Q 1: Explain what is productivity paradox?

You have to define each

point with the help of an example.

Productivity Paradox:
Productivity paradox is defined as the state in which firms have rich perceptions of
productivity improvements but gain very little from such improvement.
Or
The productivity paradox (also known as the Solow paradox or sometimes the Solow
computer paradox) is the theory that computers have contributed negligibly to
productivity.

Explanation:
The paradox is the “discrepancy between measures of investment in information
technology and measures of output at the national level.” It was widely believed that
office automation was boosting labor productivity (or total factor productivity). However,
the growth accounts didn't seem to confirm the idea.
Much of the problems lie in these “rich perceptions” that executives experience. For
example firms make visible improvements in their plant layout and cut inventory by half.
In other cases, they rationalize work force and capacity investments and visibly improve
maintenance. Despite all these, they don’t see either bottom-line or top line
improvements. We identify productivity paradox when one or more of the following exist
in an organization.
• Getting unstuck with inappropriate understanding of the term productivity
• Incompatibility between performance reports and ground realities.
• Excellent performance in some parameters but not in “order winning”
• Cashless profits and profitless turnover.

Redistribution:

IT may be beneficial to individual firms, but unproductive from the standpoint of the
industry as a whole or the economy as a whole: IT rearranges the shares of the pie
without making it any bigger.

Measurement problems:

A general model of metrological testing support is proposed that is a model of a

measurement control system that takes into account the effect of measurement accuracy
on the test results and the propagated errors of measuring and test equipment.
The easiest explanation for the low measured productivity of IT is simply that we're not
properly measuring output. The productivity and output statistics can be very unreliable.
It is important to note that measurement errors need not necessarily bias IT productivity if
they exist in comparable magnitudes both before and after IT investments. However, the
sorts of benefits ascribed by managers to IT increased quality, variety, customer service,
speed and responsiveness are precisely the aspects of output measurement that are poorly
accounted for in productivity statistics as well as in most firms' accounting numbers. This
can lead to systematic underestimates of IT productivity.

Output Mismeasurement:

The positive impact of IT on variety and the negative impact of variety on measured
productivity have been econometrically and theoretically supported by Brooke (1991).
He argues that lower costs of information processing have enabled companies to handle
more products and more variations of existing products. However, the increased scope
has been purchased at the cost of reduced economies of scale and has therefore resulted
in higher unit costs of output. For example, if a clothing manufacturer chooses to produce
more colors and sizes of shirts, which may have value to consumers, existing productivity
measures rarely account for such value and will typically show higher "productivity" in a
firm that produces a single color and size. A higher price in industries with increasing
product diversity is likely to be attributed to inflation, despite the real increase in value
provided to consumers.

Input Mismeasurement:

If the quality of work life is improved by computer usage (less repetitive retyping,
tedious tabulation and messy mimeos), then theory suggests that proportionately lower
wages can be paid. Thus the slow growth in clerical wages may be compensated for by
unmeasured improvements in work life that are not accounted for in government
statistics.
A related measurement issue is how to measure IT stock itself. For any given amount of
output, if the level of IT stock used is overestimated, then its unit productivity will appear
to be less than it really is.
To the extent that complementary inputs, such as software, or training, are required to
make investments in IT worthwhile, labor input may also be overestimated.

End user development:

End-user development (EUD) is a research topic within the field of computer science,
describing activities or techniques that allow people who are not professional developers
to create or modify a software artifact. A typical example of EUD is programming to
extend and adapt an existing package (e.g. an office suite).

Decision support system:

Decision Support Systems (DSS) are a specific class of computerized information system
that supports business and organizational decision-making activities. A properly designed
DSS is an interactive software-based system intended to help decision makers compile
useful information from raw data, documents, personal knowledge, and/or business
models to identify and solve problems and make decisions. database management system,
An interface to aid the users interaction with the computer system and to assist in analysis
of outcomes, A library of potential models that can be used to forecast the possible
outcomes of decisions.

Strategic system:

Strategic Systems provides world class software development services to software

companies, technology consultants, online businesses, and enterprises for e.g.
manufacturing, distribution, healthcare, government, education, entertainment, hospitality
and retail.

Time lag:

An interval of time between two related phenomena (such as a cause and its effect) is
time lag. Time during which some action is awaited; "instant replay caused too long a delay"; "he
ordered a hold in the action.

Another explanation for the paradox is that the benefits from IT can take several years to
show up on the bottom line. The idea that new technologies may not have an immediate
impact is a common one in business. For instance, a survey of executives suggested that
many expected it to take at much as five years for IT investments to pay-off. This accords
with a recent econometric study show that there is lags of two to three years before the
strongest organizational impacts of IT were felt. In general, while the benefits from
investment in infrastructure can be large, they are indirect and often not immediate.

The existence of lags has some basis in theory. Because of its unusual complexity and
novelty, firms and individual users of IT may require some experience before becoming
proficient.

Mismanagement:
A poorly managed activity in an organization is mismanagement. A mismanaged
operation fails to achieve its goals, is extremely wasteful, and is generally indicative of
administrative procedures that are not well thought out and directed for e.g. Using the
Canadian banking industry as an exemplar of a highly institutionalized financial services
industry, demonstrates the utility of institutional theory in understanding the origins,
nature and dynamics of powerful institutional pressures of conformity. Calls this
conformist strategy “mismanagement”.

On the whole, IT really is not productive at the firm level. The investments are made
nevertheless because the decision-makers aren't acting in the interests of the firm. Instead,
they are increasing their slack, building inefficient systems, or simply using outdated
criteria for decision-making.
Q 2: what is business case? How to write an effective business case?

A: Business case:

A business case is a tool that supports planning and decision-making,

including decisions about whether to buy, which vendor to choose, and when to
implement. The business case is not a budget, not a management accounting report, and
not a financial reporting statement. This distinction is important for deciding which kind
of cost and benefit data go into the business case such as incremental values or total cost
and benefit figures. A business case is similar to a business plan prepared for private
business. Its purpose is to outline the business rationale for undertaking the project and to
define the parameters and management factors involved in the project itself. It provides
the project manager with a tool to guide the design, management and evaluation of the
project.

The business case serves four purposes:

• It helps the applicant think through the project in a systematic, step-by-step

manner.
• It explains to program administrators, funding partners and other interested parties
why the project should be undertaken.
• It helps potential funding partners understand the economic value of the project.
• It provides a framework for completion of the project on time and on budget.

Effective Business Case:

A good business case shows expected cash flow consequences of the
action, over time, and most important thing is also includes the methods and rationale that
were used for quantifying benefits and costs. The latter are important because every
business case in a complex environment requires assumptions, arbitrary judgments, and
the development of new data.

There are different elements of preparing effective business case:

Title Page:
The title page is the first impression a reader gets of a business case. Make sure it is neat
and orderly, simple, balanced and easy to read. It contains the:

• Title of project
• Project designation (number, location, etc.)
• Name of organization
• Date of approval by organization.

Table of Contents:

The table of contents lists the major headings in the business case, and the page on which
each is found. Remember to number the pages in the document. While it is the last
section completed, it is placed immediately following the title page.

Executive or Project Summary:

This is your first and most important selling tool. It is where you create the critical first
impression of the project, so it is important to summarize the most important elements of
the project in a concise and compelling manner.

Mission Statement:

This is a concise, general statement of what the municipality intends to achieve by

completing the project. It explains what is to be done, for whom, and why. If possible, do
not exceed one sentence.

Objectives of the Project:

What, precisely, will be achieved by completing the project? State the objectives clearly;
one short statement for each, without accompanying arguments or documentation. These
appear in the body of the report and in the project summary. It should be clear to the
reviewer, however, how these objectives relate to the objectives of the funding program.

Performance Measures

Performance measures evaluate the success of the project. They indicate how the project
will meet the objectives listed at the beginning of the business case. The business case
will:

• list the plan objectives

• state the evaluation criteria for each objective
• Outline how or by whom each will be evaluated.

Needs Assessment:
The needs assessment analyses the problem and explains why the problem needs to be
corrected. It provides the information as to whether the project should be undertaken at
all. The report, in abbreviated form, becomes part of the business case.

Technical Analysis:

The technical analysis outlines the technical information used to make the decision, and
tells why the proposal represents the best or most cost-effective solution. It describes:

• technical problems encountered in existing situation

• what alternative solutions were considered
• why this is the best course of action to choose
• why this is the most cost-effective solution, or if not, why it was chosen
• What innovative technologies are being used?

Project Work Plan:

The work plan spells out the terms that will form the basis of any contracts, including the
jobs to be done, the time frames and milestones. It could help the project manager if you
include the evaluation criteria for each step or milestone here. Name those responsible for
managing the project and contracts as soon as they are known.

• Describe key activities and locations.

• Outline milestones and timelines for completion. A Gantt Chart may be helpful in
describing the timelines. It illustrates the timeframe for beginning and completing
each task in the project. There are many illustrations of Gantt Charts on the
internet
• Identify risks to project completion and contingencies.
• List project staff and consultants if known, and their responsibilities.

Financial Plan:

The financial plan shows how the project will be financed and how returns, if any, will be
credited. Give an explanation of why program funding is necessary and how funds will
be used in the introductory paragraph. This will show up again in the project budget.
Elements of a financial plan include:

• detailed budget
• Sources of funding (donations, partners, grants, etc.)
• funds expected from targeted program
• in-kind (non-cash) contributions
• returns from project performance (with time)
• operating and administrative costs
• Cash flow statement.
Capital Asset Management Plan:

• It is important to clarify how the asset will be managed.

• State the plan for managing and monitoring the resulting capital assets.
• State how funds will be raised for operating, maintenance and replacement.

Partner Profile:

Partners may be any parties with a vested interest in the project who are contributing
significantly to its success. The most effective partners are those that contribute
financially to the project.

The partner profile includes:

• Names, addresses and contact information for all participating partners

• Each partner's interest in the project
• Each partner's contribution (financial and in-kind)
• Each partner's experience and capabilities in contributing to the completion of the
project.

Appendix:

Appendices are pertinent documents that show support for or give validity to the project.
They include:

• municipal council resolutions or minutes showing authority to proceed with the

project
• documents (assessments, etc.) showing the need
• copies of permits and approvals
• Copies of recently reviewed or audited financial statements for all partners.
Generating a business case

Generation of the Business Case should not be mechanical. Indeed, the case must
demonstrate that: the issues have been thought through, the full benefits will be realised
on time, any technical aspects have been thoroughly evaluated and costed, and track and
measure their achievement.

(For any IT project it is unlikely that any significant proposal would be submitted to the
Executive Management Team for approval without both the business sponsor and the
head of IT agreeing on the merit of the proposal.)

A business case should contain some or all of the following information types (depending
on the size, timing, scale and availability of information):

• Reference - Project name/reference, Origins/background/current state

• Context - Business objectives/opportunities, Business strategic alignment
(priority)
• Value Proposition - Desired business outcomes, Outcomes roadmap, Business
benefits (by outcome), Quantified benefits value, Costs/ROI Financial scenarios,
Risks/costs of not proceeding, Project risks (to project, benefits and business)
• Focus - Problem/solution scope, Assumptions/constraints, Options
identified/evaluated, Size, scale and complexity assessment
• Deliverables - Outcomes, deliverables and benefits planned, Organizational areas
impacted (internally and externally), Key stakeholders, Dependencies
• Workload - Approach, Phase/stage definitions (Project (change) activities,
Technical delivery activities, Workload estimate/breakdown, Project plan and
schedule, Critical path)
• Required resources - Project leadership team, Project governance team, Team
resources, Funding
• Commitments (required) - Project controls, Reporting processes, Deliverables
schedule, Financial budget/schedule