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Harish Baba V.V

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Redesigning the

Organization with IS

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Establishing OrganizationalInformation Requirements

To develop an effective IS plan, the

organization must have a clear understanding

of both its long- and short-term informationrequirements

Two principal methodologies for establishing

those:

Enterprise Analysis (Business Systems Planning)

Strategic Analysis (Critical Success Factors)

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Enterprise Analysis

An analysis of organization-wide informationrequirements by looking at the entireorganization in terms of organizational units,

functions, processes, and data elements; helpsidentify the key entities and attributes in theorganizations data

Developed by IBM in the 1960s

Method: Take a large sample of managersand ask them how they use information, wherethey get it, what their environment is like, whattheir objectives are, how they make decisionsand what their data needs are

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Enterprise Analysis Take

aways Gives a comprehensive view of the organization

Produces an enormous amount of information, expensiveto collect and difficult to analyze

Bias towards top management and data processing

Focus not on critical objectives but rather on whatexisting information is used

The result is a tendency to automate whatever exists

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Critical Success Factors

A small number of easily identifiable operationalgoals shaped by the industry, the firm, themanager, and the broader environment that are

believed to ensure the success of anorganization.

Example Goals CSF

Profit Concern Earnings/share

Return on Investment

Market Share

New Product

Automotive Industry

Styling

Quality dealer system

Cost control

Energy Standards

Non-profit Excellent health care

Meeting government regulations

Future health needs

Regional integration with other

hospitals

Efficient use of resources

Improved monitoring ofregulations

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Using CSFs to Develop IS

Manager A

CSFs

Manager B

CSFs

Manager C

CSFs

Manager D

CSFs

Aggregate &

analyze

individual

CSFs

Develop

agreement on

company

CSFs

Define

company

CSFs

Define DSS

and databases

Use CSFs to

develop IS

priorities

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CSF Limitations

Produces a smaller set of data to analyze

Can be tailored to the structure of each industry

Takes into account the changing environment

Data collection and analysis are art forms

Confusion between individual and organizational CSFs

Biased towards top managers

Assumes that successful TPS already exist

Like the Enterprise Analysis method provides astatic picture

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Systems Development and

Organizational Change Global networks (International division of

labor; global reach of firms)

Enterprise networks (collaborative work)

Distributed Computing (empowerment)

Portable Computing (virtual organizations)

Graphical User Interfaces (everybody hasaccess to information)

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The Spectrum of

Organizational Change (1) Automation: using the computer to

speed up the performance of existingtasks most common form of IT-enabled change

involves assisting employees perform theirtasks more efficiently and effectively

akin to putting a larger motor in an existingvehicle

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The Spectrum of

Organizational Change (2) Rationalization of procedures: the

streamlining of existing operating procedures,eliminating obvious bottlenecks so that

automation makes operating procedures moreefficient follows quickly from early automation

Toshiba had to rationalize its procedures down to thelevel of installation manuals and software instruction

and had to create standard names and formats forthe data items in its global data warehouse

Think: without a large amount of business processrationalization, computer technology would havebeen useless at Toshiba (what ERPs do)

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The Spectrum of

Organizational Change (3) Business Process Re-engineering (BPR):

The radical redesign of business processes,combining steps to cut waste and eliminating

repetitive, paper-intensive tasks to improvecost, quality, and service and to maximize thebenefits of information technology Involves radical rethinking

Can change the way an organization conducts its

business

Strikes fear, its expensive, its very risky and itsextremely difficult to carry out and manage

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Business Process

Reengineering Develop the business vision and process

objective

Identify the processes to be redesigned (core

and highest payback) Understand and measure the performance of

existing processes

Identify the opportunities for applying

information technology Build a prototype of the new process

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The Spectrum of

Organizational Change (4) Paradigm Shift: Radical

reconceptualization of the nature of thebusiness and the nature of the organization

akin to rethinking not only the automobile, buttransportation itself

e-business is a paradigm shift

Deciding which business process to get right is halfthe challenge

70% of time programmatic reengineering efforts fail

Why then change? Because the rewards are high!

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Information Systems

Development Systems Development: the

activities that go into producing aninformation systems solution to anorganizational problem oropportunity

Structured kind of problem with

distinct activities

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Systems Analysis (1)

Systems Analysis: the analysis of aproblem that the organization will try tosolve with an IS thorough understanding of the existing

organization and system

identify the primary owners and users ofdata in the organization

identification of the details of the problemsof existing systems

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Systems Analysis (2)

Feasibility Study: the way todetermine whether the solution isachievable, given the organizations

resources and constraints Technical feasibility

Economic feasibility

Operational feasibility

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Systems Design

Systems Design: details how asystem will meet the informationrequirements as determined by the

systems analysis Output, Input, User Interface, Database

Design, Processing, Manual Procedures,Controls, Security, Documentation,Conversion, Training, OrganizationalChanges

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Completing the Design

Process Programming

Testing

Unit testing

System testing

Acceptance testing

Conversion

Parallel strategy

Direct cut-over strategy

Pilot study strategy

Phased approach strategy

MaintenanceMaintenance

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Understanding theBusiness value ofsystems

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The Business Value ofInformation Systems

Costs and Benefits of Information Systems

Costs Benefits

Hardware Tangible (Cost Savings)

Telecommunications Increased productivity, low operational costs,

reduced work force, lower outside vendor costs,lower clerical and professional costs, reduced rate

of growth in expenses

Software Intangible

Services Improved asset utilization, improved resourcecontrol, improved organizational planning, more

timely information, more information, increased

organizational learning, enhanced employeegoodwill, increased job satisfaction, improveddecision making, improved operations, higher

client satisfactions, better corporate imagePersonnel

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Capital Budgeting Models

Information Systems are considered long-termcapital investment projects

Capital budgeting: The process of analyzing and selecting various proposalsfor capital expenditures. The difference between cash outflows and cashinflows is used for calculating the financial worth of an investment.

The high rate of technological obsolescence in budgeting for systemsmeans simply that the payback period must be shorter, and the rates ofreturn higher than typical capital projects with much longer useful lives

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Capital Budgeting Models

(2) The Payback Method-A measure of the time

required to pay back the initial investment of a project

Accounting Rate of Return on Investment

(ROI)- Calculation of the rate of return from aninvestment by adjusting cash inflows produced by theinvestment for depreciation

Net Present Value (NPV) -The amount of money

an investment is worth, taking into account its cost,earnings, and the time value of money

Cost-Benefit Ratio - A method for calculating thereturns from a capital expenditure by dividing the totalbenefits by total costs

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Non-financial and StrategicConsiderations

Cautiously

Examine

Identify and

Develop

Avoid Routine Projects

Project Risk

High Low

High

Low

PotentialBenef i

tstoFi r

m

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Thank you