CHAPTER 14:

PROJECT MANAGEMENT, BUSINESS

VALUE, AND MANAGING CHANGE

COM 2KA3:
INFORMATION SYSTEMS IN MGMT
Chapter 14- Outline
Project Management, Business Value, &
Managing Change
14.1: The importance of project management
14.2: Selecting projects
14.3: Establishing the business value of
information systems
14.4: Managing project risk
The Importance of Project Management

Runaway projects: 30% - 40% IT projects

Private sector is underestimated by 50% in terms of budget and time

required to develop the complete system promised in system plan

Exceed schedule, over budget, and fail to perform as originally

specified

User often have to develop parallel manual systems to make these

systems work
The Importance of Project Management

Project Project Management

A planned series of The application of

related activities for knowledge, skills, tools,
achieving a specific and techniques to
business objective. achieve specific targets
E.g. development of new within specified budget
IS, upgrade or and time constraints.
replacement of IT
infrastructure
The Importance of Project Management
Project management activities include:
planning work
assessing risk
estimating resources required
organizing the work
acquiring human and material resources
assigning tasks
directing activities
controlling project execution
reporting progress
analyzing results
The Importance of Project Management

Major variables in project management:

Scope

Risk Time
Major
variables
in PM

Quality Cost
The Importance of Project Management
Major variables in project management:

Scope
Defines what work is or is not included in a project
Project management should ensure that the scope does not expand beyond
what was originally intended

Time
Project management determines the time required to complete each task
schedule
Each major component of a project is broken down into activities and tasks
Cost
Based on the time to complete a project x cost of human resources
required to complete the project
Cost of human resources, hardware, software and work space budget
The Importance of Project Management
Major variables in project management:

Quality
An indicator of how well the end result satisfies the objectives of
the project
Quality of IS projects is usually measured in relation to improved
organizational performance and decision making.
It also considers the ease of use of the systems and the accuracy
and timeliness of information produced

Risk
Potential problems that would threaten the success of a project
Might prevent a project from achieving its objectives by increasing
time and cost, lowering the quality of outputs, or preventing the
project from being completed altogether
The Importance of Project Management

https://www.youtube.com/watch?v=9LSnINglkQA
Selecting Projects
Management control of systems projects
 Selecting Projects
Management control of systems projects
Corporate strategic planning group
develops the firms strategic plan which may require development of new systems
key performance indicators
Information systems steering committee
Reviews and approves plans for systems in all divisions
Involve in selecting specific IS projects
Senior management group department heads from both end-user and information
systems areas
Project management group
Responsible for overseeing specific projects
Comprised by IS managers and end-user managers
Project team
Responsible for individual systems project
Consists systems analysts, specialists from end-user business areas, application
programmers, and sometimes database specialists
Linking systems Projects to the
business plan
Information Systems Plan
Identifies
systems projects that will deliver most
business value
Contains a statement of corporate goals and
specifies how IT will support the attainment
Links development to business plan
Selecting Projects
Information systems plan as a road map indicating
direction of systems development, includes:
1. Purpose of the plan
2. Strategic business plan rationale
3. Current systems
4. New developments
5. Management strategy
6. Implementation plan
7. Budget requirements
Selecting Projects
Key Performance Indicators (KPIs)
To develop effective information systems plan,
organizations must have clear understanding of both long-
term and short-term information requirements

Strategic approach to information requirements:

An organizations information requirements are
determined by a small number of Key Performance
Indicators (KPIs)
Shaped by the industry, firm, manager, and
broader environment
Selecting Projects
Portfolio analysis

Used to evaluate alternative system projects

When aligned with business strategy = superior return on their IT assets, IT

investments and better organization wide coordination of IT investments
Selecting Projects
Scoring Models
Used to evaluate alternative system projects,
especially when many criteria exist
Assigns weights to various features of system and
calculates weighted totals
Requires experts who understand the issues and
the technology
Appropriate to cycle through many times, changing
the criteria and weights to see how sensitive the
outcome is to reasonable changes in criteria
Used mostly to confirm, to rationalize, and to
support decisions, rather than as the final arbiters
of system selection
Selecting Projects

Scoring Models
Establishing Business Value of IS
IS Costs and Benefits
Tangible benefits:
Can be quantified and assigned monetary
value
Systems that relocate labour and save space

Intangible benefits:
Cannot be immediately quantified but may
lead to quantifiable gains in the long run
E.g., more efficient customer service,
enhanced decision making
Establishing Business Value of IS
IS Costs and Benefits
Establishing Business Value of IS
Capital Budgeting
Techniques used to measure the value of investing in long-term capital investment projects
Relies on measures of cash flows into and out of the firm; capital projects generate those cash flows
CF take the form of increased sales of more products or reduced costs in production and operations
Principle models = payback, ROI, NPV, and IRR

Real Options Pricing Models

Initial expenditure on technology creates the right, but not the obligation, to obtain the benefits
associated with further development and deployment of the technology as long as management has the
freedom to cancel, defer, restart, or expand the project
Can be used when future revenue streams of IT projects are uncertain and up-front costs are
high
Gives flexibility to stage their IT investment or test the waters with small pilot projects or prototypes
to gain more knowledge about the risks of a project before investing entirely
Disadvantage: estimating all the key variables affecting option value

Limitations of financial models

Does not take into account social and organizational dimensions that may affect costs and
benefits of the investment
Does not adequately consider costs from organizational disruptions created by a new system,
such as cost to train end users
Managing Project Risk

Project size

Project
Risk
Experience
Project
with
structure
technology
Managing Project Risk
Change can breed internal resistance and opposition and can lead to the demise of
an otherwise good system
Change Management
Implementation: all organizational activities working toward the adoption,
management, and routinization of an innovation
E.g. new information system
Systems analysts are change agents
Refines the configurations, interactions, job activities, and power relationships
of various organizational groups
Responsible for ensuring that all parties involved accept the changes created
by a new system
Communicates with users, mediates between competing interest groups, and
ensures that the organizational adjustment to such changes is complete
Managing Project Risk
Change Management

Benefits with high levels of user involvement and management

support
They are heavily involved in the design
System more likely to conform to requirements and control outcomes
Users more likely to accept and react positively to new system

User-designer communication gap

Different backgrounds, interests, and priorities
Different approaches and vocabularies
Different concerns regarding a new system
Leads to divergent organizational loyalties
Managing Project Risk
Managing Project Risk
Change Management
Management support & commitment
Users and technical information service staff believe
their participation will receive higher-level attention
and priority and be recognized and rewarded for
the time and effort they devote
Management backing give sufficient funding and
resources to be successful
Managing Project Risk
Change management challenges for business
process reengineering, enterprise applications, and
mergers and acquisitions
High failure rate among enterprise application and
BPR projects requires organizational change and
may require replacing old technologies and legacy
systems that are deeply rooted in many
interrelated business processes
70% of all BPR projects fail

Mergers and acquisitions have similar failure rates

Controlling Risk Factors
First step in managing risk involves identifying the nature and
level of risk conforming the project
Managing technical complexity
Internal integration tools

Project leaders with technical and administrative

experience
Team should be under the leadership of a manager with a

strong technical and project management background,

and team members should be highly experienced
Frequent team meetings

Securing of technical experience outside firm if necessary

Controlling Risk Factors
Formal Planning & Control Tools
Proactively manage the project progress

Benefit from large project benefits

Gantt and PERT charts

Planning:
Create structures & sequences of tasks; budget,
time, cost, and technical resources

Control:
monitor the progress toward completion of a task
and fulfillment of goals
Controlling Risk Factors

Common methods for documenting

projects:
1. Gantt Charts
1. Doesnt depict task dependencies
2. PERT Charts (network diagrams)
1. Graphically depicts tasks and their
interrelationships
2. Can be difficult to do for complex projects
Controlling Risk Factors

Gantt chart:
Controlling Risk Factors

PERT Chart
Controlling Risk Factors
Increasing User Involvement and overcoming user resistance
Project with relatively little structure and many undefined requirements must involve
users fully at all stages
Users must be able to commit to one design

External integration tools

Ways to link work of implementation team to users at all organizational
levels
Active involvement of users
Implementation teams responsiveness to users

Address Counterimplementation
A deliberate attempt to thwart implementation of an IS or an innovation in an
organization
Controlling Risk Factors
Strategies to Overcome User Resistance

User participation

User education and training

Management laws and policies

Incentives for cooperation

Improvement of end-user interface

Resolution of organizational problems prior to introduction of new

system
Designing for the organization
Ergonomics: interaction of people and machines in the work
environment, considers the design of job, health issues, and
end-user interface of IS
Organizational impact analysis: explains how a proposed
system will affect organizational structure, attitudes decision
making, and operations
Sociotechnical design
Social design plans explore different workgroups
structures, allocation of tasks, and the design of individual
jobs
Solution that best meets both social and technical
objectives is selected for the final design