managing projects

Chapter 14Managing Projects

Learning Objectives

1. What are the objectives of project management and why is it so essential in developing information systems?

2. What methods can be used for selecting and evaluating information systems projects and aligning them with the firm’s business goals?

3. How can firms assess the business value of information systems projects?

4. What are the principal risk factors in information systems projects?

5. What strategies are useful for managing project risk and system implementation?

Chapter Outline

14.1 The Importance of Project Management

Runaway Projects and System FailureProject Management Objectives

14.2 Selecting ProjectsManagement Structure for Information Systems ProjectsLinking Systems Projects to the Business PlanInformation Requirements and Key Performance IndicatorsPortfolio AnalysisScoring Models

14.3 Establishing the Business Value of Information SystemsInformation System Costs and BenefitsReal Options Pricing ModelsLimitations of Financial Models

14.4 Managing Project RiskDimensions of Project RiskChange Management and the Concept of ImplementationControlling Risk FactorsDesigning for the OrganizationProject Management Software Tools

Key Terms

The following alphabetical list identifies the key terms discussed in this chapter. The page number for each key term is provided.

14-1Copyright © 2014 Pearson Education, Inc.

Capital budgeting, 539 Organizational impact analysis, 550

Change agent, 542 PERT chart, 545

Change management, 542 Portfolio analysis, 536

Counterimplementation, 547 Project, 530

Critical success factors (CSFs), 533 Project management, 530

Ergonomics, 549 Project portfolio management, 551

External integration tools, 545 Real options pricing models (ROPMs), 540

Formal control tools, 545 Scope, 532

Formal planning tools, 545 Scoring model, 537

Gantt chart, 545 Sociotechnical design, 550

Implementation, 542 Tangible benefits, 538

Information systems plan, 534 User-designer communications gap, 543

Intangible benefits, 538 User interface, 530

Internal integration tools, 544

Teaching Suggestions

The opening case, “Nu Skin’s New Human Resources System Project Puts People First,” illustrates the importance of understanding the corporate culture and truly putting people first in any organizational change.

The company was very careful to select the right project team members—those who would enhance the team based on skills and personality as well as the ability to perform on-site training. Through every step of the project, the company was careful to put “people” before technology. And the company was careful to address the business and culture requirements of its new system. Even though it took two years to assess the system requirements, select the correct system, train users, and phase in the system, the benefits were immediate. All employee and human resource reports that were previously completed manually are now accessible in real-time through the new system. It’s much more efficient and cheaper.

This case study shows the upside of correctly managing projects and how successful they can be when done right. Unfortunately, too many organizations fail to correctly assess the business value of projects or fail to manage the organizational change brought on by new projects.

Section 14.1, “The Importance of Project Management” Spend some time discussing why so many information system projects fail. It is because the system wasn’t built correctly or was it really how the project was managed or mismanaged that caused the failure? You should remind students of the biggest problems with IT projects: It takes too long to build systems and they often do not work as intended. Of course, this is not always true, but building systems is difficult and labor intensive. This section provides


students with an introduction to five project management objectives: scope, time, cost, quality, and risk. What’s most important is that information technology projects should be treated the same as any other business project-installing a new production line or designing and building a major advertising and sales campaign.

Interactive Session: Management: Austin Energy’s Billing System Can’t Light Up

Case Study Questions

1. Is the Austin Energy project a failure? Explain your answer.

Yes, the project can be considered a failure for these reasons: Costs exceeded budgets Unexpected time slippages Technical performance that was less than expected Failure to obtain anticipated benefits Poor user interface

2. Describe the business impact of the faltering Austin Energy project.

Software bugs have led to errors in thousands of customer billings. Over 65,000 customers have not received bills entirely, and another 35,000 have received inaccurate bills. One customer was billed $300,000 instead of $3,000. The company was ill-prepared to deal with the outpouring of customer dissatisfaction and the customer service department was in danger of being overrun.

“Persistent system errors prevented the company from billing apartment residents for water, balancing its books, and filing audit reports. Without the ability to bill for utilities properly, the City of Austin was losing revenue,” said Austin Energy manager Larry Weiss.

3. How much was IBM responsible for the problems encountered by the Austin Energy billing project? Austin Energy? Explain your answer.

IBM responsibilities: IBM was repeating mistakes during the system implementation. Two separate errors cost the project 37 hours of delay and one of the errors was the same type the same team made earlier. The team seemingly used ad hoc methods for managing the project. The company replaced the lead manager twice.

Austin Energy responsibilities: The utility did not include strong enough penalties for vendor nonperformance, including the question of system availability in the contract. The utility did not make provisions for back-up systems in case something went wrong with the new system implementation, instead choosing to believe everything would work smoothly.


4. What were the specific organizational or technical factors as well as management factors involved in this project failure?

Management: IBM’s lead manager on the project was replaced twice. Problems with the system were not delegated to the right person. IBM and Austin Energy executives failed early on to identify gaps outside the project’s scope and recommend solutions. IBM responses to the myriad of implementation problems were too incremental.

Organizational: Communications were poor regarding the business impacts caused by known defects. Both IBM and Austin Energy failed to insist or implement best practice processes to ensure repeatable successes. Austin Energy did not manage its customer service department very well to ensure that all customer complaints were handled in a timely and proper manner. It did not plan for back-up measures in case something went wrong. Employees were not properly trained and integrated well into the system implementation.

Technical: IBM failed to work closely with third party vendors like Oracle to ensure all parts of the new system would interface with each other correctly and easily. The new billing system is complex, with 73 different interfaces.

5. Describe the steps Austin Energy and IBM should have taken to better manage this project.

Both companies should have dealt better with five major variables associated with any major project:

Scope: Define what work is or is not included in a project. Time: Assess the amount of time required to successfully complete the

project, including all activities and tasks. Cost: Determine the time to complete a project multiplied by the cost of

human resources required to complete the project. Quality: Determine how well the end result of a project satisfied the objectives

specified by management. Risk: Determine potential problems that threaten the project’s success.

Determine if the potential problems prevent a project from achieving its objectives by increasing time and cost, lowering the quality of project outputs, or preventing the project from being completed altogether.

Section 14.2, “Selecting Projects” Throughout the textbook, the Laudons’ have stressed that information systems are sociotechnical and part of the organization. This is an important point to reiterate to your students. A new information system changes the way the organization operates. Successful organizations choose to change their structure and operations over time. They choose information systems designed to mirror organizational changes. New systems can change organizational political arrangements and power relationships. The information systems plan is the first step to link the business plan to information systems. The information systems plan helps an organization answer the


following questions: What do we need to do? Who needs the information? Who creates it? How can we create a system that will change our strategy or even the business we are in?

You may want to use Figure 14-2 to show students how each management level of an organization has its own set of responsibilities for information system projects. Too many times senior managers, especially those outside the IT division/department, don’t understand how their actions or inactions affect the success of IT projects.

Section 14.3, “Establishing the Business Value of Information Systems” This section focuses heavily on mathematical models to evaluate the costs and benefits of information system projects. The Learning Tracks for this chapter may help you present the payback method, the accounting rate of return on investment, net present value, and internal rate of return models for evaluating projects. Be sure to caution students that financial models only evaluate costs versus benefits and tend to overlook the social and organizational dimensions of information systems. They don’t include the costs of organizational disruptions or the savings from better decision-making and enhanced employee performance.

Section 14.4, “Managing Project Risk” This section begins by describing three dimensions of project risk: size, structure, and experience with technology. It goes on to explain how change management can diminish the potential failure rate of projects regardless of these dimensions. Many organizations’ projects have failed mostly because they didn’t understand the behavioral changes the new system would cause. The user-designer communication gap is a good example of a common problem that can cause an information systems project to fail. Table 14-4 compares user concerns vs. designer concerns and explains how the two entities view systems so differently. One of the most effective ways to control risk factors is by using PERT and Gantt charts. If nothing else, they help increase communication between organizational factions. You might find it interesting to have students complete one of the chart types for a simple project like redesigning your course syllabus. It will show them firsthand some of the elements that go into creating a college course. If you have access to Microsoft’s Office Project software you can use it to demonstrate a quick project.

Interactive Session: Organizations: Westinghouse Electric Takes on the Risks of a “Big Bang” Project


1. Identify and discuss the risks in Westinghouse Electric’s Cornerstone project.

The company decided to update its older system to support new processes, configurations, and functionalities that related to the larger amount of business it was conducting. The company estimated that it would increase in size fourfold over the next few years. The program consisted of 40 different projects, and updating the SAP system was one of the largest. The goals were to convert all existing data that the


company wanted to save, as well as add new functionalities that would help the company manage its imminent growth. It planned to add a new general ledger, a new enterprise reporting environment and implement a new Customer Relationship Management system.

2. Why was change management so important for this project and this company?

The company ensured that every element of the project was motivated by a particular business driver or goal. It wanted to align three distinct operational regions into a single face in every customer location. The new system had to support the company’s plan to increase global hiring. By associating goals with each element of the project, Westinghouse was able to more precisely control the implementation of the new system.

Using a change agent helped the company redefine configurations, interactions, job activities, and power relationships of various organizational groups. The change agent was also responsible for ensuring all parties involved accepted the changes created by a new system.

3. What management, organization, and technology issues had to be addressed by the Westinghouse project team?

Management: The company was growing too fast for a slow implementation process. It had to release the new systems as soon as possible in order to recoup its return on investment sooner rather than later.

Organization: A phased approach is much less risky even though it’s more expensive. The whole organization had to be ready to implement the new system as quickly as possible using the “big bang” method technically referred to as the “cutover” method. Power users were recruited from key parts of the organization to help ensure a smooth implementation. Specific project details were discussed with business unit leaders to gain their support for the new system.

Technology: The supply chain was one of the area’s most likely to endure significant change since the company’s growth would add many new elements to the chain. The company created an automatic call distribution system and email system that routed users across all time zones to the employees most able to answer their questions. The project team also set up a blog where users could share tips and solutions.

4. Should other companies use a “big-bang” implementation strategy? Why or why not? Explain your answer.

Companies should only use a “big-bang” or “cutover” implementation strategy if they have a great deal of confidence in the new system. Once the implementation starts, there is no going back. If the organization has used the proper formal planning and control tools to manage and monitor the new system’s development, it can be


reasonably comfortable that the new system will operate as intended upon start up. If the company has not adequately planned the implementation, it should not use the cutover strategy.

Review Questions

1. What are the objectives of project management and why is it so essential in developing information systems?

Describe information system problems resulting from poor project management.

When an information system fails to work properly or costs too much to develop, companies may not realize any benefit from their information system investment, and the system may not be able to solve the problems for which it was intended. Good project management is essential for ensuring that systems are delivered on time, on budget, and provide genuine business benefits.

Define project management. List and describe the project management activities and variables addressed by project management.

Project management refers to the application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints. Project management activities include planning the work, assessing the risk, estimating and acquiring resources required to accomplish the work, organizing the work, directing execution, and analyzing the results. Project management must deal with five major variables: Scope: Defines what work is or is not included in a project. Time: The amount of time required to complete the project. Cost: Based on the time to complete a project multiplied by the cost of the human

resources required to complete the project. Quality: An indicator of how well the end result of a project satisfies the

objectives specified by management. Risk: Refers to potential problems that would threaten the success of a project.

2.What methods can be used for selecting and evaluating information systems projects and aligning them with the firm’s business goals?

Name and describe the groups responsible for the management of information systems projects.

Large corporations will have a management structure to ensure the most important systems projects receive priority.

Corporate strategic planning group: Responsible for developing the firm’s strategic plan, which may require the development of new systems.


Information systems steering committee: The senior management group with responsibility for systems development and operations. It’s composed of department heads from both end-user and information systems areas. The committee reviews and approves plans for systems in all divisions, seeks to coordinate and integrate systems, and occasionally selects specific information systems projects.

Project management group: Composed of information systems managers and end-user managers, this group is responsible for overseeing specific information systems projects.

Project team: Directly responsible for individual systems projects. It consists of systems analysts, specialists from the relevant end-user business areas, application programmers, and database specialists.

Describe the purpose of an information systems plan and list the major categories in the plan.

An information systems plan helps executives, managers, and users identify information systems projects that will deliver the most business value. The information systems plan must support the overall business plan. It serves as a road map indicating the following principles:

Purpose of the plan Strategic business plan rationale Current systems/situation New developments to consider Management strategy Implementation plan Budget requirements

The major categories of an information systems plan are further broken down in Table 14–1.

Explain how key performance indicators, portfolio analysis, and scoring models can be used to select information systems projects.

Key Performance indicators (KPIs) help an organization clearly understand both its long- and short-term information requirements. KPIs are shaped by the industry, the firm, the manager, and the broader environment. New information systems should focus on providing information that helps the firm meet its goals implied by KPIs.

Portfolio analysis is used to help evaluate alternative system projects. Portfolio analysis inventories all of the firm’s information systems projects and assets, including infrastructure, outsourcing contracts, and licenses. Firms try to improve the return on their information system portfolios by balancing the risk and return from their systems investments. By using portfolio analysis, management can determine the optimal mix of investment risk and reward for their firms, balancing riskier, high-


reward projects with safer, lower-reward ones.

Scoring models are useful when many criteria must be considered. It assigns weights to various system features and then calculates the weighted totals. The scoring model requires experts who understand the issues and the technology. Often the most important outcome of a scoring model is not the score but agreement on the criteria used to judge a system. It helps confirm, rationalize, and support decisions, rather than serve as the final arbiter of the system selection process. Table 14-2 can be used to explain how a simple scoring system works.

3.How can firms assess the business value of information systems projects?

List and describe the major costs and benefits of information systems.

Table 14-3 lists all of the major costs and benefits of information systems. It divides the costs among five system components: hardware, software, telecommunications, personnel, and services. Some of the tangible benefits include increased productivity, lower operational costs, and a reduced workforce. Among the intangible benefits are improved organizational planning, more timely information, improved decision making, and increased job satisfaction.

Distinguish between tangible and intangible benefits.

Students can use Table 14-3 to answer this question.

Tangible benefits can be quantified and assigned a monetary value. They include: increased productivity, lower operational costs, reduced workforce, lower computer expenses, lower outside vendor costs, lower clerical and professional costs, reduced rate of growth in expenses, reduced facility costs, and increased sales.

Intangible benefits cannot be immediately quantified but may lead to quantifiable gains in the long run. They include: improved asset utilization, improved resource control, improved organizational planning, increased organizational planning, increased organizational flexibility, more timely information, more information, increased organizational learning, legal requirements attained, enhanced employee goodwill, increased job satisfaction, improved decision making, improved operations, higher client satisfaction, and better corporate image.

Explain how real options pricing models can help managers evaluate information technology investments.

Appropriate strategies, such as real options pricing models (ROPM), can be applied to evaluate and value the information system when the benefits cannot be established in advance. Real options pricing models apply the same techniques for valuing financial options to systems investments and can be useful to help managers think about the potential value of highly uncertain IT investments. ROPM allows managers to


systematically take into account the volatility in the value of IT projects over time, the optimal timing of the investment, and the changing cost of implementation as technology prices fall over time. The disadvantages of this model are primarily in estimating all the key variables, especially the expected cash flows from the underlying asset, and changes in the cost of implementation.

4. What are the principal risk factors in information systems projects?

Identify and describe each of the principal risk factors in information systems projects.

Project size: The larger the project (dollars spent, the size of the implementation staff, the time allocated, and the number of organizational units affected), the greater the risk. The larger the project, the higher the failure rate. There are few reliable techniques for estimating the time and cost to develop large-scale information systems.

Project structure: Highly structured projects usually have clear and straightforward requirements, therefore outputs and processes are easily defined. Users know exactly what they want and what the system should do; there is almost no possibility of users changing their minds.

Experience with technology: The less experience the project team has with hardware, system software, application software, or database management system, the higher the risk of project failure.

Explain why builders of new information systems need to address implementation and change management.

An information system is a sociotechnical entity, an arrangement of both technical and social elements. Information systems change involves hardware and software, but in addition, it involves changes in jobs, skills, management, and organization. When we design a new information system, we are redesigning the organization, reordering its technical and social elements. Change management addresses these types of changes, or more directly, the effects of the changes on the people whose jobs will change. The system not only changes the technology and the organization, it also changes people, and the project must also address this aspect if it is to succeed.

Explain why eliciting support of management and end users is so essential for successful implementation of information systems projects.

The user-designer communication gap deals with the relationship that exists between end users and information systems specialists. These two groups have different backgrounds, interests, and priorities and has traditionally been a problem for information systems implementation efforts. These differences create user-designer communications gaps as depicted in Table 14-4. Information systems specialists often have a highly technical orientation to problem solving, focusing on technical


solutions in which hardware and software efficiency is optimized at the expense of ease of use or organizational effectiveness. End users prefer systems that are oriented toward solving business problems or facilitating organizational tasks.

Explain why there is such a high failure rate for implementations involving enterprise applications, business process reengineering, and mergers and acquisitions.

These projects are very challenging, partly because they usually require extensive organizational change. They also often replace deeply entrenched old technologies and legacy systems. Many are undermined by poor implementation and change management practices. The project must address employee concerns about the change, their fears and anxieties, resistance by key managers, changes in job functions, career paths, and recruitment practices.

A major reason for merger and acquisition failures is the difficulty in integrating the information systems of the different companies. Combining the different systems usually requires considerable organizational change and complex system projects to manage the change. Unless the integration of the systems is successful, the expected benefits of the merger or acquisition will not be achieved.

5. What strategies are useful for managing project risk and system implementation?

Identify and describe the strategies for controlling project risk.

Strategies you can follow to increase the chances of a successful system include: New systems that involve challenging and complex technology can be helped

by recruiting project leaders with strong technical and administrative experience.

If the firm does not have staff with the required technical skills or expertise, outsourcing or using external consultants are options that may be pursued.

Using formal planning and control tools, such as Program Evaluation and Review Technique (PERT) or Gantt charts improve project management by listing the specific activities that make up a project, their duration, and the sequence and timing of task.

Promote user participation by making user education and training easily available, and by providing better incentives for users who cooperate.

Exercise sensitivity to ergonomic issues. Solve organizational problems prior to introducing new systems.

Identify the organizational considerations that should be addressed by project planning and implementation.

The term implementation refers to the entire process of organizational change surrounding the introduction of a new information system. Information systems


design and the entire implementation process should be managed as planned organizational change using an organizational impact analysis. A very large percentage of information systems fail to deliver benefits or solve the problems for which they were intended because the process or organizational change surrounding system building was not properly addressed. The principal causes of information system failure are (1) insufficient or improper user participation in the systems development process, (2) lack of management support, (3) high levels of complexity and risk, and (4) poor project management.

Explain how project management software tools contribute to successful project management.

You can use special tools to help you manage the implementation of a new information system (internal integration tools). The software features these capabilities:

Define and order tasks Assign resources to tasks Establish starting and ending dates to tasks Track progress Facilitate modifications to tasks and resources Automate the creation of Gantt and PERT charts Track the way changes in one aspect of a project affect others

If nothing else, these special tools will help you communicate with everyone on the implementation team and in the organization as a whole.

Discussion Questions

1. How much does project management impact the success of a new information system?

Clearly, any project that is not properly thought out and managed will result in a dismal failure. Without proper management things quickly fall off the rails. Cost overruns mount, delays are unavoidable, frustration levels rise, and lack of commitment and belief in the product disappear, and so on. Success of any new information system is no different than planning for any other type of resource investment.

Murphy’s Law is made for computers; whatever can go wrong, will go wrong. You have to anticipate problems and be ready to solve them. No system yet devised has been problem-free. If you understand and accept that, implementing a new information system shouldn’t be that much different from implementing any other type of new system in the organization. You can use many of the same principles to guide you through the process.


For instance, if you were changing a production line, you’d have certain plans for analyzing, designing, building, testing, training, and implementing the new tools or methods. If you are changing the process for enrolling employees in the company’s new 401K plan, you’d have to make lots of decisions about the new process. The same thing holds true for implementing a new information system.

2. It has been said that most systems fail because system builders ignore organizational behavior problems. Why might this be so?

System building efforts often fail because there is too much emphasis on the technology and not enough attention to changes in organizational structure, job design, workflows, and reporting relationships. Inattention to these issues often breeds resistance to a new system and may also produce a system that is incompatible with the organization. Conflicts between the technical orientation of system designers and the business orientation of end users must also be resolved for successful implementation of systems. The success or failure of organizational change can be determined by how well information systems specialists, end users, and decision makers deal with key issues at various stages of implementation.

3. What is the role of end users in information systems project management?

End users play the most important role in systems development. There are two positive outcomes from having high levels of user participation in designing and operating information systems:

Users have more opportunities to mold the system according to their priorities and business requirements and more opportunities to control the outcome of the development process.

Users are more likely to react positively to the completed system.

Managers must be aware of and work to minimize the user-designer communication gap (page 541) which can cause a very high risk of failure when the two groups try to pursue different goals. Communication problems between end users and designers are the number one reason why user requirements are not properly addressed in information systems and why users are driven out of the implementation process.

Hands-on MIS Projects

Management Decision Problems

1. U.S. Census Bureau: Signed a $600 million contract with Harris corporation in 2006 to build 500,000 devices, but still weren’t sure which features they wanted included in the units. Census officials did not specify the testing process to measure the performance of the handheld devices. Four hundred change requests were added to the project requirements. Two years and hundreds of millions of taxpayer dollars


later, the handhelds were far too slow and unreliable to be used for the 2010 U.S. census. What could Census Bureau management and the Harris Corporation have done to prevent this outcome?

Both organizations could have done a much better job of defining project objectives at the very beginning including the scope, time, cost, quality, and risk of the project. Simply defining the scope of the project could have drastically reduced the number of change requests that were submitted. The Census Bureau should have developed key performance indicators to guide management of the project. It could have brought in a change agent to help guide the organization towards a more successful implementation. Closing the user-designer communication gap could have reduced the poor outcome of the project.

2. Caterpillar: The company wants to end its support for its Dealer Business System (DBS), which it licenses to its dealers to help them run their businesses. The software is becoming out of date and senior management wants to turn support over to Accenture Consultants. The dealers were never required to use the system but it had become a de facto standard for business processes. Approximately 150 dealers worldwide use some version of the system. Before Caterpillar turns the product over to Accenture, what factors and issues should it consider? What questions should it ask? What questions should its dealers ask?

Using an information systems plan, senior managers can analyze the idea of turning the system over to outside consultants and determine strategies for doing so. Step 2, Strategic Business Plan Rationale, requires managers to evaluate the current situation and business organization against changing environments. Using Step 3, Current Systems, Caterpillar executives, Accenture consultants, and a select number of dealers can determine the major systems for supporting business functions and processes and current infrastructure capabilities of dealers. It also requires them to evaluate anticipated future demands. Step 4, New Developments, allows Accenture and the dealers to understand the business rationale and the applications’ role in strategy for the continued use of the system by dealers. They would also have to evaluate new infrastructure capabilities dealers would require, especially with software updates. Step 5, Management Strategy, and Step 6, Implementation Plan, require Accenture, dealers, and Caterpillar executives to understand and develop plans for migrating the system away from corporate use to the dealers.

Improving Decision Making: Using Spreadsheet Software for Capital Budgeting for a New CAD System

Software skills: Spreadsheet formulas and functionsBusiness skills: Capital budgeting

Your company would like to invest in a new computer-aided-design (CAD) system that requires purchasing hardware, software, and networking technology, as well as expenditures for installation, training, and support. The Laudon Web site,


MyMISlab, for Chapter 14 contains tables showing each cost component for the new system as well as annual maintenance costs over a five-year period. It also features a Learning Track on capital budgeting models. You believe the new system will produce annual savings by reducing the amount of labor required to generate designs and design specifications, thus increasing your firm’s cash flow. Using the data provided in these tables, create a worksheet that calculates the costs and benefits of the investment over a five-year period and analyze the investment using the four capital budgeting models presented in this chapter’s Learning Track. Is this investment worthwhile? Why or why not?

A solution can be found in the Microsoft Excel file named: laudon_mis13_ch14_solution_file.xls.

Improving Decision Making: Using Web Tools for Buying and Financing a Home

Software skills: Internet-based softwareBusiness skills: Financial planning

You have found a new job in Denver, Colorado and would like to purchase a home in that area. Ideally, you would like to find a single-family house with at least three bedrooms and one bathroom that costs between $150,000 and $225,000 and finance it with a 30-year fixed rate mortgage. You can afford a down payment that is 20 percent of the value of the house. Before you purchase a house, you would like to find out what homes are available in your price range, find a mortgage, and determine the amount of your monthly payment. You would also like to see how much of your mortgage payment represents principal and how much represents interest. Use the Yahoo! real estate site (http://realestate.yahoo.com/ ) to help you with the following tasks:

1. Locate homes in your price range in Denver, Colorado. Find out as much information as you can about the houses, including the real estate listing agent, condition of the house, number of rooms, and the school district.

2. Find a mortgage for 80 percent of the list price of the home. Compare rates from at least three sites (use search engines to find sites other than Yahoo!).

3. After selecting a mortgage, calculate your closing costs.4. Calculate the monthly payment for the mortgage you select. 5. Calculate how much of your monthly mortgage payment represents principal

and how much represents interest, assuming you do not plan to make any extra payments on the mortgage.

When you are finished, evaluate the whole process. For example, assess the ease of use of the site and your ability to find information about houses and mortgages; the accuracy of the information you found; the breadth of choice of homes and mortgages; and how helpful the whole process would have been for you if you were actually in the situation described in this project.


Naturally, students will select different properties in the Denver area. Some of the common features of the sites they visit will have them complete an application and email it to the lender. Phone numbers are available to talk to representatives. Payment information should be accurate and easy to use. The students might have some difficulty in finding closing cost information. Many of the closing costs will only be calculated a few minutes before the actual closing. You might suggest to the students that they not complete the application and email it. This will cost the company additional money and resources; as well it could put the students on email lists that they will not be interested in receiving.

Video Cases

You will find video cases illustrating some of the concepts in this chapter on the Laudon Web site at www.pearsonhighered.com/laudon along with questions to help you analyze the cases.

Collaboration and Teamwork: Identifying Implementation Problems

Form a group with two or three other students. Write a description of the implementation problems you might expect to encounter in one of the systems described in the Interactive Sessions or chapter-ending cases in this text. Write an analysis of the steps you would take to solve or prevent these problems. If possible, use Google Sites to post links to Web pages, team communication announcements, and work assignments; to brainstorm; and to work collaboratively on project documents. Try to use Google Docs to develop a presentation of your findings for the class.

Answers for this project will vary. In addition to the models presented in this chapter, here are a few more suggestions for managing the implementation of information systems:

Fully document the firm’s applications and IT infrastructure and conduct periodic reviews of the firm’s IT portfolio.

Ensure that information systems investments are closely aligned with the firm’s business objectives.

Project risks and returns should be clearly identified. Continually measure the business value of new systems and weed out under-

performing projects. For large-scale projects, managers should assume an enterprise-wide focus, solve

problems and meet challenges as they arise rather than simply meeting formal project milestones.

Emphasize learning as well as planning and adapt to unforeseen uncertainties and chaos.


Establish a separate office to manage subprojects and coordinate the entire project effort with other ongoing projects.

Coordinate the project with ongoing changes in the firm’s business strategy, information technology infrastructure, and business processes.

Case Study: NYCAPS and CityTime: A Tale of Two New York City IS Projects


1. How important were the NYCAPS and CityTime projects for New York City? What were their objectives? What would have been their business benefits?

In terms of improving efficiencies and cutting costs, both projects were extremely important for New York City. The goal of the NYCAPS project was to create a modern, automated system for managing and updating personal information for the City’s work force, including employee benefit information. The City was using individual citywide systems, 200 individual agency systems, and a maze of paperwork.

The CityTime project depended on pen and paper to record overtime payments to city workers. It was hoped the new system would automate that and improve accountability throughout the government.

2. Evaluate the key risk factors in both projects.

The key risk factors in both projects were out-of-control time and costs, lower quality of project outputs, and problems that so far have prevented either project from being completed. All of these risk factors were heightened by a lack of qualified project management.

3. Classify and describe the problems each project encountered as the NYCAPS and CityTime systems were being implemented. What management, organization, and technology factors were responsible for these problems?

Management: A lack of qualified and responsible oversight, a lack of management, and a lack of leadership led to the failure of both projects. The NYCAPS project was controlled by government officials who did not have the authority or expertise to make important project decisions, therefore missing many opportunities to lower development costs. The CityTime project was managed by the City’s budget director whose background was in law, not project management or technology.

Organizational: The NYCAPS project monitors reported chronic mismanagement, cost overruns, and general waste plaguing the project, but the city continued ahead with the project without making any significant changes. Other city government


branches left the project mostly to him. The City Comptroller never audited the project despite numerous warnings about the project from staffers.

Technology: The technology requirements, on the surface, were sound: automate manual systems, provide ways to audit input and output, reduce cheating and fraud through better technology, and replace outdated legacy systems with newer technologies. Even though one of the objectives of the NYCAPS system was to update it, the newer system was designed to run on the same old legacy system used in the previous patchwork system.

4. What were the similarities and differences in the management of both projects?

Both projects used hourly billing vs. fixed cost payments at one time or another. That, along with improper management and oversight, invites fraud, waste, and abuse. Neither project had an experienced project manager at the top that was qualified and that had the proper authority to effectively control the project.

The NYCAPS project was totally controlled by one company, Accenture. The CityTime project was controlled by one contractor but used a lot of subcontractors to complete the work which made accountability even worse. The terms of this project’s contract were constantly changing.

5. What was the business impact of these botched implementations? Explain your answer.

Ideally, new systems improve efficiencies, reduce costs, reduce fraud and waste, and provide executives, managers, and employees with better information on which to make better decisions. None of these business benefits was met because of the botched system implementations.

6. Describe the steps that should have been taken to prevent negative outcomes in these projects.

The first step in managing project risk involves identifying the nature and level of risk confronting the project. Implementers can then handle each project with the tools and risk-management approaches geared to its level of risk.

Managing technical complexity: Project leaders need both heavy technical and administrative experience. They must be able to anticipate problems and develop smooth working relationships among a predominantly technical team.

Formal planning and control tools: Formal planning tools and formal control tools for documenting and monitoring project plans are an absolute must. Gantt charts and PERT charts are very helpful for monitoring plans and allowing managers to determine early on when the project is veering off course. These tools can help


managers identify bottlenecks and determine the impact that problems will have on project completion times.

Increasing user involvement and overcoming user resistance: External integration tools consist of ways to link the work of the implementation team to users at all organizational levels. Projects with relatively little structure and many undefined requirements must involve users full at all stages.
