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Operations & Digital Business

Nicolas van Zeebroeck


Master in Business Engineering 2014-2015
Nicolas.van.Zeebroeck@ulb.ac.be

Todays underlying issues

Cost and implementation of an Enterprise IT solution


Managing a large IT project
Managing organisational change
Definition and measures of IT success
Strategic alignment

GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

Framing the challenge

Here we are talking about EIT implementation, so we implementing EIT software and not any software in this cases is an ERP solution.Such
solution cost at the median like 20m$

Median cost of an ERP solution: $20


When we invest in such a project, 20%
million
are going on our BS in investment but it

$4 million in hardware and software is only 20%. 80% of the cost of such IT
solution is directly going to the I/S: P&L.
(accounted for as investment)
So when (c) are succeeding in such
$16 million in project management, things, it is directly going to their goodwill
consulting, training, organisational change
(accounted for as expenses)

Sometimes huge disasters:


Bombardier: $130 Mio (and failed)
Levis: planned $5 Mio, lost $200 Mio

To keep in mind:
The vast majority of IT implementation costs
never shows up in statistics of IT investments
Complementary organisational change 4x
more costly than IT

GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

A preliminary note
Solutions to case studies can never be
posted on any support
Part of the license terms
Which integration and challenges; this table says that we have stages of
internal and external organization. Here we ill talk about internal integration! We
can do it at 2 level, at the organizational level and at the functional level! At the
operational, we will integrate the stages in the primary activity/value chain. In
this case, we need to integrate a bit of both! So what is this model saying?
because there are dimension that actually help us in the process, it will find
out the things that going to be the strongest barriers we are going to face in the
process and the degree of effort that we can expect and what are the potential
benefit that we can expect by integrating at this level! For ex they say us that
the main barrier for integration at the operational level is going to be SGD (we
have diff entities, SILO organization that are highly specialized and if they are
specialized they will have objectives, divergences in their goals..). Huge
barrier because people are not aligned! When people are too specialized, they
look in directions!
The table says us that the effort required to do it are big, but the benefits are
huge!

GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

Which integration and challenges?

PO: if we integrate they will be necesserly changes in the roles


and responsabilities, people who used to be landlords in dprt,
wille become for ex simple responsible of a little team..

dont need to read it

Source: Barki et Pinsonneault (2005)

Which integration and challenges?


Which returns to internal integration?
Productivity of production processes
Superior competitiveness
Reduction of production and inventory
costs
Less mistakes, more coordination
Better visibility over production and
inventory costs

GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

Post mortem of phase I: vision


Organisational transformation projects require clear vision,
well communicated to employees
Vision should provide clear view of future state of the organisation, its goals,
processes, and supporting systems
Vision must be goal oriented
Vision should strengthen the organisational sense of direction and improve the
decision making process
Action plan describes stages required to realise the vision
Actions should be aligned with vision goals
As project evolves, vision refinement process should be undertaken

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How to measure success?

6 criteria!

System quality
Is the system usable and reliable?

Information quality

like moodle? is it really reliable or trash when we use


it?

Is the data model clear and standardized?


Are the data consistent and accurate?

Usage
Is the system actually used? or they contnue using the old system?
Is the use of the new system controlled and incentivized?

User satisfaction are they happy with the new system?


How satisfied are the users with the new system?

Individual impact does it foster the individual performance?


How does the system affect individual performance?

Organizational impact
How does the system affect the overall performance of the
organization? either yes it is good or not.. But it is not enough! But the point here is what other criteria
Source: DeLone & McLean (2003)
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There is a way to organize


those 6 package as a chain..
System and info qty should
axctually be the main thing in
use and user satis. If people
use the system and the qty of
info is good. Then it will impact
on individua and () impact!
this framework was proposed

How to measure success?

Source: DeLone & McLean (1993)


GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

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Where does it all start? Sometimes it start with IT, but it was not the case here!
When we look between the 2 phases, the IT is just a little player here.. the important thing
was the process behind,..

A model of strategic alignment


the same for the IT!

What we want to
achieve, composed of 3
things, the scope, our
distinctive
competententcies (what
can we do) and the
goverance. And those 3
thing need to be
consistant!

Those are 2 // world, the


business and the IT one

how do we take decisions?

In IT infrastructure we have the IT


archi (xhat we studied), processes
and the IT skills(people wotking in
IT drt). This how our ressources
are organized and working
together.

The lower part, is what we call


the infrastructure.
At the business infrastructure
we have the as in IT, we have
the admin infra, process
(deliver services,..) and we
have skill (workforce within the
(O)!

So we now have 2 types of matrix, the


upper part the strategy and down we
have the infrastructure and ressources!
and on the left side busines and right
But the ? is to how to make sure that business strategy is aligned with ITstrategy? Or how to be
sure that the business stratecgy is aligned with the (o) infrastructure?

Source: Henderson & Venkatraman (1993)

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In bombardier how did we start? from the business strategy, and what was it? the vision, we
wanted lower cost, more integrated.. From there where did we go?they first decided to change
the (o) first and then we can implement the IT: they first moved to the (o) infrastructure(phase
2).. And finaly they moved to the IT infrastructure!
But is not the only way possible! There are other way to act!

A model of strategic alignment

We need to answer for


each of those questions!
who is the driver? here it
started from the BS. And
then what do you ask from
the top mgt? The top mgt is
responsible for formulating
the strategy.. And then what
do we expect fro the CIO?
he will be the implementor!

Source: Henderson & Venkatraman (1993)

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Enterprise IT Implementation
Key take-aways

IT Implementation: Key take aways


EIT implementations = organisational transformation projects
Global vision is critical
Anticipating organisational change is paramount

Managing project resources


Support v. Development trade off

Different dimensions in the evaluation of an IT project


System quality, data quality, actual use, user satisfaction, individual impact,
organisational impact
Very common to focus exclusively on the latter
Successful project does not mean easy to execute

Strategic alignment process


Who is in the drivers seat?
What is the role of IT?

GESTS482 Operations and Digital Business N. van Zeebroeck 2014 2015

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Your assignments
Assignments on IT Implementation
Apply the DeLone & McLean (2003) framework of IT success
Provide evidence from the case of success or shortcomings on each of the 6
dimensions

Read the articles


Bloom, Sadun, Van Rennen Americans do IT better
DeLone, McLean Model of Information Systems Success

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