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11. REDESIGNING THE ORGANIZATION WITH INFORMATION SYSTEMS. 11.1. LEARNING OBJECTIVES. DEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGE COMPARE ROLE OF COMPUTER IN TOTAL QUALITY MANAGEMENT, BUSINESS PROCESS REENGINEERING *. 11.2. LEARNING OBJECTIVES.

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11.1

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  1. 11. REDESIGNING THE ORGANIZATION WITH INFORMATION SYSTEMS 11.1

  2. LEARNING OBJECTIVES • DEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGE • COMPARE ROLE OF COMPUTER IN TOTAL QUALITY MANAGEMENT, BUSINESS PROCESS REENGINEERING * 11.2

  3. LEARNING OBJECTIVES • EXPLAIN HOW ORGANIZATION CAN DEVELOP SUITABLE INFO SYSTEMS • IDENTIFY CORE ACTIVITIES IN SYSTEMS DEVELOPMENT PROCESS • EVALUATE MODELS FOR DETERMINING BUSINESS VALUE OF INFO SYSTEMS * 11.3

  4. MANAGEMENT CHALLENGES • SYSTEMS AS PLANNED ORGANIZATIONAL CHANGES • SYSTEMS DEVELOPMENT & ORGANIZATIONAL CHANGES • OVERVIEW OF SYSTEMS DEVELOPMENT • UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS * 11.4

  5. INFORMATION SYSTEMS PLAN CHALLENGES: • RISKS AND UNCERTAINTIES IN SYSTEMS DEVELOPMENT • BENEFITS LARGELY INTANGIBLE * 11.5

  6. INFORMATION SYSTEMS PLAN DIRECTION OF SYSTEM DEVELOPMENT: • RATIONALE • CURRENT SITUATION • MANAGEMENT STRATEGY • IMPLEMENTATION PLAN • BUDGET * 11.6

  7. INFORMATION SYSTEMS PLAN 1. PURPOSE OF THE PLAN: • OVERVIEW OF PLAN CONTENTS • CHANGES IN CURRENT SITUATION • FIRM’S STRATEGIC PLAN • CURRENT ORGANIZATION • MANAGEMENT STRATEGY * 11.7

  8. INFORMATION SYSTEMS PLAN 2. STRATEGIC BUSINESS PLAN: • CURRENT SITUATION • CURRENT ORGANIZATION • CHANGING ENVIRONMENT • MAJOR GOALS OF PLAN * 11.8

  9. INFORMATION SYSTEMS PLAN 3. CURRENT SYSTEMS: • MAJOR SYSTEMS SUPPORTING BUSINESS FUNCTIONS • MAJOR CURRENT CAPABILITIES • HARDWARE • SOFTWARE • DATABASE • TELECOMMUNICATIONS • DIFFICULTIES MEETING REQUIREMENTS • ANTICIPATED FUTURE DEMANDS * 11.9

  10. INFORMATION SYSTEMS PLAN 4. NEW DEVELOPMENTS: • NEW SYSTEM PROJECTS • PROJECT DESCRIPTIONS • BUSINESS RATIONALE • NEW CAPABILITIES REQUIRED • HARDWARE • SOFTWARE • DATABASE • TELECOMMUNICATIONS * 11.10

  11. INFORMATION SYSTEMS PLAN 5. MANAGEMENT STRATEGY • ACQUISITION PLANS • MILESTONES & TIMING • ORGANIZATIONAL REALIGNMENT • INTERNAL REORGANIZATION • MANAGEMENT CONTROLS • MAJOR TRAINING INITIATIVES • PERSONNEL STRATEGY * 11.11

  12. ENTERPRISE ANALYSIS (BUSINESS SYSTEMS PLANNING) ORGANIZATION-WIDE INFORMATION NEEDS IN TERMS OF: • ORGANIZATIONAL UNITS • FUNCTIONS • PROCESSES • DATA ELEMENTS HELPS IDENTIFY KEY ENTITIES & ATTRIBUTES IN ORGANIZATION’S DATA * 11.12

  13. CRITICAL SUCCESS FACTORS (CSFs) SMALL NUMBER, EASILY IDENTIFIABLE OPERATIONAL GOALS SHAPED BY INDUSTRY, MANAGER, ENVIRONMENT BELIEVED TO ASSURE FIRM’S SUCCESS. USED TO DETERMINE ORGANIZATION’S INFORMATION REQUIREMENTS * 11.13

  14. CRITICAL SUCCESS FACTORS& GOALS EXAMPLE GOALS CSF PROFIT EARNINGS/SHARE AUTOMOTIVE INDUSTRY: CONCERN RETURN ON INVESTMENT STYLING MARKET SHARE QUALITY DEALER SYSTEM NEW PRODUCT COST CONTROL ENERGY STANDARDS NONPROFIT EXCELLENT HEALTH CARE REGIONAL INTEGRATION WITH OTHER HOSPITALS MEETING GOVERNMENT REGULATIONS EFFICIENT USE OF RESOURCES FUTURE HEALTH NEEDS IMPROVED MONITORING OF REGULATIONS 11.14

  15. USING CSFs TO DEVELOP SYSTEMS • COLLECT MANAGERS’ CFCs • AGGREGATE, ANALYZE INDIVIDUALS’ CSFs • DEVELOP AGREEMENT ON COMPANY CSFs • DEFINE COMPANY CSFs • USE CSFs TO DEVELOP INFORMATION SYSTEM PRIORITIES • DEFINE DSS & DATABASES * 11.15

  16. SPECTRUM OF ORGANIZATIONAL CHANGE • AUTOMATION: Using technology to perform tasks efficiently / effectively • RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecks • BUSINESS REENGINEERING: Radical redesign of processes to improve cost, quality, service; maximize benefits of technology • PARADIGM SHIFT * 11.16

  17. PARADIGM SHIFT • PARADIGM IS A COMPLETE MENTAL MODEL OF HOW A COMPLEX SYSTEM FUNCTIONS • A PARADIGM SHIFT INVOLVES RETHINKING THE NATURE OF THE BUSINESS, THE ORGANIZATION; A COMPLETE RECONCEPTION OF HOW THE SYSTEM SHOULD FUNCTION * 11.17

  18. High RISK Low Low High RETURN RISKS & REWARDS 11.18

  19. IT CAPABILITIES & IMPACTS • ANALYTICAL: Can bring complex analytical methods to bear on process • INFORMATIONAL:Makes vast amounts of detailed information available • SEQUENTIAL:Enables changes in sequence, parallel tasks * 11.19 Source: Davenport & Short “The New Industrial Engineering”(1990)

  20. IT CAPABILITIES & IMPACTS • KNOWLEDGE MANAGEMENT:Allows capture, dissemination of knowledge, expertise • TRACKING:Allows detailed tracking of task status, inputs, outputs • DISINTERMEDIATION:Connects parties who otherwise depend on an intermediary * 11.20 Source: Davenport & Short “The New Industrial Engineering”(1990)

  21. BUSINESS PROCESS REENGINEERING (BPR) • WORK-FLOW MANAGEMENT: Streamlining process to move documents easily, efficiently • REENGINEERING * 11.21

  22. BUSINESS REENGINEERING STEPS: 1. Develop business vision, process objectives 2. Identify process to be redesigned 3. Understand, measure performance of existing processes 4. Identify opportunities for applying information technology 5. Build PROTOTYPE of new process * 11.22

  23. TOTAL QUALITY MANAGEMENT (TQM) RESPONSIBILITY FOR QUALITY SHARED BY ALL PEOPLE IN ORGANIZATION * 11.23

  24. CONTRIBUTIONS OF TQM • SIMPLIFY PRODUCT OR PROCESS • BENCHMARKING: Strict standards for measuring performance • LISTEN TO CUSTOMER DEMANDS • REDUCE CYCLE TIME • IMPROVE DESIGN • INCREASE PRECISION OF PRODUCTION * 11.24

  25. SYSTEM DEVELOPMENT PROCESS • SYSTEMS ANALYSIS • SYSTEM DESIGN • PROGRAMMING • TESTING • CONVERSION • PRODUCTION & MAINTENANCE * 11.25

  26. SYSTEMS ANALYSIS ANALYSIS OF PROBLEM TO BE SOLVED WITH AN INFORMATION SYSTEM FEASIBILITY STUDY: CAN PROBLEM BE SOLVED WITHIN CONSTRAINTS? * 11.26

  27. FEASIBILITY • TECHNICAL:Assess hardware, software, technical resources • ECONOMIC: Will benefits outweigh costs • OPERATIONAL:Is solution desirable within existing conditions? • INFORMATION REQUIREMENTS:Detailed statement of new system needs * 11.27

  28. SYSTEM DESIGN DETAILS HOW SYSTEM WILL MEET NEEDS: • LOGICAL DESIGN:Components, data as needed by applications • PHYSICAL DESIGN:Physical location of components and data * 11.28

  29. DESIGN SPECIFICATIONS • OUTPUT • MEDIUM; CONTENT; TIMING • INPUT • ORIGINS; FLOW; DATA ENTRY • USER INTERFACE • SIMPLICITY; EFFICIENCY; LOGIC • FEEDBACK; ERRORS • DATABASE DESIGN • LOGICAL DATA RELATIONS • VOLUME, SPEED REQUIREMENTS • FILE ORGANIZATION & DESIGN • RECORD SPECIFICATIONS * 11.29

  30. DESIGN SPECIFICATIONS • PROCESSING • COMPUTATIONS • PROGRAM MODULES • REQUIRED REPORTS • TIMING OF OUTPUTS • MANUAL PROCEDURES • WHAT ACTIVITIES • WHO PERFORMS THEM • HOW • WHERE * 11.30

  31. DESIGN SPECIFICATIONS • CONTROLS • INPUT • PROCESSING • OUTPUT • PROCEDURAL • SECURITY • ACCESS CONTROLS • CATASTROPHE PLANS • AUDIT TRAILS * 11.31

  32. DESIGN SPECIFICATIONS • CONVERSION • TRANSFER FILES • INITIATE NEW PROCEDURES • SELECT TESTING MODULES • CUT OVER TO NEW SYSTEM • TRAINING • SELECT TRAINING TECHNIQUES • DEVELOP TRAINING MODULES • IDENTIFY TRAINING FACILITIES • ORGANIZATIONAL CHANGES • TASK REDESIGN • JOB DESIGN • PROCESS DESIGN • OFFICE / ORGANIZATION STRUCTURE DESIGN • REPORTING RELATIONSHIPS * 11.32

  33. ROLE OF END USERS • USERS DRIVE SYSTEMS EFFORT • MUST HAVE SUFFICIENT CONTROL TO ENSURE SYSTEM REFLECTS BUSINESS PRIORITIES, NEEDS • FUNCTIONAL USERS DRIVE SYSTEM NEEDS 11.33

  34. COMPLETING SYSTEM DEVELOPMENT PROCESS • PROGRAMMING:Translating needs to program code • TESTING:Does system produce desired results? * 11.34

  35. TESTING • UNIT TESTING:Tests each unit separately • SYSTEM TESTING:Do modules function as planned? • ACCEPTANCE TESTING:Final certification • TEST PLAN:Preparations for tests to be performed * 11.35

  36. CONVERSION • PARALLEL:Old & new run same problems. Give same results? • DIRECT CUTOVER:Risky conversion to new system • PILOT:Introduce into one area. Does it work? Yes: introduce into other area • PHASED:Introduce in stages • CONVERSION PLAN:Schedule for conversion • DOCUMENTATION:Description of how system works * 11.36

  37. PRODUCTION & MAINTENANCE • PRODUCTION:Constant review by users & operators. Does it meet goals? • MAINTENANCE:Upkeep; Update; Corrections over time * 11.37

  38. SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION SYSTEMS ANALYSIS IDENTIFY PROBLEM(S) SPECIFY SOLUTIONS ESTABLISH INFORMATION REQUIREMENTS SYSTEMS DESIGN CREATE LOGICAL DESIGN SPECS CREATE PHYSICAL DESIGN SPECS MANAGE TECHNICAL REALIZATION OF SYSTEM PROGRAMMING TRANSLATE DESIGN SPECS INTO PROGRAM CODE 11.38

  39. SYSTEMS DEVELOPMENT CORE ACTIVITY DESCRIPTION TESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST CONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF PRODUCTION & OPERATE SYSTEM MAINTENANCE EVALUATE SYSTEM MODIFY SYSTEM 11.39

  40. UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMS • CAPITAL BUDGETING MODELS LIMITATIONS: • Assume all relevant alternatives have been examined; cost & benefits can be expressed as $$ • Ignore intangible benefits * 11.40

  41. CAPITAL BUDGET: PROCESS OF ANALYZING, SELECTING CAPITAL EXPENDITURES • PAYBACK METHOD • RETURN ON INVESTMENT • COST-BENEFIT RATIO • NET PRESENT VALUE • PROFITABILITY INDEX • INTERNAL RATE OF RETURN * 11.41

  42. COSTS & BENEFITS: COSTS: • HARDWARE • SOFTWARE • SERVICES • PERSONNEL * 11.42

  43. COSTS & BENEFITS: TANGIBLE BENEFIT: • INCREASED PRODUCTIVITY • LOW OPERATING COSTS • REDUCED WORK FORCE • LOWER COMPUTER EXPENSES • LOWER VENDOR COSTS • LOWER CLERICAL/PROFESSIONAL COSTS • REDUCED GROWTH OF EXPENSES • REDUCED FACILITY COSTS * 11.43

  44. COSTS & BENEFITS: INTANGIBLE BENEFIT: • IMPROVED ASSET USE; RESOURCE CONTROL; PLANNING • INCREASED FLEXIBILITY • MORE TIMELY INFORMATION • INCREASED LEARNING • ATTAIN LEGAL REQUIREMENTS • ENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION, DECISION MAKING, OPERATIONS • HIGHER CLIENT SATISFACTION • BETTER CORPORATE IMAGE * 11.44

  45. PORTFOLIO ANALYSIS: ANALYSIS OF POTENTIAL APPLICATIONS TO DETERMINE RISKS & BENEFITS • DETERMINE DESIRABLE FEATURES, ACCEPTABLE RISKS OF REQUIRED SYSTEM • GENERATE PORTFOLIO OF CHARACTERISTICS, RISKS FOR EACH ALTERNATIVE • SCORING MODEL * 11.45

  46. SCORING MODEL: • IDENTIFY DESIRABLE FEATURES • PROVIDE WEIGHTS FOR EACH (ADD TO 1.00) • LOOK AT EACH ALTERNATIVE: • WHICH FEATURES ARE PRESENT? • TO WHAT EXTENT (as an amount)? • SCORE THE ALTERNATIVE • RANK-ORDER THE ALTERNATIVES • SELECT HIGHEST RANKED OPTION * 11.46

  47. Connect to the INTERNET PRESS LEFT MOUSE BUTTON ON ICON TO CONNECT TO THE LAUDON & LAUDON WEB SITE FOR MORE INFORMATION ON THIS CHAPTER 11.47

  48. 11. REDESIGNING THE ORGANIZATION WITH INFORMATION SYSTEMS 11.48

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