Chapter 11

1. Chapter 11 Redesigning the Organization with Information System

2. Systems as Planned Organizational Change • More than new hardware and software • When you design an information system you redesign the organization • Information Systems plan • A road map indicating the direction of the systems development, the rationale, the management strategy, the implementation plan, and the budget.

3. The Information Systems Plan • Purpose of the Plan • Strategic Business Plan • Current Systems • New Developments • Management Strategy • Implementation Plan • Budget Requirements

4. Enterprise Analysis (Business Systems Planning) • An analysis of organization-wide information requirements by looking at the organization in terms of organizational units, functions, processes, and data elements; helps identify the key entities and attributes in the organization’s data.

5. Strategic Analysis • Critical Success Factors (CSF’s) a small number of easily identifiable goals shaped by the industry, the firm, the manager, and the broader environment that are believed to ensure the success of the organization. Used to determine the information requirements of the organization. • See page 337 for table of examples

6. The Spectrum of Organizational Change • Automation • Using the computer to speed up the performance of existing tasks • Rationalization • The streamlining of SOPs, eliminating the obvious bottlenecks, so that automation makes operating procedures more efficient • Reengineering • The radical redesign of business processes, combining steps to cut waste and eliminating repetitive paper-intensive tasks to improve costs • Paradigm Shifts

7. How IT can transform Organizations • Global Networks • Transaction costs decline • Enterprise Networks • Business processes are changed • Distributed Computing • Mgmt costs are declined, hierarchy and centralization decline. • Portable Computing • Organizational costs decline due to lower real estate costs • GUI’s • Organizational costs are declined. Eliminates paper costs

8. Reengineering and Work Flow Management • Work Flow Management • The process of streamlining business procedures so that documents can be moved easily and efficiently from one location to another. • Reengineering- page 343

9. Total Quality Management • Attributed to Charles Deming – originally rejected by US adopted by Japan – Macolm Baldridge Award • A concept that makes quality control a responsibility to be shared by all in the organization

10. How IS contribute to TQM • Simplifying the product or the production process • Benchmarking • Use customer demands as a guide to improving products and services • Reduce cycle time • Improve quality and precision of the decision • Increase the precision of production

11. Systems Development • Systems Analysis • Systems Design • Programming • Testing • Conversion • Production and Maintainance

12. Systems Analysis • Feasibility • Technical • Economic • Operational • Always three choices • Do nothing • Modify or enhance system • Develop a new system • Information Systems requirements • A detailed statement of the information needs that a new system must satisfy identifies who needs what information and when, where, and how

13. System Design • Logical Design • Lays out the components of the information system and their relationship to each other as they would appear to users • Physical Design • The process of translating the abstract logical model into the specific technical design for the new system

14. The Role Of End Users • The nature and level differs per system • Blamed for many system failures • More people more system ideas • More people more different methods/actions/etc

15. Testing • Unit Testing • The process of testing each program separately in the system • System Testing • Tests the functioning of the IS as a whole to determine if discrete modules will function together as planned • Acceptance Testing • Provides the final certification that the system is ready to be used in a production setting • Test Plan • Prepared by the development team in conjunction with the end users

16. Conversion Strategies • Parallel Strategy • Direct Cut-Over Strategy • Pilot Study Strategy • Phased Approach Strategy • Conversion Plan • Documentation

17. The Business Value of IS • A consistent IT structure can play an important role in org development, at the very least it can keep a firm alive. • Benefits can go to the firm but most likely go to the customer • Look at Capital Budgeting Models and Benefits • Tangible and Intangible

18. Capital Budgeting Models • Payback Method • A measure of the time required to pay back the initial investment of the project (original investment/annual net cash inflow = # of years to pay back) • Accounting rate of return on an investment (ROI) • Calculation of the rate of return from an investment by adjusting cash inflows produced by the investment for depreciation. ((total benefits – total costs- depreciation)/Useful Life = Net Benefit)

19. Capital Budgeting Models • Present Value • The value in current dollars of a payment or steam of payments to be received in the future • Net Present Value • The amount of money an investment is worth, taking into account its costs, earnings, and the time value of money

20. Capital Budgeting Models • Cost Benefit Ration • A method for calculating the returns from a capital expenditure by dividing total benefits from total costs. • Profitability Index • Use to compare the profitability of alternative investments, it is calculated by dividing the present value of the total cash inflow by the initial cost of the investment • Internal Rate of Return (IRR) • The rate of return or profit that a an investment is expected to earn

21. Results of Capital Budgeting Models • Four Scenarios • High Risk, High Benefits- Cautiously Examine • High Risk Low Benefits – Avoid • Low Risk High Benefits- Identify and Develop • Low Risk Low Benefits- Routine Projects

22. Portfolio Analysis • An analysis of the portfolio of potential applications within a firm to determine the risks and benefits and select alternatives for information systems • Some Risks • Benefits may not be obtained • Cost of implementation may exceed budget • Implementation time frames might be exceeded • Technical performance is less than expected • The new system is incompatible with existing software or hardware

23. Scoring Models • A quick method for deciding among alternative systems based on a system of rating for selected objectives

24. Conclusion • The goal is to develop a strategy to improve the firm • Should you include many players and if so who and how do you decide? • How do you balance all the different local and corporate interests? • You also need to determine costs. • Remember to look to see if you are changing the organization or just a simple task.