Risk Factors

Risk Factors

What are the principal risk factors in an information system project and how can they be managed? Research or select an information system project in which you have been involved and discuss what you think the risk factors were?  A good source is a search on Failed IT Projects.

QUESTION : What are the principal risk factors in an information system project and how can they be managed? Research or select an information system project in which you have been involved and discuss what you think the risk factors were?  A good source is a search on Failed IT Projects.

Your submission must be in MLA format.  This includes:

at least 2 full pages

1-inch margins

12-point Times New Roman


references and citations as necessary


Management Information Systems, 16th Edition

ISBN: 9780135192047

By: Kenneth C. Laudon; Jane P. La…

Kenneth C. Laudon; Jane P. Laudon

14-4 What are the principal risk factors in information systems projects, and how can they be managed?

We have already introduced the topic of information systems risks and risk assessment in Chapter 8. In this chapter, we describe the specific risks to information systems projects and show what can be done to manage them effectively.

Dimensions of Project Risk

Systems differ dramatically in their size, scope, level of complexity, and organizational and technical components. Some systems development projects are more likely to create the problems we have described earlier or to suffer delays because they carry a much higher level of risk than others. The level of project risk is influenced by project size, project structure, and the level of technical expertise of the information systems staff and project team.

PROJECT SIZE. The larger the project—as indicated by the dollars spent, the size of the implementation staff, the time allocated for implementation, and the number of organizational units affected—the greater the risk. Very large-scale systems projects have a failure rate that is 50 to 75 percent higher than that for other projects because such projects are complex and difficult to control. The organizational complexity of the system—how many units and groups use it and how much it influences business processes—contributes to the complexity of large-scale systems projects just as much as technical characteristics, such as the number of lines of program code, length of project, and budget. In addition, there are few reliable techniques for estimating the time and cost to develop large-scale information systems.

PROJECT STRUCTURE. Some projects are more highly structured than others. Their requirements are clear and straightforward, so outputs and processes can be easily defined. Users know exactly what they want and what the system should do; there is almost no possibility of the users changing their minds. Such projects run a much lower risk than those with relatively undefined, fluid, and constantly changing requirements; with outputs that cannot be fixed easily because they are subject to users’ changing ideas; or with users who cannot agree on what they want.

EXPERIENCE WITH TECHNOLOGY. The project risk rises if the project team and the information system staff lack the required technical expertise. If the team is unfamiliar with the hardware, system software, application software, or database management system proposed for the project, it is highly likely that the project will experience technical problems or take more time to complete because of the need to master new skills.

Although the difficulty of the technology is one risk factor in information systems projects, the other factors are primarily organizational, dealing with the complexity of information requirements, the scope of the project, and how many parts of the organization will be affected by a new information system.

Change Management and the Concept of Implementation

The introduction or alteration of an information system has a powerful behavioral and organizational impact. Changes in the way that information is defined, accessed, and used to manage the organization’s resources often lead to new distributions of authority and power. This internal organizational change breeds resistance and opposition and can lead to the demise of an otherwise good system.

A very large percentage of information systems projects stumble because the process of organizational change surrounding system building was not properly addressed. Successful system building requires careful change management.

The Concept of Implementation

To manage the organizational change surrounding the introduction of a new information system effectively, you must examine the process of implementation. Implementation refers to all organizational activities working toward the adoption, management, and routinization of an innovation, such as a new information system. In the implementation process, the systems analyst is a change agent. The analyst not only develops technical solutions but also redefines the configurations, interactions, job activities, and power relationships of various organizational groups. The analyst is the catalyst for the entire change process and is responsible for ensuring that all parties involved accept the changes created by a new system. The change agent communicates with users, mediates between competing interest groups, and ensures that the organizational adjustment to such changes is complete.

The Role of End Users

System implementation generally benefits from high levels of user involvement and management support. User participation in the design and operation of information systems has several positive results. First, if users are heavily involved in systems design, they have more opportunities to mold the system according to their priorities and business requirements and more opportunities to control the outcome. Second, they are more likely to react positively to the completed system because they have been active participants in the change process. Incorporating user knowledge and expertise leads to better solutions.

The relationship between users and information systems specialists has traditionally been a problem area for information systems implementation efforts. Users and information systems specialists tend to have different backgrounds, interests, and priorities. This is referred to as the user-designer communications gap. These differences lead to divergent organizational loyalties, approaches to problem solving, and vocabularies.

Information systems specialists, for example, often have a highly technical, or machine, orientation to problem solving. They look for elegant and sophisticated technical solutions in which hardware and software efficiency is optimized at the expense of ease of use or organizational effectiveness. Users prefer systems that are oriented toward solving business problems or facilitating organizational tasks. Often the orientations of both groups are so at odds that they appear to speak in different tongues.

These differences are illustrated in Table 14.4, which depicts the typical concerns of end users and technical specialists (information systems designers) regarding the development of a new information system. Communication problems between end users and designers are a major reason why user requirements are not properly incorporated into information systems and why users are driven out of the implementation process.

Table 14.4 THE USER-DESIGNER Communications Gap

USER CONCERNSDesigner Concerns
Will the system deliver the information we need for our work?What demands will this system put on our servers?
Can we access the data on our smartphones, tablets, and PCs?What kind of programming demands will this place on our group?
What new procedures do we need to enter data into the system?Where will the data be stored? What’s the most efficient way to store them?
How will the operation of the system change employees’ daily routines?What technologies should we use to secure the data?

Systems development projects run a very high risk of failure when there is a pronounced gap between users and technical specialists and when these groups continue to pursue different goals. Under such conditions, users are often driven away from the project. Because they cannot comprehend what the technicians are saying, users conclude that the entire project is best left in the hands of the information specialists alone.

Management Support and Commitment

If an information systems project has the backing and commitment of management at various levels, it is more likely to be perceived positively by both users and the technical information services staff. Both groups will believe that their participation in the development process will receive higher-level attention and priority. They will be recognized and rewarded for the time and effort they devote to implementation. Management backing also ensures that a systems project receives sufficient funding and resources to be successful. Furthermore, to be enforced effectively, all the changes in work habits and procedures and any organizational realignments associated with a new system depend on management backing. If a manager considers a new system a priority, the system will more likely be treated that way by his or her subordinates. According to the Project Management Institute, executive sponsors who are actively engaged is the leading factor in project success (Kloppenborg and Tesch, 2015; Project Management Institute, 2017).

Change Management Challenges for Business Process Reengineering, Enterprise Applications, and Mergers and Acquisitions

Given the challenges of innovation and implementation, it is not surprising to find a very high failure rate among enterprise application and business process reengineering (BPR) projects, which typically require extensive organizational change and which may require replacing old technologies and legacy systems that are deeply rooted in many interrelated business processes. A number of studies have indicated that 70 percent of all business process reengineering

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