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What Are the Principal Risk Factors in Information System Projects, and How Can They be Managed?

A.

Systems differ dramatically in their size, scope, level of complexity, and organizational and technical components. Some systems development projects arc more likely to create the problems we have described earlier or to suffer delays because they carry a much higher level of risk than others. The level of project risk is influenced by project size, project structure, and the level of technical expertise of the information systems staff and project team.

Project size, the larger the project- as indicated by the dollars spent, the size of the implementation staff, the time allocated for implementation, and the number of organizational units affected- the greater the risk. Very large-scale systems projects have a failure rate that is 50 to 75 percent higher than that for other projects because such projects are complex and difficult to control. The organizational complexity of the system- how many units and groups use it and how much it influences business processes- contributes to the complexity of large-scale systems projects just as much as technical characteristics such as the number of lines of program code, length of project, and budget. In addition, there are few reliable techniques for estimating the time and cost to develop large-scale information systems.

Project structure, some projects are more highly structured than others. Their requirements are clear and straightforward, so outputs and processes can be easily defined. Users know exactly what they want and what the system should do; there is almost no possibility of the users changing their minds. Such projects run a much lower risk than those with relatively undefined, fluid, and constantly changing requirements; with outputs that cannot be fixed easily because they are subject to users' changing ideas; or with users who cannot agree on what they want.

Experience with technology, the project risk rises if the project team and the information system staff lack the required technical expertise. If the team is unfamiliar with the hardware, system software, application software, or database management system proposed for the project, it is highly likely that the project will experience technical problems or take more time to complete because of the need to master new skills. Although the difficulty of the technology is one risk factor in information systems projects, the other factors are primarily organizational, dealing with the complexity of information requirements, the scope of the project, and how many parts of the organization will be affected by a new information system. The Interactive Session on Management about the UK National Health Service's move toward paperless recordkeeping illustrates a project with some of these risks. Information systems (IS) projects will possibly fail in case of inappropriate user participation in the process of systems development, scarcity of management support, and improper implementation process management. Also, the failure rate for the mergers and acquisitions, enterprise applications and business process reengineering projects is very high due to the considerable organizational change. After researching on 10 failed projects, Morgan and Soden (2002) concluded that majority of the failures in the information system projects were because of the management’s poor ability to manage planning, organizing, and controlling (1973). Later in the Seventies (1978) the implementation of an information system was considered full of uncertainty as per Alter and Ginzberg’s (1980), they mentioned the most significant risks factors faced by the information systems include: 1) designer's lack of experience to use similar information systems, 2) absence of or uninterested users, 3) excessive number of users or designers, 4) turnover of the developers, users and maintainers, 4) absence of sufficient support system, 5) failure in identifying the objective or usage patterns beforehand, 6) failure in predicting and shielding impact on each party, 7) technological issues and issues related to the cost effectiveness. Davis (1982) mentioned three risks: a) presence and stability of a significant requirement, b) user’s potential to identify requirements, and c) ability of researchers to extract requirements and assess their accuracy and completeness. As per Block (1983) failure of resource (like time, equipment, people and project scope) and failure of requirements (incorrect identification of requirements) are amongst the principal risk factors in information system projects. Barki et al. (1993) asserted that there is a large range of risk factors connected to the organizational environment, like complexity of the task, the level of changes, insufficient resources and the fear of potential loss. The Standish Group (1994) identified ten major risk factors that led to the project failure, these included: insufficient details of the project requirement, user's lack of interest, scarcity of resources, extraordinary expectations, absence of or insufficient executive support, frequent changes in requirements and specifications, improper planning, no need of the project any longer, absence of IT knowledge and technology (1990). Flowers (1996) used a factor-based approach to identify failure factors of IS project still. He proposed that the information system may fail if a specific defined situation occurs due to an error, these include 1) if the system does not perform as per the expectation and its performance is below expectation, 2) if after implementation, it doesn’t work as expected or if it is so user- dependent that users reject or discourage it's usage (3) if, the total expenditure on it's development is beyond the benefits it may bring all through its significant life; or (4) because of the issues due to the excessive complexity of the system, or the project management, the development of information system is stopped even prior to its completion. Jiang and Klein (2000) identified about the information systems project failure due to extensive size of the project, advancement of technology, personnel changes and novelty of application area. Winters (2002), identified main Information System risk factors to be the inexperienced and less skilled project managers, inability to predict and manage expectations, malfunctioning of the leadership at any or every level, inability to properly identify, note and achieve requirements, bad planning and inadequate processes, inappropriate effort estimation, ethical and cultural issues among the team members, improper or inadequate methods, lack of understanding and communication and progress tracking and reporting. Gemino et al (2008) developed a Temporal model of IS project performance that divided the IS project risk factors into former (priori) risk factors and later (emergent) risk factor. The former (priori) risks are mainly caused by the physical elements of the project or knowledge accessible to the project team, whereas emergent risks are identified as the deficiencies within the organizational support or occurs due to the IS projects volatility. Implementation involves the complete organizational change process starting from introducing the new information system. Involvement and support of users along with the management support and handling the implementation process are vital, just like the mechanisms for handling the risk level in any new systems project. Contingency approach to project management is effective in controlling project risk factors. The risk level associated with a project determines the requirement, whether or not internal integration tools, external integration tools, formal control tools and formal planning tools, will be applied. McFarlan (1981) proposed a portfolio approach aimed to manage the software development risk. As per McFarlan the inability to identify individual project risk to implement management methods was a significant source of the software projects issues [4]. A Portfolio approach addressed to three main risks: 1) amount of time and cost, staff’s skills and total number of the affected parties, 2) knowledge of the project team and the IS company about the desired technologies and 3) the appropriate structure of the project task. As per Boehm's (1991) recommendation, information system risk management can be carried out through using an approximate checklist of the most significant IS risk items including shortage of personnel, unrealistic deadlines and finances, development of the inaccurate software functions, creation of the improper user interface, gold- plating (undesirable characteristic), frequent changes in the requirements, errors in outsourced components, errors in the tasks performed outside the organisation, poor performance of individuals and lack of desired computer science knowledge.

Bonus Factual Essay

The Core Activities in the Systems Development Process

Systems analysis is the study and analysis of problems of existing systems and the identification of requirements for their solutions. Systems design provides the specifications for an information system solution, showing how it’s technical and organisational components fit together. The process of describing, designing, assessing and implementing a new software program or application is known as Systems development. It may include the inner development of specialised systems, the development of database systems, or incorporating a third party created software. The core activities that constitute systems development include.

1. systems analysis; Identify problem(s), Specify solutions, and Establish information requirements. It involves analysis of the issues present in an existing system and identifying the need to find their solutions. This is the first stage where organisations carry out tasks in presence of an identified problem along with the need for a change. If any problem arises, possible solutions are identified and analysed to evaluate the best option to achieve the desired goal(s) of a project. At this stage team members consider the functional desires of a project or a solution. Also, at this stage analysis takes place for the needs of the end users to make sure that the new system can fulfil their demands. Systems analysis is significant for assessing what exactly are a business’s needs, and how these can be achieved, who will take care of the individual processes of a project, and in how much time.

2. systems design; Create design specifications. Systems design offers the identification for an information system solution that indicates how its IT and organizational processes get along with one another. This is the second phase that explains, the required specifications, aspects and operations to fulfil the functional requirements of the proposed system that will be effective. At this stage end users discuss and assess their particular business information requirements for the proposed system. This is where they consider the desired components (software and/or hardware) structure, processing and initiatives needed to achieve the objectives.

3. Programming; Translate design specifications into program code. Programming is the third step where the actual work starts. It is when a network engineer, programmer and/or database developer are introduced such that they can carry out the major tasks of the project. Their work includes utilizing a flow chart to check that all the processes of the system are efficiently organized. The development stage includes the last step of the first stages of the process. Also, this stage involves the beginning of the production. The development stage is associated with the change and instillation. It will bring advantage if training will be provided at this stage.

4. Testing; Perform unit testing, Perform systems testing, and Perform acceptance testing. The fourth stage is associated with the systems testing and integration of programs and procedures which is usually performed by a Quality Assurance (QA) professional who checks if a proposed design fulfils the foremost set of business objectives. Testing may be carried out again, particularly to check the presence of bugs, mistakes and interoperability. The phase of testing continues until it acquires all the desired features of the end user. Two other parts of this stage are verification and validation, that are needed to make sure the successful completion of the program.

5. Conversion; This is the fifth stage where writing of most of the codes for the programs take place. Also, this stage includes the final installation of the newly-created system. This stage is characterised by the production phase of the project which transfers the data and information from the old system into the new system through a direct cutover. Considering the risk (and complexity) associated with this phase, the cutover is usually carried out in off-peak hours, to minimize the risk. At this point, the system analysts and end-users, both witness the realization of the project that has brought changes.

6. Production and Maintenance; Operate the system, Evaluate the system and Modify the system. The sixth and the last step is the maintenance and essential regular upgradation. At this stage the end users may fine-tune the system, if needed, to enhance the performance, incorporate new features and meet further requirements of the users. Systems development experts hold huge experience of managing such type of projects. Hence, if it is felt that a change is needed at any stage of systems development, the organisation may choose to repeat any or each one of the systems development steps and introduce the desired change. A project's life cycle approach is a time-consuming procedure. Regardless of the fact that some steps are more complex than others, no one should be overlooked. An minor mistake could result in the malfunctioning of the entire system and prevent the system from performing as planned.

True/False

1. Higher advertising rates can be charged by sticky web sites.

True

Websites with the largest viewership or that attract a highly specialized, differentiated viewership and arc able to retain user attention (stickiness) can charge higher advertising rates

2. Business intelligence and analytics are products defined by businesses and managers.

False

Business intelligence and analytics are products defined by technology vendors and consulting firms

3. The first step in managing project risk involves frequent communication and a culture of collaboration.

False

The first step in managing project risk involves identifying the nature and level of risk confronting the project

4. In the global arena, most companies have achieved a transnational status.

False

The governance of these firms has been likened to a federal structure in which there is a strong central management core of decision making but considerable dispersal of power and financial muscle throughout the global divisions

5.  Standard project control techniques can successfully chart the progress of a project against budgets and feedback.

False

Standard control techniques can successfully chart the progress of the project against budgets and target dates.

6.  Shrinking a full desktop website to fit a mobile device makes it difficult for a user to navigate.

True

When a full website created for the desktop shrinks to the size of a

smartphone screen, it is difficult for the user to navigate

7.  One of the worst situations to avoid with respect to global information systems is to build global systems for the sake of building global systems.

True

It is vital for the senior management at the headquarters and international division managers to understand the advantages of building a global system for the company and to individual units too.

8.  A firm’s decision to outsource its work domestically is mostly cost-driven.

False

Offshore outsourcing, the decision is much more cost-driven

9.  Knowledge that cannot be communicated and shared with others is nearly useless.

True

No sharing or communicating means not using it. And a piece of knowledge is useless if it cannot be practiced or implemented.

10.  The upstream portion of the supply chain includes processes for managing relationships with suppliers.

True

The upstream portion of the supply chain involves the company's suppliers and the management of relations with the suppliers. The downstream portion involves the company's process of distribution and delivery of goods to the final customers.

Multiple Choice Question

 1.  All web sites have tools that record:

 a.  The user’s name.

 b.  The type of operating system used.

 c.  Some broker data.

 d.  What was purchased.

All websites collect data on visitor browser activity and Store it in a database. They have tools to record the site that users visited prior to coming to the website, where these users go when they leave that site, the type of operating system they use, browser information, and even some location data. They also record the specific pages visited on the particular site, the time spent on each page of the site, the types of pages visited, and what the visitors purchased.

2.  Business intelligence and analytics require the following:

 a. A strong organization structure.

 b. A set of analytic tools.

 c. An involved management team that can ask intelligent questions.

 d. An involved management team to analyse data.

Business intelligence and analytics require a strong database foundation, a set of analytic tools, and an involved management team that can ask intelligent questions and analyze data.

3.  Major issues with Gantt charts are that they don’t:

 a.  Depict task controls.

 b.  Depict how one task is affected if another is behind schedule.

 c.  Depict how tasks should be ordered.

 d.  Show tasks.

Although Gantt charts show when project activities begin and end, they don't depict task dependencies, how one task is affected if another is behind schedule, or how tasks should be ordered.

4.  International network challenges include:

 a.  Installation delays.

 b.  Poor quality of domestic service.

 c.  Regulatory growth.

 d.  Network capacity.

Network capacity and Installation delays are widely accepted global network challenge.

5.  Organizational impact analysis explains how a proposed system will affect:

 a.  Project objectives.

 b.  Attitudes.

 c.  Decision making.

 d.  Operations.

Organizational impact analysis explains how a proposed system will affect organizational structure, attitudes, decision making, and operations.

6.  The systems life cycle is still used for building large complex systems that require:

 a.  Team development efforts.

 b.  Excessive amounts of time.

 c.  Predefined specifications.

 d.  Tight controls over the system-building process.

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.

7.  The most common and powerful specific challenges to the development of global systems include:

 a.  Nationalism.

 b.  Reliability.

 c.  Speed.

 d.  Personnel.

 The most common and powerful specific challenges to the development of global systems is reliability, Speed and Personnel.

8.  In the digital firm environment, organizations need to do the following very rapidly in response to new opportunities.

 a.  Add technology capabilities.

 b.  Change cycles.

 c.  Retire managers.

 d.  Provide apps for mobile platforms.

In the digital firm environment, organizations need to add technology capabilities very rapidly in response to new opportunities, including the need to provide applications for mobile platforms.

9.  Highly specialized knowledge work systems:

 a. Include course content.

 b. Typically feature user-friendly interfaces.

 c. Include powerful platform dimensions.

 d. Require sufficient computing power to handle complex calculations.

These systems require sufficient computing power to handle the sophisticated graphics or complex calculations necessary for such knowledge workers as scientific researchers, product designers, and financial analysts. Because knowledge workers arc so focused on knowledge In the external world, these systems also must give the worker quick and easy access to external databases. They typically feature user-friendly interfaces that enable users to perform needed tasks without having to spend a great deal of time learning how to use the system.

10.  Supply chain execution systems manage the flow of products through distribution centers and warehouses. They track what?

 a.  The physical status of goods.

 b.  Retail success.

 c.  Financial information involving all parties.

d. Profits

They track the physical status of goods, the management of materials, warehouse and transportation operations, and financial information involving all parties.

Completion

1.  What is one of the biggest changes in e-commerce?

A.

How they operate a business is one of the biggest changes in e-commerce

2.  What is the infrastructure for warehousing, integrating, reporting, and analysing data that come from the business environment, including big data?

A.

The ever-rising need for the industries to compete in international market across cost, quality and service dimensions.

3.  A sociotechnical design of a project is expected to produce what?

A.

 A sociotechnical design of a project is expected to produce interaction between people and technology in workplaces.

4.  What is a force in the environment to which businesses must respond and that influences the direction of the business?

A.

Economic, social and technological force in the environment to which businesses must respond and that influences the direction of the business

5.  During implementation, what can increase the chances for system success?

A.

Designing team's strategy and actions can increase the chances for system success.

6.  Parts of rapid application development can occur when?

A.

 Parts of rapid application development can occur when designing a computer-based system.

7.  What is the overall tactic for dealing with local units in a transnational company who are resistant to global systems?

A.

Global strategy and a thorough knowledge of the manner in which IT enhances is the overall tactic for dealing with local units in a transnational company who are resistant to global systems

8.  What shows how the system will fulfill the objective of meeting information requirements?

A.

An action plan shows how the system will fulfill the objective of meeting information requirements.

9.  Regardless of what type of knowledge management system is involved, knowledge that is not shared and applied to the practical problems facing firms and managers does not what?

A.

 Regardless of what type of knowledge management system is involved, knowledge that is not shared and applied to the practical problems facing firms and managers does not benefit.

10.  What is the bullwhip effect?

A.

The bullwhip effect occurs when demand predicts updating, batching of order and fluctuation of price. Demand based updating is carried out individually by each member of a supply chain.