Information Systems Project Management—David

Olson 1-1

Session 2:
Introduction to Project
Management

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Learning Outcomes
• Students be able to identify the importance
of project management in Information
System
• Students be able to define the importance
aspects in managing project

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Discussion Topics
• IS Project management
• Critical Success Factor
• Cases in IS Project Management

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References
• Information Systems Project Management,
David Olson, Olson, David L., 2003,
Introduction to Information Systems
Project Management, 2nd Ed.,
McGrawHill, ISBN: 0-07-282402-6.
• Schwalbe, Kathy, 2003, Information
Technology Project Management, 3rd Ed.,
Course Technology, Inc., ISBN: 0619159847.

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Project Management Case

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Olson 1-6

FoxMeyer Drug

Large drug distributor, wanted to implement ERP

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ERP

• Integrate financial, logistics, marketing

• can handle multiple sites worldwide,
with global sourcing
• integrate decision making
• coordinates all functions (makes them
use same computer software)

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ERP Market

• Compound annual growth of 37%

1997- 2002 (AMR Research)
•Top tier vendors: SAP AG PeopleSoft
Baan J.D. Edwards Oracle
• top tier growth 61%/year, have 64%
of market
• SAP $5 billion, rest near $1 billion

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SAP

• Systems, Applications & Products in

Data Processing
• founded 1972, Walldorf, Germany
• #1 vendor of standard business-application
software in the world - 32% market share
• PRODUCTS: R/2 (mainframe; 11
modules) R/3 (client/server - 1992; now > 1
• million
over 9000
userscustomers in 90 countries

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FoxMeyer Corp

• Holding company in health care services

• wholesale distribution of drugs & beauty aids
• served drug stores, chains, hospitals,
care facilities
• US: 23 distribution centers
• Sought market niches, such as home
health care

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FoxMeyer
• Due to aging population & growth in health care,
expected high growth
• Market had extreme price competition,
threatening margins
• Long-term strategies:
– efficiently manage inventory
– lower operating expenses
– strengthen sales & marketing
– expand services

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Prior FoxMeyer IS

• 3 data processing centers, linked

• included electronic order entry, invoice
preparation, inventory tracking
• 1992 began migration of core systems
• Benefits not realized until system
fully integrated

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FoxMeyer Process

• Customer fills out electronic order

• Order sent to 1 of the 3 data processing centers
• Orders sent to the appropriate distribution center
(within 24 hours)
• Orders filled manually and packaged
• Had just completed national distribution center
with multiple carousels & automated picking
• Could track inventory to secondary locations

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New System

• Needed new distribution processes & IS

to capitalize on growth
• Wanted to be able to undercut competitors
• Replacing aging IS key
• PROJECT: 1994 - hoped to save $40
million annually (estimated cost $65 million)
– complete ERP installation & warehouse
automation system (another $18 million)

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FoxMeyer Project

• Select ERP
– hundreds of thousands of transactions
– meet DEA & FDA regulations
– benchmarked & tested for months
– picked SAP R/3
– hired Andersen Consulting to integrate
– hired Pinnacle Automation for warehouse
automation system

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Operations

• FoxMeyer expected the new systems

to improve operational efficiency
• Signed several giant contracts
– counted on savings, underbid competitors
• Counted on being up and running in
18 months

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Problems

• SAP & warehouse automation

system integration
– two sources, two installers - coordination
problems
• New contracts forced change in system
requirements after testing & development
underway
• Late, Over budget
– SAP successfully implemented

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Outcomes
• Lost key customer - 15% of sales
• To recoup, signed new customer, expected $40
million benefit from ERP immediately - pushed
ERP project deadline ahead 90 days, no time to
reengineer
• Warehouse system consistently failed
– late orders, incorrect shipment, lost
shipments
– losses of over $15 million
• August 1996 filed for Chapter 11
– McKesson bought
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McKesson

• Bought FoxMeyer operation

• Made ERP work
– On time
– Within budget
– Full functionality

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Project Critical Success Factors

Belassi & Tukel [1996]

• Goal Definition
– Define goals, scope, requirements
• Top Management Support
– Continued involvement
• User Involvement
• Project Manager
– Competent; on-site
• Others
– Project team, manpower, accurate estimates, test
& train
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Code of Ethics
• Code of Ethics for the Project Management
Profession:
– Accept responsibility for their actions
– Undertake projects and accept responsibility only
if qualified by training or experience, or after full
disclosure to their employers or clients of pertinent
qualifications
– Maintain professional skills at the state of the art
and recognize the importance of continued
personal development and education

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Code of Ethics
• Code of Ethics for the Project Management
Profession:
– Advance the integrity and prestige of the profession
by practicing in a dignified manner
– Support this code and encourage colleagues and co-workers
to act in accordance with this code Support the professional
society by actively participating and encouraging collegues
and co-workers to participate
– Obey the laws of the country in which work is being
performed?

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Code of C

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Project Champion

• Top level executive

– Powerful, with access to top
• Don’t need to have authority
– Enthusiastic support leading to adoption
– Continued support key to project continuance
• Even if project should be cancelled

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Summary
• Systems view helps understand projects
• Critical Success Factors
• Top management support
• Clearly stated objectives
• End user involvement

© McGraw-Hill/Irwin 2004