Management of Computer System

Performance

Introduction

2

I am assuming that you are here for a primary and singular reason.

I believe that reason is for you to gain a competitive advantage in the job market so that you can optimize your income.

I have structured this course with this in mind.

I am committed to helping you achieve that goal.

I expect you to work towards that goal as well.

Management of Computer System Performance

3

Description: This course provides students with knowledge

and skills to comprehend the concepts on the organization of Information System Unit and Resources Planning as well as the Performance Measurement

Objectives: The students should be able to understand the

concepts on The Organization System Unit, The students should be able to plan Resources

and measure the performance of Information system Unit..

Management of Computer System Performance

4

Grading

Deliverable Weight Grade Range

1. Individual Paper Due 20% 90-100 A

2. Mid-Term Test 30% 80-89 B

3. Final Test 50% 70-79 C

4. Labs/ Studio 0% 60-69 D

Total 100% 0-59 F

5

The Text and Source Material

The effective measurement and management of IT costs and benefits Butterworth/Heinemann: ISBN 0-7506-

4420-6 Hardcover, Second Edition

Reference Material: Barrons Financial Guide: Dictionary of

Finance and Investment Terms www.TheEbusinessSite.com Class handouts

6

Assignments

The Article must be approved in advance by the Prof. Article Review

NTE 5 pages Single Spaced/10 double spaced. 1 inch margins, Font - Arial or Times New Roman Type, Point Size 10-12.

Executive Summary 1/2 page (Single Spaced) Article Summary 2-3 ½ pages (Single Spaced) Your Opinion of the article and its conclusion with a

justification of your opinion, NTE 1page (Single Spaced). External references supporting your opinion are acceptable.

Format violation is 10 points.

7

Project - Parameters

This course will require the delivery of calculated values for IT project Valuation

You are required to do the following: Forms into Groups of 4-5 People Identify a publicly traded corporation with

annual sales between $700M and $1.5B. Select a firm from an industry that you know

something about. Exercise great care in selecting a firm.

8

Project - Parameters Company selection guidelines:

The fewer the divisions, the better. This will make your lives simpler

Based on your analysis, they should not currently have an ERP system in place.

Your group will perform analysis on their annual report The analysis will involve the impact of IT investments

impacts on the firm, Your group will use the formulas and spreadsheets

presented in this course and provided on TheEBusinessSite.com for this purpose.

The performance of valuation research for some variables will be required.

9

Project – The Task

Assume that your group has been tasked to assess the financial and economic impact of the implementation of a corporate wide ERP system.

Your group will need to perform a series of evaluations for this effort.

In that you are working as a group, the final results should be consistently accurate.

Spreadsheet modifications should be documented. Assumptions must be documented and explained.

10

Project – The Task The Implementation Task Financial Parameters are as follows: Costs

10% to 13.7% of year 1 annual Gross revenues. 7% to 9% of year 2 annual Gross revenues.

Deployment and operational schedule 60% probability that it will be completed in 23 months 10% probability that it will be completed in 20 Months 30% probability that it will be completed in 32 months

Efficiency gains are expected to be as follows: (Example: Gains are correlated at 90% bottom line improvement [2%

x .9=1.8% bottom line cost reduction in months 7-11]) 2% in months 7-11 8% compounded on the previous 2% by month 18 14% compounded on the previous 8% by month 23 2% annual efficiency gains from month 24 forward for the next three

years.

11

Project – The Task

Identify Interest rates for the periods provided for use in your formulas substantiate and validate interest rates used.

Look at similar industries for comparative purposes. Compare revenue, returns, ROI and similar findings.

I reserve the right to deliver at least one change to these parameters in Session 11&12

Session 19-20, be prepared to present your findings. Presentation - 10 -15 slides Paper 15 pages single spaced/30 pages double

spaced.

12

Project – The Task 15-30 Paper format

1 inch margins, Font - Arial or Times New Roman Type, Point Size 10-12. Section 1. Company Overview [2 or 3 pages.]

Describe the company that your group selected, what it does and provide a brief overview of its current financial and future growth.

Section 2. The ERP Project’s Economic Impact [4-8 pages.] Identify and discuss the ERP Project’s potential economic impact on the firm. Use a before and after analysis for each area of measure. Based on external variables to that industry, (interest rate changes, etc.) provide

a probability of the likelihood that your estimates will occur. Section 3: Comparative Analysis [3-6 pages]

Perform an industry analysis of the selected firm’s primary competitors Provide some direct competitive analysis.

Section 4. Financial Recommendation [2-3 pages] Based on your analysis, provide a financial recommendation to move forward

with the ERP deployment project. Support your recommendation calling on earlier content.

Format violation is 10 points.

13

Overview

The course will address the underlying business needs for IT cost and benefit review

Provide a series of tools and methodologies on performing these measurements

Equipment the student to better understand the risk elements associated with IT costing.

Provide real world skills for job growth and career enhancement, as well as survivability.

14

Overview

This reality creates several significant costing and benefit quantification problems.

The following needs to be accurately defined: Direct Costs: such as resource costs (labor, H/W and

S/W+Consultants). Indirect costs: such as business operations

interruptions based on process changes. Implementation capital allocation Costs: major IT

projects within many companies, $1M+ budgets are common.

Direct and indirect benefits.

15

Overview

It is also important to consider the political realities of answering these questions. Upper manager’s opinions generally falls into two camps.

Those who see the potential or intuitive value of IT and those who see such projects as a drain of capital away from

their own projects, such as new production systems. Consider the position of the IT department in most

companies as the proposing entity of a new project. IT is the most expensive administrative overhead cost in

the corporation. It is usually a part of the Finance department, an

administrative support organization.

16

Overview

How should this be done. This is the core to IT Economics.

What is the economic benefit to corporations of employing IT resources.

Operationally, there are many problems that should be addressed. Which IT resources should be deployed? How do I select them? What are the risks and how should those affect my

decision? SWAGs can waste money and may lead to massive

failures.

17

Overview

The bottom line is that: Companies need to control and/or reduce costs, IT is the most expensive cost center, thus a primary target

for cost reduction in many organizations, Justification of operational and project costs is critical to

the survival of the IT department and in reality, the financial survival of the company may be equally at stake as well,

As managers, you will have to operate in this environment and succeed within these fiscal and political constraints.

18

Overview At the highest level, the questions are;

What is the worth of each IT project? What are the firm’s benefits by using it? How will it increase owners equity?

This course will help you answer these questions.

It will combine finance, business and IT. It will present the information in an

understandable format that is usable in real life situations.

19

Why Businesses Exist.

First and foremost, businesses exist to maximize the value of their owners equity. Non-profits may have a definition of “value” that is not

based on monetary worth, but they do what they do to increase that value.

Successful businesses never loose this focus nor deviate from it in the development and execution of their business plans.

Methodologies may vary but the goal is constant.DO NOT FORGET THIS!

20

Premise of the Course

Firms that survive and prosper show continued and managed growth.

To support growth, they focus on gaining efficiencies whenever and where possible.

The greatest efficiencies are usually achieved through Business Process Re-engineering through the application of Information Technology. BPR and IT generate the greatest gains when used

together. Their use separately may also provide gains but usually

not as great.

21

The Market Driver

In business today, most efficient and competitive firms use information technology to maximize these traits. A competitor successfully employs a fully integrated SAP R3

ERP/ERM system. They achieve efficiencies that allows them to produce the

same goods or services that you sell at a 20% lower cost. They therefore lower their sale price by 10% and still

generate a greater profit. This increases their market share and makes the owners happy.

Can you afford not to make the same moves to maintain a competitive position or to least maintain parity?

This is the problem many firms face.

22

Class Requirements

Attendance is strongly recommended. Material is on line at http://www.binus.edu.id

Attendance will be taken. There will be tests

There will not be a group project unless a group of students has a burning desire to do that.

There will be a Mid-term, Final and a topic specific paper.

23

Class Requirements

Investments Tuition Your expectations BINUS UNIV.’s Expectations Goals and Objectives