Management Information Systems

MANAGING THE DIGITAL FIRM, 12TH EDITION

Chapter 14
MANAGING PROJECTS

VIDEO CASES
Case 1 Mastering the Hype Cycle: How to Adopt the Right Innovation at
the Right Time
Case 2: NASA: Project Management Challenges
Instructional Video 1: Software Project Management in 15 Minutes

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

Learning Objectives

What are the objectives of project management

and why is it so essential in developing
information systems?
What methods can be used for selecting and
evaluating information systems projects and
aligning them with the firms business goals?
How can firms assess the business value of
information systems projects?
What are the principal risk factors in
information systems projects?
What strategies are useful for managing
project risk and system implementation?
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The Importance of Project Management

Runaway projects and system failure

Runaway projects: 30% - 40% IT projects
Exceed schedule, budget
Fail to perform as specified

Types of system failure

Fail to capture essential business
requirements
Fail to provide organizational benefits
Complicated, poorly organized user interface
Inaccurate or inconsistent data
3

IT Projects Postmortem

Figure 1: Summary of 2009 Standish Group CHAOS report

EOC Examples

Standish Group (2004) collected project completion

statistics
40,000 MIS Project in 1994 to 2004
Loss value is $55 billion in the U.S. in 2004

Statewide Automated Child Support System (SACSS),

California, 1992
Negative signals over five years
The project was ultimately cancelled following $100 million in
direct spending and $345 million in various reported costs
(Newcombe, 1998; Keil, Mann and Rai, 2000)

Denvers International Airport

Development of an automated baggage handling system

Numerous instances of negative feedback
16 Month behind schedule
$2 Billion Over budgeted
(Montealegre & Keil, 2000)

Keil, Mann and Rai (2000) report that between 30 and 40

percent of all MIS projects demonstrate some degree of
escalation

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

The Importance of Project Management

CONSEQUENCES OF POOR PROJECT MANAGEMENT

FIGURE 14-1

Without proper management, a systems development project takes longer to complete and most often exceeds the
allocated budget. The resulting information system most likely is technically inferior and may not be able to
demonstrate any benefits to the organization.

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

The Importance of Project Management

Project management
Activities include planning work,
assessing risk, estimating resources
required, organizing the work, assigning
tasks, controlling project execution,
reporting progress, analyzing results
Five major variables
1. Scope
2. Time
3. Cost
4. Quality
5. Risk
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CHAPTER 14: MANAGING PROJECTS

Selecting Projects

Management structure for information

systems projects
Hierarchy in large firms
Corporate strategic planning group
Responsible for firms strategic plan

Information systems steering committee

Reviews and approves plans for systems in all
divisions

Project management group

Responsible for overseeing specific projects

Project team
Responsible for individual systems project
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Management Information Systems

CHAPTER 14: MANAGING PROJECTS

The Importance of Project Management

MANAGEMENT
CONTROL OF
SYSTEMS
PROJECTS

Each level of
management in the
hierarchy is
responsible for
specific aspects of
systems projects, and
this structure helps
give priority to the
most important
FIGURE
14-2projects for
systems
the organization.

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Selecting Projects

Information systems plan:

Identifies systems projects that will
deliver most business value, links
development to business plan
Road map indicating direction of systems
development, includes:

11

Purpose of plan
Strategic business plan rationale
Current systems/situation
New developments to consider
Management strategy
Implementation plan
Budget

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Selecting Projects

In order to plan effectively, firms need to

inventory and document existing software,
hardware, systems
To develop effective information systems plan,
organization must have clear understanding of
both long-term and short-term information
requirements
Strategic analysis or critical success factors
(CSF) approach
Sees information requirements as determined by a
small number of critical success factors
Auto industry CSFs might include styling,
quality, cost
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Selecting Projects

Critical success factors

Principal method:
Interviews with 3-4 top managers to identify goals
and resulting CSFs
Personal CSFs aggregated into small number of firm
CSFs
Systems built to deliver information on CSFs

Suitable for top management, building DSS and ESS

Disadvantages:
No clear methods for aggregation of CSFs into firm
CSFs
Confusion between individual and organizational CSFs
Bias towards top managers

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Selecting Projects
USING CSFs TO
DEVELOP
SYSTEMS
The CSF approach
relies on interviews
with key managers to
identify their CSFs.
Individual CSFs are
aggregated to develop
CSFs for the entire
firm. Systems can then
be built to deliver
information on
FIGURE 14-3
these CSFs.

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Selecting Projects

Portfolio analysis
Used to evaluate alternative system
projects
Inventories all of the organizations
information systems projects and assets
Each system has profile of risk and benefit

High-benefit, low risk

High-benefit, high risk
Low-benefit, low risk
Low-benefit, high risk

To improve return on portfolio, balance

risk and return from systems investments
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Management Information Systems

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Selecting Projects
A SYSTEM
PORTFOLIO
Companies should examine
their portfolio of
projects in terms of
potential benefits and
likely risks. Certain
kinds of projects should
be avoided altogether
and others developed
rapidly. There is no
ideal mix. Companies in
different industries
have different profiles.
FIGURE 14-4

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CHAPTER 14: MANAGING PROJECTS

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
CRITERIA

WEIGHT

SYSTEM A %

SYSTEM A
SCORE

SYSTEM B %

SYSTEM B
SCORE

Online order entry

67

268

73

292

Customer credit check

66

198

59

177

Inventory check

72

288

81

324

Warehouse receiving

71

142

75

150

ETC
GRAND TOTALS

17

3128

3300

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CHAPTER 14: MANAGING PROJECTS

Establishing the Business Value of Information Systems

Information system costs and benefits

Tangible benefits:
Can be quantified and assigned monetary value
Systems that displace labor and save space:
Transaction and clerical systems

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

Systems that influence decision making:

ESS, DSS, collaborative work systems

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CHAPTER 14: MANAGING PROJECTS

Establishing the Business Value of Information Systems

Capital budgeting for information systems

Capital budgeting models:
Measure value of investing in long-term capital
investment projects
Rely on measures the firms
Cash outflows
Expenditures for hardware, software, labor
Cash inflows
Increased sales
Reduced costs

There are various capital budgeting models used

for IT projects: Payback method, accounting rate
of return on investment, net present value,
internal rate of return (IRR)
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Project Management Knowledge

Areas

Project Management
Process

Project Life Cycle

Defining the Project

Project Scope
Project Scope is a
definition of the
end result or
mission of your
project a product
or service for your
client/customer.

Project Scope Checklist

Employing a Project
Scope Checklist
Project Objective
Deliverables
Milestones
Technical requirements
Limits and exclusions
Reviews with customers

Project Scope
Scope definition should be as brief
as possible but complete, one or two
pages are for small projects.
Also known as Scope statement or
Statements of Work(SOW)
Project Charter authorizes the
project manager to initiate and lead
the project.
SCOPE CREEP which is the tendency
for the project scope to expand over
time.

Project Priorities
Primary job of a
project manager
to manage tradeoffs among time,
cost and
performance
Define &
understand
nature of
priorities of
project

Project Priorities
Priority Matrix (to identify
which criterion is constrained,
which should be enhanced &
which is accepted)

Creating Work Breakdown

Structure
WBS is defined as: a
deliverables-oriented
depiction of the work
involved in a project that
defines the total scope of
the project.

Subdividing the
project work into
smaller work
elements
WBS- Map of the
Project giving
different levels of
detail

WBS

WBS Development
Define the project end item
List of deliverables necessary to
develop end item
List down sub deliverables for each
deliverable
Each sub deliverables requires work
packages that is to be completed by
the assigned organizational unit

WBS Development
WORK PACKAGE
Defines work (what)
Identifies time to complete a work package
(how long)
Identifies a time-phased budget to complete
a work package (cost)
Identifies resources needed to complete a
work package (how much)
Identifies a single person responsible for
units of work (who)
Identifies monitoring points for measuring
progress (how well)

Integrating WBS with the

Organization
Organization breakdown structure- OBS
It depicts how the firm has organized
to discharge the work responsibility
Purpose of OBS:
Provide framework to summarize
organization unit work performance
Identify organization units responsible
for work packages
Tie the organizational unit to cost
control accounts

Integration
Integrationofof
WBS
WBSand
andOBS
OBS

Coding the WBS for the Information

System

WBS Coding System

Defines:
Levels and elements of the WBS
Work packages
Budget and cost information

Allows reports to be consolidated

at any level in the organization
structure

WBS to Network Diagram

Gantt Chart

Responsibility Matrix
Responsibility Matrix (RM)
Also called a linear responsibility
chart.
Summarizes the tasks to be
accomplished and who is responsible
for what on the project.
Lists project activities and
participants.
Clarifies critical interfaces between
units
and individuals that need coordination.
Provide an means for all participants
to view their responsibilities and
agree on their assignments.
Clarifies the extent or type of
authority that can be exercised by each
participant.

Responsibility Matrix for a Conveyer

Belt Project

Project Communication
Plan

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

Dimensions of project risk

Level of project risk influenced by:
Project size
Indicated by cost, time, number of
organizational units affected
Organizational complexity also an
issue

Project structure
Structured, defined requirements
lower risk

Experience with technology

42

run

Influence of risk across

time

The Risk
Management
Process

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CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

Change management
Required for successful system
building
New information systems have
powerful behavioral and
organizational impact
Changes in how information is used
often lead to new distributions of
authority and power
Internal organizational change breeds
resistance and opposition
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Managing Project Risk

Implementation
All organizational activities working
toward adoption and management of an
innovation

Change agent: One role of systems

analyst
Redefines the configurations,
interactions, job activities, and power
relationships of organizational groups
Responsible for ensuring that all parties
involved accept changes created by new
system
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Managing Project Risk

Role of end users

With high levels of user involvement
System more likely to conform to
requirements
Users more likely to accept system

User-designer communication gap:

Users and information systems specialists
Different backgrounds, interests, and
priorities
Different loyalties, priorities,
vocabularies
Different concerns regarding a new system
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Managing Project Risk

Management support and

commitment
Positive perception by both
users and technical staff
Ensures sufficient funding
and resources
Enforcement of required
organizational changes
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Managing Project Risk

Very high failure rate among enterprise

application and BPR projects (up to 70% for
BPR)
Poor implementation and change management
practices
Employees concerns about change
Resistance by key managers
Changing job functions, career paths, recruitment
practices

Mergers and acquisitions

Similarly high failure rate of integration
projects
Merging of systems of two companies requires:
Considerable organizational change
Complex systems projects

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Management Information Systems

CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

Controlling risk factors

First step in managing project risk involves
identifying nature and level of risk of project
Each project can then be managed with tools and
risk-management approaches geared to level of
risk
Managing technical complexity
Internal integration tools
Project leaders with technical and administrative
experience
Highly experienced team members
Frequent team meetings
Securing of technical experience outside firm if
necessary
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Management Information Systems

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Managing Project Risk

A GANTT CHART

FIGURE 14-5

51

The Gantt Chart in this figure shows the task, person-days, and initials of each responsible person, as well as the start and finish
dates for each task. The resource summary provides a good manager with the total person-days for each month and for each person
working on the project to manage the project successfully. The project described here is a data administration project.

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Managing Project Risk

A GANTT CHART (cont.)

FIGURE 14-5

52

The Gantt chart in this figure shows the task, person-days, and initials of each responsible person, as well as the start and finish
dates for each task. The resource summary provides a good manager with the total person-days for each month and for each person
working on the project to manage the project successfully. The project described here is a data administration project.

Management Information Systems

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Managing Project Risk

A GANTT CHART (cont.)

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Managing Project Risk

A PERT CHART

FIGURE 14-6

54

This is a simplified PERT Chart for creating a small Web site. It shows the ordering of
project tasks and the relationship of a task with preceding and succeeding tasks.

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

Increasing user involvement and overcoming

user resistance
External integration tools consist of ways to
link work of implementation team to users at all
organizational levels
Active involvement of users
Implementation teams responsiveness to users

User resistance to organizational change

Users may believe change is detrimental to their
interests
Counterimplementation: Deliberate strategy to thwart
implementation of an information system or an innovation
in an organization
E.g., increased error rates, disruptions, turnover,
sabotage
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Management Information Systems

CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

Strategies to overcome user

resistance
User participation
User education and training
Incentives for cooperation
Improvement of end-user interface
Resolution of organizational
problems prior to introduction of
new system
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Managing Project Risk

Designing for the organization

Information system projects must address
ways in which organization changes with
new system

Procedural changes
Job functions
Organizational structure
Power relationships
Work structure

Ergonomics: Interaction of people and

machines in work environment
Design of jobs
Health issues
End-user interfaces

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Managing Project Risk

Organizational impact analysis

How system will affect organizational
structure, attitudes, decision making,
operations

Sociotechnical design
Addresses human and organizational issues
Separate sets of technical and social
design solutions
Final design is solution that best
meets both technical and social
objectives
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Managing Project Risk

Project management software

Can automate many aspects of project
management
Capabilities for
Defining, ordering, editing tasks
Assigning resources to tasks
Tracking progress

Microsoft Project 2010

Most widely used project management software

PERT, Gantt Charts, critical path analysis

Increase in SaaS, open-source project

management software
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CHAPTER 14: MANAGING PROJECTS

Managing Project Risk

MOTOROLA TURNS TO PROJECT PORTFOLIO MANAGEMENT
Read the Interactive Session and discuss the following
questions

What are some of the challenges Motorola faces

as a business? Why is project management so
critical at this company?
What features of HP PPM were most useful to
Motorola?
What management, organization, and technology
factors had to be addressed before Motorola
could implement and successfully use HP PPM?
Evaluate the business impact of adopting HP
PPM at Motorola.
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Prentice Hall 2011

Management Information Systems

CHAPTER 14: MANAGING PROJECTS

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