Managing Information Systems Projects

Feasibility, Risks, and Methods

Eric Santanen, Ph.D.ILTM 2006

Overview

Information systems projects can be extremely beneficial to organizations; however,

Poorly managed projects can kill an organization…

Look at how IS and management practices fit together.

Agenda for Today

The changing business environmentIS project feasibility analysisManaging ExpectationsIS design methodologies – time permitting

But first, an illustration…

Organization

Organization

Organizational Objective

Organization

Organizational Objective

Organizational Use of

Technology

Information Systems

Collects, processes, stores, analyzes, & disseminates information– Automatically or with human intervention

What are some business functions performed by IS?

What benefits are offered by IS?– How might they be classified?

Understanding Your Organization

Think of a typical large organizationWhat are its characteristics?

– Think of: longevity, structure, mergers, reward structure, culture, attitudes of upper management, propensity for risk,

– What are implicit assumptions of above?

Are the above advantages or disadvantages when it comes to new projects?

Understanding Your Environment

What has changed since many of these large companies have begun?– In the marketplace?– With technology?– In society?

Market Pressures

Globalization & Competition– NAFTA, EU– What special requirements do these create?

Real-Time Operations– Today’s business doesn’t wait for old data

Changes in the workforce– Telecommuters, flexible hours, etc

Powerful customers– Know more than ever before (how?)– Want customized products (like what?)

Technology Pressures

Obsolescence of today’s products– Moore’s Law– Gateway commercial for the G5– Fairchild Semiconductor: replace a $1.05

television vacuum tube with $100 transistor

Substitute products and services– If you don’t jump on today’s technology…

Moore’s Law Illustrated

Societal Pressures

Major areas of Societal Pressure– Social Responsibility– Government De/Regulations– Homeland Security– Information Ethics

Social Responsibility…

Lets Look at the Cases:

Sports-for-All– What is the current business situation?– Why won’t advertising work here?– Why doesn’t Jim like David’s proposal?

Quantas Airlines– What is their business situation?– Which pressures are evident?– What are the benefits of e-commerce?

The Technology Playground

“Business as Usual” No Longer Exists!

Those that think so will ultimately Fail…

Categories of IS Projects

Problems OpportunitiesDirectives

Which categories get funding first?Which categories have the greatest

potential to return value?Any problems here?

IS Project Management

1995 survey, 352 orgs, 8000 IS projects– What percentage were on-time & on-budget?

– What percentage simply failed?

– The remainder • Are over budget by 189%

• Behind schedule by 222%

Why do these problems occur? What can be done to turn failures into successes?

Why Software Development Fails

Another Illustrated Example…

Analysis of the Swing

Why does this problem happen so often?What can be done to prevent this sequence

of events?

How about a break?!?

Preventing the Failures

Feasibility AnalysisThreats to Feasibility

IS Project Feasibility:

How do you determine if an IS project is feasible?– What does “feasible” really mean?

IS Project Feasibility:

OperationalTechnicalScheduleEconomic

Operational Feasibility, I

Does management support this system?– Attitude of executive management

• Overall budget rule-of-thumb…

• ‘Enabler’ budget…

• ‘Inhibitor’ budget…

• Sports-for-All vs. Quantas…

– Location of IS on the org chart…– What is the organization’s primary business…

Operational Feasibility, II

How do users feel about their new and changing role?

Is resistance a real threat?Will the working environment change?

– For the better? For the worse? Influences on resistance

Technical Feasibility

Is the proposed technology practical?– Is the technology available? To us…– Is it mature enough to apply?– Will it work with our current technology?

And the often forgotten ones:– Do our people have necessary skills? (mouse)

– What are Training / Hiring needs?– Both Tech staff and “regular” employees

Schedule Feasibility

Are the project deadlines reasonable?– Are they mandatory or simply desired?– What is the penalty for missing a deadline?– Watch out for Parkinson’s Law!

Useful Methods:– (Optimisitic + 4 * Likely + Pessimistic) / 6– Function Points Analysis

Function Points Analysis

Application Item Count Simple Average Complex

# Inputs 3 4 6

# Outputs 4 5 7

# Programmed Inquiries 3 4 8

# Files / Relations 7 10 15

# Application Interfaces 5 7 10

Function Points Questions

Complexity Adjustments (Scale from 0 to 5)– Is backup/recovery required?– Is data communication required?– Are any functions distributed?– Is performance critical… (there are 10 more criteria)

Function Points = total weighted count * (0.65 + (0.1*Σ (complexity adjustments)))

Roger Pressman, Software Engineering: A practitioners approach, 3rd ed, McGraw-Hill, 1992, p50.

Schedule Feasibility

An “old” saying:– It is better to deliver a correctly functioning

system late than to deliver garbage on time!

Economic Feasibility

How can you measure economics of IS?– There are several techniques...

What is wrong with these approaches to feasibility analysis?– How well do they work? – Consider our cases…– Think in terms of information availability

Economic Feasibility

Intangible Benefits: difficult to quantify– Still important to identify

– Without these, many projects would be infeasible...

Examples on intangible benefits– Improved employee morale

– Increased customer loyalty

– Better decision making capability

– Any others?

The Intangible: Cust Loyalty

There is a chance (.50) that a customer may send a few orders (.10) to competitors

There is a chance (.20) that a customer will send more orders (.50) to competitors, especially if orders are slow

There is a chance (.10) that a cust will send an order to competitor only as a last resort, reducing business by (.90)

There is a chance (.05) that a cust will not do business with us at all, 100% loss

Customer Loyalty

Calculate the estimated business loss Loss = .50 * (.10 loss of business) + .20 * (.50 loss of business) + .10 * (.90 loss of business) + .05 * (1.00 loss of business) Loss = 0.29 or 29% estimated loss of business

If avg customer places $100K in annual orders we will lose $29K for each customer

If we have 100 customers, we will lose $2.9M each year!

Economic Feasibility

Another “old saying”– It is better to count gold imprecisely than to

count pennies precisely

Feasibility Dangers

A project that was once feasible may not remain so - why not?

Feasibilities can often conflict!– Best solution can often be the most expensive– good operational feasibility– poor economic feasibility

What can you do if the project is not feasible on all levels?

Managing Expectations

Often most difficult aspect of a projectTool for balancing priorities Rows in matrix are project dimensions:

– Cost– Schedule– Scope / Quality

Managing Expectations

Columns in matrix are the priorities:– Max or Min: most important– Constrain: median importance– Accept: lowest importance

Impossible to optimize all simultaneously!Rule: 1 check per row & column

Expectation Management

Priorities Max or Min Constrain Accept

Cost: $20B

Schedule: Deadline 12/1969

Scope / Quality:Man on the moon,return safely

X

X

X

Making Development a Success

Primarily focused on SW developmentMost hardware has a significant SW

componentThree primary methodologies

– Waterfall, Prototype, None– Which do you think is most common?

Software Development

Sequential Methodologies “Waterfall”

Survey, Study, Define, Target, Design, Construct, Deliver

n-1

2

1

n

…

Software Development

Iterative Methodologies “Prototyping”

Require, Design, Code, Test, Feedback

1

2

3

4

5

SW Development Tools

What is the value of dev methodologies?How can you coordinate team efforts?

– Who works on what? – At what times?– From what locations?

What is the single difference between:– IBM vs. Apple, DVD vs. DivX, Windows vs.

Linuix

Frequent Causes of Failures

Taking shortcuts with methodology– when/why do these occur?

Cost of fixing errors, finding an error in:– Requirements: $1,000– Design: $2,500– Coding: $6,000– Testing: $25,000– Implementation: $75,000

Frequent Causes of Failures

Scope & Feature Creep– can be both good and bad, how?– are mgmt intentions clear?

Brief Summary

IS Projects present new challengesNeed to carefully consider new criteriaNew methodologies exist to helpLets reduce % of failed projects!!

And the stuff that we didn’t get to…

Investment Strategy Analysis

General IS application areas– Institutional, professional, physical

automation, external, infrastructureMap these against functional components

or user groups– R&D, QA, manufacturing, marketing, finance

What do we learn from this? What comparisons can we make?

Waves of Tech Adoption

of 100 Million US households…1/2 million are the actual Innovators5 million are the Early Adopters30-35 million are Early Majority40-50 million are Late Majority10-15 million are Technology Averse

Waves of Adoption, I

The Innovators– On the cutting edge of technology– Most people don’t understand anything about

these folksManagement’s Approach

– Support them with funding & learn from them– What are advantages? Drawbacks?– How much funding should they get?

Waves of Adoption, II

Early Adopters: The First Consumers– Risk Takers: Owned BetaMax, 8-tracks, DivX– Wait at midnight for releases on Win95, etc.– “Gotta Have It!!!!” mentality

Management’s Approach– Significant opportunities can be missed if these people

are ignored– Need guidance of IS dept to prevent overwhelming

resources– How do we manage this group?

Waves of Adoption, III

The Early Majority: First Big Wave– Open to new technology but need help– Confused by terminology, new standards, no time to

learn– Hold important positions in organizations, can make

or break technology use: must see direct benefits

Management’s Approach– Lots of training! If needs are unmet, will be rejected– IS must know the business, non-tech products &

services

Waves of Adoption, IV

Late Majority: Technology Skeptics– Not afraid of technology, have concerns about

cost, risk, security, compatibility, time, learning curves for decision making

– Face severe budget pressures– Will my client really benefit from this?

Management’s Perspective– Address risks, costs as well as opportunities– Address technology concerns (security) at level of

the audience

Waves of Adoption, V

Technologically Averse– Not even considering a computer

– Concerned about privacy, security, control

– Real estate & Publishing: web pages bypass sunk costs in infrastructure

Management’s Perspective– Need to be aware of justifiable business fears

– These people need the most time & education

Summary

Range of organizational problems– Many have happened inadvertently– Many can be addressed by IS

IS alone is not a sufficient solution to any problem

Proper management is essential

Questions??