Business Driven Information Systems 2e

1. Business Driven Information Systems 2e CHAPTER 11 SYSTEMS DEVELOPMENT AND PROJECT MANAGEMENT

2. SECTION 11.1 DEVELOPING ENTERPRISE APPLICATIONS

3. Nike SCM Failure • The US-based Nike Corporation announced that it had generated profits of $97.4 million, around $48 million below its earlier forecast for the third quarter ended February 28, 2001. • The company said that the failure in the supply chain software installation by i2 Technologies was the cause of this revenue shortfall.

4. Nike SCM Failure • This admission of failure also affected the company's reputation as an innovative user of technology. • The supply chain software implementation was the first part of a huge project to install an integrated ERP system from SAP, and customer relationship management (CRM) software from Siebel Systems • For over a year, Nike reeled as a result of this failure. i2 and Nike blamed each other in public for the failure and this led to a further downslide in the share price of both the companies. • Analysts pointed to lapses in project management, too much customization and an over reliance on demand forecasting software. Nike insiders raised doubts about the Single Instance Strategy being followed by Nike. • Single Instance Strategy refers to one ERP application with one data store that serves the entire company. Everything a company needs from financials, order entry, supply chain to CRM comes from a single vendor.

5. Nike SCM Failure • However, the company remained firm and relentlessly pursued its Single Instance Strategy for SAP implementation. The guiding instruction as put across by Gordon Steele (Steele), CIO of Nike was that the "Single Instance was a decision not a discussion." • By 2004, the company had successfully implemented its Nike Supply Chain (NSC) project, indicating that its centralized planning, production and delivery processes were right for the Single Instance Strategy. With this success, Nike's Single Instance Strategy became the desired approach for many companies implementing ERP software. Nike used SAP for 95% of its global business.

6. DEVLOPING SOFTWARE • Software that is built correctly can support agile organizations and can transform as the organization and its business transforms • Software that effectively meets employee needs will help an organization become more productive and enhance decision making • Software that does not meet employee needs may have a damaging effect on productivity and can even cause a business to fail

7. DEVELOPING SOFTWARE • As organizations’ reliance on software grows, so do the business-related consequences of software successes and failures including: • Increase or decrease revenue –Nike’s poorly designed SCM software delayed orders, increased excess inventories, and caused third quarter earnings to fall 24% below expectations • Repair or damage to brand reputation – H&R Block customers were furious when the company accidentally posted passwords and social security numbers to its Web site • Prevent or incur liabilities – FoxMeyer sued SAP for $500 million for an ERP failure • Increase or decrease productivity – Defective software accounts for 45% of computer downtime and cost U.S. businesses $100 billion in 2003

8. THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) • Systems development life cycle (SDLC) – the overall process for developing information systems from planning and analysis through implementation and maintenance

9. THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) • Planning phase – involves establishing a high-level plan of the intended project and determining project goals • Analysis phase – involves analyzing end-user business requirements and refining project goals into defined functions and operations of the intended system • Business requirement – detailed set of business requests that the system must meet in order to be successful

10. THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC)) • Design phase – involves describing the desired features and operations of the system including screen layouts, business rules, process diagrams, pseudo code, and other documentation • Development phase – involves taking all of the detailed design documents from the design phase and transforming them into the actual system

11. THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) • Testing phase – involves bringing all the project pieces together into a special testing environment to test for errors, bugs, and interoperability and verify that the system meets all of the business requirements defined in the analysis phase • Implementation phase – involves placing the system into production so users can begin to perform actual business operations with the system

12. THE SYSTEMS DEVELOPMENT LIFE CYCLE (SDLC) • Maintenance phase – involves performing changes, corrections, additions, and upgrades to ensure the system continues to meet the business goals

13. SOFTWARE DEVELOPMENT METHODOLOGIES • There are a number of different software development methodologies including: • Waterfall • Agile • Rapid application development (RAD) • Extreme programming • Rational unified process (RUP) • Scrum

14. Waterfall Methodology • Waterfall methodology – an activity-based process in which each phase in the SDLC is performed sequentially from planning through implementation and maintenance

15. Waterfall Methodology • The waterfall methodology is one of the oldest software development methods and has been around for over 30 years • The success rate for software development projects that follow this approach is only about 10 percent, or 1 in 10 • The biggest problem with the waterfall methodology is that it assumes users can specify all business requirements in advance • It also assumes that business requirements do not change over time • If you ever find yourself on a software development project that is using the waterfall methodology, do everything you can to change the methodology

16. Agile Methodology • Agile methodology – aims for customer satisfaction through early and continuous delivery of components developed by an iterative process • An agile project sets a minimum number of requirements and turns them into a deliverable product • Iterative development – consists of a series of tiny projects

17. Agile Methodology • The Agile Alliancehttp://www.agilealliance.org/ is a group of software developers whose mission is to improve software development processes and whose manifesto includes the following: • Satisfy the customer through early and continuous delivery of valuable software • Welcome changing requirements, even late in development • Business people and developers must work together daily throughout the project • Build projects around motivated individuals • The best architectures, requirements, and designs emerge from self-organizing teams • At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly

18. DEVELOPING SUCCESSFUL SOFTWARE • Primary principles for successful agile software development include: • Slash the budget – Small budgets force developers and users to focus on the essentials • If it doesn’t work, kill it – Bring all key stakeholders together to evaluate and assess the software • Keep requirements to a minimum – Start each project with what the software must absolutely do • Test and deliver frequently – As often as once a week, and not less than once a month, complete a part of the project or a piece of software • Assign non-IT executives to software projects – Non-IT executives should coordinate with the technical project manager, test iterations to make sure they are meeting user needs, and act as liaisons between executives and IT

19. Agile Methodology

20. Rapid Application Development Methodology (RAD) • Rapid application development methodology (RAD) – emphasizes extensive user involvement in the rapid and evolutionary construction of working prototypes of a system to accelerate the systems development process • The prototype is an essential part of the analysis phase when using a RAD methodology • Prototype – a smaller-scale representation or working model of the users’ requirements or a proposed design for an information system

21. Rapid Application Development Methodology (RAD) • RAD is a more popular route for system development projects • Fundamentals of RAD • Focus initially on creating a prototype that looks and acts like the desired system • Actively involve system users in the analysis, design, and development phases • Accelerate collecting the business requirements through an interactive and iterative construction approach

22. Extreme Programming Methodology • Extreme programming (XP) methodology – breaks a project into tiny phases, and developers cannot continue on to the next phase until the first phase is complete • The primary difference between the waterfall and XP methodologies is that XP divides its phases into iterations with user feedback

23. Extreme Programming Methodology • XP emphasizes that the faster the communication or feedback, the better the results • Stresses customer satisfaction and empowers the developers to respond to changing customer and business requirements even late in the systems development life cycle • Managers, developers and customers are all part of a team dedicated to to delivering quality software

24. Extreme Programming Methodology • XP consists of • Planning – user stories, stand-up meetings and small releases • Design – stresses not to add functionality until it is needed • Coding – user is always available for feedback, developers work in pairs and the code is written to an agreed standard • Testing – tests are written before the code

25. Rational Unified Process (RUP) Methodology • Rational Unified Process (RUP) – provides a framework for breaking down the development of software into four gates • Gate One: Inception –inception of the business case, assures all stakeholders have a shared understanding of the system • Gate Two: Elaboration – details of the system, architecture to support system • Gate Three: Construction • Gate Four: Transition – ownership and training

26. Rational Unified Process (RUP) Methodology • Because RUP is an iterative methodology, the user can reject the product and force the developers to go back to gate one. • Approximately 500,000 developers have used RUP in software projects of varying sizes in the 20 years it’s been available, according to IBM. • RUP helps developers avoid reinventing the wheel and focuses on rapidly adding or removing reusable chunks of processes addressing common problems.

27. SCRUM Methodology • SCRUM – uses small teams to produce small pieces of deliverable software using sprints, or 30-day intervals, to achieve an appointed goal • Under this methodology, each day ends or begins with a stand-up meeting to monitor and control the development effort

28. SCRUM Methodology • Primavera Systems, Inc., a software solutions company was finding it increasingly difficult to use the traditional waterfall methodology for development so it moved to an agile methodology. • Scrum’s insistence on delivering complete increments of business value in 30-day learning cycles helped the teams learn rapidly. • It forced teams to test and integrate experiments and encouraged them to release them into production. • Primavera’s shift resulted in highly satisfied customers and a highly motivated, energetic development environment.

29. DEVELOPING SUCCESSFUL SOFTWARE • Primary principles for successful agile software development include: • Slash the budget – Small budgets force developers and users to focus on the essentials • If it doesn’t work, kill it – Bring all key stakeholders together to evaluate and assess the software • Keep requirements to a minimum – Start each project with what the software must absolutely do • Test and deliver frequently – As often as once a week, and not less than once a month, complete a part of the project or a piece of software • Assign non-IT executives to software projects – Non-IT executives should coordinate with the technical project manager, test iterations to make sure they are meeting user needs, and act as liaisons between executives and IT

30. SECTION 11.2 PROJECT MANAGEMENT

31. MANAGING SOFTWARE DEVELOPMENT PROJECTS • Analysts predict investment in IT projects worldwide through 2010 will be over $1 trillion • 70 percent will be lost due to failed projects • The consequences of failed projects include: • Damaged brand • Lost goodwill • Dissolution of partnerships • Lost investment opportunities • Low morale • According to the Standish Group, just 29 percent of IT projects were completed on time, within budget, and with features and functions originally specified by the customer to deliver business value.

32. MANAGING SOFTWARE DEVELOPMENT PROJECTS • With so many skilled and knowledgeable IT professionals at the helm of IT projects, how can this happen? • Organizations adopt projects that do not align with mission-critical initiatives • They over commit financial and human capital • They sign off on low-value projects that consume valuable and scarce resources • They agree to support projects that are poorly defined from requirements to planning.

33. The Triple Constraint • Project management interdependent variables

34. The Triple Constraint • These three variables are interdependent • You cannot change one without changing the others • For example, decreasing a project’s timeframe means either increasing the cost of the project or decreasing the scope of the project to meet the new deadline • Increasing a project’s scope means either increasing the project’s timeframe or increasing the project’s cost – or both – to meet the increased scope changes • Project management is the science of making intelligent trade-offs among time, cost, and scope

35. The Triple Constraint • Benjamin Franklin’s timeless advice - by failing to prepare, you prepare to fail - applies to software development projects • A successful project is typically on time, within budget, meets the business’s requirements, and fulfills the customer’s needs. • A recent survey concluded that the failure rate of IT projects is much higher in organizations that do not exercise disciplined project management

36. The Triple Constraint • The Hackett Group, an Atlanta-based consultancy, analyzed its client database, which includes 2,000 companies, including 81 Fortune 100 companies, and discovered: • Three in 10 major IT projects fail • 21 percent of the companies state that they cannot adjust rapidly to market changes • One in four validates a business case for IT projects after completion

37. The Triple Constraint • Common reasons why IT projects fall behind schedule or fail

38. PROJECT MANAGEMENT FUNDAMENTALS • Project – temporary endeavor undertaken to create a unique product, service, or result • Project management – the application of knowledge, skills, tools, and techniques to project activities to meet project requirements • Project management offers a strategic framework for coordinating the numerous activities associated with organizational projects

39. PROJECT MANAGEMENT FUNDAMENTALS • The Project Management Institute (PMI) develops procedures and concepts necessary to support the profession of project management (www.pmi.org) and has three areas of focus: • The distinguishing characteristics of a practicing professional (ethics) • The content and structure of the profession’s body of knowledge (standards) • Recognition of professional attainment (accreditation)

40. PROJECT MANAGEMENT FUNDAMENTALS • Projectdeliverable – any measurable, tangible, verifiable outcome, result, or item that is produced to complete a project • Project milestone – represents key dates when a certain group of activities must be performed • Project manager – an individual who is an expert in project planning and management • Project management office (PMO) – an internal department that oversees all organizational projects

41. PROJECT MANAGEMENT FUNDAMENTALS • Project management take all of these activities and ensure they flow smoothly to develop and deliver a successful project

42. PROJECT MANAGEMENT FUNDAMENTALS

43. CHOOSING STRATEGIC PROJECTS • Project stakeholders - individuals and organizations actively involved in the project or whose interests might be affected as a result of project execution or project completion • Executive sponsor - the person or group who provides the financial resources for the project

44. CHOOSING STRATEGIC PROJECTS • Research has shown that the leadership strength of the executive sponsor has more do to with the success or failure of a project than any other critical success factor. • The executive sponsor communicates up the chain on behalf of the project; • He or she supports the project manager by championing the project to others sharing the vision and benefit of the successfully completed project; • The executive sponsor demonstrates the commitment and accountability necessary to survive a project. • If a team has a hands-off sponsor who merely reviews invoices and inquires as to the status of a project, then that project surely is in trouble from the start

45. CHOOSING STRATEGIC PROJECTS • Which technique is the most important when choosing strategic projects? 1. Focus on organizational goals—Managers are finding tremendous value in choosing projects that align with the organization’s goals. Projects that address organizational goals tend to have a higher success rate since they are important to the entire organization.

46. CHOOSING STRATEGIC PROJECTS 2. Categorize projects • Problem, opportunity, and directives. • Problems are undesirable situations that prevent an organization from achieving its goals. • Opportunities are chances to improve the organization. • Directives are new requirements imposed by management, government, or some other external influence. • It is often easier to obtain approval for projects that address problems or directives because the organization must respond to these categories to avoid financial losses.

47. CHOOSING STRATEGIC PROJECTS 3. Perform a financial analysis—A number of different financial analysis techniques can be performed to help determine a project’s priority. A few of these include • net present value • return on investment • payback analysis. These financial analysis techniques help determine the organization’s financial expectations for the project

48. UNDERSTANDING PROJECT PLANNING • After selecting strategic projects and identifying a project manager the next critical component is the project plan • Building a project plan involves two key components: • Project charter • Project plan

49. UNDERSTANDING PROJECT PLANNING • No one would think of building an office complex by turning loose 100 different construction teams to build 100 different rooms, with no single blueprint or agreed-upon vision of the completed structure. • Yet this is precisely the situation in which many large organizations find themselves when managing information technology projects. • Organizations routinely overschedule their resources (human and otherwise), develop redundant projects, and damage profitability by investing in nonstrategic efforts that do not contribute to the organization’s bottom line. • Project management offers a strategic framework for coordinating the numerous activities associated with organizational projects.

50. Project Charter • Project charter - a document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities and includes: • Project scope • Project objectives • Project constraints • Projects assumptions