13.1 © 2004 by prentice hall management information systems 8/e chapter 13 understanding the...
Post on 19-Dec-2015
214 views
TRANSCRIPT
13.1 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change1313
UNDERSTANDINGUNDERSTANDING
THE BUSINESSTHE BUSINESS
VALUE OF SYSTEMSVALUE OF SYSTEMS
AND MANAGINGAND MANAGING
CHANGECHANGE
Chapter
13.2 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• How can our company measure the How can our company measure the business benefits of our information business benefits of our information systems? What models should be used to systems? What models should be used to measure that business value?measure that business value?
• Why do so many system projects fail? Why do so many system projects fail? What are the principal reasons for system What are the principal reasons for system failures?failures?
OBJECTIVES
13.3 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
13.4 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
• Dealing with the complexity of large-scale Dealing with the complexity of large-scale systems projectssystems projects
MANAGEMENT CHALLENGES
13.5 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Capital budgetingCapital budgeting
• Process of analyzing and selecting Process of analyzing and selecting various proposals for capital expendituresvarious proposals for capital expenditures
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Traditional Capital Budgeting Models
13.6 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Limitations of Financial Models
13.7 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.8 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.9 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Costs and Benefits of the Legal Information System
Figure 13-1
13.10 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Financial Models
Figure 13-2
13.11 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.12 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Present valuePresent value• Value in current dollars of a payment or Value in current dollars of a payment or
stream of payments to be received in the stream of payments to be received in the futurefuture
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.13 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.14 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
13.15 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Strategic Considerations
13.16 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
A System Portfolio
Figure 13-3
13.17 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Strategic Considerations
13.18 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Strategic Considerations
13.19 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION SYSTEMS
Information Technology Investments and Productivity
13.20 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
System failureSystem failure• Information system does not perform as Information system does not perform as
expected, is not operational at a specified expected, is not operational at a specified timetime
• Problem areas: Poor design, inaccurate Problem areas: Poor design, inaccurate data, excessive expenditure, breakdown in data, excessive expenditure, breakdown in operationsoperations
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
Information System Problem Areas
13.21 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
Information System Problem Areas
Figure 13-4
13.22 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
Change Management and the Concept of Implementation
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.23 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.24 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Factors in Information System Success or Failure
Figure 13-5
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.25 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
User Involvement and Influence
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.26 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
Management Support and Commitment
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.27 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• Project size:Project size: Larger project has greater Larger project has greater riskrisk
• Project structure:Project structure: Clear and Clear and straightforward requirements help define straightforward requirements help define outputs and processes outputs and processes
• Experience with technology:Experience with technology: Project Project risk rises if project team and information risk rises if project team and information system staff lack required technical system staff lack required technical expertiseexpertise
Level of Complexity and Risk
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.28 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Improper management leads to:Improper management leads to:
• Cost overruns Cost overruns
• Unexpected time slippageUnexpected time slippage
• Technical shortfalls Technical shortfalls
• Failure to obtain anticipated benefitsFailure to obtain anticipated benefits
Management of the Implementation Process
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.29 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Consequences of Poor Project Management
Figure 13-6
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.30 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.31 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• High failure rates: High failure rates: enterprise system, enterprise system, BPR, CRM, and SCM BPR, CRM, and SCM implementationsimplementations
• Hurdles:Hurdles: Extensive change required in Extensive change required in organizational culture and business organizational culture and business processesprocesses
Change Management Challenges
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM SUCCESS AND FAILURE
13.32 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• Managing Technical Complexity:Managing Technical Complexity: Usage of internal integration tools to Usage of internal integration tools to ensure operation of implementation team ensure operation of implementation team
• Formal Planning and Control Tools:Formal Planning and Control Tools: Structures and sequences tasks, monitors Structures and sequences tasks, monitors progress towards fulfillment of goals progress towards fulfillment of goals
MANAGING IMPLEMENTATION
Controlling Risk Factors
13.33 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• Increasing User Involvement and Increasing User Involvement and Overcoming User Resistance:Overcoming User Resistance: External integration toolsExternal integration tools l linking work of inking work of implementation team to that of users at all implementation team to that of users at all organizational levels organizational levels
• Counterimplementation:Counterimplementation: Deliberate Deliberate strategy to thwart an implementation effortstrategy to thwart an implementation effort
Controlling Risk Factors
MANAGING IMPLEMENTATION
13.34 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
Formal planning and control tools help to manage information systems projects successfully
Figure 13-7
MANAGING IMPLEMENTATION
13.35 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
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
Designing for the Organization
MANAGING IMPLEMENTATION
13.36 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change
• 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
MANAGING IMPLEMENTATION
13.37 © 2004 by Prentice Hall
Management Information Systems 8/eManagement Information Systems 8/eChapter 13 Understanding the Business Value of Systems and Managing ChangeChapter 13 Understanding the Business Value of Systems and Managing Change1313
UNDERSTANDINGUNDERSTANDING
THE BUSINESSTHE BUSINESS
VALUE OF SYSTEMSVALUE OF SYSTEMS
AND MANAGINGAND MANAGING
CHANGECHANGE
Chapter