IT Project Governance. Prof. Dr. Juliana Sutanto Chair of Management Information Systems (MIS)

Transcription

1 IT Project Governance Prof. Dr. Juliana Sutanto Chair of Management Information Systems (MIS)

2 Scope of Work Tactical Strategic Scope of Initiatives Portfolio Management The continuous process of identifying, selecting, and managing the optimum set of Portfolio investments to realize maximum business value. Project management The application of knowledge, skills, tools, and techniques to Project activities to meet the Project requirements IT Business/IT Enterprise Sources: Chevron Gartner Group PMI Combined Standards Glossary (2 nd ed.) Jsutanto 2

3 IT Development IT Implementation IT Outsourcing Vendor Selection IT Offshoring Agenda Jsutanto 3

4 IT Project Phases Jsutanto 4

5 Jsutanto 5 5

6 Alternative IT Development Approaches Approaches Description Focus Traditional System Life Cycle Prototyping Application Packages End User Development Go through a fixed sequence of steps with sign offs after each step and careful documentation. Quickly develop a working model of the system; use the model to gain experience and decide how the final system should operate. Purchase application software from a vendor; customize the software if necessary. Provide tools and support that make it practical for end users to develop their own information systems. Jsutanto 6

7 Comparison Approach Advantages Disadvantages Traditional System Life Cycle Systematic development processes Enforces quality by maintaining standards Less likely to make mistakes or have Omissions Excess documentation Problematic Sign-offs Long Process (Unclear user requirements) Prototyping Helps clarify user requirements Helps verify design feasibility Promotes user participation May produce part of the final system Inadequate problem analysis User may not give up the prototype May require super-programmers Confusion completion Application Packages Software exists (& can be tried out) Software has been used for similar problems elsewhere Shortcuts delay for system development Documentation Available Controlled by vendor Package s limitations may prevent desired business processes May be difficult to customize Lack of intimate knowledge of the system End-User Development By pass the IT Dept and avoids delays User controls the application & can change it as needed System Quality May eventually require more consulting & maintenance effort from the IT Dept. Jsutanto (Alter, 2002) 7

8 Examples: Hybrid Approaches Use a Prototype as part of the Traditional System Life Cycle Use a small Application Package as a Prototype Adopt aspects of a Traditional System Life Cycle to purchasing an Application Package Add End-User Development component to Traditional System Life Cycle Jsutanto 8

9 Two Antithetical Development Approaches 1. MDA (Model Driven Architecture) 2. XP (extreme Programming) Both of them can lower development costs? (Alter, 2002) Jsutanto 9

10 1. MDA Yet another architectural scheme Start with a Platform Independent Model (PIM) which lives forever Then translate it (using automated tools) to a Platform Specific Model (PSM) (Alter, 2002) Jsutanto 10

11 Sponsored by the OMG 1. MDA Its underlying technologies, XML and UML are widely accepted standards In practice, very tool dependent (Alter, 2002) Jsutanto 11

12 Assume: 2. XP organizations evolve so rapidly that bothering to set up a highly detailed architecture (prior to beginning coding) is a waste of time (Alter, 2002) Jsutanto 12

13 2. XP Can be viewed as a form of rationalized RAD No requirements/design effort can anticipate change. It s inevitable embrace it, prepare to support it. (Alter, 2002) Jsutanto 13

14 2. XP OO Languages and development methodologies have been successful in allowing big projects to be composed from modular components Allow each component to be an RAD project, Quick initial development Constantly evolving as inevitable changes are discovered (Alter, 2002) Jsutanto 14

15 2. XP Program in pairs (continuous mutual code review) No specialization Programmers = architects = designers = analysts Continuous changes (toward simplification) are encouraged at any level (code to architecture) at any time Development is driven by tests Integrate immediately after development and successful unit testing Jsutanto (Alter, 2002) 15

16 Both techniques have success stories? XP works for extraordinarily talented and flexible development teams in highly volatile environments MDA works in more stable environments with more traditional big shop development teams (Alter, 2002) Jsutanto 16

17 IT Development IT Implementation IT Outsourcing Vendor Selection IT Offshoring Agenda Jsutanto 17

18 Conversion Strategy Direct Cutover (Big Bang) Parallel Strategy Phased Approach IT Implementation Jsutanto 18

19 Tektronix Case Example Spent around 2 months ensuring that Oracle could do what Tektronix needed Phased implementation approach 5 major sub-projects 1. Implement financial management system (FINANCIALS) 2. Implement order management/accounts receivable (OMAR) in the 1 st division 3. Implement OMAR in the 2 nd division 4. Implement OMAR in the 3 rd division 5. Global rollout Financials were implemented in parallel with OMAR at the 1 st division Implement in the US first (Harvard Business School, 1999) Jsutanto 19

20 Tektronix Case Example (Harvard Business School, 1999) Jsutanto 20

21 Tektronix Case Example Total costs: approx. $55 million Total time taken: around 6 years Results: Finished goods inventory visibility regardless of where in the world it was located Same day shipments rise from 15% to nearly 75% Cycle time expended in obtaining credit approvals, from over 24 hours to virtually 0 hour (Harvard Business School, 1999) Jsutanto 21

22 Cisco Case Example Spent 10 days writing RFP, giving vendors 2 weeks to respond. After a 75-day selection process, Oracle won Big bang implementation approach: 1. Demonstrate software s capacity to take a Cisco order all the way from quote to cash 2. Make the system works: generate detailed scripts of procedures used to complete a business process 3. Test the system 4. Test the full system & Assess readiness to go live (Harvard Business School, 2002) Jsutanto 22

23 Cisco Case Example Total costs: approx. $15 million Total time taken: around 9 months Results? (Harvard Business School, 2002) Jsutanto 23

24 IT Development IT Implementation IT Outsourcing Vendor Selection IT Offshoring Agenda Jsutanto 24

25 Why Outsourcing IT? Vendor Economics of Scale Cost Reduction To Increase Shareholder s Value Vendor Specialization Improve Performance To Focus on Core Competence To Provide IT Professionals Better Career Prospects 25

26 Types of IT Outsourcing

27 Why Finding the Right Vendor is Important? To ensure continuity To potentially gain a strategic partner (Bogue 2005) Jsutanto 27

28 Vendor Selection Process (NPower Network) Jsutanto 28

29 Vendor s Competencies (Willcocks et al. 2009) Jsutanto 29

30 Some Criteria for Vendor Selection People Fit Technical Fit Completeness Ease of Use Documentation Transportability Expandability Cost Purchase Price Customization Cost Training Cost Maintenance Cost Consulting Charges Conversion Costs Financial Strength Track Record Jsutanto 30

31 Sample Evaluation Matrix (NPower Network) Jsutanto 31

32 Hidden Costs of IT Outsourcing Original Idea to Outsource Vendor Search & Contracting Costs Reducing Hidden Costs Initial Transition Costs Beginning of the IT Outsourcing Relationship Cost of Managing the IT Outsourcing Effort Post IT Outsourcing Transition Costs Change of IT Vendor or Reintegration of IT Time Choose activities that are safe to outsource Spend some time researching vendors Contract or hire people with outsourcing experience Draft tight contracts Cultivate the vendor relationship Keep key IT people in-house (Barthélemy, 2001) Jsutanto

33 The Golden Triangle Time Time Budget Quality/Scope Budget Time Quality/Scope Budget Quality/Scope Quality & Scope Budget Time Jsutanto 33

34 IT Outsourcing Management Relationship with vendor must be aligned with the strategic intents underlying outsourcing initiative IT improvement Do IT better Business impact Use IT to achieve better business results Commercial exploitation Exploit IT assets externally (DiRomualdo & Gurbaxani, 1998) Jsutanto

35 Eastman Kodak Case Best-of-Breed IT Outsourcing Strategy with 4 Main Suppliers Relationships with vendors Collaborative; not adversarial Long-term mutual benefits; not short-term Making systemic improvements on a global basis; not local Results IT capital costs dropped 90% PC support costs dropped 5-10% Mainframe operations costs were cut 10-15% Jsutanto 35

36 IT Development IT Implementation IT Outsourcing Vendor Selection IT Offshoring Agenda Jsutanto 36

37 Offshoring Trends Rising spend on offshore outsourcing for IT and business services > $55 billion in 2008 Annual growth rate of 20% over the next 5 years Multi-sourcing India s changing role and China s promise India and China are increasing their own offshoring work to other countries Emerging country competition (non-bric) Shared language, culture and/or history continue to influence purchasing decisions (e.g. France to Northern Africa, UK to South Africa, USA to the Philippines) Near-shoring vs long-run bestshoring (Willcocks et al. 2009) Jsutanto 37

38 Offshoring Trends (Willcocks et al. 2009) Jsutanto 38

39 Countries Attractiveness Key Factors 1. Costs Labor costs Infrastructure costs Corporate taxes (Willcocks et al. 2009) Jsutanto 39

40 Countries Attractiveness Key Factors 2. Skills availability (Willcocks et al. 2009) Jsutanto 40

41 Countries Attractiveness Key Factors 3. Environment Government support Business environment Living environment Accessibility (Willcocks et al. 2009) Jsutanto 41

42 Countries Attractiveness Key Factors 4. Infrastructure quality Telecoms and IT Real estate Transportation Power supply (Willcocks et al. 2009) Jsutanto 42

43 Countries Attractiveness Key Factors 5. Risk Profile Security Disruptive events Regulatory risks Macroeconomic risks Intellectual property risk (Willcocks et al. 2009) Jsutanto 43

44 Where will you offshore your IT? Jsutanto 44

45 Takeaways IT development approaches (traditional & hybrid) IT implementation approaches One-size does not fit all IT vendor selection processes and criteria IT offshore Countries attractiveness Jsutanto 45

46 References Alter, S. Information Systems, Prentice Hall, 2002 Barthélemy, J. The Hidden Costs of IT Outsourcing, Sloan Management Review, 2001, pp Bogue, R.L. Three keys to selecting the right vendor for your next project, TechRepublic, 2005 Cisco Systems, Inc.: Implementing ERP, HBS, 2002 DiRomualdo, A. & Gurbaxani, V. Strategic Intent for IT Outsourcing, Sloan Management Review, 1998, pp NPower Network, Selecting the Right Technology Vendor Tektronix, Inc.: Global ERP Implementation, HBS, 1999 Willcocks, L., Griffiths, C., Kotlarsky, J. Beyond BRIC: Offshoring in non-bric countries: Egypt a new growth market, LSE Outsourcing Unit report, 2009 Jsutanto 46

47 Harley Next Week Group Presentation 1. Based on the information in the case, which provider would you select (and why)? 2. What is your overall assessment of Harley s approach to enterprise software selection? What (if anything) would you have done differently? Jsutanto 47