Chapter 10

Management Issues in Systems Development

Todays Lecture

Project Management Improving Legacy Systems Measuring the Benefits of Systems

Project Management
Today, much organizational work is performed via projects In IS as well as other functions, being able to manage a project to completion, and deliver the expected outcome within the allotted time and budget, has become an increasingly valuable skill

Project Management
What is Project Management? A project is a collection of related tasks and activities undertaken to achieve a specific goal. All Projects (IT or other) should:
Have a clearly stated goal Be finite
Clear beginning & end

Project Management
What is Project Management? cont.
Project Management Institute Project Management encompasses five processes 1. Initiating 2. Planning 3. Executing 4. Controlling, and 5. Closing To become a certified PMP = must pass tests covering nine knowledge areas: 1. Integration 2. Scope 3. Time 4. Cost 5. Quality 6. Human Resources 7. Communication 8. Risk 9. Procurement

Project Management
The Job of a Project Manager
Responsible for the following tasks: 1. Setting Up the Project Why A brief background of the project, and The business objectives to be achieved What Key outputs to be produced Benefits When List of milestones and expected timing High level project plan Who Project team Stakeholders and their expectations How Definition of the work that needs to be undertaken Scope 6 Specific exclusions

Project Management
The Job of a Project Manager cont. Responsible for the following tasks cont.:
2. Managing the Schedule
Schedule / project plan = heart of the project and main communication tool High level first then break down as you proceed Financial plan, who is accountable, benefits etc. Need to know how much has been spent and how much money is left

3. Managing the Finances

Project Management
The Job of a Project Manager cont. Responsible for the following tasks cont.:
4. Managing the Benefits
Profitability Cost reduction

5. Managing Risks, Opportunities and Threats 6. Soliciting Independent Reviews

Health checks (of the project)
By someone independent (could be external)

Project Management
Change Management
IS often assume a technically elegant system is a successful system. (ITS NOT!!!) Many technically sound systems have turned into implementation failures because the people side of the system was not handled correctly System is only a success if it meets the users requirements and they are happy with it and with using it Information technology is all about managing change New systems require changing how work is done Focusing only on the technical aspects is only half the job the other job is change management

Project Management
Change Management cont.
Changing management = process assisting people to make change in their working environment
Change caused by the introduction of a new computer system

People resist change, especially technological change, when they view it as a crisis. Resistance includes:
Deny the change Distort information they hear about the change Convince themselves and others the new system will not change status quo

10

Project Management
Change Management cont.

Type of people involved in a change project

Sponsor: the person or group that legitimizes the change top mgt Change agent: the person or group who causes the change to happen IS staff Target: the person or group who is being expected to change and at whom the change is aimed user

11

Project Management
Change Management cont.
Methodology to manage technological change

Conduct surveys with all three groups

to determine:
Whether the scope of the project is doable, or whether the organization is trying to change too much at one time Whether the sponsors are committed enough to push the change through, or whether they are sitting back expecting the organization to change on its own Whether the change agents have the skills to implement the change, or whether e.g. they are not adept at rallying support Which groups are receptive to the change and which are resistant
12

Project Management
Risk Management
Not all IT-based projects succeed
Many fail, especially the really large ones e.g. ERP, CRM 30 to 70% fail Why? = Do not overcome their risks
Technical Business

Technical risks
Sub-performance, scope creep making it too complex Cant always be predicted but they can be contained Business does not change properly to use the new systems Are not as easily righted

Business risks

Need to:
1. 2. 3. Assess the risk Mitigate the risk Adjust the project management approach
13

Project Management
Risk Management cont.
Step 1: Assess the Risks Three predominant risk factors: 1. Leadership of the business change 2. Employees perspective of the change 3. Scope and urgency of the change Decision tree (Figure 10-1) Project leader = executive(s) responsible for the change Must be a business executive It is the business, not IT that is required to change Contributes to success/failure? 6 questions: 1. Are they committed to the business case? 2. Do they understand the extent of change in work behaviour required for the project to succeed? 3. Are they formally motivated to pull off the change? 4. Are they at the appropriate org. level with the formal power..? 5. Do they have experience with a project of similar scope, urgency and people impact? 6. Do they have informal power, such as credibility and respect? 14

15

Project Management
Risk Management cont.
Step 2: Mitigate the Risks
Project management styles
Authoritative Vs. Participative Rigid Vs. Adjustable Big Bang
Only appropriate when all 3 factors = positive Leadership and employee = positive but scope or urgency place the project at risk Committed workforce can adapt etc. Used when only the employee perception is negative Can be overcome by involving them Only works when the leadership factor supports the business change and when the leadership is respected, full-time and highly experienced in leading business 16 change

Projects budget and timeframe Figure 10-2

Improvisation

Guided Evolution

Top-down Coordination

17

Tips for Good IT Project Management

Establish the Ground Rules
Open systems, industry standards, webenabled etc.

Foster Discipline, Planning, Documentation and Management

If the process is not controlled properly, anything can happen or, more realistically, potentially nothing will happen

Obtain and Document the Final User Requirements Obtain Tenders from All Appropriate Potential Vendors Include Suppliers in Decision Making Convert Existing Data
Task might appear quite simple but often causes the biggest headaches

Follow Through After Implementation

18

Reasons for Success

Proper Planning Appropriate User Involvement Strong Visible Management Support Project Manager(s) with Power and Time Good Change Management Working As A Team Proper Project Monitoring and Control Proper Project Closure

19

Improving Legacy Systems

Many Information Systems executives feel trapped by the past:

Old legacy programs & data they would love to replace However, replacement is not the only option
In many cases = not even the wisest

20

Improving Legacy Systems:

To Replace or Not to Replace?

Upgrading sometimes makes more sense

More difficult (to sell?) Not as exciting as a totally new system Most replacement projects that failed could have been upgrade projects
Many reverted to upgrading anyway

When a systems technology is so obsolete that it does not exist in many places, then replacement is probably the only choice.

21

Improving Legacy Systems:

Options for Improving a Legacy System Figure 10-3 illustrates the choices companies have with dealing with legacy systems
Analogy with a home

The options can be performed:

In-house or Outsourced

22

23

Improving Legacy Systems:

Options for Improving a Legacy System cont.

1. Restructure the system:

House = updating the look of a room e.g. repainting or getting rid of clutter IT = Applicable to systems that are basically doing the job but run inefficiently or are fragile.

24

Improving Legacy Systems:

Options for Improving a Legacy System cont.
2. Reengineer the system: House = fixing what isnt working, fixing broken door IT = A step beyond restructuring, implies extracting the data elements from an existing file and the business logic from an existing program and moving them to a new hardware platform. 1. Reverse engineering: existing programs, along with their files and DB descriptions, are converted from their implementation level description (e.g. records, databases, code) to their equivalent design level components (e.g. entities, attributes, processes) 2. Forward engineering: goes the opposite direction, from requirements (e.g design) level to operational systems (e.g. application)

25

Improving Legacy Systems:

Options for Improving a Legacy System cont.

3. Refurbish the system

House = enhancing the usefulness by replacing old furniture, landscaping etc. IT = If the old system is maintainable and causing no major problems; it may be worthwhile to add extensions Current registration system
Potential extensions:
Supply input in a new manner Make new uses of input, or Allow the programs to deal more comprehensively with the data
26

Improving Legacy Systems:

Options for Improving a Legacy System cont.
4. Rejuvenate the system: House = adding new functions e.g. new room, pool etc. IT = adding new functions to a reengineered system to make it more valuable to the firm. Phases of rejuvenation process: 1. Recognize a systems potential First clean up existing system using code restructuring tools and then building from there 2. Clean up the system Transform the poorly structured COBOL code into more structured, maintainable code 3. Make the system more efficient System can be converted to a new operating environment and a new file structure, together with manual tuning and enhancements to reduce system processing time 4. Give the system more strategic role - Feed a data warehouse or become back-end system accessible via Web
27

Improving Legacy Systems:

Options for Improving a Legacy System cont.

5. Rearchitect the System:

House = rethinking the use of space by perhaps gutting a major portion of the house and remodelling it by combining kitchen and dinning room. This option involves having a to-be architecture for new systems, then using that architecture to upgrade legacy systems. Due to the increasing complexity of enterprise systems, the advent of inter-enterprise systems, and the independence of interlinked systems in supply chains, CTOs are designing enterprise IT architecture. Where possible CTOs work hard to migrate their enterprise to that desired to-be architecture, generally one system at a time. 28

Improving Legacy Systems:

Options for Improving a Legacy System cont. 6. Replace with a Package or Service:
House = the house no longer works for you, move to another house IT = to move an old application to a new operating environment, e.g.: centralized to distributed, e.g., SAP

7. Rewrite the System:

House = knock down and build a new one in the same location. System is too far gone to rescue, obsolete technology; beware of 29 true cost and risk failure.

Measuring the Benefits of Systems

Executives want specific links between new systems and corporate financial measures e.g.
Increase in earnings Shareholder value Revenue

30

Measuring the Benefits of Systems cont.

Achieving this is very difficult because IT is only one of many factors contributing to the successful use of systems e.g. the value of decision support systems and data warehouses are difficult to measure because they are intended to change such unmeasurable actions as: Improved decisions Better identification of opportunities More thorough analysis Enhanced communication among people
31

Measuring the Benefits of Systems cont.

Distinguish Between the Different Roles of Systems
Information systems can play three roles in a company: 1. Help other departments do their job better: support systems with the goal to increase organizational efficiency 2. Carry out a business strategy: e.g. CAD systems that customers and suppliers can use together to design custom products Differ from support systems because they are used by customers 3. As a product or service as the basis for a product or service: e.g. testing or design software that a company sells to another firm Measuring the benefits of these three kinds of systems differs
32

Measuring the Benefits of Systems

Distinguish Between the Different Roles of Systems
cont.

1. Measuring Organizational Performance: Meeting deadlines and milestones Operating within budget Doing quality work Performance measures internal efficiency of operations 2. Measuring Business Value: Deals with marketplace goals They must have a direct impact on the companys relationships with customers, clients, or suppliers; e.g. sales/customer 3. Measuring a Product or Service: An IS offered as a product or service to produce revenue = measured as any other business venture e.g. by ROI

33

Measuring the Benefits of Systems

Measure What Is Important to Management IS support can only be linked to corporate effectiveness by finding all the indicators management use, besides the traditional financial ones Measure in terms like:
Customer relations (incl. satisfaction) Employee morale Cycle time
How long to accomplish a complete assignment; fast cycle time might mean higher-quality products, beating competitors to the market, winning a bid, etc.

34

Measuring the Benefits of Systems

Assess Investments Across Organizational Levels
IT benefits cross organizational levels, sources of value at three levels: Individual Division Corporation Impact focus of an IT investment extends to Economic performance payoffs - market measures of performance Organizational process impacts - process change Technology impacts - key functionality

35

Do Investors Value IT Investments?

An even more intriguing question than how business executives value IT investments is how investors value IT investments A study found that every $1 invested in computers yielded up to $17 in stock market value and no less than $5
Whereas, $1 invested in property, plant, and equipment (book value) only yielded $1 in stock market value; and $1 investment in other assets (inventory, liquid assts, and accounts receivables) yielded only 70 cents
36

Do Investors Value IT Investments? cont.

The researchers reason that investors value $1 spent on computers more than the other investments because it leads to organizational changes that create $16 worth of intangible assets know-how, skills, organizational structures, and such Investments in organizational capital generally lead to adopting decentralized work practices:
Using teams more often Giving employees broader decisionmaking authority, and Offering more employee training
37

Conclusion
Managing projects has always been one of the most important, and toughest, jobs in the IS organization People job in system development: Managing development staff Helping people adjust to the organizational changes that occur with a new system Successfully implementing systems: Sponsors understand their role in enforcing change giving change agents the tools & skills to foster the change Assisting the targets in making the change providing training etc. Software difficult to keep up-to-date: Variety of options (refurbish etc.) as well as replacing it with a package New alternative = rearchitect the system toward a desired to be architecture Rent software off the Web, per seat, per month Measuring benefits afterward can help companies spot benefits they had not originally 38 planned