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3 ۳ 13
UNDERSTANDING
THE BUSINESS
VALUE OF j
SYSTEMS 75
AND MANAGING
هس رجا 8008© ۷ ۸ 5۱7۲ 90
Chapter
13
UNDERSTANDING
THE BUSINESS
VALUE OF
SYSTEMS
AND MANAGING
13.1
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
OBJECTIVES
• How can our company measure the business
benefits of our information systems? What models
should be used to measure that business value?
• Why do so many system projects fail? What are the
principal reasons for system failures?
• How should the organizational change surrounding a
new system be managed to ensure success?
13.2
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
OBJECTIVES
• Are there any special challenges in implementing
international information systems?
• What strategies can our organization use to manage
the system implementation process more
effectively?
13.3
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGEMENT
CHALLENGES
• Determining benefits of a system when they are largely
intangible
• Dealing with the complexity of large-scale systems
projects
13.4
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Traditional Capital Budgeting Models
Capital budgeting
• Process of analyzing and selecting various
proposals for capital expenditures
13.5
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Limitations of Financial Models
• Do not express the risks and uncertainty of own cost
and benefits estimates
13.6
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
The Problem
• No automated way of tracking billable hours
• No secure method for communication
• No client database
• No system to track costs
13.7
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
The Solution
• Local area network
• Lotus Notes to handle client accounting, document
management, group collaboration, and e-mail
13.8
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Costs and Benefits of the Legal Information System
13.9
Figure 13-1
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Financial Models
13.10
Figure 13-
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
The Payback Method
• Measure of time required to pay back the initial investment on a
project
Accounting Rate of Return on Investment
(ROI)
• Approximates the accounting income earned by the investment
13.11
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
Present value
• Value of a payment or stream of payments to be
received in dollars
Net present value
• Amount of money an investment is worth
13.12
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
Cost-benefit ratio
• Calculates returns from capital expenditure
Profitability index
• Compares profitability of alternative investments by
dividing the present value of total cash inflow by initial
cost
13.13
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example: Primrose, Mendelson, and Hansen
Internal Rate of Return (IRR)
• Rate of return or profit an investment is expected to earn
Results of the Capital Budgeting
Analysis
• Cash flow positive over the time period and returns more
benefits than it costs
13.14
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations
Portfolio Analysis
• Analysis of portfolio of potential applications within a
firm
• Determines risks and benefits
• Selects among alternatives for information systems
13.15
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations
Scoring Models
• Method for deciding among alternative systems
based on a system of ratings
Real Options Pricing Models
• Models for evaluating information technology
investments with uncertain returns
13.16
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
A System Portfolio
13.17
Figure 133
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations
Knowledge Value–Added Approach
• Focuses on knowledge input into a business process
• Determines costs and benefits of changes in
business processes from new information systems
13.18
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Information Technology Investments and Productivity
Productivity
• Measure of firm’s efficiency in converting inputs to
outputs
Information Technology
• Reduces cost
• Increases quality of products and services
13.19
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Information System Problem Areas
System failure
• Information system does not perform as expected,
is not operational at a specified time
• Poor design, inaccurate data, excessive expenditure,
breakdown in operations
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
THE IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Information System Problem Areas
13.21
Figure 134
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Change Management and the Concept of Implementation
Implementation
• Organizational activities working towards adoption,
management, and routinization of innovation
Change agent
• Individual acting as catalyst to ensure successful
organizational adaptation to a new system or innovation
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Causes of Implementation Success and Failure
• Role of users in implementation process
• Degree of management support for implementation
effort
• Level of complexity and risk of implementation project
• Quality of management of implementation process
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Factors in Information System Success or Failure
13.
Figure 13-
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
User Involvement and Influence
User–designer communications gap
• Different backgrounds, interests, and priorities
• Impedes communication and problem solving among
end users and information systems specialists
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Management Support and Commitment
• Project requires backing and commitment of
management at various levels
• Perceived positively by both users and technical
information services staff
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Level of Complexity and Risk
• Project size: Larger project has greater risk
• Project structure: Clear and straightforward
requirements help define outputs and processes
• Experience with technology: Project risk rises if
project team and information system staff lack
required technical expertise
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Management of the Implementation Process
Improper management leads to:
• Cost overruns
• Unexpected time slippage
• Technical shortfalls
• Failure to obtain anticipated benefits
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Consequences of Poor Project Management
Figure 136
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
Change Management Challenges for Enterprise Applications, Business Process Reengineering
(BPR), and Mergers and Acquisitions
System Challenges of Mergers and
Acquisitions
• Integrating systems
• Organizational characteristics
• Information technology infrastructures
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
The Challenge of Implementing Global Systems
Disparate Information Requirements
and Business Processes
• Transborder data flow: Movement of information
across international boundaries in any form
• Technology Hurdles: Lack of standards and
connectivity in hardware, software, and telecommunications
13.31
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION SYSTEM
SUCCESS AND FAILURE
The Challenge of Implementing Global Systems
• Local User Resistance to Global Systems:
Difficult to convince local managers to change their
business processes
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Controlling Risk Factors
• Managing Technical Complexity: Usage of
internal integration tools to ensure operation of
implementation team
• Formal Planning and Control Tools:
Structures and sequences tasks, monitors
progress towards fulfillment of goals
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Controlling Risk Factors
• Increasing User Involvement and
Overcoming User Resistance: Linking work of
implementation team to that of users at all
organizational levels
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Formal planning and control tools help to manage information systems projects successfully
13.
Figure 13-
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Designing for the Organization
Allowing for the Human Factor
• Interaction of people and machines in work environment
Sociotechnical Design
• Produces information system blending technical
efficiency with sensitivity to organizational and human
needs
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Managing Global Implementations
Core systems
• Support functions absolutely critical to organization
Implementation Tactics: Cooptation
• Bringing opposition into process of designing and
implementing a solution
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
13.
Figure 13-8
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Managing Global Implementations
Creating a Global Technology
Infrastructure
• Build international private network
• Rely on value added network service
• Use Internet technology
• Build global intranets
• Use Virtual Private Networks
13.
© 2003 by Prentice Hal
Essentials of Management Information Systems
Chapter 13 Understanding the Business Value of Systems and
Managing Change
MANAGING IMPLEMENTATION
Fourth-Generation Project Management
• Project planning is an enterprise-wide focus
• Managers focus on solving problems and meeting
challenges
13.
© 2003 by Prentice Hal
Chapter
13
UNDERSTANDING
THE BUSINESS
VALUE OF
SYSTEMS
AND MANAGING
13.41
© 2003 by Prentice Hal