Information Systems Project Management—David Olson
1-2
Information System Projects
Systems
Critical Success Factors
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
Bozman [1994]; Zetlin [1996]; Montealegre & Keil [2000]
1-3
• Designed as largest US airport
• Cost
– Estimate $1.7 billion (to be done Oct 1993)
– Pre-construction budget $2.08 billion
– Aug 1994 spent $3.2 billion
– Final 16 months late, $2 billion over budget
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-4
• Functionality
– Malfunctioning computerized baggage system
• Cost $193 million
• 55 networked computers, 56 barcode scanners
• Sometimes bags on wrong flights
• Major effort
– Many problems
– Functioning airport
– Typical project
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-5
– definable purpose
– cut across organizational lines
– unique
– ad hoc
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Information Systems Project Management—David Olson
1-6
• everything done the first time is a project
• can be constructing something
– road, dam, building
• can be organizing something
– a meeting, an election campaign, a symphony, a movie
• GETTING A NEW, COMPLEX ACTIVITY
DONE
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-7
• Because projects are new (not at the repetitive operations stage), they typically involve
– high levels of uncertainty and risk
– difficult to estimate resources required
– difficult to estimate time required
• Temporary activities by ad hoc organizations
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-8
• magnitude of effort
• number of groups and organizations to be coordinated
• diversity in skills or expertise needed usually the MORE COMPLEX, the more time and resources required
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Information Systems Project Management—David Olson
1-9 individual group term paper wedding system implementation auditing organization plant construction multiorganization space shuttle wars
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Information Systems Project Management—David Olson
• high levels of risk and uncertainty from many interacting forces and variables
• rapidly changing technology
• rising costs
• increased competition
• frequent resource shortages
• many opposing interest groups
1-10
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Information Systems Project Management—David Olson
• differs from repetitive operations
– market and technology much less predictable
– greater uncertainty of outcomes
– more parties or organizations involved
– DYNAMIC environment
1-11
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Information Systems Project Management—David Olson
IS
• technological explosion
– 286; 386; 486; Pentium; ?
– CASE tools; C++; GUI;
• highly volatile & expanding market
– CAD/CAM; EDI; laptops; Internet
• uncertainty
– is what requester wants feasible?
– how long will it take to program?
– will there be any bugs?
• many people involved
– user group; systems designers; programmers; end users;
© McGraw-Hill/Irwin 2004
1-12

Information Systems Project Management—David Olson
1-13
• recognize that organizations are made up of interrelated units
• need coordinated goals
• integration benefits global objective attainment
– all pull towards same goal
• PROJECTS are system of interrelated tasks and work units
• PROJECT MANAGEMENT unifies planning and work efforts to accomplish multiple goals
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-14
INTERRELATED DIMENSIONS
• Cost
– stay within budget
• Time
– stay within time schedule specified
• Performance
– end product performs to specifications
Maintain focus on all 3, control trade-offs
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-15
• Brooks’s Law
Adding manpower to a late software project makes it later .
• Throwing money at a project doesn’t solve the problem
• Taking resources away from a project doesn’t always make it easier either
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-16
• Project Manager
– coordinates efforts across functional areas;
– integrates planning & controls costs;
– schedules , assigns tasks
• Project Team
– group of people doing what needs to be done
– often from different functions, organizations
• Project Management System
– organizational structure, information processing, procedures permitting integration of tasks and those who accomplish them
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-17
• Risky
– Standish Group reports:
• >30% cancelled
• About 40% lack designed functionality
• Only 13% rated successful by sponsors
– Examples
• Bank of America project
• American Airlines subsidiary travel reservation
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-18
Large drug distributor, wanted to implement ERP
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Information Systems Project Management—David Olson
1-19
• Integrate financial, logistics, marketing
• can handle multiple sites worldwide, with global sourcing
• integrate decision making
• coordinates all functions ( makes them use same computer software )
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-20
• Compound annual growth of 37% 1997-
2002 (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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-21
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-22
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-23
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-24
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-25
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-26
• 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)
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-27
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-28
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-29
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-30
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-31
• Bought FoxMeyer operation
• Made ERP work
– On time
– Within budget
– Full functionality
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
Belassi & Tukel [1996]
1-32
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-33
• 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
© McGraw-Hill/Irwin 2004

Information Systems Project Management—David Olson
1-34
• All projects are complex
– IS projects even more so
– Get diverse people to work together
• Time
• Cost
• Functionality
• Systems view helps understand projects
• Critical Success Factors
• Top management support
• Clearly stated objectives
• End user involvement
© McGraw-Hill/Irwin 2004