CHAPTER 2

Management of IS
 CONTENTS
1. IS Planning
2. IS choices
3. IS implementation & change
management
4. Evaluation & Maintenance of IS
Part-1 [Ch-10 from book]

IS Planning
Introduction
 Organizations that plan their information systems
tend to achieve better results than organizations
that do not

 Yet studies reveal that many organizations either

do not plan for or do it unsystematically.
IS Planning - Why?
 The business organizations today are quite
complex, large and dynamic and exist in an ever-
increasing competition.

 Accordingly, they have to develop and update their

information systems in a systematic way.

 This requires an overall plan for the information

systems in the organization.
Planning Terminology
1) Mission: ‘reason for being’
2) Objectives:
◦ The desired future positions and destinations the
organization intends to reach in order to fulfill its
mission.
◦ It is understood to be in generic terms
◦ Goal is specific, time-based points of measurement that
organization design to complete its objective.
3) Strategies: A general direction in which an
objective is to be sought
4) Policies: General guidelines that directs and
constrains decision-making within an
organization
 The Nolan Stages Model
 While progressing, an organization must go through
each stage of growth before it can move to the next
stage.
 It is a contingency model (IF these features exist
THEN IS in this stage)
 The Nolan stage model has identified four stages of
information system growth .
1. initiation stage
2. expansion or contagion stage
3. formalization or control stage
4. maturity or integration stage
 Nolan enhanced his model to six stages.
 Added stages are:
5. data administration
6. maturity stage
CREATING AN IS PLAN
(CRISP)
 Information system planning, essentially
involves the following steps:
1. Strategic Analysis
2. Aligning of ISs with the business
3. Information Analysis
4. Identification of IS solutions
5. Prioritization of ISs
1. Strategic Analysis
 In this step, strategic analysis is performed to
understand the business organization.
 Strategic analysis refers to the formulation of
vision, mission, goals and strategies for the
organization.
 Various models like Porter’s five model; SWOT
analysis; Stages growth model; Value chain model
etc are applied.
2. Alignment of business with ISs
 In this stage, mission, goals and strategies of
information systems are derived from the mission,
goals and strategies of the organization.
 In other words, the business is aligned with the
required information systems.
 Techniques used:
◦ Derivation from organizational plan
◦ Strategic information system grid
◦ Strategic fit with organizational culture
◦ Strategy set transformation
3. Information Analysis
 After the strategic planning stage, the information
requirements of the managers, is determined in
this stage.
 Current and future needs are understood and
operations are assessed.
 Plan is formulated for integrations of ISs
 To undertake information requirement analysis, the
following steps are followed.
◦ Define underlying organizational requirements
◦ Develop sub-system matrix
◦ Determine the critical information requirements
◦ Evaluate Existing Information Systems
◦ Gap analysis
4. IS Solutions
 Proposed IS solutions =
◦ the information systems that need to be
developed
◦ or the proposed changes that are identified to be
done in the existing systems
5. Prioritization of ISs
 Having identified the need for information system
applications for the entire organization, the next
step of IS planning process is the prioritization of IS
applications.

 As the resources in terms of manpower and

financial resources may be limited, and not all IS
applications may be developed at once, it becomes
important to identify which applications are to be
developed and in what order.
5. Prioritization of ISs (contd.)
 The sequence of prioritized applications is
determined on the basis of
◦ value of IS and
◦ the organizational readiness, also known as feasibility
analysis
 Readiness is seen in terms of:
◦ People issues
◦ Data issues
◦ Integration/links with other systems/external links
◦ Technology/Infra issues
◦ Other issues
Part-2 [Ch-11 from book]

IS Choices & System

Acquisition
Introduction
 Once the requirements of IS applications
and the sequence in which these
applications are to be implemented in the
organization is decided, management
needs to take a decision whether to
◦ Develop these applications (in-house
development or by outsourcing the development
of IS work to a vendor/development house); or
◦ Acquire these applications either by purchasing
the IS applications or by hiring the services of a
vendor/service agent.
IS Choices
 There are generally four alternatives to in-
house development, which are mentioned
as below:
◦ Outsourcing
◦ Software licensing
◦ Using the service of an application service
provider (ASP)
◦ End-users development
Outsourcing
 Outsourcing, with regards to IT, refers
◦ to hiring some organization for the development
of information system or
◦ to hire the services of another company to
manage all or parts of the services that otherwise
would be rendered by an IT unit of the
organization.
Outsourcing IS Applications
 An organization outsources the development of
custom-designed applications to companies that
specialize in providing consulting and software
development services.
Advantages of Outsourcing IS
Applications
 Fit to business needs
 Fit to organizational culture
 Availability of trained manpower for maintenance
 Interfaces with other information systems
 Availability of desired security measures
 Strategic advantage:
Disadvantages of Outsourcing IS
Applications
 High cost
 Long wait for development
 IS may be too organization-specific to interface
with systems of other organizations
 Request for Changes
 Incompatibility with development methods
 Communication gap
Outsourcing IT Services
 Many business organizations may like to engage IT
companies for long-term services: like purchasing
and maintaining hardware; developing, licensing,
and maintaining software; installing and
maintaining communications networks; developing,
maintaining, and operating Web sites; running IT
daily operations, managing customer and supplier
relations, and so on.
Outsourcing IT Services
(Contd..)
 The decision whether to go in for outsourcing IT
services or not depends upon many factors like
core competency of the organization; specialization
of other organizations in providing IT services;
alliance with other IT organizations and the
possible improvements in activities; criticality of
the service required and reliability of the vendors
etc
Advantages of Outsourcing IT
Services
 Increased attention to core business
 Improved financial planning
 Reduced license and maintenance fee
 Shorter implementation cycles
 Reduction of personnel and fixed costs
 Increased access to highly qualified know-how
 Availability of ongoing consulting as part of
standard support
Risks of Outsourcing IT Services
 Loss of Control
 Loss of Experienced Employees
 Risks of losing a competitive advantage
 High price
Software Licensing
 Typically “purchased” software refers to licensed
software. The purchaser actually purchases a
license to use the software, not the software itself.
Thus, the term “licensing” means purchasing a
license to use.
Software Licensing
 Ready-made software may be used as
routine applications or as enterprise wide
applications
◦ Small applications which are relatively
inexpensive software, such as Microsoft Office,
Accounting application and similar suites etc.
◦ Large software applications that support whole
organizational functions, such as marketing
management and financial management, or
enterprise applications that span the entire
organization. Such packages include ERP, SCM,
and CRM applications.
Software Licensing Benefits
 An organization gets many benefits from
software licensing alternative. These
benefits are discussed as follow:
◦ Immediate system availability
◦ High quality
◦ Low price (license fee)
◦ After-sale support.
Software Licensing Risks

 Licensing a ready-made application has the

following broad risks
◦ Inadequate fit between needs and features
◦ Difficulties in modifications
◦ High turnover of vendor personnel
Software As A Service (SaaS)
 Software as a service (SaaS) refers to the renting
out the applications through the Web.

 An organization that offers the use of software

through communication lines is called an
application service provider (ASP).

 The concept is called software as a service (SaaS)

or software by subscription.
Benefits of SaaS
 The organization is not required to commit large
sums of upfront money.
 The application is immediately available.
 There is no need to hire experts for installation and
maintenance.
 No need to acquire hardware for the installation.
 There is no need to learn how to maintain the
application, as it is the responsibility of the ASP.
 No storage hardware is required for the application
and the associated data, as the vendor uses its
own hardware.
Risks of SaaS
 There may be long transaction response time on
the Internet.
 There is a high security risk, as the application is
controlled by vendor.
End User Development
 When the application is simple and it is not
available as a ready made package in the market
or the organization does not want to take any risk
in purchasing or renting it, the organization has got
another alternative, known as end user application
development.
ACQUISITION OF HARDWARE
AND SOFTWARE
The main steps of the acquisition process are listed
below.
 Requirement analysis
 Preparation of tender specifications
 Inviting tenders
 Technical scrutiny and shortlisting
 Detailed evaluation of shortlisted vendors
 Negotiations and procurement decision
 Delivery and installation
 Post-installation review
 Part-3 [Ch-14 from book]

IS Implementation and Change

Management
INTRODUCTION
 Once the design of MIS is complete, it is
ready for implementation. Implementation is
a process of coding, testing, installation,
documentation, training and support.
IMPLEMENTATION PROCESS
 The various steps involved in MIS
implementation process are as follows.
1. Planning the implementation
2. Acquisition of facilities & Space Planning
3. MIS Organization & Procedure Development
4. Acquisition of IT infrastructure
5. Coding
6. Testing
7. Creation of Forms & Databases
8. Documentation
9. Users’ training
10. Installation
Installation Strategies
 There may be four different strategies, namely:

i. Direct
ii. Parallel
iii. Modular
iv. Phase-in
Direct Approach
 A direct implementation is the installation of the
new system and the immediate discontinuation of
the old system, sometimes called cut-off.

Old system New System

Parallel Approach
 In this approach, the new system is installed and
operated in parallel with the current system until it
has been tested thoroughly; then the current
system is cut-out.
 This is the opposite of the direct implementation
approach.
 In a parallel implementation approach, the outputs
from each system are compared and differences
reconciled.

Old system
New System New System
Modular Approach
 Modular approach, sometimes termed the ‘pilot
approach’, refers to the implementation of a system
in the organization on a module (piecemeal) basis.

Module (a) Old Module (c) New

Module (b) Old Module (d) New

Module (a) New Module (c) New

Module (b) New Module (d) New

Phase-in Implementation
 This method is also referred to as ‘cut over by
segments’ approach, which is similar to the
modular approach.
 However, it differs in that the system itself is
segmented and not the organization.
 For example, the new data collection activities are
implemented and an interface mechanism with the
old system is developed.

Old System

Function (a) Function (b)

Old New
Organizational Change
 The use of information systems may result in many
changes in the organizations.
 It may affect the organizational structure, goals,
work-design, values, competition between interest
groups, decision-making and day-to-day behavior.
 The impacts of ISs include
◦ Centralization of Authority
◦ Organizational Structure
◦ Job Content
◦ Relationships
◦ Resistance to change
Change Management
 The following three steps may be useful in
managing the resistance to change.
◦ Create a climate for change
◦ Develop effective agents of change
◦ Modify the ‘required’ organizational system.
 Part-4 [Ch-15 from book]

Evaluation & Maintenance of IS

INTRODUCTION
 Evaluation of MIS is an integral part of the
management control process, in which the
organizations determine or appraise the quality or
worth of their information systems.

 In other words, evaluation of MIS is a process of

measuring performance of organizational
information systems.
 EVALUATION CLASSES
 Two major classes:
1. Effectiveness – Outputs against desired outputs
2. Efficiency – Relative cost of producing outputs

Efficiency Effectiveness
Inputs
Process Output

Feedback
EVALUATION APPROACHES
 There are different approaches to evaluate
MIS in an organization.
◦ Product-based MIS Evaluation
◦ Economic Evaluation
◦ Process-based MIS Evaluation
Product Based MIS Evaluation
 Since the focus of the product-based evaluation is
on the product (information support) or the output
from the system, the evaluation may be termed as
effectiveness evaluation.
 Model for assessing effectiveness:
 Model structure: components of general model of
evaluation (quality measures)
 Model implementation: five-point scale for getting
user response
 Effectiveness norm
Cost/Benefit Based Evaluation
 In cost/benefit evaluation, a thorough study of
various expected costs, the benefits to be expected
from the system and expected savings, if any, is
done.

 It is an economic evaluation of the system, in which

costs to be incurred for developing, implementing
and operating a system are to be justified against
the expected benefits from the system.
Cost/Benefit Based Evaluation
 Cost elements:
1. Initial development cost
2. Capital cost
3. Annual operating cost
 Identification of costs and benefits
 Classification of costs and benefits
1. Direct and indirect
2. Tangible and intangible
3. Fixed and variable
MODELS USED IN EVALUATION
 For evaluation, there are several capital budgeting
models, which can be used, namely:
i. Net benefit analysis,
ii. Present value analysis,
iii. Net present value,
iv. Payback method,
v. Cash-flow analysis,
vi. Break-even analysis, etc.
Process Based Evaluation
 Process based evaluation focuses at the
effectiveness of the processes (sub processes) that
make it.
 The IS sub processes are plan process;
development process; and use process.
Contributors to IS Process Effectiveness

Plan Development
Process Process

IS
Effectiveness

Use Process
SYSTEM MAINTENANCE
 System maintenance may be categorized
into three classes, namely
1. Corrective maintenance
2. Adaptive maintenance
3. Perfective maintenance
1. Corrective maintenance
 Corrective maintenance mainly refers to removing
errors in a program which might have crept in the
system.
 Thus, in corrective maintenance, processing or
performance failures are repaired.
 Corrective maintenance may be initiated by the
developer; technical people either on their own
initiative or the user may bring certain errors in the
input/output etc.
 1. Corrective maintenance
(Contd..)
 Corrective maintenance may be required
because of:
1) Faulty design, configuration of the ERP system
2) Wrong assumptions or wrong logic for the
processing of data
3) Inconvenience of the users to use input/output
interface
2. Adaptive maintenance
 In adaptive maintenance, ERP modules /
functionality, etc. are changed to enable the ERP
system to satisfy the information needs of the
users.
 This type of maintenance may become necessary
because of organizational changes which may
include:
1. Change in the organizational procedures
2. Change in organizational objectives, goals, and
strategies
3. Continuous improvement initiative of an organization; or
the ERP vendor
4. Business environment may force the organization to
initiate certain changes
5. Change in system controls and security need
3. Perfective maintenance:
 This refers to the enhancements to be made in the
existing ERP system that can be achieved either by
adding new modules or by adding new
functionalities.
 This type of maintenance is undertaken because of
the following factors:
1) Changes within the organization
2) Changes in governmental policies, laws, and so on
3) Economic and competitive conditions
4) Changes in technology