Chapter 3 Solving Problems The Strategic Management of Information Technology.

Chapter 3Chapter 3Solving ProblemsSolving Problems

The StrategicManagement of

InformationTechnology

Systems ApproachSystems Approach

Input OutputProcess

Feedback and Control Feedback and Control SystemsSystems

Input OutputProcess

Control

Goal

Feedback

Strategic Leverage Strategic Leverage ParadigmParadigm

CompetitivePosition

CompetitivePosition

Nature of Conflict;Terms of

Competition

StrategicLeverage

ObjectivesStrategies

Tactics

Changethe

Game

Changethe

Game

Systems DevelopmentSystems DevelopmentLifecycleLifecycle

Planning

Support

Implementation Design

Analysis

Obsolete SolutionProblem to be Solved

ProblemUnderstanding

andSolution

RequirementsAcceptable

SolutionStatement

ImplementedSolution

ImplementationError (bug)

New, Related Problem or Requirement

New implementation Alternative or Requirement

Systems Planning ElementsSystems Planning Elements People

– Users, Management, Information Specialists

Data– How it is captured, used, and stored

Activities– Automated and Manual– Business and Information Applications

Networks– Where data is stored and processed– How data is exchanged between different locations

Technology– hardware and software used

Information SystemInformation SystemBuilding BlockBuilding Block

Systems Builders

Systems Designers

Systems Users

Systems Owners

Differentiation versus Cost LeadershipDifferentiation versus Cost LeadershipT1

SustainablePremium

Quality

Cost

Minimum or Market-RequiredQuality

DifferentiatedPlayer

CostLeader

TechnologyCurve

Is Cost Leadership Sustainable?Is Cost Leadership Sustainable?T1

SustainablePremium

Quality

Cost

Minimum or Market-RequiredQuality

DifferentiatedPlayer

CostLeader

OldTechnologyCurve

T2

NewTechnologyCurve

Industry/Company Industry/Company RelationshipsRelationships

IndustryStructure &Competitive

Position

Long-termObjectives,StrategicDirection

DetailedStrategies

and Tactics

Freedomof

Maneuver

Break-Even PointBreak-Even PointTotal Revenue

Profit

Total Costs

Fixed Costs

SalesBreak-Even Volume

Revenueand

Costs

Profit

FixedCosts

DecisionDecision Trees Trees

DecisionPoint

Probability

Efforts to CategorizeEfforts to Categorizethe Unknownthe Unknown

Complexity

Instability

Uncertainty

Barriers to Entry SourcesBarriers to Entry Sources Economies of Scale Economies of Scope Product Differentiation Capital Requirements Cost Disadvantages

– Independent of Size Distribution Channel Access Government Policy

Four Generic ApproachesFour Generic ApproachesWin

Win

Lose

Lose

Win/Win Win/Lose orCooperative Equilibrium

Lose/LoseWin/Lose orCooperative Equilibrium

Lose/LoseLose/Lose Total Industry Profits are Very Low, Zero,

or Negative Industry Revenues are Declining, or, at

best, steady Product Technology is at or past its peak

Structure Defines the Industry War

Win/WinWin/Win

Total Industry Revenues and Profits are Growing Rapidly

Numerous Players of All Sizes Products and Services are not Standardized

Win/LoseWin/Lose Total Industry Revenues and/or Profits are

Constant or are Growing very Slowly Significant Economies of Scale in Production,

Distribution, and/or Promotion Number of Firms Participating in the Industry is

Limited and Stable Individual Participants have, or can obtain,

Information Regarding the Relative Positions of the Players

Structure Defines the Terms Structure Defines the Terms of Competitionof Competition

Wasting Resources – generic advertising rather than focusing on specific

market segments Precipitating Unwanted Warfare

– Causing a full-scale price war when only brand repositioning was necessary

Failing to Anticipate and Adapt to Changes– Following historical patterns– Underspending on Advertising

Structure Defines ManeuverStructure Defines Maneuver

Standard or Dominant Product Emerges Distribution Channels Limit Firm’s Ability

to Determine which Channels to Select Target and Market Niches Become More

Difficult to Defend Substitutes Limit Price Increases which

Requires Increase in Advertising Expenditure

Project ManagementProject Management

Set of Principles, Methods, Tools, Techniques

For the Effective Management of Results-Oriented Work

Utilized in the Context of a Specific and Unique Organizational Environment

VariablesVariables

Cost

Risk

Time

GoalsGoals

Critical Path/PERT Charting Progress Presentation Reports

– Clients and Management Dependencies/Prerequisites/Linkages Variance Analysis Resource Assignments

MSProject Program LinkagesMSProject Program Linkages

Suite: Lotus/Microsoft/WordPerfect– Spreadsheet– Presentation– word processing– Database– Notes– Flowcharting (AllClear or ABC)– Risk Analysis Tool

Project Management IssuesProject Management Issues Learning Curve Requires Understandable

Training Program Drown in Data Entry Loose Perspective in Extent of Project Captured Management Commitment Critical Mass Required Rollups Discipline in Monitoring/Using Plan

Project Management TermsProject Management Terms

Schedule From:– Project Start Date– Project Finish Date

Duration Type:– Resource Driven– Fixed Duration

Constrain Task– Date

Project Management TermsProject Management Terms

Priority– High– Medium– Low

Risk– High– Medium– Low

Project Management TermsProject Management Terms

Relationship with Predecessor:– Finish-to-Start (FS)– Start-to-Start (SS)– Finish-to-Finish (FF)– Start-to-Finish (SF)

Project Management TermsProject Management Terms

Tasks:– Noncritical– Critical– Milestone– Summary– Project Summary

MIS RisksMIS Risks

Creeping User Requirements 80% Excessive Schedule Pressure 65% Low Quality 60% Cost Overruns 55% Inadequate Configuration Controls 50%

Systems Software RisksSystems Software Risks

Long Schedule 70% Inadequate Cost Estimating 65% Excessive Paper Work 60% Error-prone Modules 50% Canceled Projects 35%

Commercial Software RisksCommercial Software Risks

Inadequate User Documentation 70% Low User Satisfaction 55% Excessive Time to Market 50% Harmful Competitive Actions 45% Litigation Expenses 30%

Military Software RisksMilitary Software Risks

Excessive Paperwork 90% Low Productivity 85% Long Schedules 75% Creeping User Requirements 70% Unused or Unusable Software 45%

Contract or Outsourced RisksContract or Outsourced Risks

High Maintenance Costs 60% Friction between Contractor and Client 50% Creeping User Requirements 45% Unanticipated Acceptance Criteria 30% Legal Ownership of Software 20%

End-User Software RisksEnd-User Software Risks

Non-Transferable Applications 80% Hidden Errors 65% Unmaintainable Software 60% Redundant Applications 50% Legal Ownership of Software 20%

– Deliverables

Risk Prevention and ControlRisk Prevention and Control

Creeping User Requirements Schedule Pressure, Long Schedules, and

Excessive Time to Market Cost Overruns Low Quality and Error-Prone Modules High Maintenance Costs

Risk Factors Resistant to Risk Factors Resistant to ControlControl

Excessive Paperwork Inadequate User Documentation Low User Satisfaction Friction Between Clients and Contractors Legal Issues and Litigation Expense

Serious Software RisksSerious Software Risks Inadequate Metrics Inadequate Measurement Excessive Schedule Pressure Management Malpractice Inaccurate Cost Estimating Silver Bullet Syndrome Creeping User Requirements Low Quality Low Productivity Canceled Projects

Risk Factors to DefineRisk Factors to Define

Definition Severity Frequency Occurrence Susceptibility and Resistance Root Causes Associated Problems

Risk Factors to DefineRisk Factors to Define

Cost Impact Methods of Prevention Methods of Control Product Support Consulting Support Education Support Publication Support

Risk Factors to DefineRisk Factors to Define

Periodical Support Standards Support