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BUILDING SYSTEMS AND PLANNED ORGANISATIONAL CHANGE

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Information Systems Development and Acquisition Contents

A. BUILDING SYSTEMS AND PLANNED ORGANISATIONAL CHANGE

The objectives of this chapter are to:

 Describe the relationship between system development and organisational change

 Explain business process re-engineering and process improvement

 Briefly describe Total Quality, Six Sigma and Benchmarking

 Provide an overview of system development

 Describe Systems Investigation; Systems Analysis; Systems design; Programming;

Testing; Implementation; Production and Maintenance

 Describe various system development approaches

– Traditional System Development Life Cycle; Prototyping; End-User Development; Application Software Packages; Outsourcing

 Provide an overview of some contemporary approaches to application development – JAD: RAD; Component-based Development and Web Services

A. BUILDING SYSTEMS AND PLANNED ORGANISATIONAL CHANGE

The process of building and implementing a new information system will bring about change in the organisation. The introduction of new information systems has a far greater impact that the purchase and deployment of new pieces of technology. It also includes changes to business processes, jobs, skills and even the structure of the organisation. System builders must consider how the nature of work and business processes will change.

System Development and Organisational Change

According to Laudon & Laudon (2010) information technology can enable the following four kinds of organisational change;

1. Automation: this involves using computers to speed up the performance of existing tasks by eliminating the need for manual activity. This approach to organisational change may release staff to other jobs, reduce the number of employees needed, or enable the organisation to process more transactions.

2. Rationalisation of procedures refers to the streamlining of standard operating procedures and eliminating some tasks in a process removing any blockages.

3. Business process reengineering refers to the radical redesign of business processes. It can involve combining tasks in a process to cut waste and eliminating repetitive, labour-intensive tasks in order to improve cost and quality and to maximise the benefits of information technology.

4. A paradigm shift is a radical change in the business and the organisation. The strategy of the business can be changed and sometimes even the business the company is in.

Page 163 Business Process Re-engineering

Business process re-engineering (BPR) is a management practice that aims to improve the efficiency of the business processes. Reengineering is a fundamental rethinking and radical redesign of business processes to achieve major improvements in performance, cost, quality, speed and service.

Companies should next identify a few core business processes to be redesigned, focusing on those with the greatest potential return. Identifying the business processes with the highest priority includes looking at those which are crucial to the business strategy of the company and those where there are already issues and problems.

After identification of the core processes for re-designing, the business process itself must be analysed in terms of its inputs and outputs, flow of products or services, activities, resources etc. The performance of the existing processes must be measured and used as a baseline.

Business processes are typically measured along the following dimensions:

Process cost

Process time

Process quality

Process flexibility

Rather than designing the process in isolation and then looking at how Information technology can support it, information technology should be allowed to influence process design from the start. Once a business process is understood, a variety of techniques or principles can be used to improve it, such as:

Replace sequential steps in the process with parallel steps

Enrich jobs by enhancing decision authority and concentrating information

Enable information sharing throughout to all participants

Eliminate delays

Transform batch processing and decision making into continuous flow processes

Automate decision tasks where possible

Following these steps does not guarantee that reengineering will always be successful because the required organisational changes are often very difficult to manage. Therefore companies will also need to develop a change management strategy to deal with the resistance to changes that is likely to occur among the people impacted by the planned changes.

New information system software provides businesses with new tools to support process redesign. Work flow management offers the opportunity to streamline procedures for companies whose primary business was traditionally focused on processing paperwork.

Instead of multiple people handling a single customer in serial fashion, work flow management software speeds up the process, by allowing several people to work on the electronic form of the document at the same time, and it can also decrease the total number of people who handle it.

Page 164 Process Improvement

While business process re-engineering might be a once off effort that focuses on processes that need radical change, organisations have many business processes that must be constantly revised to keep the business competitive. Business process management and quality improvement programs provide opportunities for more incremental and ongoing types of business process change.

Business Process Management (BPM)

Business Process Management (BPM) is an effort to help organisation manage process change that are required in many areas of the business. Business process management (BPM) involves analysing every task in a business and helping firms continually optimise them.

BPM includes work flow management, business process modelling, quality management, change management and standardising processes throughout the organisation. Every business should continually analyse how they accomplish each task and look for possible ways to improve them.

Total Quality Management

In addition to business process management, Total Quality Management (TQM) is used to make a series of continuous improvements rather than dramatic bursts of change. Many organisations are using TQM to make quality control the responsibility of all the people and functions within the organisation. Traditionally quality was the responsibility of the quality control department, whose job was to identify and remove mistakes after they had occurred.

However trying to control mistakes after they had occurred is very difficult, as many quality defects are embedded in the finished product and are essentially hidden, making them more difficult to discover. Despite an organisations best efforts certain mistakes remained hidden and undetected. The Total Quality Management (TQM) approach emphasised preventing mistakes rather than finding and correcting them. To achieve this goal the responsibility for quality is moved from the quality control department to everyone in the organisation.

Deming and Juran who are considered to be the fathers of TQM were both Americans but it was the Japanese in the 1950s that embraced their ideas. Deming‘s view was that by board total quality initiatives in an attempt to cope with increased competition.

TQM is an all-encompassing approach to managing quality where the organisation tries to achieve total quality products/services through the involvement of the entire organisation, with customer satisfaction as the driving force.

Page 165 Six Sigma

Six Sigma is another improvement approach that stresses quality by designating a set of methodologies and technologies for improving quality and reducing costs.

Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects. A defect is defined as nonconformity of a product or service to its specifications.

While the particulars of the methodology were originally formulated by Bill Smith at Motorola in 1986, Six Sigma was heavily inspired by six preceding decades of quality improvement methodologies such as quality control, TQM, and Zero Defects. Like its predecessors, Six Sigma asserts the following:

Continuous efforts to reduce variation in process outputs is fundamental to business success

Manufacturing and business processes can be measured, analysed, improved and controlled

Succeeding at achieving sustained quality improvement requires commitment from the entire organisation, particularly from top-level management

The term "Six Sigma" refers to the ability of highly capable processes to produce output within specification. In particular, processes that operate with Six Sigma quality produce products with defect levels below 3.4 defects per (one) million opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to this level of quality or better.

The basic methodology consists of the following five steps:

Define the process improvement goals that are consistent with customer demands and business strategy.

Measure the current process and use this for future comparison.

Analyse to verify relationship between factors. Determine what the relationship is and attempt to ensure that all factors have been considered.

Improve or optimise the process based upon the earlier analysis. In this phase, project teams seek the optimal solution and develop and test a plan of action for implementing and confirming the solution.

Control to ensure that any variances are corrected before they result in defects.

Set up pilot runs to establish process capability, move to full production and continuously measure the process.

Benchmarking

Benchmarking involves setting strict standards for products, services and other activities and then measuring performance against those standards. Companies may use external industry standards, standards set by competitors, internally generated standards or a combination of all three.

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