Week 14–Managing projects

Why Project Management Matters in Information Systems

High Failure Rate in IS Projects

• Many IS projects take far more time and money than planned.

• Systems often do not work properly or fail to meet expectations.

• When systems fail, rms lose bene ts and may still rely on manual workarounds.

Runaway Projects

• 30–40% of software projects become runaways:

◦ Exceed budget, Exceed schedule, Deliver incomplete or missing functionality

• Only 29% of IT projects nish on time, on budget, with promised features.

Consequences of Poor Project Management

• Massive cost overruns

• Time delays

• Lower technical performance

• Failure to deliver expected business value

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Why Systems Fail

Common System Problems

• Poor requirement de nition

◦ System fails to capture essential business needs

• Bad user interface design

◦ Hard-to-use input forms

◦ Confusing screen layouts

◦ Slow or cluttered web pages

• Low-quality data

◦ Inaccurate, inconsistent, incomplete

◦ Data not organized for business use

• User resistance

◦ System too complicated, unintuitive, or slow

• System not used

◦ Users create manual workarounds instead

Even technically functioning systems can fail if they do not support business processes or user needs.
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Project Management Objectives (The Five Variables)

What Is a Project?

A structured set of activities designed to achieve a speci c business objective (e.g., new information system, upgrade, infrastructure
replacement).

Project Management Tasks

• Plan the work

• Estimate resources

• Assess risks

• Organize & assign tasks

• Direct activities

• Control execution

• Report progress

• Evaluate results
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Five Key Variables of Project Management

1. Scope – What the project will and will not include.

2. Time – Schedule, deadlines, task durations, milestones.

3. Cost – Budget for labor, hardware, software, and facilities.

4. Quality – How well the system meets user needs: accuracy, timeliness, usability.

5. Risk – Potential issues that could delay, increase cost, or derail project success.
Why Project Selection Matters

Project Selection Challenge

• Organizations always have more project ideas than available time, money, or staff.

• Must select the projects that deliver the greatest business value.

• Project choices must support the overall business strategy.

Goal of Project Selection

• Choose projects that:

◦ Align with business goals

◦ Improve performance

◦ Provide measurable bene ts

◦ Fit within resource limits

• Avoid low-value, high-risk, or misaligned projects.

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 Management Structure for IS Projects

Hierarchy for Project Governance

1. Corporate Strategic Planning Group

• De nes corporate strategy

• Identi es where new systems are needed

2. Information Systems Steering Committee

• Senior managers from IT + business units

• Approves major projects & budgets

• Coordinates systems across divisions

3. Project Management Group

• IT and end-user managers

• Oversees multiple project teams

4. Project Team

• Systems analysts, programmers, database specialists, and business users

• Responsible for day-to-day development

Purpose: Provide structure, align systems with strategy, and ensure right projects get funded.
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Linking Projects to the Business Plan

Information Systems Plan (IS Plan)

A roadmap that aligns future systems with the business plan.

Plan Includes:

• Corporate goals & how IT supports them

• Current systems analysis

• New system proposals

• Key decisions (hardware, telecom, centralization)

• Organizational changes (training, new roles)

• Implementation schedule & budget

Why It Matters

• Ensures the right systems are built

• Coordinates development across the rm

• Provides measurable objectives & timelines

• Helps evaluate progress and performance

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 Critical Success Factors (CSF Method)

CSF Approach (Rockart)

An organization’s IT needs are shaped by a small set of Critical Success Factors—the essential areas where good performance guarantees
success.

Key Features

• Based on interviews with top managers

• Identi es strategic information needs

• Helps focus attention on high-priority areas

Strengths

• Simple and top-management focused

• Links systems directly to business goals

Weaknesses

• Dif cult to aggregate individual CSFs into a company-wide pattern

• Biased toward senior executives

• May miss needs of middle/lower-level employees

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Portfolio Analysis & Scoring Models

Portfolio Analysis

• Make a list of all IT projects & assets

• Evaluates each project by risk and bene t

• Helps balance:

◦ High-risk, high-reward innovations

◦ Low-risk, high-bene t operational improvements

• Avoids low-bene t/high-risk investments

• Aligns IT spending with business strategy → proven to improve ROI(return of investment)

Scoring Models

• Used when many criteria must be considered

• Criteria weighted by importance (e.g., sales order processing, inventory management)

• Each system option scored based on how well it meets requirements

• Highest overall weighted score → best choice

The real value is often the discussion and agreement on evaluation criteria—not just the nal score.
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 Understanding the Business Value of IS

Why Financial Evaluation Matters

• Even if a system supports strategy and meets user needs, it must be a good investment.

• Key question: Does the system produce a positive return on invested capital (ROI)?

Types of Costs and Bene ts

• Tangible bene ts

◦ Quanti able (e.g., labor savings, fewer errors, reduced operating costs)

• Intangible bene ts

◦ Harder to measure but valuable (e.g., better decisions, improved service, faster response)

Beyond TCO (Total Cost of Ownership)

• TCO measures full IT costs but does not evaluate:

◦ Business bene ts

◦ Strategic factors

◦ Organizational impacts

◦ Complexity and “soft costs”

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Capital Budgeting & Real Options Models

Capital Budgeting for IS

Evaluates long-term investment value using cash ow–based models:

• Payback period – when investment breaks even

• ROI (Return on Investment) – pro tability measure

• Net Present Value (NPV) – value of future cash ows today

• Internal Rate of Return (IRR) – discount rate that yields break-even

Used to answer: “Is this project nancially worth it?”

Real Options Pricing Models (ROPMs)

Useful for high-uncertainty projects (e.g., IT infrastructure, emerging tech).

• Treat IT investments like nancial options:

◦ Right—but not obligation—to expand, cancel, defer, or continue

• Allow small pilot investments before full commitment

• Capture value from exibility and future opportunities

Main challenge: Estimating cash ows, risks, and option value is complex.
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Limitations of Financial Models

Why Traditional Financial Analysis Falls Short

Financial models often ignore organizational and social costs, such as:

• Training users and managers

• Productivity dip during transition

• Resistance, learning curves, and change management

• Time spent redesigning processes

Also Underestimates Bene ts

Some bene ts are hard to quantify but critical:

• Faster, better decision making

• Improved employee skills

• Increased customer satisfaction

• Greater organizational learning

• Strategic exibility and innovation

A system’s value is not only nancial —true success requires evaluating both measurable returns and strategic, organizational impacts.
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Dimensions of Project Risk

Projects differ in risk level depending on size, structure, and technology:

1. Project Size

• Larger projects = higher risk:

◦ More money, people, time, and units involved

◦ More complex to control and coordinate

• Very large systems have 50–75% higher failure rates.

• Hard to estimate time and cost for big projects.

2. Project Structure

• Well-structured projects→ lower risk.

• Poorly structured projects→ high risk.

• If users don’t agree on what they want, risk increases.

3. Experience with Technology

• If team lacks experience with:

◦ Hardware

◦ System software

◦ Application software

◦ Databases
 Change Management & Implementation

Why Change Management Matters

• New systems change:

◦ How information is de ned, accessed, and used

◦ Job roles, processes, power and authority

• These changes can trigger resistance and con ict.

• Many projects fail not for technical reasons, but because organizational change is mishandled.

Implementation

• Implementation = all activities to adopt, manage, and routinize a new system.

• The systems analyst acts as a change agent:

◦ Designs technical solution

◦ Rede nes jobs, work ows, relationships

◦ Mediates between groups

◦ Helps the organization adjust and accept the system.

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 Users, Management Support & High-Risk Changes

Role of End Users

• High user involvement leads to:

◦ Better t with business needs

◦ More acceptance & ownership

◦ Better design
• Problem: user–designer communication gap

◦ IT staff: technical, machine-oriented perspective

◦ Users: business, task-oriented perspective

Management Support

• Strong management backing:

◦ Signals project is a priority

◦ Ensures funding and resources

◦ Supports enforcement of new procedures & roles

• Without leadership support, change is often ignored.
High-Risk Situations

• Particularly risky projects:

◦ Business Process Reengineering (BPR)

◦ Enterprise applications (ERP, CRM, SCM)

◦ Mergers & acquisitions (systems integration)

• High failure rates due to:

◦ Deep organizational change

◦ Legacy systems

◦ Fear, anxiety, resistance, and poor change management.a

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Tools & Strategies for Controlling Risk

Managing Technical Complexity

• Use internal integration tools:

◦ Experienced project leaders with strong technical + managerial skills

◦ Skilled, stable project team

◦ Frequent communication and problem-solving

◦ Outsource missing specialized skills when needed

Formal Planning & Control Tools

• Gantt Charts

◦ Show tasks, start/end dates, duration, and resource needs

◦ Good for visualizing timeline

• PERT Charts

◦ Show task dependencies & sequences

◦ Identify critical path and bottlenecks

• Help to:

◦ Break big projects into manageable tasks

◦ Track progress vs plan

◦ Predict impact of delays.

User Involvement & Resistance

• Increase user involvement at all stages.

• Use external integration tools:

◦ Add users to the project team

◦ Give users leadership roles in training and rollout

◦ Show responsiveness to user feedback

• Recognize counterimplementation (deliberate efforts to block the system).

 Designing for the Organization & Project Tools

Designing for the Organization

• New system affects:

◦ Work ows & procedures

◦ Job descriptions & skills

◦ Power and reporting relationships

◦ Work environment & ergonomics

• Need organizational impact analysis:

◦ How will structure, attitudes, decision-making, and operations change?

◦ Document and plan these changes, not just the technology.

Sociotechnical Design

• Separate technical and social design solutions.

• Compare and choose solutions that balance:

◦ Technical ef ciency

◦ Human needs, job satisfaction, quality of work life

• Goal: systems that work well technically and are accepted by people.

Project Management Software Tools

• Tools like Microsoft Project, Project Server, SharePoint, and Web-based tools:

◦ De ne & order tasks

◦ Assign resources

◦ Track time, cost, and progress

◦ Generate Gantt/PERT charts and reports

• Project portfolio management tools:

◦ Manage sets of projects together

◦ Coordinate dependencies and resources

◦ Align project mix with strategy and capacity.

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