Information Systems Project Management—David Olson
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Session 2:
Introduction to Project
Management
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Information Systems Project Management—David Olson
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Learning Outcomes
• Students be able to identify the importance of
project management in Information System
• Students be able to define the importance
aspects in managing project
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Information Systems Project Management—David Olson
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Discussion Topics
• IS Project management
• Critical Success Factor
• Cases in IS Project Management
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References
•
•
Information Systems Project Management,
David Olson, Olson, David L., 2003,
Introduction to Information Systems
Project Management, 2nd Ed.,
McGrawHill, ISBN: 0-07-282402-6.
Schwalbe, Kathy, 2003, Information
Technology Project Management, 3rd Ed.,
Course Technology, Inc., ISBN: 0619159847.
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Project Management Case
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FoxMeyer Drug
Large drug distributor, wanted to implement ERP
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ERP
• Integrate financial, logistics, marketing
• can handle multiple sites worldwide, with
global sourcing
• integrate decision making
• coordinates all functions (makes them use
same computer software)
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Information Systems Project Management—David Olson
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ERP Market
• Compound annual growth of 37% 19972002 (AMR Research)
• Top tier vendors: SAP AG PeopleSoft
Baan
J.D. Edwards Oracle
• top tier growth 61%/year, have 64% of
market
• SAP $5 billion, rest near $1 billion
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SAP
• Systems, Applications & Products in Data
Processing
• founded 1972, Walldorf, Germany
• #1 vendor of standard business-application
software in the world - 32% market share
• PRODUCTS: R/2 (mainframe; 11 modules)
R/3 (client/server - 1992; now > 1 million users
• over 9000 customers in 90 countries
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FoxMeyer Corp
• Holding company in health care services
• wholesale distribution of drugs & beauty aids
• served drug stores, chains, hospitals, care
facilities
• US: 23 distribution centers
• Sought market niches, such as home health
care
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FoxMeyer
• Due to aging population & growth in health care,
expected high growth
• Market had extreme price competition,
threatening margins
• Long-term strategies:
–
–
–
–
efficiently manage inventory
lower operating expenses
strengthen sales & marketing
expand services
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Prior FoxMeyer IS
• 3 data processing centers, linked
• included electronic order entry, invoice
preparation, inventory tracking
• 1992 began migration of core systems
• Benefits not realized until system fully
integrated
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FoxMeyer Process
• Customer fills out electronic order
• Order sent to 1 of the 3 data processing centers
• Orders sent to the appropriate distribution center
(within 24 hours)
• Orders filled manually and packaged
• Had just completed national distribution center
with multiple carousels & automated picking
• Could track inventory to secondary locations
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New System
• Needed new distribution processes & IS to
capitalize on growth
• Wanted to be able to undercut competitors
• Replacing aging IS key
• PROJECT: 1994 - hoped to save $40 million
annually (estimated cost $65 million)
– complete ERP installation & warehouse
automation system (another $18 million)
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FoxMeyer Project
• Select ERP
–
–
–
–
–
–
hundreds of thousands of transactions
meet DEA & FDA regulations
benchmarked & tested for months
picked SAP R/3
hired Andersen Consulting to integrate
hired Pinnacle Automation for warehouse
automation system
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Operations
• FoxMeyer expected the new systems to
improve operational efficiency
• Signed several giant contracts
– counted on savings, underbid competitors
• Counted on being up and running in 18
months
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Problems
• SAP & warehouse automation system
integration
– two sources, two installers - coordination
problems
• New contracts forced change in system
requirements after testing & development
underway
• Late, Over budget
– SAP successfully implemented
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Outcomes
• Lost key customer - 15% of sales
• To recoup, signed new customer, expected $40
million benefit from ERP immediately - pushed
ERP project deadline ahead 90 days, no time to
reengineer
• Warehouse system consistently failed
– late orders, incorrect shipment, lost shipments
– losses of over $15 million
• August 1996 filed for Chapter 11
– McKesson bought
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McKesson
• Bought FoxMeyer operation
• Made ERP work
– On time
– Within budget
– Full functionality
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Project Critical Success Factors
Belassi & Tukel [1996]
• Goal Definition
– Define goals, scope, requirements
• Top Management Support
– Continued involvement
• User Involvement
• Project Manager
– Competent; on-site
• Others
– Project team, manpower, accurate estimates, test &
train
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Code of Ethics
• Code of Ethics for the Project Management
Profession:
– Accept responsibility for their actions
– Undertake projects and accept responsibility only
if qualified by training or experience, or after full
disclosure to their employers or clients of pertinent
qualifications
– Maintain professional skills at the state of the art
and recognize the importance of continued
personal development and education
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Code of Ethics
• Code of Ethics for the Project Management
Profession:
– Advance the integrity and prestige of the profession by
practicing in a dignified manner
– Support this code and encourage colleagues and co-workers
to act in accordance with this code Support the professional
society by actively participating and encouraging collegues
and co-workers to participate
– Obey the laws of the country in which work is being
performed?
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Code of C
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Project Champion
• Top level executive
– Powerful, with access to top
• Don’t need to have authority
– Enthusiastic support leading to adoption
– Continued support key to project continuance
• Even if project should be cancelled
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Summary
• Systems view helps understand projects
• Critical Success Factors
• Top management support
• Clearly stated objectives
• End user involvement
© McGraw-Hill/Irwin 2004