BS3909 Week 5 2004 – 1

Information Systems – Week 5

Last week: Approaches to System Building» Radical approaches to bespoke systems (Steve Bullas)» Conventional approaches – Name three

Revision and Self-Study: Enhancing Management Decisions» Laudon & Laudon Chapter 11 (Ch.13 in 7th edition)

This week: Redesigning the Organization with IS

BS3909 Week 5 2004 – 2

Enhancing Management Decisions

Capital Budgeting Decision on p.409» What’s the lowest acceptable additional income at 7%?

Summary on p.426» Distinguishes DSS and Group DSS» What kinds of DSS are described?» Where do Executive Support Systems help?

Why do you think DSS systems seem so much more sophisticated than GDSS?

BS3909 Week 5 2004 – 3

Redesigning the Organization

Building new systems can cause organizational change

» Example?

Role of IS in Total Quality Management and Business Process Reengineering

Introduction to System Development(lead in to IS Project management week)

Reading: Laudon & Laudon (2002) Ch 10 (or Chapter 11 in 6th edition)

BS3909 Week 5 2004 – 4

Business Environment

Information Systems have both technical and social components

IS needs to support the overall business » should be included in a business plan

Management challenges» Planned organizational changes» Systems development» Understanding business value of info systems

Organizational change needs to be planned» Don’t install technology without considering people who

work with it

BS3909 Week 5 2004 – 5

Process of Building Information Systems

Systems builders need to consider: » nature of tasks» speed and sequence in which they must be completed» who has what information about what

Challenges» Benefits of planning seen as intangible» Without it, development is very risky

(will your nerve hold while you’re planning?)» Can force unforeseen (and undesirable) changes...» ... While missing valuable opportunities for improvement

BS3909 Week 5 2004 – 6

Linking IS to the Business Plan

Work within context of a strategic plan for the business » Once specific projects have been selected » Information Systems plan can be developed

Planning » Management strategy » Current situation » Directions of systems development» Implementation plan

– rationale – budget – schedule

BS3909 Week 5 2004 – 7

Project Variables

When you squeeze in one place, it bulges out in

another

Resource Quality

Schedule Function

Cost factors

Product factors

Dywig,odywiT

Which one typically gets forgotten?

BS3909 Week 5 2004 – 8

Strategic Business Plan Analyse Current Situation

» Systems supporting main business functions» Installed base of hardware, software, infrastructure» Known requirements not being (fully) met» Trends and anticipated demands

Review Current Organization» Are there any “ping pong” business processes?

Changing Environment» Competition and Customer expectations» Technology, regulation, acquisitions » Input costs, including commodity and energy trends

Set Major Goals of Plan

BS3909 Week 5 2004 – 9

Planning New Developments

Description of New IS Projects should include:» Statement of corporate goals » Description of how IT supports attaining of those goals» Scope of plan – what data/processes are we considering?» Business Rationale

Plan sets out target dates and milestones » Used to judge the progress of the project

Provides details of» Hardware requirements – IT and telecommunications» Software needed – OS, package, bespoke, support» Data» Training and organizational change required

BS3909 Week 5 2004 – 10

Information Requirements

Methods for establishing essential information requirements for organization as a whole

Enterprise Analysis (Business Systems Planning)» look at entire business» consider the functions» consider processes» consider the data elements required

Strategic analysis (Critical Success factors)» Based on belief that firm’s success is determined by a

small number of easily identifiable operational goals» Shaped by industry, management, environment

BS3909 Week 5 2004 – 11

• how they use information• where they get information• what environment do they

work in

• what their objectives are• how they make decisions• what their data needs are

Enterprise Analysis

Developed by IBM in the 1960s Argues that information requirements of a firm can only

be understood by looking at the entire organization in terms of organizational units, functions, processes and data elements

Basis of this approach » take a large sample of managers and ask:

BS3909 Week 5 2004 – 12

Enterprise Analysis – Evaluation

Strengths Comprehensive view of the

following:» the whole organization» the systems in place» the data elements

Weaknesses produce large amount of data about here and now expensive to collect difficult to analyse based on interviews with

senior or middle managers rather than general users

tendency to look at existing information..

.. not how to do better

BS3909 Week 5 2004 – 13

Strategic Analysis: Critical Success factors

Argues that information requirements of organization are determined by a small number of critical success factors

Basis of this approach: » Assumes there are a small number of objectives that

managers can easily identify and on which IS can focus» Collected in 3-4 personal interviews with senior managers

Senior managers identify a small number of operational goals (objectives) or critical success factors at interview» Managers asked to consider their working environment and

consequent information needs» Information System focuses on these needs only» Critical success factors are pooled to form basis for the IS

BS3909 Week 5 2004 – 14

Using CSFs to Develop Systems

Collect managers’ CSFs» Aggregate and analyse individuals’ CSFs» Develop agreement on company CSFs» Define CSFs for company

Use CSFs to develop Information System priorities» Operational and DSS

Define Data Requirements» To feed Operational and Decision Support Systems

Is this bottom up approach appropriate?

BS3909 Week 5 2004 – 15

Critical Success Factors – Evaluation

Strengths Less data to consider Is more tailored to meet the

business requirement Meets changing needs of the

environment

Weaknesses Dependent on managers’ view No rigour Needs of the organization as a

whole not taken into account Vulnerable to sub-optimization If business environment or

management changes, system might not adapt successfully

May need to do it all over again if management changes

Probably need a combination of

thetwo approaches

BS3909 Week 5 2004 – 16

Transforming Organizations

Some ways that IT is being used for transformation Structural organizational change from the more

superficial to the most profound:» Automation» Rationalization» Reengineering» Paradigm shifts

The more profound and radical the change» the more impact on scope of business activity

and on organizational and human relationships » the greater the risk of failure

Increasing Risk and Reward

BS3909 Week 5 2004 – 17

Case Studies

Please read MacBride case study in handout» In the break and during the rest of the lecture

Think about how these factors affect that business» Prepare to offer advice in the seminar

Other sources» Laudon and Laudon give several examples

– TVA Nuclear (p.302) – Cemex (p.311)– An E-Commerce Site Overnight (p.327)

» Or listen to the Mass Customization programme» Come up with examples of paradigm shifts

BS3909 Week 5 2004 – 18

Evolutionary Approaches

Automation – Perform common tasks more efficiently and effectively» Fine, providing the processes you automate are necessary» Obvious candidates are payroll and accounts

Rationalization – Goal is to get processes right before automating them» Careful consideration of procedures» Structure your data in most appropriate way

BS3909 Week 5 2004 – 19

Business Process Re-engineering

Radical rethink (or Revolutionary approach) Requires analysis of business processes

» then a simplified version is sought» followed by a redesign of the process

Reorganizes workflows» combining steps to cut waste» eliminate repetitive paper intensive tasks

A new design may eliminate a job altogether

Laudon p.339 cites example of Ford motor company

BS3909 Week 5 2004 – 20

Business Process Reengineering

BPR usually depends on Work-flow Management» Streamlining processes to move information efficiently

Steps to BPR» Develop process objectives within business vision» Identify processes to be redesigned» Make sure the process is really needed» Understand and measure performance of existing process

– Are there any elements that could be cut out?– Where are delays and sources of cost?

» Identify opportunities to apply IT» Build Prototype of new process to validate it» Plan and execute deployment (human and IS aspects)

BS3909 Week 5 2004 – 21

Paradigm Shift

Paradigm is a mental model of how a complex system works – for example» Production Line paradigm assumes productivity is maximized

by reducing skills through a high degree of specialization» CEGB paradigm was that generation is best done in large,

efficient, centralized power stations near sources of coal Paradigm Shift:

» Is a more radical form of business change» Forces rethinking the nature of the business and the nature

of the organization » “Mass Customization” involves a paradigm shift

Paradigm shifts and reengineering often fail because of the extent of the change

BS3909 Week 5 2004 – 22

Cycle of Opportunity

Increased shop opening hours drives multiple staffing» Allowing longer opening, which leads to more sales, with» faster turnover of stock, better deployment of capital

Cheaper computers allow real-time control of telephony» Can build cellular radio network

– Tracks which phone is in which cell and route calls there– Creates mass-market for mobile electronics– Business usage pays for building infrastructure

» Now there are new opportunities– Can enter consumer market to bypass need for wayleaves– Mobile data will consume increasing network bandwidth

» Rewarding investments yet further

BS3909 Week 5 2004 – 23

Process Improvement and TQM

Total Quality Management makes Quality the responsibility of everyone in the organization» To improve quality of products, services and operations

Employees are encouraged to seek out problems or deficiencies» Sooner these are identified the less costly to fix them» Often incentives are used to encourage participation

TQM contributes by:» Simplifying process or product – better design» Improving responsiveness to customer demands» Reducing cycle time» Increasing precision of production

BS3909 Week 5 2004 – 24

IS role in TQM

Supports benchmarking – performance measurement against objective criteria

Allows sharing of data» When problem is identified, solver can quickly take action» Eliminate middlemen from information flows» Improve customer service – Give an example

Supports design and production improvements» Reduced complexity

– fewer things fall through the cracks» Shorter production cycle time through timely information

– defects corrected more quickly; fewer faults reach customer– faster response to customer requirements

BS3909 Week 5 2004 – 25

Building an Information System

Systems development has to be part of business strategy » Must serve the business goals » Be consistent with the business plan » And match any planned organizational change

TQM and Enterprise Analysis » Look at processes and organization wide goals » Focus on managers rather than general users» System development has to consider all its users

Eric’s view» “Big Bang” developments usually fail» Managers need to minimize number of sources of risk

BS3909 Week 5 2004 – 26

System Development Process

Don’t Forget» Goal of IS is solution to a specific business challenges » IS is result of a series of activities known as the

systems development process » or more accurately, the system development life cycle

Stages are:» Systems Analysis and Specification» System Design (High and Low Level)» Programming» Testing» Deployment» Production, maintenance and enhancement

Will never be perfect first time

BS3909 Week 5 2004 – 27

Systems Analysis

Analysis of Problem to be solved by the IS

Feasibility: Can the problem be solved within constraints?» What are the requirements for the system?» Where does the information come from?» What are the costs? (hardware, software, training…)» What are the benefits? Do they justify the investment?» Are we confident that the solution will still be appropriate

when delivered? Specification: What the system must do

» And what is outside its scope Design – logical and practical

BS3909 Week 5 2004 – 28

Summary

Information Systems can be used to cut costs, but… the big gains come from changing how the business runs

» Reward and Risk tend to grow together Introducing IS will always create organizational change

» Make sure this matches your strategy» May give you extra freedom to develop business plan

Analyse Information requirements top-down or bottom-up» Or look at them from both points of view

TQM can be assisted by Information Systems Building a good IS needs good objectives, planning and

implementation