Post on 17-Dec-2015
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Management Information Systems - Class Note # 5 (Chap-13)
Prof. Yuan-Shyi Peter Chiu Feb. 2012
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CHAP. 13 Understanding the Business Value of Systems and Managing Change
13.1 Understanding the Business Value of Information Systems
13.2 The Importance of Change Management inInformation System Success and Failure
13.3 Managing Implementation
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13.1 Understanding the Business Value of Information Systems
CHAP. 13
■ Tangible BenefitsTangible Benefits Benefits that can be quantified and assigned a monetary value; they include lower operational costs and increased cash flows.
■ Intangible BenefitsIntangible Benefits Benefits that are not easily quantified; they include more efficient customer service or enhanced decision making.
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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
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■ 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
Costs & Benefits◇◇
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13.1
■ The Payback MethodThe Payback Method
• Measure of Measure of timetime required to pay back the initial required to pay back the initial investment on a project investment on a project (p.420)(p.420)
■ Accounting Rate of Return on Investment Accounting Rate of Return on Investment (ROI)(ROI)
• Calculation of the rate of return on an investmCalculation of the rate of return on an investment by its net benefit. Approximates the accouent by its net benefit. Approximates the accounting nting income earnedincome earned by the investment by the investment (p.42(p.421)1)
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13.1
■ Present valuePresent value
• The value, The value, in current dollarsin current dollars, of a payment or , of a payment or stream of payments to be received in the futustream of payments to be received in the future.re.
■ Net present valueNet present value
• Amount of money an investment is worth, takAmount of money an investment is worth, taking into account its cost, earnings, and ing into account its cost, earnings, and the tithe time value of moneyme value of money..
■ Cost-benefit ratioCost-benefit ratio• Calculates returns from capital expenditure bCalculates returns from capital expenditure b
y dividing total benefits by total costs.y dividing total benefits by total costs.
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13.1
■ Profitability indexProfitability index
• Compares profitability of alternativeCompares profitability of alternative inv investments by dividing the present value of total estments by dividing the present value of total cash inflow by initial cost.cash inflow by initial cost.
■ Internal Rate of Return (IRR)Internal Rate of Return (IRR)
•Rate of return (or profit) an investment is expeRate of return (or profit) an investment is expected to earn.cted to earn.
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9Fig 13-3: A System portfolio.
13.1 Strategic considerations
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13.2 The Importance of change management in information
system success and failure
■ Information System Problem Areas
■ Measures of information system success
■ Factors in Implementation success or failure
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Systems FailureAn information system that either does not perform as expected, or is not operational at a specified time, or cannot be used in the way it was intended
As many as 75% of all large systems may beconsidered to be operating failures
13.2
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13.2
Fig. 13-4: Information System Problem Areas
■ Information System Problem Areas
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Data
Data in the systems have a high level ofinaccuracy or inconsistency
may be ambiguous
may be inaccessible
13.2 ■ Information System Problem Areas
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Information Attributes or Qualities
FreedomFrom Bias
FreedomFrom Bias
Appropriate -ness
Appropriate -ness
ClarityClarity
TimelyTimely
PrecisionPrecision
AccuracyAccuracyQuantifiableQuantifiable
Comprehen-sive
Comprehen-sive
VerifiableVerifiable
AccessibleAccessible
INFORMATIONINFORMATION
13.2 ■ Information System Problem Areas
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Accuracy-- The degree of the absence of error in information
Quantifiable-- The ability to state information numerically
Precision--The measurement detail used in providing information
Verifiable--The degree of consensus arrived at among various users examining the same information
Timely--The receipt of information within the time frame it is needed by the recipient
Accessible--The ease and speed with which information can be obtained
Clarity--The degree to which information is free from ambiguity
Freedom From Bias --The absence of intent to alter or modify information in order to influence recipients
Appropriateness--How well the information relates to the user’s requirement
Comprehensive--The completeness of the information
13.2 ■ Information System Problem Areas
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Design
Fails to capture essential business requirements
Fails to improve organizational performance
Information may not be provided quickly enough to be helpful
Information may be in a format that is impossibleto digest and use
It may represent the wrong pieces of data
13.2 ■ Information System Problem Areas
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Cost
run way over budget
too costly to implement
excessive expenditures cannot be justified by the business value of the informationthey provide
13.2 ■ Information System Problem Areas
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Operations
The system does not run well
Information is not provided in a timelyand efficient manner, because the c
omputer operations break down
Delayed & missed schedules for delivery of information
An on-line system may be operationallyinadequate because the response time is too long
13.2 ■ Information System Problem Areas
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Measures of information system success
Measures of informationSystem success
Measures of informationSystem success
HighLevels of
System use
HighLevels of
System use
Financial payoff
Financial payoff
AchievedSystem
objectives
AchievedSystem
objectives
Favorable Attitudes
About IS function
Favorable Attitudes
About IS function
UserSatisfactionWith system
UserSatisfactionWith system
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High levels of system use
Measured by polling users
Employing questionnaires
Monitoring system parameters such as thevolume of on-line transactions
13.2 ■ Measures of information system success
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User satisfaction with system measured by questionnaires or interviews:measured by questionnaires or interviews:
users’ opinions on the accuracy, timeliness,quality of service, and the schedule of operations
managers’ attitudes on how well theirinformation needs were satisfied
users’ opinions about how well the system enhanced their job performance
13.2 ■ Measures of information system success
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Favorable attitudes about information system function
Favorable attitudes of users about information systems and theinformation systems staff
13.2 ■ Measures of information system success
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Achieved system objectives
the extent to which the system meets its the extent to which the system meets its specified goalsspecified goals
as reflected by improved organizational performance and decision making
resulting from use of the system
13.2 ■ Measures of information system success
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Financial Payoff
either
by reducing costs or by increasing sales or profits
be of limited value, since benefits of an information system may not betotally quantifiable (intangible benefits
exists)
13.2 ■ Measures of information system success
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13.2 Factors in Implementation Success or Failure
Implementation
outcome
Design
Cost
Operations
Data
User involvement
and influence
Management
support
Level of
Complexity / risk
Management of implementation
process
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User Involvement and Influence
If users are heavily involved in systems design, they have more opportunities to
- Mold the system
- Control the outcome
Users are more likely to react positively to the system
Factors in Implementation Success or Failure13.2
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Management Support
Users and technical IS staff - Receive higher-level attention and priority - Recognized and rewarded for the time and effort
they devote to implementation
Ensures that a systems project will receive sufficient funding and resources to be successful
Factors in Implementation Success or Failure13.2
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Level of Complexity / Risk
Project size : The larger the project , the greater the risk.
Project structure :
Requirements are clear and straightforward, ( highly structured ), risk is lower.
Experience with technology :
The project risk will rise if the project team lack the required technical expertise.
Factors in Implementation Success or Failure13.2
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Factors in Implementation Success or Failure13.2
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Management of implementation process
Without proper management :Without proper management :
Cost overruns that vastly exceed budgets
Time slippage that is much greater than expected
Technical shortfalls resulting in performance that is significantly below theestimated level
Failure to obtain anticipated benefits
Factors in Implementation Success or Failure13.2
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13.3 Managing implementation
Increasing User Involvement Overcoming User Resistance Managing Technical Complexity Controlling Risk Factors Formal Planning and Control Tools (CPM &
PERT) Allowing for Human Factor Creating a Global Technology Infrastructure
Must :Must :
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#1. Describe the tangible and intangible benefits of a business information system?
#2. What are the problem areas of an Information system?
#3. What are the measures of the Information system success?
#4. Describe the factors in implementationsuccess or failure?
#5. What are the main considerations in determining a project’s level of complexity and risk?
HOMEWORK Chap.13HOMEWORK Chap.13
~ THE END ~~ THE END ~
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THE ENDTHE END
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~ To Think About ~ Info. System ?
企業之 I. T 應用 ?
I.S. 建立之程序 ?
I.S. 建立之方法 ?
I.S. 應用於企業 vs I.T. 應用於生活 ?
I.T. 之挑戰與創意 ?