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1. Case overview2. Offering an informed point of view of the problem statement3. What would you do differently, if anything, given the chance to start this project all over again?4. What should your agenda for tomorrow’s meeting be? Should you press on with your strategy, or is it a change of course in order?5. APA formate; use headings and sub-headings; 1000 words.
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MINICASE: Project Management Blues
“What am I going to do now?” you find yourself asking out loud while staring at the
ceiling in your office. “Should I de-escalate this project or press on?” It felt like you were
in one of those management case studies—except that it was real and it was you!
You replayed the events leading up to this dilemma. It all started when you were
appointed the lead of the HRBPS team—the project team in charge of creating the new
human resources benefits package management system. You had made a very successful
business case presentation and received public praise from the executive team. “Finally!
Someone who does not speak techno-mumbo-jumbo but can present an IT project in
business terms!” L. J. Lalli, the chief executive officer (CEO), had exclaimed. It had been
your ability to interface with both the developers and the business stakeholders that had
landed you the project manager position. You were the first project manager in your firm
to come from a functional area (human resources) instead of the information systems
function.
The project had proceeded very well, with great support from the user
community—your former colleagues, of course. This was due in large part to your
knowledge of HR and your stakeholder-friendly approach. You had made a conscious
choice to seek user feedback and to honor as many requests for enhancements as
possible. “You have to freeze the requirements,” Erik Khan, the lead system analyst, had
objected. “Otherwise it’s going to be anarchy.” But you had dismissed his complaints as
“development team grumblings.” Those guys were never happy with a little uncertainty
anyway. Having been on “the other side” as a stakeholder in a number of system
development projects, you knew full well that unhappy users were the fastest route to
system failure.
Now you were beginning to second guess your decision. The original schedule called
for releasing the beta version of the application for user testing later this week. Instead
you had only 40% of the approved functionality coded. Moreover, your team was looking
at a list of 22 enhancements, 2 of which would require a change in the database structure.
Projected completion, without the proposed enhancements, entailed seven more months
(a 45% increase on the original).
It was now apparent that the original project had also been underfunded. The current
estimate for finishing the project with the approved set of requirements called for a 62%
budget increase (over the original). It was unclear how much more it would cost to
exceed the requirements since the 22 proposed enhancements had yet to be evaluated by
the system architect.
You were due to present a progress report to Ms. Lalli tomorrow afternoon, but you
were still unsure about what course to take. The only certainty at this point was that you
had to make your pitch for a project extension and ask for further funding at the meeting.
Your plan was to report on the current state of affairs, paint a picture of the final product,
and seek support. But what was the final product going to be?
Chapter 11
Creating Information Systems
What You Will Learn in This Chapter
This chapter covers a very important subject: the process by which organizational
information systems come to be. While as a general or functional manager you may not
concern yourself with hardware decisions, you must partake in the software design,
acquisition, and implementation processes. Your involvement is essential because technology
professionals rarely can evaluate the cost/benefit trade-off and impact of new information
systems on the organization and its business success drivers.
Specifically, this chapter will
11.. Help you appreciate how complex it is to design and implement information systems
(IS) and the stable, robust, secure technology at their core.
22.. Articulate the advantages and disadvantages of custom software design and
development versus acquisition of an off-the-shelf product.
33.. Describe and teach you to use the main methodologies for custom software design and
development. Specifically, you will be able to identify the major phases of the system
development life cycle (SDLC) and discuss its advantages and disadvantages. You will
also become familiar with the prototyping approach and will be able to identify its
principal advantages and disadvantages.
44.. Identify the systems selection methodology so you can choose a prepackaged software
program for a specific organization.
55.. Describe the reasons for the increasing prominence of end-user development in modern
organizations and articulate the benefits and risks of this approach to software development.
MINICASE: Project Management Blues
“What am I going to do now?” you find yourself asking out loud while staring at the
ceiling in your office. “Should I de-escalate this project or press on?” It felt like you were
in one of those management case studies—except that it was real and it was you!
You replayed the events leading up to this dilemma. It all started when you were appointed
the lead of the HRBPS team—the project team in charge of creating the new human resources
benefits package management system. You had made a very successful business case
presentation and received public praise from the executive team. “Finally! Someone who does
not speak techno-mumbo-jumbo but can present an IT project in business terms!” L. J. Lalli,
the chief executive officer (CEO), had exclaimed. It had been your ability to interface with
both the developers and the business stakeholders that had landed you the project manager
position. You were the first project manager in your firm to come from a functional area
(human resources) instead of the information systems function.
The project had proceeded very well, with great support from the user community—your
415
former colleagues, of course. This was due in large part to your knowledge of HR and your
stakeholder-friendly approach. You had made a conscious choice to seek user feedback and
to honor as many requests for enhancements as possible. “You have to freeze the
requirements,” Erik Khan, the lead system analyst, had objected. “Otherwise it’s going to
be anarchy.” But you had dismissed his complaints as “development team grumblings.”
Those guys were never happy with a little uncertainty anyway. Having been on “the other
side” as a stakeholder in a number of system development projects, you knew full well that
unhappy users were the fastest route to system failure.
Now you were beginning to second guess your decision. The original schedule called for
releasing the beta version of the application for user testing later this week. Instead you had
only 40% of the approved functionality coded. Moreover, your team was looking at a list
of 22 enhancements, 2 of which would require a change in the database structure. Projected
completion, without the proposed enhancements, entailed seven more months (a 45%
increase on the original).
It was now apparent that the original project had also been underfunded. The current estimate
for finishing the project with the approved set of requirements called for a 62% budget increase
(over the original). It was unclear how much more it would cost to exceed the requirements since
the 22 proposed enhancements had yet to be evaluated by the system architect.
You were due to present a progress report to Ms. Lalli tomorrow afternoon, but you
were still unsure about what course to take. The only certainty at this point was that you
had to make your pitch for a project extension and ask for further funding at the meeting.
Your plan was to report on the current state of affairs, paint a picture of the final product,
and seek support. But what was the final product going to be?
Discussion Questions
11.. What should your agenda for tomorrow’s meeting be? Should you press on
with your strategy, or is a change of course in order?
22.. What would you do differently, if anything, given the chance to start this project
all over again?
Introduction
Once a firm has developed a strategic plan for the use of information systems (IS) resources
(Chapter 6) and has gone through the budgeting and prioritization processes (Chapter 10) to
identify what specific information systems it needs, it is ready to act. Whether the
information systems rely on custom-developed technology or off-the-shelf software, it is
critical that you as a general or functional manager understand how information systems
come to be. Armed with this knowledge, you can proactively participate in the process.
While general and functional managers need not be concerned with hardware decisions, they must
take part in the software design, acquisition, and implementation processes. Aside from the significant
portion of your budget devoted to information systems management and development, general and
functional managers’ involvement in information systems funding and design is essential
416
because never before has a firm’s success depended so much on the use of the right software
applications. Deciding what the characteristics of the “right” applications are is a business
decision. It is a decision based more on the business case and the understanding of the business
processes the software will enable (or constrain!) than on any technical consideration.
How Hard Can IT Be?
Consider the following three recent examples, each playing out in the last few years. On a
separate sheet, answer the question before reading on to find out what really happened:
• The U.S. subsidiary of one of the major food producers in the world inked a deal to implement
SAP (the leading enterprise system application) in an effort to centralize and rationalize
operations across its nine divisions. The project required streamlining processes, standardizing
software applications, and implementing the same organizational structure across the units.
How much time and how much money would you budget for this project?
• A large hospitality company with more than 2,000 branded hotels developed a customer
information system to enable its customer relationship management (CRM) strategy. The
custom-developed functionalities of the software application at the heart of the information
system included a property-management system, the loyalty and CRM applications, and the
reporting modules. How much time and how much money would you budget for this project?
• A major telecommunication carrier scheduled an upgrade of its customer service
systems from version 6 to version 7 of a leading off-the-shelf application. The newer,
more powerful version, exchanging information with 15 other systems (e.g., billing),
would simplify customer service representatives’ access to customer data and would
increase the amount of customer information available for sales and service
transactions. How much time and how much money would you budget for this project?
There are few technologies and products that have evolved as far and as fast as information
technology (IT) has. However, the astounding successes of IT can be misleading, tricking
you into severely underestimating what it takes to build and implement a stable, robust,
secure system that will work under a wide array of organizational conditions.
Should you check your answers one last time before reading on? OK, here’s what happened:
• The implementation of SAP by the major food service company took more than six years and
more than $200 million. It was mired by setbacks and dead ends, with high-profile casualties,
including the project leader, who was reassigned midway through the implementation.
• The large hospitality firm invested more than $50 million in the design and development of
the application and in integrating it with the other applications in the firm’s infrastructure.
The project took about two years and by its conclusion it had cost about $120 million. The
resulting system, the firm’s largest investment in recent history, was considered a success.
• The upgrade at the telecommunication company was a complete failure. The new
system was unstable, crashing for days at a time, and the old system was no longer
usable. The customer service difficulties translated into an estimated $100 million in
lost revenue during the three months it took to complete the upgrade. A rival acquired
the firm, which was mired in difficulties, for half its original valuation.
The critical insight to be gained from this simple exercise is that organizational information systems
417
usher in a wealth of complexities that go far beyond those associated with the personal computing
environment that is most familiar to the typical end user (i.e., purchasing and installing Microsoft
Office; Figure 11.1). Unfortunately, managers are surrounded by the misleading rhetoric of statements
like “IT is easy; the hard part is people,” or “Today, firms can easily develop or purchase technology
to obtain the capabilities to rapidly match their competitors,” or “IT is a commodity.”
Figure 11.1. The potential and risk of IS projects
Source: Baseline Magazine, http://www.baselinemag.com
These views are gross oversimplifications of reality. When they are held by those who
have never been involved in large-scale information systems development efforts, they
dangerously hide the truth: organizational information systems’ development efforts are very
complex and risky endeavors. A McKinsey study performed on more than 5,400 IT projects
showed that, on average, they run 45% over budget, 7% over time, while delivering 56% less
value than expected, and that 17% of them produce negative consequences to threaten “the
very existence of the company.”1 IT projects are complex and risky precisely because they
involve both technical and social challenges—and the intersection of the two.
Rob Austin, a professor at the Copenhagen Business School and author, captured this notion best
when explaining why information systems projects will likely never be as disciplined and predictable
as other engineering processes (e.g., the building of a factory). He stated the following:
In classic IT terms, important “requirements” are often not discernible in advance. If this
statement sounds wrong to you, try on the alternative—that it’s always possible to discern
all the important requirements in advance, regardless of the size and complexity of the
system and the rate of technological and business change. […] Indeed, what makes a system
great in the end, usually, is not just that it satisfies requirements that were known in
advance. The difference between a great, value-adding IT system and a clunky dog that
everyone hates is often in the details that are discovered along the way, as the system is
implemented and users begin to have a more tangible sense of how it will work.2
The interplay of many different actors (often with divergent agendas), the sheer size of many
418
organizational systems, the myriad of expected and unforeseen organizational conditions the
system must support, and the constantly evolving nature of the modern firm make these
projects extremely challenging. These projects require technical expertise. They also call for
a big dose of managerial skill and informed involvement by general and functional managers.
Fulfilling Information Processing Needs
In Chapter 2, we stated that the primary reason modern organizations introduce information systems
is to fulfill their information processing needs. Information systems leverage IT at their core to
optimize the manner in which the firm captures, processes, stores, and distributes information.
How does the firm go about introducing the information processing functionalities needed
to fulfill its information processing needs? How do information systems come to be in
modern organizations? At the most general level of analysis, this process has two main
components—technology development and information system deployment:
• Technology development. Modern information systems are built on an IT core. Whether
the technology is acquired and integrated into the existing firm’s infrastructure or is
custom built by (or for) the organization, generating the IT core is a prerequisite to
delivering the needed information processing functionalities.
• Information system development. Creating the needed IT core is not sufficient to fulfill the
information processing needs of the firm (see Chapter 2). The firm must successfully integrate
the technology with the other components of the organization (i.e., people, processes, structure)
to develop a working information system. This is the implementation process.
The technology development and implementation processes are intertwined, not sequential.
Because of systemic effects (Chapter 2), the components of an information system must interact
with one another without friction. Thus the design of a new software program (i.e., technology
development) must take into account how the technology will be employed (i.e., processes), by
whom (i.e., people), and with what purpose (i.e., structure). That is, technology development
must take into account future implementation as it is being designed.
Three Approaches
There are three general approaches to the acquisition of information processing functionalities
and the introduction of IT-based information systems. Note that each of these approaches
encompasses both the technology development and implementation processes. However, the
critical differences among them pertain to how the technology components—and more
specifically, the software that defines the capabilities of the system—are designed and developed:
11.. Custom design and development. With this approach the organization implements a
software application that is expressly made, whether internally or through outsourcing,
for the unique needs of the firm.
22.. System selection and acquisition. With this approach the organization implements an
off-the-shelf software application that is mass-produced by a vendor.
33.. End-user development. With this approach the organization uses a software application
419
created by its end users, rather than the firm’s information systems professionals.
We describe below the advantages and risks associated with each approach. We also
introduce the most prevalent methodologies used to articulate the information systems design
and development process in each case. Our objective here is not for you to become an expert
in systems design and development. Rather, it is to help you nurture an understanding of the
process so that you can successfully take part in it.
Make versus Buy
In some cases, custom developing the software at the heart of a new information system is
not an option for your firm; it is a necessity. This is the case when the system must enable a
new initiative and no market for such a product already exists. For example, when Amazon
first introduced its personal recommendation system, electronic commerce was largely
uncharted territory and the firm was indeed shaping the online retailing industry. Waiting for
an off-the-shelf product to be developed was not an option.
Typically, though, the firm will have to weigh the choice between custom development and
purchase of the needed technology. Each approach offers some advantages and disadvantages and
increasingly firms decide to reverse course—a process known as insourcing. In 2013, General
Motors’ chief information officer (CIO) Randy Mott ended a $3 billion a year outsourcing
contract, deciding instead to up the number of GM software engineers from 1,400 to 8,000. He
summarized the rationale for the decision: “Because we brought the [information technology]
work back in-house, we can take the lid off of what is possible.”3
Advantages of Custom Development While prepackaged software is available in the
marketplace, …
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