Sunday, April 15, 2012

Chapter 14 - Managing Projects

It is essential to have some knowledge about managing information systems projects and the reasons why they succeed or fail.  A systems development project without proper management will most likely suffer consequences such as costs that vastly exceed budgets, unexpected time slippage, technical performance that is less than expected, and failure to obtain anticipated benefits.  The actual design of the system may fail to capture essential business requirements or improve organizations performance.  In addition, the way that nontechnical business users must interact with the system may be excessively complicated and discouraging.  Also, the data in the system may have a high level of inaccuracy or inconsistency. 

Project management is the application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints.  Activities include planning the work, assessing risk, estimating resources required to accomplish the work, organizing the work, acquiring human and material resources, assigning tasks, directing activities, controlling project execution, reporting progress, and analyzing the results.  Project management must deal with five major variables:  scope (defines what work is or is not included in a project), time (the amount of time required to complete the project), cost (based on the time to complete a project multiplied by the cost of human resources required to complete the project), quality (an indicator of how well the end result of a project satisfies the objectives specified by management), and risk (potential problems that would threaten the success of a project).

Firms are presented with many different projects for solving problems and improving performance.  The firm’s overall business strategy should drive project selection.  The management structure for information systems project helps ensure that the most important projects are given priority.  At the top of the structure is the corporate strategic planning group, which is responsible for developing the firm’s strategic plan, and the information system steering committee, which is the senior management group with responsibility for systems development and operation.  They review and approve plans for systems in all divisions, seek to coordinate and integrate systems, and occasionally become involved in selecting specific information systems projects.  The next level is the project management group, which is composed of information systems managers and end-user managers responsible for overseeing several specific information systems projects.  They supervise the project team and they are responsible for the individual systems projects. 

An information systems plan needs to be developed to identify the information systems projects that will deliver the most business value.  The plan serves as a road map indicating the direction of systems development, the rationale, the current system’s situation, new developments to consider, the management strategy, the implementation plan, and the budget.  

Critical success factors (CSFs) are used to determine the information requirements of an organization.  It relies on interviews with key mangers to identify their CSFs.  Individual CSFs are aggregated to develop CSFs for the entire firm and systems can then be built to deliver information on these CFSs.

Portfolio analysis can be used to evaluate alternative system projects once strategic analyses have determined the overall direction of systems development.  It inventories all of the organization’s information systems projects and assets, including infrastructure, outsourcing contracts, and licenses, and each information systems project carries its own set of risks and benefits.  The most desirable are systems with high benefit and low risk because they promise early returns and low risks.  Next, high-benefit, high-risk systems should be examined.  Systems that are low-benefit, high-risk should be totally avoided.  Low-benefit, low-risk systems should be reexamined for the possibility of rebuilding and replacing them with more desirable systems having higher benefits.

Scoring models are useful for selecting projects where many criteria must be considered because it assigns weights to various features of a system and then calculates the weighted totals.  This model requires experts who understand the issues and the technology.  These models are used most commonly to confirm, to rationalize, and to support decisions, rather than as the final arbiters of system selection. 

A system project needs to be a good investment for a firm, which is determined by the return on invested capital.  Costs of information systems include the hardware, telecommunications, software, services, and personnel.  Tangible benefits are cost savings and can be quantified and assigned a monetary value.  Examples include increased productivity, lower operational costs, reduced workforce, lower computer expenses, lower outside vendor costs, and reduced facility costs.  Intangible benefits cannot be immediately quantified but may lead to quantifiable gains in the long run.  Examples include improved asset utilization, improved resource control, improved organizational planning, increased organizational learning, higher client satisfaction, and better corporate image.

All costs and benefits will need to be calculated to determine if a project is feasible.  If costs outweigh benefits, of course it is not.  If benefits outweigh costs, additional financial analysis is required to determine whether the project represents a good return on the firm’s invested capital.  One way to measure this is by using capital budgeting models.  This method relies on measures of cash flows into and out of the firm; capital projects generate those cash flows. 

In some cases management may benefit from using real options pricing models (ROPMs) to evaluate information technology investments.  These models use the concept of options valuation borrowed from the financial industry.  It gives managers the flexibility to stage their IT investment or test the waters with small pilot projects or prototypes to gain more knowledge about the risks of a project before investing in the entire implementation. 

Financial models have limitations that are often overlooked.  Some companies’ information systems investment decisions do not adequately consider costs from organizational disruptions created by a new system, such as the cost to train end users, the impact that users’ learning curves for a new system have on productivity, or the time managers need to spend overseeing new system-related changes.  Benefits, such as more timely decisions from a new system or enhanced employee learning and expertise may also be overlooked.

The level of risk in information systems projects is influenced by the project size, the project structure, and the experience with technology.  Other risk factors include the complexity of information requirements, the scope of the project, and how many parts of the organization will be affected by a new information system. 

The introduction or alteration of an information system has an impact on behavioral and organizational elements.  Careful change management is needed for successful system building.  The process of implementation must be examined to manage the organizational change surrounding the introduction of a new information system effectively.  Implementation is all organizational activities working toward the adoption, management, and routinization of an innovation, such as a new information system.  In this process the systems analyst is a change agent.  System implementation generally benefits from high levels of user involvement and management support.  User participation in the design and operation of information systems has several positive results.  However, the relationship between users and information systems specialists has traditionally been a problem area for information systems implementation efforts.  Systems development projects run a high risk of failure when there is a distinct gap between users and technical specialists and when these groups continue to pursue different goals.  If an information systems project has the backing and commitment of management at various levels, it is more likely to be perceived positively by both users and the technical information services staff.  In addition, management support ensures that a systems project receives sufficient funding and resources to be successful.

It is not surprising to find a high failure rate among enterprise application and business process reengineering projects given the challenges of innovation and implementation.  These projects typically require extensive organizational change and may require replacing old technologies and legacy systems that are deeply rooted in many interrelated business processes.  Also, projects related to mergers and acquisitions have a similar failure rate.  They are deeply affected by the organizational characteristics of the merging companies as well as by their IT infrastructures.  Without a successful systems integration, the benefits anticipated from the merger cannot be realized, or the merged entity cannot execute its business processes effectively.
Not all aspects of the implementation process can be easily controlled or planned, however anticipating potential implementation problems and applying appropriate corrective strategies can increase the chances for system success.  First, the level and nature of risk must be identified.  The success of projects depends on how well their technical complexity can be managed.  Next, implementers can handle each project with the tools and risk-management approaches geared to its level of risk.  Large projects benefit from appropriate use of formal planning tools and formal control tools for documenting and monitoring project plans.  The two most commonly used methods are Gantt charts and PERT charts.  Gantt charts lists project activities and their corresponding start and completion dates.  PERT charts graphically depict project tasks and their interrelationships.  They list the specific activities that make up a project and the activities that must be completed before a specific activity can start. 

Projects with relatively little structure and many undefined requirements must involve users fully at all stages.  External integration tools links the work of the implementation team to that of users at all organizational levels.  Overcoming user resistance is another issue faced when implementing a project.  The implementation strategy must not only encourage user participation and involvement, but it must also address the issue of counterimplementation.  This is a deliberate strategy to thwart the implementation of an information system or an innovation in an organization.  Strategies to overcome user resistance include user participation, user education and training, management edicts and policies, and better incentives for users who cooperate. 

Information systems projects must explicitly address the ways in which the organization will change when the new system is installed.  Organizational factors that must be addressed when planning and implementing information systems include employee participation and involvement, job design, standards and performance monitoring, ergonomics (including equipment, user interfaces, and the work environment), employee grievance resolution procedures, health and safety, and government regulatory compliance.  System analysis and design activities should also include an organizational impact analysis.  This explains how a proposed system will affect organizational structure, attitudes, decision-making, and operations.  Sociotechnical design results in blending technical efficiency with sensitivity to organizational and human needs, leading to higher job satisfaction and productivity.

Project management software tools typically features capabilities for defining and ordering tasks, assigning resources to tasks, establishing starting and ending dates to tasks, tracking progress, and facilitating modifications to tasks and resources.  The most widely used project management software today is Microsoft Office Project 2010.  While project management software helps organizations track individual projects, the resources allocated to them, and their costs, project portfolio management software helps organizations manage portfolios of projects and dependencies among them.

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