10 1 LEARNING OBJECTIVES DEMONSTRATE HOW BUILDING NEW

10. 1

LEARNING OBJECTIVES • DEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGE • EXPLAIN HOW ORGANIZATION CAN DEVELOP SUITABLE INFO SYSTEMS • IDENTIFY CORE ACTIVITIES IN SYSTEMS DEVELOPMENT 10. 2 PROCESS

LEARNING OBJECTIVES • ANALYZE ORGANIZATIONAL REQUIREMENTS FOR BUILDING SUCCESSFUL SYSTEMS • DESCRIBE MODELS FOR DETERMINING BUSINESS VALUE OF INFO SYSTEMS 10. 3

INFORMATION SYSTEMS PLAN DIRECTION OF SYSTEM DEVELOPMENT: • RATIONALE • CURRENT SITUATION • MANAGEMENT STRATEGY • IMPLEMENTATION PLAN • BUDGET 10. 4

INFORMATION SYSTEMS PLAN 1. PURPOSE OF THE PLAN: • OVERVIEW OF PLAN CONTENTS • CHANGES IN CURRENT SITUATION • FIRM’S STRATEGIC PLAN • CURRENT ORGANIZATION • MANAGEMENT STRATEGY 10. 5

INFORMATION SYSTEMS PLAN 2. STRATEGIC BUSINESS PLAN: • CURRENT SITUATION • CURRENT ORGANIZATION • CHANGING ENVIRONMENT • MAJOR GOALS OF PLAN 10. 6

INFORMATION SYSTEMS PLAN 3. CURRENT SYSTEMS: • MAJOR SYSTEMS SUPPORTING BUSINESS FUNCTIONS • MAJOR CURRENT CAPABILITIES – HARDWARE – SOFTWARE – DATABASE – TELECOMMUNICATIONS • DIFFICULTIES MEETING REQUIREMENTS • ANTICIPATED FUTURE DEMANDS 10. 7

INFORMATION SYSTEMS PLAN 4. NEW DEVELOPMENTS: • NEW SYSTEM PROJECTS – PROJECT DESCRIPTIONS – BUSINESS RATIONALE • NEW CAPABILITIES REQUIRED – HARDWARE – SOFTWARE – DATABASE – TELECOMMUNICATIONS 10. 8

INFORMATION SYSTEMS PLAN 5. MANAGEMENT STRATEGY • ACQUISITION PLANS • MILESTONES & TIMING • ORGANIZATIONAL REALIGNMENT • INTERNAL REORGANIZATION • MANAGEMENT CONTROLS • MAJOR TRAINING INITIATIVES • PERSONNEL STRATEGY 10. 9

INFORMATION SYSTEMS PLAN 6. IMPLEMENTATION PLAN: • DETAILED IMPLEMENTATION PLAN • ANTICIPATED IMPLEMENTATION DIFFICULTIES • PROGRESS REPORTS 7. BUDGET REQUIREMENTS: • REQUIREMENTS • POTENTIAL SAVINGS • FINANCING • ACQUISITION CYCLE 10. 10

ENTERPRISE ANALYSIS 10. 11 (BUSINESS SYSTEMS PLANNING) ORGANIZATION-WIDE INFORMATION NEEDS IN TERMS OF: • ORGANIZATIONAL UNITS • FUNCTIONS • PROCESSES • DATA ELEMENTS HELPS IDENTIFY KEY ENTITIES & ATTRIBUTES IN ORGANIZATION’S DATA *

CRITICAL SUCCESS FACTORS SMALL NUMBER, EASILY IDENTIFIABLE OPERATIONAL GOALS SHAPED BY INDUSTRY, MANAGER, ENVIRONMENT BELIEVED TO ASSURE FIRM’S SUCCESS. USED TO DETERMINE ORGANIZATION’S INFORMATION REQUIREMENTS 10. 12

CRITICAL SUCCESS FACTORS (CSFs) & GOALS EXAMPLE PROFIT CONCERN GOALS EARNINGS/SHARE RETURN ON INVESTMENT MARKET SHARE NEW PRODUCT CSF AUTOMOTIVE INDUSTRY: STYLING QUALITY DEALER SYSTEM COST CONTROL ENERGY STANDARDS NONPROFIT EXCELLENT HEALTH CARE REGIONAL INTEGRATION WITH OTHER HOSPITALS MEETING GOVERNMENT REGULATIONS EFFICIENT USE OF RESOURCES FUTURE HEALTH NEEDS IMPROVED MONITORING OF REGULATIONS 10. 13

USING CFCs TO DEVELOP SYSTEMS • COLLECT MANAGERS’ CFCs • AGGREGATE, ANALYZE INDIVIDUALS’ CFCs • DEVELOP AGREEMENT ON COMPANY CFCs • DEFINE COMPANY CFCs • USE CFCs TO DEVELOP INFORMATION SYSTEM PRIORITIES • DEFINE DSS & DATABASES 10. 14

SPECTRUM OF ORGANIZATIONAL CHANGE • AUTOMATION: Using technology to perform tasks efficiently / effectively • RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks • BUSINESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology • PARADIGM SHIFT 10. 15

PARADIGM SHIFT • PARADIGM IS A COMPLETE MENTAL MODEL OF HOW A COMPLEX SYSTEM FUNCTIONS • A PARADIGM SHIFT INVOLVES RETHINKING THE NATURE OF THE BUSINESS, THE ORGANIZATION; A COMPLETE RECONCEPTION OF HOW THE SYSTEM SHOULD FUNCTION 10. 16

HOW INFO TECHNOLOGY CAN TRANSFORM ORGANIZATION • GLOBAL NETWORKS: International division of labor • ENTERPRISE NETWORKS: Collaborative work and teamwork • DISTRIBUTED COMPUTING: Empowerment of individuals, groups 10. 17

HOW INFO TECHNOLOGY CAN TRANSFORM ORGANIZATION • PORTABLE COMPUTING: Virtual organizations • GRAPHICAL USER INTERFACES: Accessibility to information and knowledge 10. 18

RISKS & REWARDS High RISK Low 10. 19 Low RETURN High

IT CAPABILITIES & IMPACTS • TRANSACTIONAL: Transforms unstructured processes toroutinized transactions • GEOGRAPHICAL: IT makes processes independent of location • AUTOMATIONAL: Replaces, reduces human labor 10. 20 Source: Davenport & Short “The New Industrial Engineering”(1990)

IT CAPABILITIES & IMPACTS • ANALYTICAL: Can bring complex analytical methods to bear on process • INFORMATIONAL: Makes vast amounts of detailed information available • SEQUENTIAL: Enables changes in sequence, parallel tasks 10. 21 Source: Davenport & Short “The New Industrial Engineering”(1990)

IT CAPABILITIES & IMPACTS • KNOWLEDGE MANAGEMENT: Allows capture, dissemination of knowledge, expertise • TRACKING: Allows detailed tracking of task status, inputs, outputs • DISINTERMEDIATION: Connects parties who otherwise depend on an intermediary 10. 22 Source: Davenport & Short “The New Industrial Engineering”(1990)

BUSINESS REENGINEERING STEPS: 1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process 10. 23

SYSTEM DEVELOPMENT PROCESS • • • SYSTEMS ANALYSIS SYSTEM DESIGN PROGRAMMING TESTING CONVERSION PRODUCTION & MAINTENANCE * 10. 24

SYSTEMS ANALYSIS OF PROBLEM TO BE SOLVED WITH AN INFORMATION SYSTEM FEASIBILITY STUDY: CAN PROBLEM BE SOLVED WITHIN CONSTRAINTS? 10. 25

FEASIBILITY • TECHNICAL: Assess hardware, software, technical resources • ECONOMIC: Will benefits outweigh costs • OPERATIONAL: Is solution desirable within existing conditions? • INFORMATION REQUIREMENTS: Detailed statement of new system needs 10. 26

SYSTEM DESIGN DETAILS HOW SYSTEM WILL MEET NEEDS: • LOGICAL DESIGN: Components, data as needed by applications • PHYSICAL DESIGN: Physical location of components and data 10. 27

DESIGNER SPECIFICATIONS • OUTPUT – MEDIUM; CONTENT; TIMING • INPUT – ORIGINS; FLOW; DATA ENTRY • USER INTERFACE – SIMPLICITY; EFFICIENCY; LOGIC – FEEDBACK; ERRORS • DATABASE DESIGN – LOGICAL DATA RELATIONS – VOLUME, SPEED REQUIREMENTS – FILE ORGANIZATION & DESIGN – RECORD SPECIFICATIONS 10. 28

DESIGNER SPECIFICATIONS • PROCESSING – COMPUTATIONS – PROGRAM MODULES – REQUIRED REPORTS – TIMING OF OUTPUTS • MANUAL PROCEDURES – WHAT ACTIVITIES – WHO PERFORMS THEM – HOW – WHERE 10. 29

DESIGNER SPECIFICATIONS • CONTROLS – INPUT – PROCESSING – OUTPUT – PROCEDURAL • SECURITY – ACCESS CONTROLS – CATASTROPHE PLANS – AUDIT TRAILS 10. 30

DESIGNER SPECIFICATIONS • CONVERSION – TRANSFER FILES – INITIATE NEW PROCEDURES – SELECT TESTING MODULES – CUT OVER TO NEW SYSTEM • TRAINING – SELECT TRAINING TECHNIQUES – DEVELOP TRAINING MODULES – IDENTIFY TRAINING FACILITIES • ORGANIZATIONAL CHANGES – TASK REDESIGN – JOB DESIGN – PROCESS DESIGN – OFFICE / ORGANIZATION STRUCTURE DESIGN – REPORTING RELATIONSHIPS 10. 31

ROLE OF END USERS • USERS DRIVE SYSTEMS EFFORT • MUST HAVE SUFFICIENT CONTROL TO ENSURE SYSTEM REFLECTS BUSINESS PRIORITIES, NEEDS • FUNCTIONAL USERS DRIVE SYSTEM NEEDS 10. 32

COMPLETING SYSTEM DEVELOPMENT PROCESS • PROGRAMMING: Translating needs to program code • TESTING: Does system produce desired results? 10. 33

TESTING • UNIT TESTING: Tests each unit separately • SYSTEM TESTING: Do modules function as planned? • ACCEPTANCE TESTING: Final certification • TEST PLAN: Preparations for tests to be performed 10. 34

CONVERSION • PARALLEL: Old & new run same problems. Give same results? • DIRECT CUTOVER: Risky conversion to new system • PILOT: Introduce into one area. Does it work? Yes: introduce into other area • PHASED: Introduce in stages • CONVERSION PLAN: Schedule for conversion • DOCUMENTATION: Description of how system works 10. 35

PRODUCTION & MAINTENANCE • PRODUCTION: Constant review by users & operators. Does it meet goals? • MAINTENANCE: Upkeep; Update; Corrections over time 10. 36

SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION SYSTEMS ANALYSIS IDENTIFY PROBLEM(S) SPECIFY SOLUTIONS ESTABLISH INFORMATION REQUIREMENTS SYSTEMS DESIGN CREATE LOGICAL DESIGN SPECS CREATE PHYSICAL DESIGN SPECS MANAGE TECHNICAL REALIZATION OF SYSTEM PROGRAMMING TRANSLATE DESIGN SPECS INTO PROGRAM CODE 10. 37

SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION TESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST CONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF PRODUCTION & MAINTENANCE OPERATE SYSTEM EVALUATE SYSTEM MODIFY SYSTEM 10. 38

MANAGING CHANGE • IMPLEMENTATION: All activities work toward adopting innovation • CHANGE AGENT: Individual acts as catalyst during change process • USER-DESIGN COMMUNICATION GAP: Differences in backgrounds, interests, priorities impede communication 10. 39

MANAGING CHANGE • • • USER INVOLVEMENT & INFLUENCE MANAGEMENT SUPPORT LEVEL OF COMPLEXITY & RISK – PROJECT SIZE – PROJECT STRUCTURE – EXPERIENCE WITH TECHNOLOGY 10. 40

MANAGING IMPLEMENTATION • INCREASE USER INVOLVEMENT • DETECT, OVERCOME USER RESENTENCE, COUNTERIMPLEMENTATION • USE INTEGRATION TOOLS • CONTROL RISK FACTORS • EMPLOY ERGONOMICS 10. 41

INTEGRATION TOOLS • EXTERNAL: – Link users and implementation team – Place users on implementation team • INTERNAL: – FORMAL PLANNING TOOLS – FORMAL CONTROL TOOLS 10. 42

FORMAL PLANNING TOOLS • STRUCTURE, SEQUENCE TASKS • BUDGET TIME, MONEY, RESOURCES • EXAMPLES: – Program Evaluation & Review Technique (PERT) – Gantt Chart to show schedule 10. 43

FORMAL CONTROL TOOLS • MONITOR PROGRESS TOWARD COMPLETING TASKS, FULFILLING GOALS • ORGANIZATIONAL IMPACT ANALYSIS: Study of how proposed system will affect organizational structure, attitudes, decision making, operations 10. 44

ERGONOMICS: • • INTERACTION OF PEOPLE AND MACHINES WORK ENVIRONMENT DESIGN OF JOBS HEALTH ISSUES END-USER INTERFACE OF INFO SYSTEM 10. 45

UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS • CAPITAL BUDGETING MODELS LIMITATIONS: • Assume all relevant alternatives have been examined; cost & benefits can be expressed as $$ • Ignore intangible benefits 10. 46

CAPITAL BUDGET: • • • PROCESS OF ANALYZING, SELECTING CAPITAL EXPENDITURES PAYBACK METHOD RETURN ON INVESTMENT COST-BENEFIT RATIO NET PRESENT VALUE PROFITABILITY INDEX INTERNAL RATE OF RETURN 10. 47

COSTS & BENEFITS: COSTS: • HARDWARE • SOFTWARE • SERVICES • PERSONNEL 10. 48

COSTS & BENEFITS: TANGIBLE BENEFIT: • INCREASED PRODUCTIVITY • LOW OPERATING COSTS • REDUCED WORK FORCE • LOWER COMPUTER EXPENSES • LOWER VENDOR COSTS • LOWER CLERICAL/PROFESSIONAL COSTS • REDUCED GROWTH OF EXPENSES • REDUCED FACILITY COSTS 10. 49

COSTS & BENEFITS: INTANGIBLE BENEFIT: • IMPROVED ASSET USE; RESOURCE CONTROL; PLANNING • INCREASED FLEXIBILITY • MORE TIMELY INFORMATION • INCREASED LEARNING • ATTAIN LEGAL REQUIREMENTS • ENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION, DECISION MAKING, OPERATIONS • HIGHER CLIENT SATISFACTION • BETTER CORPORATE IMAGE 10. 50

PORTFOLIO ANALYSIS: ANALYSIS OF POTENTIAL APPLICATIONS TO DETERMINE RISKS & BENEFITS • DETERMINE DESIRABLE FEATURES, ACCEPTABLE RISKS OF REQUIRED SYSTEM • GENERATE PORTFOLIO OF CHARACTERISTICS, RISKS FOR EACH ALTERNATIVE • SCORING MODEL 10. 51

SCORING MODEL: • • • IDENTIFY DESIRABLE FEATURES PROVIDE WEIGHTS FOR EACH (ADD TO 1. 00) LOOK AT EACH ALTERNATIVE: – WHICH FEATURES ARE PRESENT? – TO WHAT EXTENT (as an amount)? – SCORE THE ALTERNATIVE RANK-ORDER THE ALTERNATIVES SELECT HIGHEST RANKED OPTION 10. 52