Recap of IT Outsourcing (Recap)

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Agendas

• Recap of IT Outsourcing (Recap)
• A Managing IT Project Delivery
• Case 3-2 Volkswagen of America Managing IT
  Priorities

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Course Road Map
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Outsourcing (recap)

• What important issues you need to pay attention
  to when outsourcing?

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Recommendations

• Define what your outsourcing plan is
• Choose the right person to lead your organization
  and hire the right team
• Outsource small auxiliary tasks and scale with
  time
• Work with a trusted partner with strong local
  presence
• Choose the right culture and strategy to
  implement it
• Focus on building a strong brand locally to
  attract top talent
• Think as one company across multiple cultures
• Do post-implementation assessments to track costs
  and benefits

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Chapter 10 A Portfolio Approach to Managing IT
Projects

• Three IT Deficiencies
• Failure to assess the implementation risk of a
  project at the time it is funded
• Failure to consider the aggregate implementation
  risk of a portfolio of projects
• Failure to recognize that different projects
  require different managerial approaches

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Projects Typically Fail

• Over budget
• Average cost overrun 189
• Delivered late
• Average schedule overrun 222
• Failed to meet expectations
• Average coverage 61
• Larger companies are even worse
• Standish Group, 2004

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Source of Implementation Risk

• Project size
• Experience with the technology
• Requirements volatility

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Effect of Adding Rick Factors
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Risk Metric
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Managing the Dip during Project Implementation
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Risk and Return Distribution for a Portfolio of
Projects
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Risk and Return Matrix Exercise

• Information Systems Implementation at Texas Tech
• System 1 Updating MS Office Suite
• System 2 Student Relationship Management (SRM)
  software in Banner.
• System 3 RFID system for TTU procurement
  replacing bar code system.

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Criteria for Selecting the Appropriate Methodology

• Clear user requirements
• Familiarity with technology
• Complexity of system
• Reliability of system
• Time schedule
• Schedule visibility

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IT Portfolio Approach

• Highlights total implementation risk
• Enables rebalancing of portfolio to key
  priorities
• Ensure limited resources are linked to critical
  company needs
• 20 individual unites priorities may not be a good
  portfolio
• Existing methods hide commutability (efficiency)

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IT Portfolio Approach
Comparison of Financial and Project Portfolios Comparison of Financial and Project Portfolios Comparison of Financial and Project Portfolios

Financial Portfolio Project Portfolio
Assets Various financial Various project with
instruments with distince characteirstics
distinct characteristics

Diversification Employing multiple Many project variables -
financial instruments scope, approach, vendor
can reduce risk project manager, etc. - can reduce risk

Goals Income capital gains Profitability growth

Asset Allocaiton Invest according to Invest according to
investment goals organizational intentions

Connection Correlation Interdependency
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IT Portfolio Approach Barriers

• Cut cross management control systems and
  reallocate scarce resources differently
• Changing rules win-loose ? to much pain
• Can force drastic shift resource allocation
  inside/out
• Not seen as providing enough value we are OK
• Cost too much Dont understand it
• We choose not to look at IT in aggregate

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THE SYSTEMS DEVELOPMENT LIFE CYCLE

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Project Phases

• Planning (Why build the system? How should the
  team go about building it?)
• Analysis (Who uses system, what will it do, where
  and when will the system be used?)
• Design (How will the system work?)
• Implementation (System delivery)

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A simple process for making lunch
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Processes and Deliverables
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SYSTEM DEVELOPMENT METHODOLOGIES

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Waterfall Development Methodology
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Parallel Development Methodology
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Rapid Application Development

• Incorporate special techniques and tools
• CASE tools
• JAD sessions
• Fourth generation/visualization programming
  languages
• Code generators

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Three RAD Categories

• Phased development
• A series of versions developed sequentially
• Prototyping
• System prototyping
• Throw-away prototyping
• Design prototyping

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How Prototyping Works
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Throwaway Prototyping
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Agile Development Extreme Programming (UML)