Building Information Systems

Building a new information system is one kind of planned organizational change. The introduction of a new information system involves much more than new hardware and software.

Systems Development And Organizational Change

Information technology can promote various degrees of organizational change, ranging from incremental to far-reaching. There are four kinds of structural organizational change that are enabled by information technology:
 

1. automation - assist employees with performing their tasks more efficiently and effectively.
2. rationalization - a deeper form of organizational change and one that follows quickly from early automation
3. business process redesign - business processes are analyzed, simplified, and redesigned
4. paradigm shifts - involves rethinking the nature of the business and the nature of organization. Each carries different risks and rewards.

Business Process Redesign

Business process managemet provides a variety of tools and methodologies to analyze existing processes, design new processes, and optimize those processes. It has to go through the following steps:

1. Identify processes for change: managers need to detrmine what business processes are the most important and how improving these processes will help business performance.
2. Analyze existing processes: existing business processes should be modeled and documented, noting inputs, outputs, resources, and the sequence of activities.
3. Design the new process: once the existing process is mapped and measured in terms of time and cost, the process design team will try to improve the process by designing a new one. A new streamlined “to-be” process will be documented and modeled for comparison with the old process.
4. Implement the new process: new information systems or enhancements to existing systems may have to be implemented to support the redesigned process.  
5. Continuous measurement: once a process have been implemented and optimized, it needs to be continually measured because they may lose their effectiveness if the business experiences other changes or deteriorate over time as employees fall back on old methods.

Overview of Systems Development

The activities that go into producing an information system solution to an organizational problem or opportunity are called systems development. Systems development is a structured kind of problem solved with distinct activities such as analysis, systems design, programming, testing, conversion, and production and maintenance.

Systems Analysis – the analysis of a problem that a firm tries to solve with an information system. It also includes a feasibility study to determine whether that solution is feasible or achievable, from a financial, technical, and organizational standpoint.

Establishing Information Requirements – it carefully defines the objectives of the new or modified system and develops a detailed description of the functions that the new system must perform.

Fig. The Systems Development Process

Systems Design – shows how the system will fulfill this objective. The design of an information system is the overall plan or model for that system.

The Role of End Users – users must have sufficient control over the design process to ensure that the system reflects their business priorities and information needs, not the biases of the technical staff.

Completing The Systems Development Process

The remaining steps in the systems development process translate the solution specifications established during system analysis and design into a fully operational information system. They are

· Programming – system specifications that were prepared during the design stage are translated into software program code.

· Testing – conducted thoroughly to ascertain whether the system produces the right results.

· Conversion – the process of changing from the old system to the new system.

· Production and Maintenance – after the new system is installed and conversion is complete, the system is said to be in production. Changes in hardware, software, documentation, or procedures to a production system to correct errors, meet new requirements, or improve processing efficiency are termed maintenance.

Modeling And Designing Systems: Structured And Object-Oriented Methodologies

There are alternative methodologies for modeling and designing systems. Structured methodologies and object-oriented development are the most prominent.

Structured Methodologies

Structured methodologies have been used to document, analyze, and design information systems since the 1970s. It refers to the fact that the techniques are step by step, with each step building on the previous one. They are top-down, progressing from the highest, most abstract level to the lowest level of detail – from the general to the specific. Process specifications describe the transformation occurring within the lowest level of the data flow diagrams. They express logic for each process. The structure chart is a top-down chart, showing each level of design, its relationship to other levels, and its place in the overall design structure.

Fig. High-Level Structure Chart for a Payroll System

Object-Oriented Development

Object-oriented development addresses these issues. It uses the object as the basic unit of systems analysis and design. An object combines data and the specific processes that operate on those data.

Fig. Class And Inheritance

Computer-Aided Software Engineering

Computer-aided software engineering (CASE) – sometimes called computer-aided systems engineering, provides software tools to automate the methodologies we have just described to reduce the amount of repetitive work the developer needs to do. CASE tools also facilitate the creation of clear documentation and the coordination of team development efforts.

Alternative Systems-Building Approaches

Traditional Systems Life Cycle

The systems life cycle is the oldest method for building information systems. The life cycle methodology is a phased approach to building a system, dividing systems development into formal stages. The systems life cycle is still used for building large complex systems that require a rigorous and formal requirements analysis, predefined specifications, and tight controls over the system-building process.

Prototyping

Prototyping consists of building an experimental system rapidly and inexpensively for end users to evaluate. The prototype is a working version of an information system or part of the system, but it is meant to be only a preliminary model.

Steps in Prototyping

Step 1: Identify the user’s basic requirements.

Step 2: Develop an initial prototype.

Step 3: Use the prototype.

Step 4: Revise and enhance the prototype.

Fig. The Prototyping Process

End-User Development

Some types of information systems can be developed by end users with little or no formal assistance from technical specialists. This phenomenon is called end-user development. A series of software tools categorized as fourth-generation languages makes this possible. Fourth-generation languages are software tools that enable end users to create reports or develop software applications with minimal or no technical assistance. Query languages are software tools that provide immediate online answers to requests for information that are not predefined.

Application Development For the Digital Firm

In the digital firm environment, organizations need to be able to add, change, and retire their technology capabilities very rapidly to respond to new opportunities. Companies are starting to use shorter, more informal development processes that provide fast solutions.

Rapid Application Development (RAD)

The term rapid application development (RAD)is used to describe this process of creating workable systems in a very short period of time. RAD can include the use of visual programming and other tools for building graphical user interfaces, iterative prototyping of key system elements, the automation of program code generation, and close teamwork among end users and information systems specialists. Sometimes a technique called joint application design (JAD) is used to accelerate the generation of information requirements and to develop the initial systems design. Properly prepared and facilitated, JAD sessions can significantly speed up the design phase and involve users at an intense level. Agile development focuses on rapid delivery of working software by breaking a large project into a series of small subprojects that are completed in short periods of time using iteration and continuous feedback.

Component-based Development and Web Services

To further expedite software creation, groups of objects have been assembled to provide software components for common functions such as a graphical user interface or online ordering capability that can be combined to create large-scale business applications. This approach to software development is called component-based development, and it enables to a system to be built by assembling and integrating existing software components. Web servicescan provide significant cost savings in systems building while opening up new opportunities for collaboration with other companies.

SUMMARY

Building a new information system is one kind of planned organizational change. The introduction of a new information system involves much more than new hardware and software. Information technology can promote various degrees of organizational change, ranging from incremental to far-reaching. The core activities in systems development are systems analysis, systems designs, programming, testing, conversion, production, and maintenance. The two principal methodologies for modeling and designing information systems are structured methodologies and object-oriented development. The oldest method for building systems is the systems life cycle, which requires that information systems be developed in formal stages. The stages must proceed sequentially and have defined outputs; each requires formal approval before the next stage can commence. Companies are turning to rapid application design, joint application design (JAD), agile development, and reusable software components to accelerate the systems development process. Component-based development expedites application development by grouping objects into suites of software components that can be combined to create large-scale business applications. Web services provide a common set of standards that enable organizations to link their systems regardless of their technology platform through standard plug- and –play architecture.

Managing Projects

A systems development project without proper management will most likely suffer these consequences:

• Costs that vastly exceed budgets
• Unexpected time slippage
• Technical performance that is less than expected
• Failure to obtain anticipated benefits

The systems produced by failed information projects are often not used in the way they were intended, or they are not used at all. Users often have to develop parallel manual systems to make these systems work.

Project Management Objectives

A project is a planned series of related activities for achieving a specific business objective. Project management refers to the application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints. Scope defines what work is or is not included in a project.

Management Structure For Information Systems Projects

The following figure shows the elements of a management structure for information systems projects in a large corporation. It helps ensure that the most important projects are given priority. At the apex of this structure is the corporate strategic planning group and the information system steering committee.

Fig. Management Control of Systems Projects

Linking Systems Projects To The Business Plan

In order to identify the information systems projects that will deliver the most business value, organizations need to develop an information systems plan that supports their overall business plan and in which strategic systems are incorporated into top-level planning. The plan serves as a road map indicating the direction of systems development (the purpose of the plan), the rationale, the current system/situation, new developments to consider, the management strategy, the implementation plan, and the budget.

Critical Success Factors

To develop an effective information systems plan, the organization must have a clear understanding of both its long- and short-term information requirements. The strategic analysis, or critical success factors, approach argues that an organization's information requirements are determined by a small number of critical success factors (CSFs) of managers. CSFs are shaped by the industry, the firm, the manager, and the broader environment.

Portfolio Anaylsis

Once strategic analyses have determined the overall direction of systems development, portfolio analysis can be used to evaluate alternative system projects. Portfolio analysis inventories all of the organization's information systems projects and assets, including infrastructure, outsourcing contracts and licenses. Its investments can be described as having a certain profile of risk and benefit to the firm.

Fig. Using CSFs to Develop Systems

Scoring Models

A scoring model is useful for selecting projects where many criteria must be considered. It assigns weights to various features of a system and then calculates the weighted totals.

Establishing The Business Value of Information Systems

Even if a system project supports a firm's strategic goals and meets user information requirements, it needs to be a good investment for the firm.  The value of systems from a financial perspective essentially revolves around the issue of return on invested capital.

Information System Costs and Benefits

Tangible benefits can be quantified and assigned a monetary value. Intangible benefits, such as more efficient customer service or enhanced decision making, cannot be immediately quantified but may lead to quantifiable gains in the long run.

Capital Budgeting for Information Systems

To determine the benefits of a particular project, you'll need to calculate all of its costs and all of its benefits. Capital budgeting models are one of several techniques used to measure the value of investing in long-term capital investment projects.

Real Options Pricing Models

Real options pricing models (ROPMs) use the concept of options valuation borrowed from the financial industry. An option is essentially the right, but not the obligation, to act at some future date. ROPMs value information systems projects similar to stock options, where an initial expenditure on technology creates the right, but not the obligation, to obtain the benefits associated with further development and deployment of the technology as long as management has the freedom to cancel, defer, restart, or expand the project.

Limitations of Financial Models

Many companies' information systems investment decisions do not adequately consider costs from organizational disruptions created by a new system, such as the cost to train end users, the impact that users' learning curves for a new system have on productivity, or the time managers need to spend overseeing new system-related changes. These are overlooked in a traditional financial analysis.

Change Management and The Concept Of Implementation

 A very large percentage of information systems projects stumble because the process of organizational change surrounding system building was not properly addressed. Successful system building requires careful change management.

The Concept of Implementation

Implementation refers to all organizational activities working toward the adoption, management, and routinization of an innovation, such as a new information system. In the implementation process, the systems analyst is a change agent.

The Role of End Users

The relationship between users and information systems specialists has traditionally been a problem area for information systems implementation grounds, interests and priorities. This referred to as the user-designer communications gap. These differences lead to divergent organizational loyalties, approaches to problem solving, and vocabularies.

Management Support and Commitment

If an information systems project has the backing and commitment of management at various levels, it is more likely to be perceived positively by both users and the technical information services staff.

Change Management Challenges for Business Process Reengineering, Enterprise Applications, and Mergers and Acquisitions

A number of studies have indicated that 70 percent of all business process reengineering project fail to deliver promised benefits. A high percentage of enterprise applications fail to be fully implemented or to meet the goals of their users even after three years of work. Projects related to mergers and acquisitions are deeply affected by the organizational characteristics of the merging companies as well as by their IT infrastructures.

Controlling Risk Factors

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-managment approaches geared to its level of risk.

Managing Technical Complexity

Projects with challenging and complex technology for users to master benefit from internal integration tools. The success of such projects depends on how well their technical complexity can be managed. Project leaders need both heavy technical and administrative experience. Team meetings should take place frequently. Essential technical skills or expertise not available internally should be secured from outside the organization.

Formal Planning and Control Tools

Large projects benefit from appropriate use of formal planning tools and formal control tools for documenting and monitoring project plans. A Gantt chart lists project activities and their corresponding start and completion dates. Program Evaluation and Review Technique (PERT) chart lists the specific activities that make up a project and the activities that must be completed before a specific activity can start.

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. Participation in implementation activities may not be enough to overcome the problem of user resistance to organizational change. Different users may be affected by the system in different ways. Counterimplementation is a deliberate strategy to thwart the implementation of an information system or an innovation in an organization.

Designing For The Organization

Because the purpose of a new system is to improve the organization's performance, information systems projects must explicitly address the ways in which the organization will change when the new system is installed. Ergonomics refers to the interaction of people and machines in the work environment. An organizational impact analysis explains how a proposed system will affect organizational structure, attitudes, decision making, and operations.

Sociotechnical Design

The social design plans explore different work group structures, allocation of tasks, and the design of individual jobs. The resulting sociotechnical design is expected to produce an information system that blends technical efficiency with sensitivity to organizational and human needs, leading to higher job satisfaction and productivity.

Fig. Sociotechnical Model

SUMMARY

Good project management is essential for ensuring that systems are delivered on time, on budget, and provide genuine business benefits. 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 variable: scope, time, cost, quality, and risk. Organizations need an information systems plan that describes how information technology supports the attainment of their business goals and documents all their system applications and IT infrastructure components. The level of risk in a systems development project is determined by (1) project size (2) project structure and (3) experience with technology. Implementation refers to the entire process of organizational change surrounding the introduction of a new information system. The risk level of each project determines the appropriate mix of external integration tools, internal integration tools, formal planning tools, and formal control tools to be applied.

 

Managing Global Systems

The new world order is sweeping away many national corporations, national industries, and national economies controlled by domestic politicians. Many localized firms will be replaced by fast-moving networked corporations that transcend national boundaries. The growth of international trade has radically altered domestic economies around the globe.

Developing An International Information Systems Architecture

An international information systems architecture consists of the basic information systems required by organizations to coordinate worldwide trade and other activities. The basic strategy to follow when building an international system is to understand the global environment in which your firm is operating. This means understanding the overall market forces, or business drivers, that are pushing your industry toward global competition. A business driver is a force in the environment to which businesses must respond and that influences the direction of the business. 

Fig. International Information Systems Architecture

The Global Environment: Business Drivers and Challenges

The global business drivers can be divided into two groups: general cultural factors and specific business factors. Easily recognized general cultural factors have driven interantionalization since World War II. The development of global communications has created a global village in a second sense: A global culture created by television, the Internet, and other globally shared media such as movies now permits different cultures and peoples to develop common expectations about right and wrong, desirable and undesirable, heroic and cowardly. 

Responding to demand, global production and operations have emerged with precise online coordination between far-flung production facilities and central headquarters thousands of miles away. The new global markets and pressure toward global production and operation have called forth whole new capabilities for global coordination.

Finally, global markets, production, and administration create the conditions for powerful, sustained global economies for scale. Not all industries are similarly affected by these trends. Clearly, manufacturing has been much more affected than services that still tend to be domestic and highly inefficient. However, the localism of services is breaking down in telecommunications, entertainment, transportation, finance law, and general business. 

Business Challenges

As a cultural level, particularism, making judgments and taking action on the basis of narrow or personal characteristics, in all its forms (religious, nationalistics, ethnic, regionalism, geopolitical position) rejects the very concept of a shared global culture and rejects the penetration of domestic markets by foreign goods and services. Transborder data flow is defined as the movement of information across international boundaries in any form.

Table 15-2  Challenges and Obstacles to Global Business Systems

State of The Art

There are significant difficulties in building appropriate international architectures. The difficulties involve planning a system appropriate to the firm's global strategy, structuring the organization of systems and business units, solving implementation issues, and choosing the right technical platform. 

Organizing International Information Systems

Three organizational issues face corporations seeking a global position: choosing a strategy, organizing the business, and organizing the systems management area.

Global Strategies and Business Organization

Four main global strategies form the basis for global firms' organizational structure are domestic exporter, multinational, franchiser, and transnational. The domestic exporter strategy is characterized by heavy centralization of corporate activities in the home country of origin. The multinational strategy concentrates financial management and control out of a central home base while decentralizing production, sales, and marketing operations to units in other countries. Franchisers are an interesting mix of old and new. On the one hand, the product is created, designed, financed, and initially produced in the home for further production, marketing, and human resources. In a transnational strategy, nearly all the value-adding activities are managed from a global perspective without reference to national borders, optimizing sources of supply and demand wherever they appear, and taking advantage of any local competitive advantages.

Global Systems to Fit The Strategy

Information technology and improvements in global telecommunications are giving international firms more flexibility to shape their global strategies. The configuration, management, and development of systems tend to follow the global strategy chosen.

 Fig. Global Strategy and Systems Configurations

Reorganizing The Business

To develop a global company and information systems support structure, a firm needs to follow these principles:

1. Organize value-adding activities along lines of comparative advantage.
2. Develop and operate systems units at each level of corporate activity - regional, national, and international.
3. Establish at world headquarters a single office responsible for development of international systems - a global chief information officer (CIO) position.

Managing Global Systems
It is interesting to note that these problems are the chief difficulties managers experience in developing ordinary domestic systems as well. But these are enormously complicated in the international environment.


Table 15-4  Management Challenges in Developing Global Systems

Global Systems Strategy

The following figure lays out the main dimensions of a solution. First, consider that not all systems should be coordinated on a transnational basis; only some core systems are truly worth sharing from a cost and feasibility point of view. Core systems support functions that are absolutely critical to the organization.

Fig. Local, Regional, and Global Systems

The Management Solution: Implementation

Agreeing on Common User Requirements

Establishing a short list of the core business processes and core support systems will begin a process of rational comparison across the many divisions of the company, develop a common language for discussing the business, and naturally lead to an understanding of common elements.

Introducing Changes in Business Processes

Your success as a change agent will depend on your legitimacy, your authority, and your ability to involve users in the change design process. Legitimacy is defined as the extent to which your authority is accepted on grounds of competence, vision, or other qualities.

Coordinating Applications Development

Choice of change strategy is critical for this problem. At the global level there is far too much complexity to attempt a grand design strategy of change. It is far easier to coordinate change by making small incremental steps toward a larger vision.

Coordinating Software Releases

Firms can institute procedures to ensure that all operating units converts to new software updates at the same time so that everyone's software is compatible.

Encouraging Local Users to Support Global Systems

The key to this problem is to involve users in the creation of the design without giving up control over the development of the project to parochial interests. The overall tactic for dealing with resistant local units in transnational company is cooptation. Cooptation is defined as bringing the opposition into the process of designing and implementing the solution without giving up control over the direction and nature of the change. 

Technology Issues And Opportunities For Global Value Chains

One major challenge is finding some way to standardize a global computing platform when there is so much variation from operating unit to operating unit and from country to country.

Computing Platforms And Systems Integration

The goal is to develop global, distributed, and integrated systems to support digital business processes spanning national boundaries. Briefly, these are the same problems faced by any large domestic systems development effort. However, the problems are magnified in an international environment. 

Connectivity

Truly integrated global systems must have connectivity - the ability to link together the systems and people of global firm into a single integrated network just like the phone system but capable of voice, data, and image transmissions.

Table 15-5 Problems of International Networks

Quality of service

Security

Costs and tariffs

Network management

Installation delays

Poor quality of international service

Regulatory constraints

Network capacity

Fig. Internet Penetration By Region

Software Localization

Aside from integrating the new with old systems, there are problems of human interface design and functionality of systems. When international systems involve knowledge workers only, English may be the assumed international standard. But as international systems penetrate deeper into management and clerical groups, a common language may not be assumed and human interfaces must be built to accommodate different languages and even conventions. The entire process of converting software to operate in a second language is called software localization.

 

SUMMARY

The growth of inexpensive international communication and transportation has created a world culture with stable expectations or norms. Political stability and a growing global knowledge base that is widely shared also contribute to the world culture. There are four basic international strategies: domestic exporter, multinational, franchiser, and transnational. There is a connection between firm strategy and information systems design. Global information systems pose challenges because cultural, political, and language diversity magnifies differences in organizational culture and business processes and encourages proliferation of disparate local information systems that are difficult to integrate. Implementation a global system requires an implementation strategy that considers both business design and technology platforms. Global networks are extremely difficult to build and operate. The main software issues concern building interfaces to existing systems and selecting applications that can work with multiple cultural, language, and organizational frameworks.