Identifies systems projects that will deliver most business value
• Links development to business plan
• Road map indicating direction of systems development, includes:

– Purpose of plan
– Strategic business plan rationale
– Current systems/situation
– New developments
– Management strategy
– Implementation plan
– Budget
Information Systems Plan (2 of 2)
• For effective plan
– Document existing systems and infrastructure
components
– Identify decision-making improvements
– Develop metrics established for quantifying values
– Clear understanding of long-term and short-term
information requirements
– Describe organizational changes required
Portfolio Analysis
• Used to evaluate alternative system projects
• Inventories all of the organization’s information systems projects and assets
• Each system has profile of risk and benefit

– High benefit, low risk
– High benefit, high risk
– Low benefit, low risk
– Low benefit, high risk
• To improve return on portfolio, balance risk and return from systems

investments
Figure 14.2 A System Portfolio
Scoring Models
• Used to evaluate alternative system projects, especially when
many criteria exist
• Assigns weights to various features of system and calculates
weighted totals
• Many qualitative judgments involved
• Requires experts who understand the issues and the technology
Table 14.2: Example of a Scoring Model for an ERP System
Criteria Weight ERP ERP ERP ERP
System System System System
A% A Score B% B Score
1.1 Online order entry 4 67 268 73 292
1.2 Online pricing 4 81 324 87 348
1.3 Inventory check 4 72 288 81 324
1.4 Customer credit check 3 66 198 59 177
1.5 Invoicing 4 73 292 82 328
2.1 Production forecasting 3 72 216 76 228
2.2 Production planning 4 79 316 81 324
(etc.) (etc.) (etc.) (etc.) (etc.) (etc.)
Grand Totals 3,128 3,300
Determining Solution Costs and Benefits
• Information system costs and benefits
– Tangible benefits
▪ Can be quantified and assigned monetary value
▪ Typically produced by systems that displace labor, save space
– E.g. transaction and clerical systems
– Intangible benefits
▪ Cannot be immediately quantified but may lead to quantifiable gains
in the long run
– Example: more efficient customer service, enhanced decision
making
▪ Typically produced by systems that influence decision making
– E.g. ESS, DSS, collaborative work systems
Capital Budgeting for Information Systems
• Capital budgeting models
– Measure value of long-term capital investment projects
– Rely on measures of the firm’s cash outflows and inflows
• Principal capital budgeting models used to evaluate IT projects
– Payback method
– Accounting rate of return on investment (ROI)
– Net present value
– Internal rate of return (IRR)
• Limitations of financial models
Runaway Projects and System Failure
• Runaway projects
– Exceed budget, schedule
▪ McKinsey/Oxford University study: ran 66 percent over budget;
33 percent over schedule
• Types of system failure

– Fail to capture essential business requirements
– Fail to provide organizational benefits
– Complicated, poorly organized user interface
– Inaccurate or inconsistent data
Figure 14.4 Consequences of Poor Project
Management
Project Management Objectives
• Project: planned series of related activities for achieving a specified
business objective
• Project management
– Activities include planning work, assessing risk, estimating resources
required, organizing the work, assigning tasks, controlling project
execution, reporting progress, analyzing results
• Five major variables

– Scope
– Time
– Cost
– Quality
– Risk
Dimensions of Project Risk
• Project size
– Cost
– Time
– Number of organizational units affected
– Organizational complexity
• Project structure
– Structured, defined requirements run lower risk
• Experience with technology
– Team familiar with hardware and software
Change Management and the Concept of
Implementation (1 of 3)
• Change management
– Required for successful system building
– New information systems have powerful behavioral and organizational impact
• Implementation
– All organizational activities working toward adoption, management, and
routinization of an innovation
• Change agent
– One role of systems analyst
– Redefines the configurations, interactions, job activities, and power relationships of
organizational groups
• Role of end users
– With high levels of user involvement
▪ System more likely to conform to requirements
▪ Users more likely to accept system
• User–designer communication gap

– Users and information systems specialists
• Management support and commitment

– Affects positive perception by both users and technical staff
– Ensures sufficient funding and resources
– Helps enforce required organizational changes
• Change management challenges for business process management (BPM), enterprise
applications, and mergers and acquisitions
– Very high failure rate among enterprise application and BPM projects (up to 70
percent for far-reaching BPM)
▪ Poor implementation and change management practices
– Employee concerns about change
– Resistance by key managers
– Changing job functions, career paths, recruitment practices
– Mergers and acquisitions
▪ Similarly high failure rate of integration projects
▪ Merging of systems of two companies requires:
– Considerable organizational change, complex systems projects
Managing Project Risks
• First step 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
– 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 and Control Tools
• Used for documenting and monitoring project plans
• Help identify bottlenecks and impact of problems
• Gantt charts
– Visual representation of timing and duration of tasks
– Human resource requirements of tasks
• PERT charts
– Graphically depict tasks and interrelationships
– Indicate sequence of tasks necessary
Figure 14.5 A Gantt Chart
Figure 14.6 A PERT Chart
Increasing User Involvement and Overcoming
User Resistance
• External integration tools
– Link work of implementation team to users at all levels
• User resistance to organizational change

– Counterimplementation
• Strategies to overcome user resistance

– User participation, education and training
– Management edicts and policies
– Incentives for cooperation
– Improvement of end-user interface
– Resolution of organizational problems prior to introduction of new system
Designing for the Organization
• Need to address ways in which organization changes with new system
• Ergonomics
– Interaction of people and machines in work environment
• Organizational impact analysis
– How system will affect organizational structure, attitudes, decision
making, operations
• Sociotechnical design
– Addresses human and organizational issues
Project Management Software Tools
• Can automate many aspects of project management
• Capabilities for defining, ordering tasks
– Assigning resources to tasks, tracking progress
– Manage very large numbers of tasks and relationships
• Microsoft Project
• Cloud-based software
• Project portfolio management software

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Management Information Systems:

Managing the Digital Firm

• Systems proposal report

Output Medium, Content, Timing

Input Origins, Flow, Data entry

User Interface Simplicity, Efficiency, Logic, Feedback, Errors

Processing Computations, Program modules, Required reports, Timing of outputs

Controls Input controls (characters, limit, reasonableness), Processing controls

Security Access controls, Catastrophe plans, Audit trails

Systems analysis Identify problem(s), Specify solutions, Establish information

• Evaluation criteria for systems analysis include:

• Request for Proposal (RFP)

• Automated software testing

• Links development to business plan

• Road map indicating direction of systems development, includes:

• Inventories all of the organization’s information systems projects and assets

• Each system has profile of risk and benefit

• To improve return on portfolio, balance risk and return from systems

• Types of system failure

• Five major variables

• User–designer communication gap

• Management support and commitment

• User resistance to organizational change

• Strategies to overcome user resistance

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