Dr. Honghui Deng

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Dr. Honghui DengDr. Honghui Deng

Associate ProfessorAssociate Professor

MIS DepartmentMIS Department

UNLVUNLV

MIS 746 IS Project Management

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Outsourcing:Outsourcing:Managing Interorganizational RelationsManaging Interorganizational Relations

Chapter 12Chapter 12

MIS 746 IS Project Management

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Outsourcing: Reclining Chair ProjectOutsourcing: Reclining Chair Project

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Outsourcing Project WorkOutsourcing Project Work

• Advantages:Advantages:– Cost reduction– Faster completion– Higher level of expertise– Flexibility

• DisadvantagesDisadvantages– Coordination breakdowns– Loss of control– Conflict– Internal morale issues

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Best Practices in Outsourcing Project WorkBest Practices in Outsourcing Project Work

Treat Outsourcers as Partners!

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Key Practices in Partnering Relationships Key Practices in Partnering Relationships versus Traditional Practicesversus Traditional Practices

TABLE 12.1

Partnering Relationships

Mutual trust forms the basis for strong working relationships.

Shared goals and objectives ensure common direction.Joint project team exists with high level of interaction.Open communications avoid misdirection and bolster effective working relationships.

Long-term commitment provides the opportunity to attain continuous improvement.

Traditional Practices

Suspicion and distrust; each party is wary of the other.

Each party’s goals and objectives, while similar, are geared to what is best for them.

Independent project teams; teams are spatially separated with managed interactions.

Communications are structured and guarded.

Single project contracting is normal.

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Key Practices in Partnering Relationships Key Practices in Partnering Relationships versus Traditional Practices (cont’d)versus Traditional Practices (cont’d)

TABLE 12.1 (cont’d)

Partnering Relationships

Objective critique is geared to candid assessment of performance.

Access to each other’s organization resources is available.

Total company involvement requires commitment from CEO to team members.

Integration of administrative systems equipment takes place.

Risk is shared jointly among the partners, encouraging innovation and continuous improvement.

Traditional Practices

Objectivity is limited due to fear of reprisal and lack of continuous improvement opportunity.

Access is limited with structured procedures and self-preservation taking priority over total optimization.

Involvement is normally limited to project-level personnel.

Duplication and/or translation takes place with attendant costs and delays.

Risk is transferred to the other party.

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Project Partnering CharterProject Partnering Charter

FIGURE 12.2

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PartneringPartnering

• Advantages of Long-Term Advantages of Long-Term PartnershipsPartnerships

– Reduced administrative costs

– More efficient utilization of resources

– Improved communication

– Improved performance

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The Art of NegotiatingThe Art of Negotiating

• Project Management Is Project Management Is NOTNOT a Contest. a Contest.

– Everyone is on the same side—OURS.

– Everyone is bound by the success of the project.

– Everyone has to continue to work together.

• Principled NegotiationsPrincipled Negotiations

– Separate the people from the problem.

– Focus on interests, not positions.

– Invent options for mutual gain.

– When possible, use objective criteria.

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The Art of Negotiating (cont’d)The Art of Negotiating (cont’d)

• Dealing with Unreasonable PeopleDealing with Unreasonable People

– If pushed, don’t push back.

– Ask questions instead of making statements.

– Use silence as a response to unreasonable demands.

– Ask for advice and encourage others to criticize your ideas and positions.

– Use Fisher and Ury’s best alternative to a negotiated agreement (BATNA) concept to work toward a win/win scenario.

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Managing Customer RelationsManaging Customer Relations

• Customer SatisfactionCustomer Satisfaction– The negative effect of dissatisfied customers on a

firm’s reputation is far greater than the positive effect of satisfied customers.

– Every customer has a unique set of performance expectations and met-performance perceptions.

– Satisfaction is a perceptual relationship:

Perceived performanceExpected performance

– Project managers must be skilled at managing both customer expectations and perceptions.

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Managing Customer Relations (cont’d)Managing Customer Relations (cont’d)

• Managing Customer ExpectationsManaging Customer Expectations– Don’t oversell the project; better to undersell.– Develop a well-defined project scope statement.– Share significant problems and risks.– Keep everyone informed about the project’s

progress.– Involve customers early on decisions about project

development changes.– Handle customer relationships and problems in an

expeditious, competent, and professional manner.– Speak with one voice.– Speak the language of the customer.

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Key TermsKey Terms

Best alternative to a negotiated agreement (BATNA)

Co-location

Escalation

Met-expectations model

Outsourcing

Partnering charter

Principled negotiation

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Contract ManagementContract Management

Chapter 12.1 AppendixChapter 12.1 Appendix

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Types of ContractsTypes of Contracts

• Fixed-price (FP) Contract or Lump-Sum Fixed-price (FP) Contract or Lump-Sum AgreementAgreement– The contractor with the lowest bid agrees to perform

all work specified in the contract at a fixed price.

– The disadvantage for owners is that it is more difficult and more costly to prepare.

– The primary disadvantage for contractors is the risk of underestimating project costs.

– Contract adjustments• Redetermination provisionsRedetermination provisions

• Performance incentivesPerformance incentives

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Types of Contracts (cont’d)Types of Contracts (cont’d)

• Cost-Plus ContractsCost-Plus Contracts

– The contractor is reimbursed for all direct allowable costs (materials, labor, travel) plus an additional prior-negotiated fee (set as a percentage of the total costs) to cover overhead and profit.

– Risk to client is in relying on the contractor’s best efforts to contain costs.

– Controls on contractors

• Performance and schedule incentivesPerformance and schedule incentives

• Costs-sharing clausesCosts-sharing clauses

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Contract Type versus RiskContract Type versus Risk

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Contract ChangesContract Changes

• Contract Change Control SystemContract Change Control System

– Defines the process by which a contract’s authorized scope (costs and activities) may be modified:

• PaperworkPaperwork

• Tracking systemsTracking systems

• Dispute resolution proceduresDispute resolution procedures

• Approval levels necessary for authorizing changesApproval levels necessary for authorizing changes

– Best practice is the inclusion of change control system provisions in the original contract.

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International ProjectsInternational Projects

Chapter 15Chapter 15

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International ProjectsInternational Projects

• Types of ProjectsTypes of Projects– Domestic

– Overseas

– Foreign

– Global

• Issues in Managing International ProjectsIssues in Managing International Projects– Environmental factors affecting projects

– Global expansion considerations

– Challenges of working in foreign cultures

– Selection and training of overseas managers

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International AssignmentsInternational Assignments

• PositivesPositives

– Increased income

– Increased responsibilities

– Career opportunities

– Foreign travel

– New lifetime friends

• NegativesNegatives

– Absence from home and friends, and family

– Personal security risks

– Missed career opportunities

– Difficulties with foreign language, culture, and laws

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Environmental Factors Affecting Environmental Factors Affecting International ProjectsInternational Projects

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Environmental FactorsEnvironmental Factors

• Legal/PoliticalLegal/Political– Political stability

– National and local laws and regulations

– Government, state and local bureaucracies

– Government interference or support

– Government corruption

• SecuritySecurity– International terrorism

– National and local security

– Local crime and kidnapping

– Risk management

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Environmental Factors (cont’d)Environmental Factors (cont’d)

• GeographyGeography– Climate and seasonal differences

– Natural obstacles

• EconomicEconomic– Gross domestic product (GDP)

– Protectionist strategies and policies

– Balance of payments

– Currency convertibility and exchange rates

– Inflation rates

– Local labor force: supply, educational and skill levels

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Environmental Factors (cont’d)Environmental Factors (cont’d)

• InfrastructureInfrastructure– Telecommunication networks

– Transportation systems

– Power distribution grids

– Unique local technologies

– Educational systems

• CultureCulture– Customs and social standards

– Values and philosophies

– Language

– Multicultural environments

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Assessment Matrix Project Site SelectionAssessment Matrix Project Site Selection

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Assessment Matrix Project Site SelectionAssessment Matrix Project Site Selection

FIGURE 15.3

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Cross-Cultural Considerations:Cross-Cultural Considerations: A Closer Look A Closer Look

• CultureCulture– A system of shared norms, beliefs, values,

and customs that bind people together, creating shared meaning and a unique identity

• Cultural DifferencesCultural Differences• Geographic regionsGeographic regions

• Ethnic or religious groupsEthnic or religious groups

• LanguageLanguage

• EconomicEconomic

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Cross-Cultural Considerations… (cont’d)Cross-Cultural Considerations… (cont’d)

• Ethnocentric PerspectiveEthnocentric Perspective– The tendency believe that one’s cultural values and

ways of doing things are superior to all others• Wanting to conduct business only on your terms and Wanting to conduct business only on your terms and

stereotyping other countries as lazy, corrupt, or stereotyping other countries as lazy, corrupt, or inefficient.inefficient.

• Ignoring the “people factor” in other cultures by putting Ignoring the “people factor” in other cultures by putting work ahead of building relationships.work ahead of building relationships.

• AdjustmentsAdjustments– Relativity of time and punctuality– Culture-related ethical differences– Personal and professional relationships– Attitudes toward work and life

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Cross-Cultural OrientationsCross-Cultural Orientations

• Relation to NatureRelation to Nature– How people relate to the natural world around them and

to the supernatural.

• Time OrientationTime Orientation– The culture focus on the past, present, or future.

• Activity OrientationActivity Orientation– How to live: “being” or living in the moment, doing, or

controlling.

• Basic Nature of PeopleBasic Nature of People– Whether people viewed as good, evil, or some mix of

these two.

• Relationships Among PeopleRelationships Among People– The degree of responsibility one has for others.

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Hofstede Cultural Dimensions FrameworkHofstede Cultural Dimensions Framework

• Individualism versus CollectivismIndividualism versus Collectivism– Identifies whether a culture holds individuals or the group

responsible for each member’s welfare.

• Power DistancePower Distance– Describes degree to which a culture accepts status and

power differences among its members.

• Uncertainty AvoidanceUncertainty Avoidance– Identifies a culture’s willingness to accept uncertainty and

ambiguity about the future.

• Masculinity-FemininityMasculinity-Femininity– Describes the degree to which the culture emphasizes

competitive and achievement-oriented behavior or displays concerns for relationships.

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Sample Country Clusters on Hofstede’s Dimensions Sample Country Clusters on Hofstede’s Dimensions of Individualism-Collectivism and Power Distanceof Individualism-Collectivism and Power Distance

FIGURE 15.5

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Cross-Cultural Considerations (cont’d)Cross-Cultural Considerations (cont’d)

Working inWorking inMexicoMexico

Working inWorking inSaudi ArabiaSaudi Arabia

Working inWorking inFranceFrance

Working inWorking inChinaChina

Working in the Working in the United StatesUnited States

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Working in Different CulturesWorking in Different Cultures

• Relying on Local IntermediariesRelying on Local Intermediaries– Translators

– Social connections

– Expeditors

– Cultural advisors and guides

• Culture ShockCulture Shock– The natural psychological disorientation that

people suffer when they move into a different culture• A breakdown in a person’s selective perception and A breakdown in a person’s selective perception and

effective interpretation system induced by foreign stimuli effective interpretation system induced by foreign stimuli and the inability to function effectively in a strange landand the inability to function effectively in a strange land

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Culture Shock CycleCulture Shock Cycle

FIGURE 15.6

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Selection and Training for Selection and Training for International ProjectsInternational Projects

• Selection FactorsSelection Factors– Work experience with cultures other than

one’s own

– Previous overseas travel

– Good physical and emotional health

– Knowledge of a host nation’s language

– Recent immigration background or heritage

– Ability to adapt and function in the new culture

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Selection and Training for Selection and Training for International Projects (cont’d)International Projects (cont’d)

• Areas for Training to Increase Understanding of Areas for Training to Increase Understanding of a Foreign Culture:a Foreign Culture:– Religion

– Dress codes

– Education system

– Holidays—national and religious

– Daily eating patterns

– Family life

– Business protocols

– Social etiquette

– Equal opportunity

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Selection and Training for Selection and Training for International Projects (cont’d)International Projects (cont’d)

• Learning Approaches to Cultural FluencyLearning Approaches to Cultural Fluency

– The “information-giving” approach—the learning of information or skills from a lecture-type orientation.

– The “affective approach”—the learning of information/skills that raise the affective responses on the part of the trainee and result in cultural insights.

– The “behavioral/experiential” approach—a variant of the affective approach technique that provides the trainee with realistic simulations or scenarios.

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IS PROJECT TYPESIS PROJECT TYPES

project management project management characteristics of different characteristics of different

IS projectsIS projects

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IS ProjectsIS Projects

• programming more automatedprogramming more automated– CASE tools, code generators, 4GL,

systems re-engineering tools, OOL

• focus therefore on focus therefore on – systems design– development– implementation

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IS Project TypesIS Project Types

• maintenancemaintenance

• conversionconversion

• new systems developmentnew systems development

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Maintenance Maintenance ProjectsProjects

by far the most commonby far the most common

• durationduration

• trainingtraining

• categoriescategories– fixing errors– minor enhancements– major enhancements

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What is ERP? ERP stands for Enterprise Resources Planning, which represents an information technology system that support business operations throughout an entire enterprise by optimizing, planning, maintaining, and tracking the use of company resources….

Enterprise Resource Planning

Human ResourcesFacilities

Raw MaterialsEquipmentFinished Goods

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ERP systems have the capability to integrate the functions that make up the backbone of most businesses, such as financials, manufacturing, distribution, and human resources…..

Enterprise Resource Planning

Human ResourcesüBenefitsüPayrollüRecruitingüPensionsüTime & LaborüTraining

FinancialsüGeneral LedgerüAccounts PayableüReceivablesüAsset ManagementüExpense ReportingüCash Management

Manufacturing & DistributionüInventory ControlüDemand PlanningüSchedulingüEngineeringüBills of MaterialsüProduction

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1960 1985 1992 1997 2000

MRP Systems ERP Systems

The Next Big Thing

The origin of ERP systems can be traced back to the early 1960’s when businesses began looking at improving their operations by automating basic shop-floor systems…..

1975

MRP II Systems

2005

Enterprise Resource Planning

Manufacturing Systems Lifecycle

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The top tier ERP suppliers include the following software companies…….

Enterprise Resource Planning

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Working as an IT project manager, you’ll find yourself faced with developing and implementing a variety of information technology systems….

Info

rmat

ion

Syst

ems

Transaction Processing Systems

Office Automation Systems

Decision Support Systems

Executive Support Systems

Expert Support Systems

Management Information Systems

Enterprise Resource Planning

Strategic Level

Operational Level

Tactical Level

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It has been estimated that 90% of the fortune 500 companies use ERP systems as the “information technology backbone” to run their business operations…

Enterprise Resource Planning

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