Warning: IS investment can go wrong

6 Feb

In my last blog I looked at a successful investment in information system in the retail industry, using Tesco as an example. I talked about the various information systems they invested in and how it actually benefited the company. In this blog I intend to look at the complaxity in investing in information system that could possible caused an IS investment to go wrong.

Though investment in information system is an area of important strategyc concern to most managers, there has been little understanding of how to measure real benefits of IS to businesses. Most managers have always been under increasing pressure to adopt new technology or face with the impression of being left behind.

A complex system is an entity which is coherent in some recognizable way, but whose elements, interactions and dynamics generate structures admitting suprise and novelty which can not be defined in advance. (Batty & Torners, 2001)

Further defination of complexity was defined as dependent on a system number of different types of components, it’s number of types of Links and it’s speed of change. (Schneberger and McLeen (2003).

IS project are mostly designed to improve the operation of business activities that are dynamic and complex. A dynamic system is a system that characterize by interactions of closed chains (or feedback loops) that when combined, define the structure of the system and hence how to behaves over time. (Kennedy, 2001) This affects correctness of output and makes it difficult to estimate the exact benefits. (Marquez & Blanchar, 2004)[1]

It is important for us to understand that apart from technology, people and processes also have a great effect on a project out come. We all know that before a firm decides to invest in any information systems, they must have carried out some form of research on the risk that can be associated to that investment and if possible develop some kind of tools or technique. Increased complexity leads to increased risks. A complex system can leads to difficulties in understanding how different component work and interact.

When it comes to IS investment, whether it’s an applcation targeted to a specific mission, web enabling business processes or a complete enterprise planning system, determining which information system truly meets a company’s need is often a challange. An incorrect decision is often the result of starting with the technology rather than the business process. Very often, businesses find the information system they have purchased and installed not meeting up with their needs and application. With the increasing cost and complexity of existing information systems, and the wide range of vendors, making the right match can be difficult.

However, predicting the future is always difficult, especially in todays complex ever-chaning world. Unanticipated opportunities and threats can result in catastrophic failure (Vitale, 1986). Projects are said to be successful if they reach their targets of scope, quality, time and cost, but a project may satisfy these goals and fail because business need may change between project conception and implementation. [2]

IS project outcomes are effectively invisible. This invisibility is the source of many IS project to go wrong. Top managers sometimes ask for functions that are overambitous, or even impossible to deliver, without having any sense of the level of complexity entailed in meeting their request. (Sauer and Cuthbertson, 2003)




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