Chapter 11

Redesigning the Organization with Information System

Systems as Planned Organizational Change

More than new hardware and softwareWhen you design an information system you redesign the organizationInformation Systems plan A road map indicating the direction of

the systems development, the rationale, the management strategy, the implementation plan, and the budget.

The Information Systems Plan

Purpose of the PlanStrategic Business PlanCurrent SystemsNew DevelopmentsManagement StrategyImplementation PlanBudget Requirements

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.

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

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

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

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

Total Quality Management

Attributed to Charles Deming – originally rejected by US adopted by Japan – Macolm Baldridge AwardA concept that makes quality control a responsibility to be shared by all in the organization

How IS contribute to TQM

Simplifying the product or the production processBenchmarkingUse customer demands as a guide to improving products and servicesReduce cycle timeImprove quality and precision of the decisionIncrease the precision of production

Systems Development

Systems AnalysisSystems DesignProgrammingTestingConversionProduction and Maintainance

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

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

The Role Of End Users

The nature and level differs per systemBlamed for many system failuresMore people more system ideasMore people more different methods/actions/etc

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

Conversion Strategies

Parallel StrategyDirect Cut-Over StrategyPilot Study StrategyPhased Approach StrategyConversion PlanDocumentation

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 customerLook at Capital Budgeting Models and Benefits Tangible and Intangible

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)

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

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

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

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

Scoring Models

A quick method for deciding among alternative systems based on a system of rating for selected objectives

Conclusion

The goal is to develop a strategy to improve the firmShould 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.