week 11 fall 2014 rev0

Intro to Business Information Systems

WEEK 11

Conclude System Development

A Couple of Voices from The Real World

Skate to Where the Money Will Be (Harvard Business Review, 2001)

Dynamics of Business Information Systems vendorsand Systems Thinking Intro.

Changing the OrganizationBuilding Software to Support an Agile Organization

Business benefits of successful software developmentSeven phases of the systems development life cycleSoftware development methodologiesWaterfall methodology and the Agile methodologyManaging the methodology

Then an introduction to system thinking

The Question and Where the Answer LiesWhats the business case for getting the business requirements right, early in the process of developing a system enhancement?

Logic of an answer:

Hard to know requirementskey is agile learningClarify requirements early with examples to create agilityThe business case is based on:Traditional waterfall process only works 10% of the timeMore agile methods work 65% of the timeTime to repair one error in financial services software*: During requirements clarification: 1.2 hoursDuring coding and unit testing: 8.8 hours (> 7 X) During integration or system testing:14.9 hours (> 12 X)After release:18.7 hours (> 15 X)

* National Institute of Standards and Technology, on Software Errors, 2002, p. 149

Prototype to Learn Real Requirements Early

Key to New MethodsFinding the ReturnsObserved Data

AboutTime to repairDevelopmentErrors

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Investment to Find Requirement Errors Early$(30,000.00)

Expected Number of Errors40

Hours to Fix an Error found in

Requirements Clarification Stage1.2

Integration Testing Stage14.9

Difference in Hours/Error13.7

Total Difference in Hours548

Cost per Hour$100.00

Total Cost Saving$54,800.00

Return on Investment (before considering time value of money)$24,800.00

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Learning Real Requirements Early(continued)Users and Developers Mis-Communicate

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Learning Real Requirements Early(continued)Errors found early almost 12 x quicker to fixAdds up to many hours, and $

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Learning Real Requirements Early(concluded)Saves a lot more than the cost of an EarlyPrototype

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Value of Spending More to Find Requirements Errors Early











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The Example is Realistic-to-UnderstatedAn industry rule of thumb is that a bug which costs $1 to fix on the programmersdesktop costs $100 to fix once it is incorporated into a build and thousands of dollars if is identified only after the software has been deployed in the field

The Economist, March 8th, 2008, p 20 of Technology Review.

The example says it is 15 x more expensive if found in testingThe Economist reports it gets very expensive if it isnt found in testing100 x more expensive if found after integration (the end of testing) > 1000 x if found by the users after deployment (implementations)

Who finds information like this? Experts like Capers Jones

Latest from Experts: March 2008One Expert - Capers Jones Chief scientist emeritus of Artemis Management Systems and Software Productivity Research Inc., Burlington, Mass. International consultant and author on software management topics (his company's research programs)Software QualitySoftware Process ImprovementSoftware Project ManagementFormerly, Assistant director of programming technology at the ITT Programming Technology Center in Stratford, Conn. IBM for 12 years work in software quality and productivity improvement methods. Web site: www.spr.com. E-mail: [email protected].

Also research on project management.

Ivey Schools Deborah Compeau (oddly perhaps, on the same page as Westjet story)"Management is not the five surefireways to make your next IT project asuccess I think I could give youthe five surefire ways to make yournext IT project a failure, but theconverse is a lot harder.

You need to develop a deepunderstanding of a problem frommultiple perspectives and buildsolutions that take into account allthe inter-relationships andcomplexities that exist.

That's not a new course you teach.That's a function of how you think about what you are doing."Professor of Management Information Systems at the Ivey Business School, Western Ontario. HBA and PhD from Ivey.

Primary Reasons For Project Failure Include

Unclear or missing business requirementsSkipping SDLC phasesFailure to manage project scopeScope creep as everyone tries to get system needs met by a project Feature creep extra features are addedFailure to manage project well

Project Management in Govt of Canada(2004 to 2007 $8.7 Billion in projects) Auditor General reported in November 2007 (sample of 7 projects)

Only two (2006 Census Online and My Account, My Business Account) projects met all criteria for well-managed projects.Government made limited progress 1997 2007 audits Quality of governance varied widely from project to project (see Six Decisions). In four projects governance responsibilities were not carried out adequately (key issues either not reported or not resolved)Five projects were allowed to proceed with business cases that were incomplete, out-of-date or contained information that could not be supported.Four of the projects undertaken by departments that lacked the skills and experience to manage the projects or to use the system effectively.Quality of project management ranged from good to seriously flawed. In 2 cases, poor project management long delays and large cost overruns

Scott Adams (Dilbert) ViewFrom a student Winter Term, 2010business cases that were incomplete, out-of-date or contained information that could not be supported.

2011 Update on Govt of Canada ProjectsIn June 2011, the Auditor General reported to Parliament: unsatisfactory progresson commitments from 2006-7 recommendations re. governance & business cases.

Two of five projects met most criteria for well-managed projects.Many departments just reduced the scope and extended the timelines of projects. Two projects deferred important deliverables with little analysis of impacts and costs.Three projects business cases did not identify benefits or benefits not measured. Three projects adequately assessed their capacity to manage the projects anddemonstrated they were ready to accept the business transformation that followedThree projects departments have adequately managed projects risks

Treasury Board has completed a policy suite renewal (new policies,standards, and guidance that will directly impact IT projects) in five years.

What Are We Talking About Here?But dont worrythereve been renewals of policy suites

Department or Agency/ProjectInitial ScheduleInitial Budget2010 Schedule2010 BudgetScope ChangeTreasury Board expenditure management system2000 - ongoing (?)$16 million2000-2007$51 million (actual)Of 4 phases, 2 deferred indefinitelyCitizenship and Immigration global case management2000-2005$195 million2000-2011$387 millionScope reduced in 2008, rest deferred until after 2011.CRA Integrated revenue collection2001-2004$2.5 million2001-2014$144 millionScope increasedPWSSC and TB secure channel1999-2002$96 million1999-2004$377 million (actual)Citizenship and Immigration bio-metrics2008-2013$180 millionProject risk reduced by targeting 25% of original people

Need for IT System Change(March 23, 2010)

Need for IT System Change at a Large European Bank(March 23, 2010)

Need for IT System Change at a Middle Eastern Bank(March 23, 2010)

Is Net Present Value a Mystery?http://www.youtube.com/watch?v=PCrBvhTJiAwU Michigan open university lecture50:15Excel examples

Business Information Systems VendorsVendors: companies who sell, deliver and profit from:

Hardware,Software (operating system, applications, etc.)Networks (Local, Metro, Wide Area)Services (outsourcing, system development)

How vendors might think about buyersHow smart buyers think about vendors an exampleThis style of thinking is Systems Thinking

Examples

Skate to Where the Money Will BeWinning strategy for IT vendors in early 21st Century:

Mix and match the best components from top suppliers to meet customers needs (create interdependence to meet challenging needs)

Control one or more of the interdependent links in the industrys value chain

Control thru selection of core competenciesDont outsource interdependent componentsRe-configure them as the industry evolvesSell interdependent link(s) in the value chain to other vendors

ExampleBusiness Model

Clayton M. Christensen, Michael Raynor, Matthew Verlinden,Skate to Where the Money Will Be, HBR, November 2001

Skate to Where the Money Will BeWinning strategy:

Mix and match the best components from top suppliers to meet customers needs (creating interdependence to meet challenging needs)Control the the interdependent links in the industrys value chainControl thru selection of core competenciesDont outsource interdependent componentsFlexibly re-configure them as the industry evolvesSell the interdependent links in the value chain to other vendorsExample (not from HBR article)

Operating systemsEarly 1980s Apple: Motorola Processor + beautifully integrated applicationsMicrosoft: windows icons pasted onto QDOS + Intel processor + anyones applicationsChoice over-whelmed integration.Apple falls from #1 to

Skate to Where the Money Will BeWinning strategy:Mix and match the best components from top suppliers to meet customers needs (creating interdependence to do so)Control the the interdependent links in the industrys value chainControl thru selection of core competenciesDont outsource interdependent componentsFlexibly re-configure them as the industry evolvesSell the interdependent links in the value chain to other vendorsExampleOperating systemsEarly 1980s Apple: Motorola Processor + beautifully integrated applicationsMicrosoft: windows icons pasted onto QDOS + Intel processor + anyones applicationsChoice over-whelmed integration.Apple PCs fall from #1 to almost goneMicrosoft sold an ugly paste up but it chose the right skills: Assembling applications, recruiting and co-opting application developersBundling and integrating where the market would pay

Business Model

Outsource the modular componentsCompetency: integration for fast customized delivery, competitive pricesExtraordinary skill at valued, hard to imitate part of product or service Clayton M. Christensen, Michael Raynor, Matthew Verlinden,Skate to Where the Money Will Be, HBR, November 2001

Where the Money Went in Personal ComputersFast hardware customization and delivery with negative working capital needs $$$$ Systems design, implementation, maintenance and management services $$$$

Where the Money Went in Personal ComputersFast hardware customization and delivery with negative working capital needs $$$$ Systems design, implementation, maintenance and management services $$$$MicrosoftIntel/AMDDellIBM

Ways of ThinkingVendors about Buyers

How do Buyers systems workWhere are the challenges today, tomorrow?The challenges where money is madeWhere will future challenges be?How can we meet them Creating value for buyersAt cost < value In ways hard to imitate?Who is trying to disrupt our position?What can we do?

This is beyond knowledgeIts based on understanding Buyers about Vendors

How Buyers think about vendors.

Business Information Systems VendorsVendors: companies who sell, deliver and profit from:

Hardware,Software (operating system, applications, etc.)Networks (Local, Metro, Wide Area)Services (outsourcing, system development)

How vendors might think about buyersHow smart buyers think about vendors an exampleThis style of thinking is Systems Thinking

Next examples

A Framework for Locating Sources of PerformanceSowhat did the research say were the sources?

Core SystemsEnvironmentComponentsCustomersCompetitorsMission/StrategyTasksPrescribed NetworksPeopleProcessesEmergent NetworksTechnicalPoliticalCultural

Management Knowledge/Reasons for Performance (simplified)School 1School 2


E1E3E4E2Reasons: Relationships within Management System


Ways of ThinkingVendors about Buyers

How do Buyers systems workWhere are the challenges todayThe challenges where money is madeWhere will future challenges be?How can we meet them Creating value for buyersAt cost < value In ways hard to imitate?Who is trying to disrupt our position?What can we do?

This is beyond knowledgeIts based on understanding Buyers about Vendors

Knowledge - in the upper left hand cornerUnderstand vendors lower right handInteraction across the Vendors and Buyers and Competitors management systemsBeyond knowledge into understanding

Introduction: Systems ThinkingSystem: a whole of two or more parts that each can effect the wholeThe management systems of mainframe vendors and their buyersAnalysis (of parts) doesnt reveal character:British cars on left side: knights rode on left side (to have sword arm available)(who decided this would matter?)American cars in 1970: built for 6 (family size) and go fast, wont turn or stop (how did the USA come to have those Interstates?)

Need to look outside the car to see reasonsSystems thinking: a fusion of analysis and synthesis, in search of understanding, with the scope determined by what youre trying to understand.Analysis vs. synthesis?

Russell Ackoff, From Mechanistic to Social System Thinking, November 1993

Scope of System: Depends on GoalWant to sell enterprise servers?Understand the management systems of buyers, competitors and shape your management system to competeAnalyze the technical opportunities and competitive advantages of your products, compared to competitorsSynthesis is how you winall the analysis in the world wont do itGoogle synthesized Search and Advertizing (and wants to synthesize much more) Want to make money in an evolving IT industry?Understand buyers future challengesAnalyze how to sustain a competitive advantage around those challengesSynthesize and skate to where the money will beIs the PC a broad-enough scope today?More thoughts next week.New Media businessesGlobal outsourcing and employment growth

Reminder: Course OutlineRead for next Week:

New Media (Economist 2006) Who Wins in Off-shoring (McKinsey Quarterly, 2003)

Uses of system thinking

***********Provide an example of scope creepWe added a new type of discount to our marketing planProvide an example of feature creepWe would like a new logo placed on the top corner of every screen and it should play a song when clicked *********************

week 11 fall 2014 rev0

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