Chapter 14 Chapter 14: Managing Projects Managing Projects

Management Information Systems Management Information Systems
MANAGING THE DIGITAL FIRM, 12TH EDITION CHAPTER 14: MANAGING PROJECTS
Learning Objectives
Chapter 14 • What are the objectives of project management and why is

it so essential
ti l in
i ddeveloping
l i information
i f ti systems?
t ?
• What methods can be used for selecting and evaluating
MANAGING PROJECTS information systems projects and aligning them with the
firm’s business goals?
• How can firms assess the business value of information
systems projects?
• What are the principal risk factors in information systems
projects?
VIDEO CASES
Case 1 Mastering the Hype Cycle: How to Adopt the Right Innovation at the Right Time • What strategies are useful for managing project risk and
Case 2: NASA: Project Management Challenges
Instructional Video 1: Software Project Management in 15 Minutes
system implementation?
2 © Prentice Hall 2011

CHAPTER 14: MANAGING PROJECTS CHAPTER 14: MANAGING PROJECTS
“Opening Happiness” with a New Project Management System The Importance of Project Management
• Problem: Coke Bottling’s existing project • Runaway projects and system failure
management software unable to deliver needed
• Runaway projects: 30% ‐ 40% IT projects
reports, projects running over budget, past schedule
• Solutions: Microsoft Office Enterprise Project – Exceed d schedule,
h d l b budget
d
Management
g (EPM)
( ) Solution,, integrated
g with existingg – Fail to p
perform as specified
p
network and software, to allow online, centralized • Types of system failure
project
p j management
g
– Fail to capture essential business requirements
• Demonstrates use of information systems and
accurate data to manage projects effectively – Fail to p
provide organizational
g benefits
• Illustrates need for organizational and management – Complicated, poorly organized user interface
change to ensure success of new technology – I
Inaccuratet or inconsistent
i i t t data
d t
3 © Prentice Hall 2011 4 © Prentice Hall 2011
The Importance of Project Management The Importance of Project Management

CONSEQUENCES OF POOR PROJECT MANAGEMENT
• Project management
– Activities include planning work, assessing risk,
estimatingg resources required,
q , organizing
g g the work,,
assigning tasks, controlling project execution,
p
reportingg progress,
p g analyzing
y g results
– Five major variables
1.
1 Scope
2. Time
FIGURE 14‐1
14 1 With t proper management,
Without t a systems
t development
d l t project
j t takes
t k longer
l to
t complete
l t and d mostt often
ft
exceeds the allocated budget. The resulting information system most likely is technically inferior and may
3
3. C t
Cost
not be able to demonstrate any benefits to the organization.
4. Quality
5. Riskk

Selecting Projects The Importance of Project Management
• Management structure for information systems MANAGEMENT

CONTROL OF
projects SYSTEMS PROJECTS
– Hierarchy in large firms Each level of management in
the hierarchy is responsible for
• Corporate strategic planning group specific aspects of systems
projects, and this structure
helps
p give
g priority
p y to the most
– Responsible for firm’s
firm s strategic plan important systems projects for
the organization.
• Information systems steering committee
– Reviews and approves plans for systems in all divisions FIGURE 14‐2
• Project management group

– Responsible
R ibl ffor overseeing
i specific
ifi projects
j t
• Project team
– Responsible
ibl ffor iindividual
di id l systems project
j

Selecting Projects Selecting Projects
• Information systems plan: • In order to plan effectively, firms need to inventory

– Identifies systems projects that will deliver most and document existing software, hardware, systems
business value,, links development
p to business plan
p • To develop effective information systems plan
plan,
– Road map indicating direction of systems organization must have clear understanding of both
development includes:
development, long‐term and short‐term information requirements
• Purpose of plan
• Strategic business plan rationale • Strategic analysis or critical success factors (CSF)
• Current systems/situation approach
• p
New developments to consider – Sees information requirements as determined by a
• Management strategy small number of critical success factors
• Implementation plan
• Budget – Auto industry CSFs might include styling
styling, quality
quality, cost

• Critical success factors USING CSFs TO

DEVELOP SYSTEMS
– Principal method:
The CSF approach relies on
• Interviews with 3‐4 topp managers
g to identifyy goals
g and interviews with key managers
to identify
d f their
h CSFs.
resulting CSFs Individual CSFs are aggregated
to develop CSFs for the entire
• Personal CSFs aggregated
gg g into small number of firm CSFs firm. Systems can then be built
to deliver information on
• Systems built to deliver information on CSFs these CSFs.
FIGURE 14‐3
– Suitable for top management,
management building DSS and ESS
– Disadvantages:
• No clear methods for aggregation of CSFs into firm CSFs
• Confusion between individual and organizational CSFs
• Bias towards top managers
• Portfolio analysis A SYSTEM

PORTFOLIO
– Used to evaluate alternative system projects Companies should examine
their portfolio of projects in
– Inventories all of the organization’s
organization s information terms off potentiall bbenefits
f and
likely risks. Certain kinds of
d
systems projects and assets projects should be avoided

altogether and others
– Each
E h system has
h profilefil off risk
i k and
d benefit
b fi developed rapidly.
rapidly There is no
ideal mix. Companies in
different industries have
• High‐benefit, low risk different profiles.
• High‐benefit,
Hi hb fit high
hi h risk
ik FIGURE 14‐4
• Low‐benefit, low risk

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

Selecting Projects Establishing the Business Value of Information Systems
• Scoring models • Information system costs and benefits

• Used to evaluate alternative system projects, especially when many – Tangible benefits:
criteria exist
• Can be quantified and assigned monetary value
• Assigns weights to various features of system and calculates
weighted totals • Systems that displace labor and save space:
– Transaction and clerical systems
CRITERIA WEIGHT SYSTEM A % SYSTEM A SYSTEM B % SYSTEM B
SCORE SCORE – Intangible benefits:
Online order entry
y 4 67 268 73 292
• Cannot be immediately quantified but may lead to
Customer credit check 3 66 198 59 177
quantifiable gains in the long run
Inventory check 4 72 288 81 324
– E.g.,
g , more efficient customer service,, enhanced decision
Warehouse receiving 2 71 142 75 150
making
ETC
• Systems that influence decision making:
GRAND TOTALS 3128 3300
– ESS, DSS, collaborative work systems
Establishing the Business Value of Information Systems Establishing the Business Value of Information Systems
• Capital budgeting for information systems • Real options pricing models (ROPM)
– Capital budgeting models: – Can be used when future revenue streams of IT projects
• Measure value of investingg in long‐term
g capital investment are uncertain and up‐front costs are high
projects – Use concept of options valuation borrowed from financial
• Rely on measures the firm’s industry
– Cash outflows – Gives
Gi managers flexibility
fl ibilit tto stage
t IT iinvestment
t t or ttestt
» Expenditures for hardware, software, labor the waters with small pilot projects or prototypes to gain
– Cash inflows more knowledge about risks before investing in entire
» Increased sales implementation
» Reduced costs
• Limitations
Li it ti off fi
financial
i l models
d l
• There are various capital budgeting models used for IT
projects: Payback method, accounting rate of return on – Do not take into account social and organizational
investment, net present value, internal rate of return (IRR) dimensions that may affect costs and benefits

Managing Project Risk Managing Project Risk
• Dimensions of project risk • Change management

– Level of project risk influenced by: – Required for successful system building
• Project
P j t size
i – New information systems have powerful behavioral
and organizational impact
– Indicated by cost, time, number of organizational
units affected • Ch
Changes ini h
how iinformation
f ti iis used
d often
ft lead
l d to
t new
distributions of authority and power
– Organizational complexity also an issue
• Internal organizational change breeds resistance and
• Project structure opposition
– Structured,
Structured defined requirements run lower risk
• Experience with technology

• Implementation • Role of end users

– All organizational activities working toward – With high levels of user involvement
adoption, management, and routinization of an
• System more likely to conform to requirements
innovation
• Users more likely to accept system
• Change agent: One role of systems analyst
• User‐designer
d communication gap:
– Redefines the configurations, interactions, job
activities and power relationships of organizational
activities, – Users and information systems
y specialists
p
groups • Different backgrounds, interests, and priorities
– Catalyst for entire change process • Different loyalties
loyalties, priorities
priorities, vocabularies
– Responsible for ensuring that all parties involved • Different concerns regarding a new system
accept changes
h created
d by
b new system

• Management
g support
pp and commitment • Very high failure rate among enterprise application
and BPR projects (up to 70% for BPR)
• Positive perception by both users and – Poor implementation and change management
t h i l staff
technical t ff practices
• Employee’s concerns about change
• Ensures sufficient fundingg and resources • Resistance
R it b
by key
k managers
• Enforcement of required organizational • Changing job functions, career paths, recruitment practices
changes • Mergers and acquisitions
– Similarly high failure rate of integration projects
– Merging
M i off systems t off two
t companies
i requires:
i
• Considerable organizational change
• Complex systems projects


A GANTT CHART
• Controlling risk factors
– First step in managing project risk involves
y g nature and level of risk of project
identifying p j
– 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
FIGURE 14‐5 The Gantt Chart in this figure shows the task, person‐days, and initials of each responsible person, as well as
– Frequent team meetings the start and finish dates for each task. The resource summary provides a good manager with the total
person‐days
d for
f each h month h and
d for
f each h person working
k on the
h project to manage the h project successfully.
f ll
– Securing of technical experience outside firm if necessary The project described here is a data administration project.


A GANTT CHART (cont.) A GANTT CHART (cont.)
FIGURE 14‐5 The Gantt chart in this figure shows the task, person‐days, and initials of each responsible person, as well as
the start and finish dates for each task. The resource summary provides a good manager with the total
person‐days
d for
f each h month h and
d for
f each h person working
k on theh project to manage the h project successfully.
f ll
The project described here is a data administration project.


A PERT CHART
• Increasing user involvement and overcoming user
resistance
– External
te a integration
teg at o tools
too s co
consist
s st of
o ways
ays to link work
o ofo
implementation team to users at all organizational levels
• Active involvement of users
• Implementation team’s responsiveness to users
– User resistance to organizational
g change
g
• Users may believe change is detrimental to their interests
• Counterimplementation: Deliberate strategy to thwart
implementation of an information system or an innovation in an
organization
FIGURE 14‐6 This is a simplified PERT Chart for creating a small Web site. It shows the ordering of project tasks and the – E.g.,
E g increased error rates
rates, disruptions
disruptions, turnover
turnover, sabotage
relationship of a task with preceding and succeeding tasks.

• Strategies to overcome user resistance • Designing for the organization

– User participation – Information system projects must address ways in
g
which organization changes
g with new system
y
– User
U education
d i and d training
i i • Procedural changes
– Management
g edicts and p
policies • Job functions
• O
Organizational
i i l structure
– Incentives for cooperation • Power relationships
• Work structure
– Improvement off end‐user
d i
interface
f
– Ergonomics: Interaction of people and machines in
– Resolution of organizational
g p
problems p
prior to work environment
introduction of new system • Design of jobs
• Health issues
• End‐user interfaces

DST SYSTEMS SCORES WITH SCRUM AND APPLICATION LIFE CYCLE MANAGEMENT
Read the Interactive Session and discuss the following questions
• Organizational impact analysis
• What were some of the problems with DST Systems’ old – How system will affect organizational structure,
software
ft development
d l t environment?
i t? attitudes decision making,
attitudes, making operations
• How
o d did
d Sc
Scrum
u de
development
e op e t help
e p so
solve
e so
some
eoof tthose
ose • Sociotechnical design
g
problems? – Addresses human and organizational issues
• What
h other
h adjustments
dj did DST makek to b
be able
bl to use • Separate
S sets off technical
h i l andd social
i lddesign
i
Scrum more effectively in its software projects? solutions
• What management, organization, and technology issues had • Final design is solution that best meets both
to be addressed? technical and social objectives

MOTOROLA TURNS TO PROJECT PORTFOLIO MANAGEMENT

• Project management software Read the Interactive Session and discuss the following questions
– Can automate many aspects of project management • What are some of the challenges Motorola faces as a
– Capabilities for b i
business?
? Wh
Why iis project
j t managementt so critical
iti l att thi
this
• Defining, ordering, editing tasks company?
• Assigning resources to tasks
• Tracking progress • What features of HP PPM were most useful to Motorola?
– Microsoft Project 2010 • What management,
management organization,
organization and technology factors
• Most widely used project management software had to be addressed before Motorola could implement and
• PERT,
PERT Gantt Charts
Charts, critical path analysis successfully use HP PPM?
– Increase in SaaS, open‐source project management • Evaluate the business impact of adopting HP PPM at
software Motorola.
Motorola
Management Information Systems
CHAPTER 14: MANAGING PROJECTS
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Printed the U
United
it d St
States
t off A
America.
i
Copyright © 2011 Pearson Education, Inc.
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Publishing P ti HallH ll
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Management Information Systems Management Information Systems

Chapter 14 • What are the objectives of project management and why is

Management Information Systems Management Information Systems

The Importance of Project Management The Importance of Project Management

Management Information Systems Management Information Systems

Selecting Projects The Importance of Project Management

• Management structure for information systems MANAGEMENT

• Project management group

7 © Prentice Hall 2011 8 © Prentice Hall 2011

Selecting Projects Selecting Projects

• Information systems plan: • In order to plan effectively, firms need to inventory

Management Information Systems Management Information Systems

Selecting Projects Selecting Projects

• Critical success factors USING CSFs TO

• Systems built to deliver information on CSFs these CSFs.

Selecting Projects Selecting Projects

• Portfolio analysis A SYSTEM

systems projects and assets projects should be avoided

• Low‐benefit, low risk

Management Information Systems Management Information Systems

Selecting Projects Establishing the Business Value of Information Systems

• Scoring models • Information system costs and benefits

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

• Dimensions of project risk • Change management

19 © Prentice Hall 2011 20 © Prentice Hall 2011

Managing Project Risk Managing Project Risk

• Implementation • Role of end users

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

23 © Prentice Hall 2011 24 © Prentice Hall 2011

Managing Project Risk Managing Project Risk

25 © Prentice Hall 2011 26 © Prentice Hall 2011

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

27 © Prentice Hall 2011 28 © Prentice Hall 2011

Managing Project Risk Managing Project Risk

29 © Prentice Hall 2011 30 © Prentice Hall 2011

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

• Strategies to overcome user resistance • Designing for the organization

31 © Prentice Hall 2011 32 © Prentice Hall 2011

Managing Project Risk Managing Project Risk

33 © Prentice Hall 2011 34 © Prentice Hall 2011

Management Information Systems Management Information Systems

Managing Project Risk Managing Project Risk

MOTOROLA TURNS TO PROJECT PORTFOLIO MANAGEMENT

All rights reserved. No part of this publication may be reproduced, stored

37 © Prentice Hall 2011

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