Chapter 3 Solving Problems The Strategic Management of

Chapter 3 Solving Problems The Strategic Management of Information Technology

Systems Approach Input Process Output

Feedback and Control Systems Input Process Output Control Goal Feedback

Strategic Leverage Paradigm Change the Game Competitive Position Nature of Conflict; Terms of Competition Strategic Leverage Objectives Strategies Tactics Change the Game

Systems Development Lifecycle Obsolete Solution Planning Problem to be Solved New, Related Problem or Requirement Support New implementation Alternative or Requirement Implementation Error (bug) Implemented Solution Design Implementation Acceptable Solution Statement Analysis Problem Understanding and Solution Requirements

Systems Planning Elements l People – l Data – l – Automated and Manual Business and Information Applications Networks – – l How it is captured, used, and stored Activities – l Users, Management, Information Specialists Where data is stored and processed How data is exchanged between different locations Technology – hardware and software used

Information System Building Block Systems Owners Systems Users Systems Designers Systems Builders

Differentiation versus Cost Leadership T 1 Cost Differentiated Player Sustainable Premium Technology Curve Cost Leader Minimum or Market-Required Quality

Is Cost Leadership Sustainable? T 1 T 2 Cost Differentiated Player Sustainable Premium New Technology Curve Cost Leader Old Technology Curve Minimum or Market-Required Quality

Industry/Company Relationships Industry Structure & Competitive Position Freedom of Maneuver Long-term Objectives, Strategic Direction Detailed Strategies and Tactics

Break-Even Point Revenue and Costs Total Revenue Profit Total Costs Fixed Costs Break-Even Volume Sales

Decision Trees Probability Decision Point

Efforts to Categorize the Unknown Uncertainty Complexity Instability

Barriers to Entry Sources l l l Economies of Scale Economies of Scope Product Differentiation Capital Requirements Cost Disadvantages – l l Independent of Size Distribution Channel Access Government Policy

Four Generic Approaches Win/Win Lose Win/Lose or Cooperative Equilibrium Lose/Lose

Structure Defines the Industry War Lose/Lose l l l 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

Win/Win l l l Total Industry Revenues and Profits are Growing Rapidly Numerous Players of All Sizes Products and Services are not Standardized

Win/Lose l l 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 of Competition l Wasting Resources – l Precipitating Unwanted Warfare – l generic advertising rather than focusing on specific market segments 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 Maneuver l l 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 Management l l l 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

Variables Cost Time Risk

Goals l l Critical Path/PERT Charting Progress Presentation Reports – l l l Clients and Management Dependencies/Prerequisites/Linkages Variance Analysis Resource Assignments

MSProject Program Linkages l Suite: Lotus/Microsoft/Word. Perfect – – – – Spreadsheet Presentation word processing Database Notes Flowcharting (All. Clear or ABC) Risk Analysis Tool

Project Management Issues l l l l 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 Terms l Schedule From: – – l Duration Type: – – l Project Start Date Project Finish Date Resource Driven Fixed Duration Constrain Task – Date

Project Management Terms l Priority – – – l High Medium Low Risk – – – High Medium Low

Project Management Terms l Relationship with Predecessor: – – Finish-to-Start (FS) Start-to-Start (SS) Finish-to-Finish (FF) Start-to-Finish (SF)

Project Management Terms l Tasks: – – – Noncritical Critical Milestone Summary Project Summary

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

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

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

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

Contract or Outsourced Risks l l l 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 Risks l l l Non-Transferable Applications Hidden Errors Unmaintainable Software Redundant Applications Legal Ownership of Software – Deliverables 80% 65% 60% 50% 20%

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

Serious Software Risks l l l l l 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 Define l l l l Definition Severity Frequency Occurrence Susceptibility and Resistance Root Causes Associated Problems

Risk Factors to Define l l l l Cost Impact Methods of Prevention Methods of Control Product Support Consulting Support Education Support Publication Support

Risk Factors to Define l l Periodical Support Standards Support