Managing Information Systems Projects

Insights on IS Project Management through Cases and Cartoons

Eric Santanen, Dept of Mgmt

June 13, 2007

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

Overview of ISThe changing business environmentProblem solving & organizational

prioritiesEvaluating IS readiness and fit

Information Systems

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

What are some typical business functions performed by IS?

What categories of benefits offered by IS?

Burlington Northern RR

Company Overview/Background– What do they do?– Who is there competition?– Overall characteristics/statistics?– General Operations?

Who are BN’s main competitors?

Understanding Your Organization

Think of a typical large organization (BN)What 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/large projects?

Understanding Your Environment

What has changed since a typical large company (BN) was founded?– 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?)

Which of these are evident in BN case?

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 transistorSubstitute products and services

– If you don’t jump on today’s technology…What tech pressures are evident for BN?

Moore’s Law Illustrated

Societal Pressures

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

Which of these impact BN?

Social Responsibility…

A Brief Pause to Consider…

In general, how stable is the environment created by these three pressures ?

How often do changes occur?How predictable is the business

environment?

The Technology Playground

“Business as Usual”

No Longer Exists!

Those that think id does will ultimately Fail…

Categories of IS Projects

Solving Problems Leveraging OpportunitiesComplying Directives

Which category gets funding first?Which category has the greatest potential

to return value?Anyone see a problem here?

Lets Take Another Look at BN

What directives exist?What problems need to be solved?What opportunities exist?

BN and ARES

Which of the identified problems, opportunities, and directives does ARES seem to be able to address?

Evaluating ARES

What are its strengths/benefits?

What are its weaknesses?

But Management is Wary…

What are mgmt’s largest concerns?

Wary of Programming Flaws

Wary about Lack of Numbers

Looking into Alternatives

What alternatives are there to the ARES project?

The $350M Question:

Is Burlington Northern Ready for ARES?

(Lets take a break first…)

Risks and 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…

– 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!

A number of tools are available to manage schedules – Gantt Charts, PERT Charts

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 case…– 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

New opportunities usually contain lots of gold…

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?

Overall Risk/Feasibility so far:

How do we stand? What is your assessment?

Anything Else?

What haven’t we considered thus far about ARES and Burlington?

Aligning IS & Org Structure

How would you describe BN’s organizational structure?– Does anything stand out to you as particularly

positive or negative?

How would you describe the overall structure/organization of the ARES system?– What are its requirements?

Let’s go back to the beginning for some additional insight…

Organization

Organization

Organizational Objective

Organization

Organizational Objective

Organizational Use of

Technology

The Missing Component:

What is BN Organizational Objective?What is driving this objective?Are there any conclusions we can draw

from this?

IS Project Management

Business environment changes rapidlyIntelligent organizations use IS to keep upCritical to have a project championImportant to solve problems, but biggest

rewards derive from new opportunitiesTechnology needs to be aligned with

organizational strategy!

Questions??