Management of Computer System Performance Introduction
Management of Computer System Performance I am assuming that you are here for a primary and singular reason. I believe that reason is for you to gain a competitive advantage in the job market so that you can optimize your income. I have structured this course with this in mind. I am committed to helping you achieve that goal. I expect you to work towards that goal as well.
Management of Computer System Performance • Description: • This course provides students with knowledge and skills to comprehend the concepts on the organization of Information System Unit and Resources Planning as well as the Performance Measurement • Objectives: • The students should be able to understand the concepts on The Organization System Unit, • The students should be able to plan Resources and measure the performance of Information system Unit..
The Text and Source Material • The effective measurement and management of IT costs and benefits • Butterworth/Heinemann: ISBN 0-7506-4420-6 • Hardcover, Second Edition • Reference Material: • Barrons Financial Guide: Dictionary of Finance and Investment Terms • www.TheEbusinessSite.com • Class handouts
Assignments • The Article must be approved in advance by the Prof. • Article Review • NTE 5 pages Single Spaced/10 double spaced. • 1 inch margins, • Font - Arial or Times New Roman Type, • Point Size 10-12. • Executive Summary 1/2 page (Single Spaced) • Article Summary 2-3 ½ pages (Single Spaced) • Your Opinion of the article and its conclusion with a justification of your opinion, NTE 1page (Single Spaced). • External references supporting your opinion are acceptable. • Format violation is 10 points.
Project - Parameters • This course will require the delivery of calculated values for IT project Valuation • You are required to do the following: • Forms into Groups of 4-5 People • Identify a publicly traded corporation with annual sales between $700M and $1.5B. • Select a firm from an industry that you know something about. • Exercise great care in selecting a firm.
Project - Parameters • Company selection guidelines: • The fewer the divisions, the better. • This will make your lives simpler • Based on your analysis, they should not currently have an ERP system in place. • Your group will perform analysis on their annual report • The analysis will involve the impact of IT investments impacts on the firm, • Your group will use the formulas and spreadsheets presented in this course and provided on TheEBusinessSite.com for this purpose. • The performance of valuation research for some variables will be required.
Project – The Task • Assume that your group has been tasked to assess the financial and economic impact of the implementation of a corporate wide ERP system. • Your group will need to perform a series of evaluations for this effort. • In that you are working as a group, the final results should be consistently accurate. • Spreadsheet modifications should be documented. • Assumptions must be documented and explained.
Project – The Task • The Implementation Task Financial Parameters are as follows: • Costs • 10% to 13.7% of year 1 annual Gross revenues. • 7% to 9% of year 2 annual Gross revenues. • Deployment and operational schedule • 60% probability that it will be completed in 23 months • 10% probability that it will be completed in 20 Months • 30% probability that it will be completed in 32 months • Efficiency gains are expected to be as follows: • (Example: Gains are correlated at 90% bottom line improvement [2% x .9=1.8% bottom line cost reduction in months 7-11]) • 2% in months 7-11 • 8% compounded on the previous 2% by month 18 • 14% compounded on the previous 8% by month 23 • 2% annual efficiency gains from month 24 forward for the next three years.
Project – The Task • Identify Interest rates for the periods provided for use in your formulas • substantiate and validate interest rates used. • Look at similar industries for comparative purposes. • Compare revenue, returns, ROI and similar findings. • I reserve the right to deliver at least one change to these parameters in Session 11&12 • Session 19-20, be prepared to present your findings. • Presentation - 10 -15 slides • Paper 15 pages single spaced/30 pages double spaced.
Project – The Task • 15-30 Paper format • 1 inch margins, Font - Arial or Times New Roman Type, Point Size 10-12. • Section 1. Company Overview [2 or 3 pages.] • Describe the company that your group selected, what it does and provide a brief overview of its current financial and future growth. • Section 2. The ERP Project’s Economic Impact [4-8 pages.] • Identify and discuss the ERP Project’s potential economic impact on the firm. • Use a before and after analysis for each area of measure. • Based on external variables to that industry, (interest rate changes, etc.) provide a probability of the likelihood that your estimates will occur. • Section 3: Comparative Analysis [3-6 pages] • Perform an industry analysis of the selected firm’s primary competitors • Provide some direct competitive analysis. • Section 4. Financial Recommendation [2-3 pages] • Based on your analysis, provide a financial recommendation to move forward with the ERP deployment project. • Support your recommendation calling on earlier content. • Format violation is 10 points.
Overview • The course will address the underlying business needs for IT cost and benefit review • Provide a series of tools and methodologies on performing these measurements • Equipment the student to better understand the risk elements associated with IT costing. • Provide real world skills for job growth and career enhancement, as well as survivability.
Overview • This reality creates several significant costing and benefit quantification problems. • The following needs to be accurately defined: • Direct Costs: such as resource costs (labor, H/W and S/W+Consultants). • Indirect costs: such as business operations interruptions based on process changes. • Implementation capital allocation Costs: major IT projects within many companies, $1M+ budgets are common. • Direct and indirect benefits.
Overview • It is also important to consider the political realities of answering these questions. • Upper manager’s opinions generally falls into two camps. • Those who see the potential or intuitive value of IT and • those who see such projects as a drain of capital away from their own projects, such as new production systems. • Consider the position of the IT department in most companies as the proposing entity of a new project. • IT is the most expensive administrative overhead cost in the corporation. • It is usually a part of the Finance department, an administrative support organization.
Overview • How should this be done. • This is the core to IT Economics. • What is the economic benefit to corporations of employing IT resources. • Operationally, there are many problems that should be addressed. • Which IT resources should be deployed? • How do I select them? • What are the risks and how should those affect my decision? • SWAGs can waste money and may lead to massive failures.
Overview • The bottom line is that: • Companies need to control and/or reduce costs, • IT is the most expensive cost center, thus a primary target for cost reduction in many organizations, • Justification of operational and project costs is critical to the survival of the IT department and in reality, the financial survival of the company may be equally at stake as well, • As managers, you will have to operate in this environment and succeed within these fiscal and political constraints.
Overview • At the highest level, the questions are; • What is the worth of each IT project? • What are the firm’s benefits by using it? • How will it increase owners equity? • This course will help you answer these questions. • It will combine finance, business and IT. • It will present the information in an understandable format that is usable in real life situations.
Why Businesses Exist. • First and foremost, businesses exist to maximize the value of their owners equity. • Non-profits may have a definition of “value” that is not based on monetary worth, but they do what they do to increase that value. • Successful businesses never loose this focus nor deviate from it in the development and execution of their business plans. • Methodologies may vary but the goal is constant. DO NOT FORGET THIS!
Premise of the Course • Firms that survive and prosper show continued and managed growth. • To support growth, they focus on gaining efficiencies whenever and where possible. • The greatest efficiencies are usually achieved through Business Process Re-engineering through the application of Information Technology. • BPR and IT generate the greatest gains when used together. • Their use separately may also provide gains but usually not as great.
The Market Driver • In business today, most efficient and competitive firms use information technology to maximize these traits. • A competitor successfully employs a fully integrated SAP R3 ERP/ERM system. • They achieve efficiencies that allows them to produce the same goods or services that you sell at a 20% lower cost. • They therefore lower their sale price by 10% and still generate a greater profit. This increases their market share and makes the owners happy. • Can you afford not to make the same moves to maintain a competitive position or to least maintain parity? • This is the problem many firms face.
Class Requirements • Attendance is strongly recommended. • Material is on line at http://www.binus.edu.id • Attendance will be taken. • There will be tests • There will not be a group project unless a group of students has a burning desire to do that. • There will be a Mid-term, Final and a topic specific paper.
Class Requirements • Investments • Tuition • Your expectations • BINUS UNIV.’s Expectations • Goals and Objectives