You are on page 1of 108

Case #1: Development Challenges

• Good Web-based Self-service:


• Customer satisfaction soars

• Call center costs plummet as customers


answer their own questions, enter their
own credit card numbers and change their
own passwords without extensive live
help

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 1


Case #1: Development Challenges

Bad Web-Based Self-Service:


• Frustrated customers click to a
competitor’s site
• Frustrated customers dial up your call
center
• Customer is unhappy
• You have paid both for self service web
site and for a call center

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 2


Case #1: Development Challenges

1. Why do more than a third of all Web self-


service customers get frustrated and end up
calling a help center? Use the experiences of
Blue Cross-Blue Shield and AT&T Wireless to
help you answer.
A: A poorly designed web interface with a
confusing sequence of options or asking them
Questions they cannot answer
A: Cumbersome drop down boxes
A: Wording hard to understand
A: Requiring customers to indicate which network
they are using, which most did not know
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 3
Case #1: Development Challenges

2. What are some solutions to the problems


users may have with Web self-service? Use
the experiences of the companies in this case
to propose several solutions.
A: Using a focus group of end users to test the
prototype
A: Redesign the web site to automatically send
customers to the correct network site
A: Setting aside money and time for maintaining
the site
A: Designing flexibility into application interfaces
and business rules so the site can be changed
as needed

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 4


Case #1: Take away

• Web self service should be good


• Bad web based self service will have
frustrated customers, who may switch to
competitors
• Some major customers don’t do business with
you if you do not have a good web based self
service capabilities
• Important to communicate with business units
& end users during the design phase
• Testing the prototype by a focus group of end
users
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 5
Case #1: Take away

• Do not ask questions to customers of


which they do not know the answers
• Setting aside money and time for
maintaining the site
• Designing flexibility into application
interface and business rules so the site
can be changed as needed
• Software helps speed up the
development process e.g. JRules

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 6


What is the Systems Approach?

• A problem solving technique that uses a


systems orientation to define problems and
opportunities and develop solutions.

• Analyzing a problem and formulating a solution


involves the following interrelated activities:
• Recognize and define a problem or opportunity using
systems thinking
• Develop and evaluate alternative system solutions
• Select the system solution that best meets your
requirements
• Design the selected system solution
• Implement and evaluate the success of the designed
system
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 7
Systems Thinking Example

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 8


Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 9
Systems Development Lifecycle (SDLC)

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 10


Prototyping

• Prototyping is the rapid development and


testing of working models

• An interactive, iterative process used during


the design phase
• Makes development faster and easier, especially
when end user requirements are hard to define
• Has enlarged the role of business stakeholders

12-11
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 11
Prototyping Life Cycle

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 12


Systems Development Life Cycle - PHASE 1:
PLANNING

• Planning phase – involves establishing


a high-level plan of the intended project
and determining project goals

• Primary planning activities include


1. Identify and select the system for
development
2. Assess project feasibility
3. Develop the project plan
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 13
PLANNING 1: Identify and Select the System
for Development

• Organizations use different forms of


evaluation criteria to determine which
systems to develop
• Critical success factor (CSF) – a factor
that is critical to an organization’s success

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 14


PLANNING 2: Assess Project Feasibility

• Feasibility study – determines if the


proposed solution is feasible and
achievable from a financial, technical,
and organizational standpoint
• Different types of feasibility studies
• Operational feasibility
• Economic feasibility
• Technical feasibility
• Human Factors feasibility
• Legal and Political feasibility
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 15
Feasibilty Study

• Feasibility Studies: a preliminary study


to determine the
• Information needs of prospective users
• Resource requirements
• Costs
• Benefits
• Feasibility
• In some cases, a feasibility study is
unnecessary
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 16
Operational Feasibility

• How well the proposed system will


• Support the business priorities of the
organization
• Solve the identified problem
• Fit with the existing organizational structure

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 17


Economic Feasibility

• An assessment of
• Cost savings
• Increased revenue
• Decreased investment requirements
• Increased profits
• Cost/benefit analysis

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 18


Technical Feasibility

• Determine the following can meet the


needs of a proposed system and can be
acquired or developed in the required time
• Hardware
• Software
• Network
• Technical competence of the Developers
• Technical competence of the users

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 19


Human Factors Feasibility

• Assess the acceptance level of


• Employees
• Customers
• Suppliers
• Management support
• Determine the right people for the various
new or revised roles

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 20


Legal/Political Feasibility

• Assess
• Possible patent or copyright violations
• Software licensing for developer side only
• Governmental restrictions
• Changes to existing reporting structure

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 21


Feasibility

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 22


Cost/Benefit Analysis

• Tangible – costs or benefits that can be


quantified

• Intangible – costs or benefits that can not


be quantified

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 23


Examples of Benefits

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 24


PLANNING 3: Develop the Project Plan

• Developing the project plan is a difficult


and important activity

• The project plan is the guiding force


behind on-time delivery of a complete
and successful system

• Continuous updating of the project plan


must be performed during every
subsequent phase during the SDLC
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 25
Systems Development Life Cycle – PHASE
2: ANALYSIS

• Analysis phase – involves analyzing


end-user business requirements and
refining project goals into defined
functions and operations of the intended
system
• Primary analysis activities include
1. Gather business requirements
2. Create process diagrams
3. Perform a buy vs. build analysis
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 26
ANALYSIS 1: Gather Business Requirements

• Business requirements – the detailed set of


business requests that the system must meet
in order to be successful
• Different ways to gather business
requirements
• Joint application development (JAD) session –
where employees meet to define or review the
business requirements for the system
• Interviews
• Questionnaires
• Observations
• Review business documents

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 27


ANALYSIS 1: Gather Business Requirements

• The system users review the


requirements definition document and
determine if they will sign-off on the
business requirements
• Requirements definition document –
contains the final set of business
requirements, prioritized in order of
business importance
• Sign-off – the system users’ actual
signatures indicating they approve all of the
business requirements
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 28
ANALYSIS 2: Create Process Diagrams

• Process modeling – graphically representing


the processes that capture, manipulate, store,
and distribute information between a system
and its environment
• Common process modeling diagrams include
• Data flow diagram (DFD) – illustrates the
movement of information between external entities
and the processes and data stores within the
system
• Computer-aided software engineering (CASE)
tools –automate systems analysis, design, and
development
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 29
ANALYSIS 2: Create Process Diagrams

• Sample data flow diagram

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 30


ANALYSIS 3: Perform a Buy vs. Build
Analysis

• An organization faces two primary choices


when deciding to develop an information
system
1. Buy the information system from a vendor
– Commercial off-the shelf (COTS) – software
package or solution that is purchased to
support one or more business functions and
info. systems
– SCM, CRM, and ERP solutions are typically
COTS
2. Build the information system itself
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 31
ANALYSIS 3: Perform a Buy vs. Build
Analysis

• Organizations must consider the following


when making a buy vs. build decision:
• Are there any currently available products that fit
the organization’s needs?
• Are there features that are not available and
important enough to warrant the expense of in-
house development?
• Can the organization customize or modify an
existing COTS to fit its needs?
• Is there a justification to purchase or develop based
on the cost of acquisition?

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 32


ANALYSIS 3: Perform a Buy vs. Build
Analysis

• Three key factors an organization should


also consider when contemplating the
buy vs. build decision:
1. Time to market
2. Availability of corporate resources
3. Corporate core competencies

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 33


Functional Requirements

Definition:
• End user information requirements that
are not tied to the hardware, software,
network, data, and people resources that
end users presently use or might use in
the new system

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 34


Functional Requirement Categories

• User Interface

• Processing

• Storage

• Control

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 35


Example of Functional Requirements

• User Interface: automatic entry of product


data and easy-to-use data entry screens for
Web customers

• Processing: fast, automatic calculation of sales totals


and shipping costs

• Storage: fast retrieval and update of data from product,


pricing, and customer databases

• Control: signals for data entry errors and quick e-mail


confirmation for customers

12-36
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 36
Systems Development Life Cycle – PHASE
3: DESIGN

• Design phase – involves describing the


desired features and operations of the
system including screen layouts,
business rules, process diagrams,
pseudo code, and other documentation

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 37


Systems Design

Definition:
• Design activities that produce system
specifications satisfying the functional
requirements that were developed in the
systems analysis process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 38


System Design Categories

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 39


User Interface Design

Definition:
• Focuses on supporting the interactions
between end users and their computer-
based applications

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 40


User Interface Design

• Focuses on supporting the interactions between


end users and their computer-based
applications

• Designers concentrate on the design of attractive and


efficient forms of user input and output
• Frequently a prototyping process
• Produces detailed design specifications for
information products, such as display screens

12-41
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 41
Checklist for Corporate Websites

• Remember the customer


• Aesthetics
• Broadband content
• Easy to navigate
• Searchability
• Incompatibilities
• Registration forms
• Dead links
12-42
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 42
System Specifications

• Formalizing the design of

• User interface methods and products


• Database structures
• Processing procedures
• Control procedures

12-43
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 43
Checklist for Corporate Websites

• Remember the customer – successful websites


are built solely for the customer, not to make
company vice presidents happy

• Aesthetics – successful designs combine fast-


loading graphics and simple color palettes for
pages that are easy to read

• Broadband Content – the Web’s coolest stuff


can’t be accessed by most Web surfers; don’t
make it the focus of a site
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 44
Checklist for Corporate Websites

• Easy to navigate – make sure it’s easy to


get from one part of site to another

• Searchability – include a useful search


engine

• Incompatibilities – test site with target web


browsers

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 45


Checklist for Corporate Websites

• Registration forms – short registration


forms are a useful way to gather customer
data

• Dead links – be sure to keep links


updated

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 46


Examples of System Specifications

User interface Use personalized screens that welcome repeat Web


specifications customers and that make product recommendations

Database Develop databases that use object/relational database


specifications management software to organize access to all customer
and inventory data and to multimedia product information
Software Acquire an e-commerce software engine to process all
specifications e-commerce transactions with fast responses, i.e., retrieve
necessary product data and compute all sales amounts in
less than one second

Hardware Install redundant networked Web servers and sufficient


and network high-bandwidth telecommunications lines to host the
specifications company e-commerce website
Personnel Hire an e-commerce manager and specialists and a
specifications webmaster and Web designer to plan, develop, and
manage e-commerce operations
12-47
End User Development

Definition:
• IS professional plays a consulting role,
while end user does his/her own
application development

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 48


End User Development

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 49


Encouraging End User Web Development

• Look for tools that make sense

• Spur creativity

• Set some limits

• Give managers responsibility

• Make users comfortable


Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 50
Systems Development Life Cycle – PHASE 4:
DEVELOPMENT

• Development phase – involves taking


all of the detailed design documents
from the design phase and transforming
them into the actual system

• Primary development activities include:


1. Develop the IT infrastructure
2. Develop the database and programs

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 51


DEVELOPMENT 1: Develop the IT
Infrastructure

• The platform upon which the system will


operate must be built prior to building the
actual system

• In the development phase, the


organization purchases and implements
the required equipment to support the IT
infrastructure

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 52


DEVELOPMENT 2: Develop the Database
and Programs

• Once the IT infrastructure is built, the


organization can begin to create the
database and write the programs
required for the system

• IT specialists perform the majority of the


tasks associated with the development
phase

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 53


Systems Development Life Cycle – PHASE
5: TESTING

• Testing phase – involves bringing all


the project pieces together into a special
testing environment to test for errors,
bugs, and interoperability, in order to
verify that the system meets all the
business requirements defined in the
analysis phase
• Primary testing activities include:
1. Write the test conditions
2. Perform the system testing
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 54
System Testing

• Testing and debugging software

• Testing website performance

• Testing new hardware

• Review of prototypes of displays, reports


and other output

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 55


TESTING 1: Write the Test Conditions

• Test condition – the detailed steps the


system must perform along with the
expected results of each step

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 56


TESTING 2: Perform the System Testing

• Different types of testing:


• Unit testing – tests each unit of code upon
completion
• Application (or system) testing – verifies that all
units of code work together
• Integration testing – exposes faults in the
integration of software components or units
• Backup and recovery testing – tests the ability of
an application to be restarted after failure
• Documentation testing – verifies instruction guides
are helpful and accurate
• User acceptance testing (UAT) – tests if a system
satisfies its acceptance criteria
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 57
Systems Development Life Cycle – PHASE
6: IMPLEMENTATION

• Implementation phase – involves


placing the system into production so
users can begin to perform actual
business operations with the system

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 58


Implementing New Systems

• The systems implementation stage involves

• Hardware and software acquisition


• Software development
• Testing of programs and procedures
• Conversion of data resources
• Conversion alternatives
• Education/training of end users and
specialists who will operate the new system

12-59
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 59
Other Implementation Activities

• The keys to successful implementation of


a new business system

• Testing
• Data conversion
• Documentation
• Training

12-60
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 60
Data Conversion

• Data conversion includes


• Converting data elements from the old database to
the new database
• Correcting data errors
• Filtering out unwanted data
• Consolidating data from several databases
• Organizing data into new data subsets

• Improperly organized and formatted data is a


major cause of implementation failures

12-61
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 61
Importance of Documentation

• Documentation serves as a method of


communication among the people
responsible for developing, implementing,
and maintaining a computer-based
system.

• Documentation is extremely important in


diagnosing errors and making changes,
especially if the end users or systems
analysts who developed a system are no
longer with the organization.
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 62
Documentation

• User Documentation
• Sample data entry screens, forms, reports
• System operating instructions

• Systems Documentation
• Method of communication among those developing,
implementing, and maintaining
a computer-based system
• Detailed record of the system design
• Extremely important when diagnosing
problems and making system changes
12-63
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 63
Training

• End users must be trained to operate a new business


system or its implementation will fail
• May involve only activities, such as data entry,
or all aspects of system use
• Managers and end users must understand how
the new technology impacts business operations

• System training should be supplemented with training


related to
• Hardware devices
• Software packages

12-64
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 64
Major System Conversion Strategies

12-65
Direct Conversion

• Direct conversion
• The simplest conversion strategy
• The most disruptive to the organization
• Sometimes referred to as the slam dunk or
cold-turkey strategy
• May be the only viable solution in cases of
emergency implementation or if the old and
new system cannot coexist
• Has the highest risk of failure
• Involves turning off the old system and turning on the
new one

12-66
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 66
Parallel Conversion

• Old and new systems are run simultaneously until


everyone is satisfied that
• The new system functions correctly
• The old system is no longer needed

• Conversion to new system can be single


cutover or phased cutover

• Has the lowest risk, but the highest cost


• Can cost 4 times more than using the old system

• Best choice where an automated system is replacing a


manual one
12-67
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 67
Pilot Conversion

• Scenarios best suited to a pilot conversion


• Multiple business locations
• Geographically diverse locations

• Advantages of single location conversion


• Can select a location that best represents
the conditions across the organization
• Less risky in terms of loss of time or delays
in processing
• Can be evaluated and changed before further
installations

12-68
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 68
Phased Conversion

• A phased or gradual conversion


• Takes advantage of both the direct and parallel
approaches
• Minimizes the risks involved
• Allows the new system to be brought online
as logically ordered functional components
• Disadvantages
• Takes the most time
• Created the most disruption to the organization over
time

12-69
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 69
Implementation Process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 70


Hardware Evaluation Factors

• Performance • Ergonomics

• Cost • Connectivity

• Reliability • Scalability

• Compatibility • Software

• Technology • Support

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 71


Software Evaluation Factors

• Quality • Connectivity

• Efficiency • Maintenance

• Flexibility • Documentation

• Security • Hardware

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 72


IS Services

• Developing a • System design


company website
• Contract
• Installation programming

• Conversion
• Consulting services

• Employee training
• System integration
• Hardware
maintenance
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 73
IS Services Evaluation Factors

• Performance • Backup

• Systems • Accessibility
development
• Business Position
• Maintenance
• Hardware
• Conversion
• Software
• Training
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 74
Systems Development Life Cycle – PHASE
7: MAINTENANCE

• Maintenance phase – involves


performing changes, corrections,
additions, and upgrades to ensure the
system continues to meet the business
goal

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 75


Post-Implementation Activities

• The single most costly activity


• Correcting errors or faults in the system
• Improving system performance
• Adapting the system to changes in the
operating or business environment
• Requires more programmers than does
application development
• May exist for years

12-76
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 76
Systems Maintenance

• There are four basic categories of system


maintenance
• Corrective: fix bugs and logical errors
• Adaptive: add new functionality
• Perfective: improve performance
• Preventive: reduce chances of failure

12-77
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 77
Post-Implementation Review

• Ensures that the newly implemented


system meets the established business
objectives
• Errors must be corrected by the maintenance
process
• Includes a periodic review/audit of the system

as well as continuous monitoring

12-78
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 78
Software Problems Are Business Problems

• Primary reasons for project failure


include
• Unclear or missing business requirements
• Skipping SDLC phases
• Failure to manage project scope
• Scope creep – occurs when the scope increases
• Feature creep – occurs when extra features are
added
• Failure to manage project plan
• Changing technology

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 79


Software Problems Are Business Problems

• Find errors early: the later in the SDLC


an error is found - the more expensive it
is to fix

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 80


Blue Rhino Case Learnings

• Companies are sometimes forced to


redesign their processes and systems
because of legislation and statutory
requirements
• Management challenge – Fundamental
change in culture and operating
procedures
• Legislation may bring in lots of controls
• Challenges – Change Management,
Technical challenges, Organizational
challenge etc.
Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 81
Blue Rhino Case Learnings

• Companies are sometimes forced to


maintain the documentation for
compliance purpose
• Security flaws were discovered
• Process improvements were needed e.g.
HR department - new employee
equipment requirement
• Redesigning Purchasing and Customer
Service systems

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 12 - 82


Case 4: Hewlett-Packard: Managing
Radical Change

• Some facts about Randy Mott & his


earlier achievements
– In Wal-Mart, he had only 30 tech staff
– Yet they developed a network of
computerized distribution centers that made
it simple to open and run new store with
cookie cutter efficiency
– In 1990, as a CIO, he persuaded higher ups
to invest in Data Warehouse

12-83
Case 4: Hewlett-Packard: Managing
Radical Change

• Some facts about Randy Mott & his


earlier achievements
– With that the company was able to analyze
buying trends of customers as no other
company had done.
– In 2005, he took up the job of CIO in HP
– He understood not only technology and how
to use it to improve business, but how to
deliver those benefits
– In Dell, he meld 100 separate systems into a
single data warehouse.

12-84
Case 4: Hewlett-Packard: Managing
Radical Change

• Some facts about Randy Mott & his


earlier achievements
– Mott’s team enabled Dell to quickly
spot its inventory for a particular chip,
so the company could offer online
promotions for devices containing that
part before the prices fell too steeply.
– Most challenging project - 3 year, $1
billion plus makeover of HP internal
tech systems

12-85
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of its


internal tech systems
– Replacing 85 loosely connected data centers
around the world with 6 cutting-edge facilities
– Cutting thousands of smaller projects to
focus
on a few corporate-wide initiatives
– Scrapping 784 databases for one data
warehouse
– Laying off thousands of IT workers
– Building its own fiber-optic network to
connect the six data centers

12-86
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– If Mott is successful, HP’s annual
spending on tech should be cut in half
in the years ahead, from $3.5 billion in
2005.
– Data warehouse could help HP make
headway on how to capitalize on its
vast breadth
12-87
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– If all information about HP’s shipment
of printers, PCs and servers can be
integrated, it will enable HP to know
exactly, what each location is doing on
a given day
– Mott had the advantage at Wal-Mart &
Dell of building infrastructure from
scratch

12-88
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– He will need support of the remaining
staffers who have resisted centralized
control
– Mott is testing the limits of the HP
culture, taking away the rights of
thousands of IT workers to purchase
their own tech equipments
12-89
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– Tearing up the IT infrastructure &
putting many IT initiatives on hold
– CEO Hurd is demanding revamp of
everything from sales to product lines
– Everyone is averaging 60 hours a
week
– At some point you hit a breaking point

12-90
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– Mott’s greatest strength is while a
technologist, he has management
skills to make IT actually take root in a
company’s culture
– Moot championed the deployment of
IT by showing how it achieved Wal-
Mart’s business goals
12-91
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of its


internal tech systems
– The idea of data warehousing is to make
sure that all of HP’s businesses are working
of the same set of data, and to give them
tools to quickly make the best decisions for
the entire company – say a single customer
management system, so executives can
know the full breadth of what any account
buys from HP

12-92
Case 4: Hewlett-Packard: Managing
Radical Change

• HP is embarking on a makeover of
its internal tech systems
– Hurd & Mott believed in speed over
endless analysis
• Benefits achieved
– Trimmed 1200 individual projects –
such as e learning application for new
hires to only 500

12-93
Case 4: Hewlett-Packard: Managing
Radical Change

• Benefits achieved
– He also imposed real deadlines to
make that the Projects were
completed in time.
– HP had 5 or more IT workers in 100
different locations, he decided to
reduce them to 25

12-94
Case 4: Hewlett-Packard: Managing
Radical Change

• Strategy adopted by Mott to break


the news of impending layoffs
– He held close to 20 “Coffee talks” with
HP employees in various countries.
– This could lead to some trying times
next year, but the benefits may be
surprising
– Cut monthly networking bill to phone
companies by 40%

12-95
Case Study Questions

1. Will the initiatives being undertaken by


CIO Randy Mott to implement major
changes to the IT function at HP make IT
a more efficient and vital contributor to
HP’s business success?
– Defend your position on each of the major
initiatives he is implementing
• Initiatives
– Consolidate data centers
• May cut HP’s IT costs in half

12-96
Case Study Questions

– Consolidation will reduce significant amount


of facility maintenance expenses
– This cost reduction will help HP improve its
bottom line
• Databases consolidation
– Will allow data analysis
– Benefits can range from improved supplier &
inventory management to better customer
relations

12-97
Case Study Questions

2. Do you approve of the change


management job Mott is doing,
including his meetings with HP
employees throughout the world,
and having “coffee talks” with them?
– HP employees both on IT side & on
the business side need to learn Mott’s
strategy, buy into business objectives
and understand their role in HP’s
future

12-98
Case Study Questions

– This will reduce employee’s doubts


and uncertainties and help each one
make a more informed decision
– Employee may choose to stay or leave
for right reasons
– These meetings give Mott the
opportunity to learn about HP, its
employees & its culture
– He will find this useful as develops its
plans
12-99
Case Study Questions

– These meetings will open new channel


of communications, which can supply
Mott with information during the course
of restructuring

12-100
Case Study Questions

3. Assume you have been hired as a


management consultant or coach
to CIO Mott
– What are several suggestions you
might give him to help him
successfully implement his
ambitious plans for IT changes at
HP?

12-101
Case Study Questions

– Mott has to succeed in each of the three


major disciplines in order to make this
project a success, business, technology &
HRM.
– Mott has experience of achieving business
success in his previous companies
– He also has the technical experience to
understand and manage the technical
challenges created by these projects
– The key difference between his prior
experience & HP falls on the Human
Resource side

12-102
Case Study Questions

– Both Dell & Wal-Mart were relatively


new & heavily centralized
organizations
– Centralizing their data services did
not pose much challenge to their
fundamental business model
– While with HP, it will.
– In order to succeed Mott will full
support & dedication of CEO & its
board of directors
12-103
Case Study Questions

– He will need this support because


these changes will prompt
considerable internal backlash & this
backlash must be met with resolute
determination
– Resistance to change must be met
with an “adapt or leave” message
that only top leadership can make
stick.

12-104
Case Study Questions

– Mott must ensure that only right


people stay & the right people leave
both on the business side and IT
side in HP
– To do this, he must first clearly
communicate what these changes
will mean both to business units and
to the IT staff.
– People should stay or leave for the
right reasons

12-105
Case Study Questions

– He should also explain the benefits


to the individuals who fully
participate in this changeover
– Employees fully participating in the
changeover will have a meaningful
future with HP
– HP needs to offer early retirement
packages to senior & mid level
managers both within business units
and his own IT staff

12-106
Case Study Questions

– HP also needs to assure managers


that those facing layoffs will receive
generous separation packages
– This will encourage employees who
wish to participate in the change to
take a chance & stay
– This is important because Mott need
experienced and willing HP hands on
board with his program

12-107
Case Study Questions

– Lastly Mott needs to identify failing


managers and terminate their
employment
– This will help managers learn about
centralization plans and its benefits
– This will also give chance to some
managers to accept early retirement

12-108

You might also like