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Prof. Rushen Chahal

Managing Information Systemsand Technology Investments

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Agenda

Investment issues

Evaluating IS/IT investment

Setting priorities for applications Benefit management

IT service charging

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Investment Issues

Justification & evaluation of IS/IT in termsof benefits

Determining the priority in terms ofbenefits

Realization of benefits

Risk assessment

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Evaluating IS/IT Investment

Types of IS

Types of benefits

Relationship of IS & benefits IS & financial benefits

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Types of Benefits

Cost/benefit analysis

Value linking: improvement in businessperformance not cost saving

Value acceleration: time dependency of costsand benefits in other dept. of systemimprovement

Value restructuring: productivity resulting from

organizational change & change of job roles Innovation evaluation: new business practice

levered from IS/IT

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Relationship of IS & Benefits - I

High potential (innovative): cost/benefit,value linking, value acceleration, valuerestructuring, & innovation evaluation)

Strategic (innovative & complementary):cost/benefit, value linking, valueacceleration, & value restructuring

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Relationship of IS & Benefits - II

Key operational (complementary &substitute): cost/benefit, value linking, &value acceleration

Support (substitute): cost/benefit, valuelinking, & value acceleration

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IS & Financial Benefits - I

High Potential: fund R&D exploringpotential value & cost (risk money)

Strategic: enable achievement of businessobjectives via explicit critical successfactors (low)

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IS & Financial Benefits - II

Key operational: disadvantage/risk if it isnot done (critical failure factors) &quantified performance improvement

(medium)

Support: net cost reduction throughquantified saving (high)

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Setting Priorities for

Applications Assessment factors Objectives (critical success factors)

Benefits (tangible & intangible)

Resources (financial, technology & human)

Risks (time, size, duration, technology, userexpectation & availability)

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Benefit Management

Objectives: Organizing and managing businessactivities to realize the potential benefit

Process

Identify and structuring of benefits Planning benefits realization (business improvement

by stakeholders)

Executing the benefits realization plan

Evaluating and reviewing results

Potential for future benefits

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Risk Management

Types of IS failure

Success factors of IS

Success factors & IS Types of risk

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Types of IS Failure

Business environment

Organizational

User Data

Technical

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Success Factors of IS

Time

Quality or benefits

Cost

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Success Factors & Application

Strategic: time (h), quality (m), cost (l)

Key operational: time (m), quality (h), cost(m)

Support: time (l), quality (m), cost (h)

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Types of Risk

People: management, user, technical, &communication

Size: person-years

Project control: time, quality and cost

Complexity of system: business functions

Novelty: business change & technical

solution Stability of requirement

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IT Service Charging

Types of service charging

Service charging and IS

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Service Center

Pros

Stimulate experimentation

Avoid conflict

Promote use of service Cons

Uneconomic usage

No accountability

Excessive demand

No priority setting

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Cost Center

Pros

Justify request

Control on IS/IT

User aware of costs Enable priority setting

Cons

Deter use of IT

Focus on cost not benefit

Unsatisfactory in practice

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Service Charging and IS

Service center (no charge out & leading edge:high potential

Cost center (average cost & scarce resource):

support Cost center (standard cost & monopoly): key

operational

Profit center (market price & free market):

support & high potential Hybrid center (flexible & centrally planned):

strategic and potential

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Points to Remember

Investment issues

Evaluating IS/IT investment

Setting priorities for applications Benefit management

IT service charging