12.1 copyright © 2005 pearson education canada inc. management information systems, second canadian...

12.1 Copyright © 2005 Pearson Education Canada Inc.

Management Information Systems,Management Information Systems, Second Canadian Edition Second Canadian Edition

Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource Management

INFORMATION AS A INFORMATION AS A

CRITICAL RESOURCE: CRITICAL RESOURCE:

INFORMATION INFORMATION

RESOURCE RESOURCE

MANAGEMENTMANAGEMENT




• How can our company manage the various How can our company manage the various components of information resource components of information resource management and the issues involved with management and the issues involved with each component?each component?

• How can our company measure the business How can our company measure the business benefits of our information systems? What benefits of our information systems? What models should be used to measure that models should be used to measure that business value?business value?

• Why do so many system projects fail? What Why do so many system projects fail? What are the principal reasons for system failures?are the principal reasons for system failures?

continued

OBJECTIVES




• How should the organizational change How should the organizational change surrounding a new system be managed to surrounding a new system be managed to ensure success?ensure success?

• What strategies can our organization use to What strategies can our organization use to manage the system implementation process manage the system implementation process more effectively?more effectively?

OBJECTIVES (continued)



Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource ManagementTRANSALTA CORPORATION ACHIEVES HIGH ROI ON HR SYSTEM




1.1. Managing the information systems function Managing the information systems function as a critical resourceas a critical resource

2.2. Determining benefits and costs of a system Determining benefits and costs of a system when they are difficult to quantifywhen they are difficult to quantify

3.3. Dealing with the complexity of large-scale Dealing with the complexity of large-scale systems projectssystems projects

MANAGEMENT CHALLENGES




Functions of the IS DepartmentFunctions of the IS Department• Manage computer operationsManage computer operations• Manage systems development and systems Manage systems development and systems

development projectsdevelopment projects• Manage IS personnelManage IS personnel• Budget for the department and others in the Budget for the department and others in the

organization who use computersorganization who use computers• Plan for strategic, tactical and operational Plan for strategic, tactical and operational

level systems and for the IS department’s level systems and for the IS department’s operationsoperations

• Justify financial investment in ISJustify financial investment in IS

12.1 INFORMATION RESOURCE MANAGEMENT

The Information Systems Department



Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource Management12.1 INFORMATION RESOURCE MANAGEMENT






• Chief Information Officer (CIO)Chief Information Officer (CIO)– Strategic level manager of information

systems for an organization

• MIS Steering CommitteeMIS Steering Committee– A strategic level committee composed

of the CIO and other top managers who set IS policy and prioritize and review major IS projects




Managing Systems Development

• Systems OperatorsSystems Operators– IS personnel who operate the hardware

• Data Entry OperatorsData Entry Operators– IS personnel who enter data in a computer

readable format

• Network ManagersNetwork Managers– IS personnel who supervise the operations of

an organization’s network

• WebmastersWebmasters– IS personnel who supervise an organization’s

web-based presence




Capital BudgetingCapital Budgeting• Process of analyzing and selecting Process of analyzing and selecting

various proposals for capital expendituresvarious proposals for capital expenditures

12. 2 UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS

Traditional Capital Budgeting Models




Tangible BenefitsTangible Benefits• Benefits that can be quantified and Benefits that can be quantified and

assigned a monetary valueassigned a monetary value• Include lower operational costs and Include lower operational costs and

increased cash flowsincreased cash flows

Intangible BenefitsIntangible Benefits• Benefits that are not easily quantifiedBenefits that are not easily quantified• Include more efficient customer service Include more efficient customer service

and enhanced decision makingand enhanced decision making






Limitations of Financial ModelsLimitations of Financial Models

• Do not express the risks and uncertainty Do not express the risks and uncertainty of own cost and benefits estimatesof own cost and benefits estimates






Case Example: Primrose, Mendelson, and Hansen


The ProblemThe Problem

• No automated way of tracking billable No automated way of tracking billable hourshours

• No secure method for communicationNo secure method for communication

• No client databaseNo client database

• No system to track costsNo system to track costs




The SolutionThe Solution

• Local area networkLocal area network

• Lotus Notes to handle client accounting, Lotus Notes to handle client accounting, document management, group document management, group collaboration, and e-mailcollaboration, and e-mail






The Payback MethodThe Payback Method

• Measure of time required to pay back the initial Measure of time required to pay back the initial investment on a projectinvestment on a project

Accounting Rate of Return on Investment Accounting Rate of Return on Investment (ROI)(ROI)

• Approximates the accounting income earned Approximates the accounting income earned by the investmentby the investment






Net Present ValueNet Present Value• Amount of money an investment is worth Amount of money an investment is worth

after considering its cost, earnings and after considering its cost, earnings and the time value of money the time value of money

Cost-Benefit RatioCost-Benefit Ratio• Divides total benefits by total costsDivides total benefits by total costs






Profitability IndexProfitability Index• Compares profitability of alternative Compares profitability of alternative

investments by dividing the present value investments by dividing the present value of total cash inflow by initial costof total cash inflow by initial cost

Internal Rate of Return (IRR)Internal Rate of Return (IRR)• Rate of return or profit an investment is Rate of return or profit an investment is

expected to earnexpected to earn






Portfolio AnalysisPortfolio Analysis• Analysis of portfolio of potential Analysis of portfolio of potential

applications within a firm applications within a firm

• Determines risks and benefitsDetermines risks and benefits

• Selects among alternatives for information Selects among alternatives for information systemssystems

Strategic Considerations





Scoring ModelsScoring Models• Method for deciding among alternative Method for deciding among alternative

systems based on a system of ratings systems based on a system of ratings

Real Options Pricing ModelsReal Options Pricing Models• Models using techniques for valuing Models using techniques for valuing

financial options to evaluate information financial options to evaluate information technology investments with uncertain technology investments with uncertain returns returns






Knowledge Value–Added ApproachKnowledge Value–Added Approach• Focuses on knowledge input into a Focuses on knowledge input into a

business process business process

• Determines costs and benefits of changes Determines costs and benefits of changes in business processes from new in business processes from new information systemsinformation systems






Productivity Productivity • Measure of firm’s efficiency in converting Measure of firm’s efficiency in converting

inputs to outputsinputs to outputs

Information TechnologyInformation Technology• Contribution to productivity difficult to Contribution to productivity difficult to

measuremeasure

Information Technology Investments and Productivity





• System FailureSystem Failure– Information system does not perform as

expected, or is not operational at a specified time

• Problem Areas:Problem Areas: – Poor design – Inaccurate data – Excessive expenditure– Breakdown in operations

12.3 IMPORTANCE OF CHANGE MANAGEMENT IN IS SUCCESS AND FAILURE

Information System Problem Areas



Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource Management12.3 IMPORTANCE OF CHANGE MANAGEMENT IN IS SUCCESS AND FAILURE





• DesignDesign–Fail to capture essential business

requirements–Poor user interface

• DataData–Inaccurate or incomplete data

• CostCost–Too costly to develop or operate

• OperationsOperations–System does not run well





Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource Management12.3 IMPORTANCE OF CHANGE MANAGEMENT IN IS SUCCESS AND FAILURE

Change Management and the Concept of Implementation

ImplementationImplementation

• Organizational activities working towards Organizational activities working towards adoption, management, and routinization adoption, management, and routinization of innovationof innovation

Change AgentChange Agent

• Individual acting as catalyst to ensure Individual acting as catalyst to ensure successful organizational adaptation to a successful organizational adaptation to a new system or innovationnew system or innovation




• Role of users in implementation processRole of users in implementation process

• Degree of management support for Degree of management support for implementation effortimplementation effort

• Level of complexity and risk of Level of complexity and risk of implementation projectimplementation project

• Quality of management of implementation Quality of management of implementation processprocess

Causes of Implementation Success and Failure







User–Designer Communications GapUser–Designer Communications Gap

• Different backgrounds, interests, and Different backgrounds, interests, and priorities priorities

• Impedes communication and problem Impedes communication and problem solving among end users and information solving among end users and information systems specialistssystems specialists






Management Support and CommitmentManagement Support and Commitment

• Project requires backing and commitment Project requires backing and commitment of management at various levels of management at various levels

• Helps project to be perceived positively by Helps project to be perceived positively by both users and technical information both users and technical information services staffservices staff






Level of Complexity and RiskLevel of Complexity and Risk

• Project Size:Project Size: Larger project has greater riskLarger project has greater risk

• Project Structure:Project Structure: Clear and straightforward Clear and straightforward requirements help define outputs and processes requirements help define outputs and processes

• Experience with Technology:Experience with Technology: Project risk Project risk rises if project team and information system staff rises if project team and information system staff lack required technical expertiselack required technical expertise






Management of the Implementation Management of the Implementation ProcessProcess

• Improper management leads to:Improper management leads to:– Cost overruns – Unexpected time slippage– Technical shortfalls – Failure to obtain anticipated benefits






Why Are Projects Managed Poorly?Why Are Projects Managed Poorly?

• Ignorance and optimismIgnorance and optimism• The mythical “man-month”The mythical “man-month”• Falling behind: bad news travels slowly Falling behind: bad news travels slowly

upwardupward




System Challenges of Mergers and System Challenges of Mergers and AcquisitionsAcquisitions

• Integrating systemsIntegrating systems

• Organizational characteristics Organizational characteristics

• Information technology infrastructuresInformation technology infrastructures

Change Management Challenges





• High Failure RatesHigh Failure Rates– Enterprise system, BPR, CRM, and SCM

implementations

• HurdlesHurdles– Extensive change required in

organizational culture and business processes

Change Management Challenges





• Managing Technical ComplexityManaging Technical Complexity– Usage of internal integration tools to

ensure operation of implementation team

• Formal Planning and Control ToolsFormal Planning and Control Tools– Structures and sequences tasks,

monitors progress towards fulfillment of goals

12.4 MANAGING IMPLEMENTATION

Controlling Risk Factors



Chapter 12: Information as a Critical Resource: Information Resource ManagementChapter 12: Information as a Critical Resource: Information Resource Management12.4 MANAGING IMPLEMENTATION





• Increasing User Involvement and Increasing User Involvement and Overcoming User ResistanceOvercoming User Resistance– External integration tools link work of

implementation team to that of users at all organizational levels

• Counterimplementation:Counterimplementation: – Deliberate strategy to thwart an

implementation effort






Designing for the Organization


• Organizational Impact AnalysisOrganizational Impact Analysis– Study of the way a proposed system will

affect organizational structure, attitudes, decision making, and operations




Allowing for the Human FactorAllowing for the Human Factor• Ergonomics: interaction of people and Ergonomics: interaction of people and

machines in work environmentmachines in work environment

Sociotechnical DesignSociotechnical Design • Produces information system blending Produces information system blending

technical efficiency with sensitivity to technical efficiency with sensitivity to organizational and human needsorganizational and human needs






• Project planning is an enterprise-wide Project planning is an enterprise-wide focusfocus

• Managers focus on solving problems as Managers focus on solving problems as they arise and meeting challenges they arise and meeting challenges

Fourth-Generation Project Management





INFORMATION AS A INFORMATION AS A

CRITICAL RESOURCE: CRITICAL RESOURCE:

INFORMATION INFORMATION

RESOURCE RESOURCE

MANAGEMENTMANAGEMENT

12.1 copyright © 2005 pearson education canada inc. management information systems, second canadian...

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