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Critical Issues in Managing IT in Organizations 1

1.0 Information Technology in McDonalds

1.1 Industry Overview

The food service industry has gone through some kind of evolution. In the United States,

it started with public houses in 17 th century that most of the time served beers and other

limited choices of food, and has evolved to the range as we can see nowadays, such as;

fine dining restaurant, cafeterias, and fast food restaurants. This evolution, more or less,

is the same in all over the world.

The fast food industry in United States, in the 1999, shown the highest sales compare to

the other types of food service based company, such as; restaurant, cafeterias and other

drinking places. It can be seen from the rapid growing of the fast food industry. InMalaysia, The fast food market are highly competitive as the total market was rather

equally occupied by several major players, such as; McDonalds, KFC, Pizza Hut, and

Burger King, and new competitors, such as; Chicken Rice Shop and Carls Jr. Burger are

coming in every once in a while.

In order to keep the organization survives; the role of information technology cannot be

missed out. In one of the book written by Wick, R. R. (2006), it stated that the fast foodindustry uses sophisticated IT to track and manipulate the market. Furthermore, IT has

helped the organization in creating competitive advantage over their competitors. It

ranges from the use of IT for online ordering until the artificial intelligent system for

prediction of customer order flow build by HyperActive Technologies.

1.2 Company Overview

In fast food, industry, we can see some big companies that have lead the overall growth

of the industry. One of them is million dollars franchise brand, McDonalds. It is a

company that imposes on offering products range from fried-chicken, hamburgers,

french-fries, as well as shakes. The idea of the business is offering the same quality of

products and services in all over the world.

Asia Pacific Institute of Information Technology


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McDonalds Company Background

In Malaysia, McDonalds has been operates for twenty six years, and now it becomes a

huge and well organize fast food restaurant. McDonalds is hiring more than 7000

employees, 120 support staffs and also keeps expanding with 15 until 20 new restaurants

opening annually.

In keeping the business run well, McDonalds organize its people by putting them in the

level, where each of them is given some responsibilities to handle. Some of the important

posts that keep the daily activities and the operation of the overall business in

McDonalds Malaysia run smoothly are;

Managing director : The one who decides and makes the final decision which brings profits to the company.

General Manager : The one who is in charge in planning the strategic plan in the

company and managing the cost related element of the company.

Senior Vice President : The person who helps, supports, and collects any issues and tries

to solve them, before bringing it up to the upper level.

Deputy General Manager : The person who assists the general manager, as well as

ensuring the standard within the crew.

Apart from these main posts, there are others employees, both full-time and part-time

employees, who assist in running the day to day operation in the stores. As a service

based organization, employees who interact with the customers have a very important

role. Therefore, there is training given to all the employees of McDonalds to ensure the

services standard given to the customers.

McDonalds Current Situation

As mentioned above, fast food industry is one of the industries that cannot miss out the

effects of the technology in order to grow. The same situation applies in McDonalds in

Malaysia.



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McDonalds Malaysia has constantly evolved and changed its strategy to win over the

competitors, by recognizing Malaysian youths sociological habit of having supper and

hang out until late night, McDonalds started 24 hours operation in the mid 2007 and

round the clock delivery service now. Before that, McDelivery has enjoyed exceptionally

success in Malaysia than anywhere outside Asia.

However, McDonalds is still taking order by phone instead of receiving order online like

what Pizza Hut is doing. The major drawback of phone ordering is it is less cost effective.

McDonalds is spending hundred over thousands monthly for its call centre that is

outsourced to Telebiz Sdn. Bhd., by going online, it could cut the cost at least to half. In

addition, the online ordering system is hoped can reduce the load in this call centre,

afterward.

In addition, phone ordering is not efficient enough as there are complaints about

mismatch of order that happens quite often and the delivery crew is often wasting much

time to search for customer location and figuring out the best route. These problems can

actually be easily solved by implementing an online ordering system that with a

comprehensive customers database that could capture and show each distinct account

owners location upon purchase.

Surely, similar to any other implementation of new system, there will be a question on

the feasibility. Here, the problems will be on society acceptance, problem of computer

literacy in certain places, and many more. In short, can it be accepted? To answer it, take

McDelivery as an example, derived from MSNBC News (2007) this service is not even

available at McDonalds origin, however it was so successful in Egypt that delivery

accounted for 27% of its total revenue.

According to Dr Fadhullah Suhaimi Abdul Malek, General Manager of Telekom

Malaysia, a very encouraging increase in internet subscribers had been recorded in the

past few years, and it is very likely that the figure could reach a benchmark of 10 millions

in the next five years. (Malaysia internet subscribers to double by 2012, 2007) In



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addition, another statistic from MCMC (Malaysia communications and multimedia

commission) (2007) shown that internet penetration had mark 47.8% by 2007, it means

that almost half of the population is using internet regularly and the figure is rising

tremendously.

Therefore, by referring to the analysis of the environment that supports the

implementation of the new system, and considering the advantages of the system, it will

be an advantage for McDonalds to try out the online ordering service in adding value to

the business. And at the same time, it is proposed with the intention to further reduce the

cost that incurred from recent less effective operational flow and enjoy higher efficiency

at the same time.



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2.0 New Roles of IT Management Ter Pek Yew (TP013172)

2.1 The Emerge of IT Management and its evolving roles

Since the adoption of IT at some 50 years ago, the management of IT in organization had

changed drastically, initially it was only used to process vast data, therefore managing IT

is simple, just make sure machine is working all the time and reduce cost of running

business. As technology has developed so rapidly since then, IT was further exploited to

improve products and services, support decision making, or even reaching consumer, the

trend had suggested that the aims of IT in an organization was shifting from efficiency to

value added and from technical to business expertise.

Initially, IT was used mainly to reduce operational cost by automating businessoperational process. Simplified foods preparation process had helped McDonald to save

whole chunk of money as employee efficiency had greatly increased, thus labor cost is

lower and cost to conduct employee training is relatively low as well. After that,

McDonald had further utilized IT by launching Drive-Thru services, an ordering device

with microphone embedded inside was deployed at the entrance of Drive-Thru lane and

consumer can collect its food and make payment at the exit. This unique business model

had brought so much convenient to consumers and help Mc Donald to tap into and

capture a new market where it is hardly attainable by its competitors. At this era of ICT,

Internet is commonly used and was deemed to be a convenient and effective way to

communicate directly with consumers, it has lead to a new way of marketing, distribution

and service strategy, Internet has also changed the rules of competition in fast food

industry, it is certainly the future direction of IT, even business. For the sake of those

advantages that discussed as earlier, there is a need to implement McDonald online

ordering system.

However, developing the new system is one thing, managing the system is another. Rapid

advancement of IT had open up plenty opportunities for the industry, on the other hand it

also push information system management to another altitude. As the information system

grown complex, problems like system vulnerability, data privacy, ethic issue, etc.



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appeared, managing contemporary information system is definitely another great

challenge for CIO.

2.2 System Reengineering

As mentioned earlier, the practice of using IT to being cost efficiency had became

obsolete now, as consumer are more demanding nowadays, most organizations has a

tendency to embrace IT to add value on their product/services. As a result, most

information system now required to be highly personalized to suit respective business,

unlike conventional IT manager, while contemporary IT manager has to possess thorough

knowledge of the business or even the whole industry, he/she must also anticipate

actively in management and know well about operation flow. As shown in figure 2-1,

such a shift in demand on IT had added a new harsh rule for IT manager, which is theyhas to be not only a IT savvy, but also a veteran of business and management.

Source: George Cox, Time to Reshape the IS department?, Wentworth Research Program, June 1994

Figure 2-1

The main reason to become so particular toward CIO is because of their role of

conveying vision on how potential new technology could be use to benefit organization


AddedValue

CostEfficiency

ITKnowledge

BusinessKnowledge

Impact

Balance of ExpertiseRequired

Computer Operations

System Developmentand Maintenance

System andInformationArchitecture

BusinessRequirementIdentification


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to top management. Once a new plan is granted, the 1 st step was to redesign IS system, its

all about examine the whole business process and identify the needs of organization, then

come out with a new blueprint, this is the foremost determinant of whether a project

could success, a small mistake could cause the whole project go awry. Others than that,

CIO must also ensure that the development of any project is always pertinent to

government regulation.

2.3 Scalability & Reliability of System and Capacity Management

To date, McDonald Malaysia has 172 restaurants nationwide and it is expanding at a pace

of 10-15 more outlets annually. Therefore, great amount of data is expected to yield from

new online ordering system, capacity and reliability emerge as a great challenge for IT

management, robust IT infrastructure must be developed so that it could providesufficient bandwidth and storage capacity for transmission and maintenance of such data.

Data corruption is a very common problem that plaguing network engineer all the time, it

is sometime inevitable that organization networking will be using different brand or

different version of machine or software, often these machine does not work compatibly

and cause data lose in transmission, thus, IT management will have to take relevant

measure to prevent this problem to happen and ensure the reliability of data.

On top of that, IT management has another infrastructure issue to take care of, which is

the scalability of system. As inventing new system inevitably incurred massive

investment, it is always wiser to expand/revamp current system to suit current

organization needs rather than develop a new one. Hence strategic planning at first had

played a vital role on developing a high scalability system. CIO must be able to foresee

future need and judge the future trend of IT when planning for new system, sufficient

spaces for advancement conserved. The increasing popular of cutting edge mobile device

had indicated that McDonald online ordering system will likely be access by different

platform like web browser, handphone and other mobile devices, thus new system must

be carefully scaled so that it could work steadily on several major platform.



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2.4 Change Management

Another role of IT management in this era was to manage the changes to organization

leaded by the inception of new information system effectively, successful of a IS project

are very much depends on whether the process of implementation has carried out

carefully, as suggested by ( Laudon & Laudon, 2006) , implementation refers to all

organizational activities working toward the adoption, management, and routinization of

an information system. They also listed out 4 success/failure factors in implementation:

The role of users in the implementation process

The degree of management support for and commitment to implementation

effort

The level of complexity and risk of the implementation project

The quality of management of the implementation process

ODR, a change management firm in Atlanta had pointed out that the major cause of

failure is people resisted to change, especially when they do not understand the new IS

fully or not prepared to change, or they think that the impending system will not change

the status quo. This case is likely to happen in McDonald online ordering system, as

McDonald is adopting a franchise system, thus they will have little influence over its

franchisee, communicating with all of them will be a very hard task while convincingthem to change will be even tough.

There is a possible remedy, which is to increase user involvement in designing the

system, they argue that by getting end users heavily anticipating in designing new

system, they will have the chance to shape the system with their priorities and

requirement, also they will react more positively to completed project too, so it will

ultimately ruled out the possibility of users resistance to adopt new system.

However, there are high chances of backfire too, end users and system developer hold

different perspective, what concerned them the most could be very different, for instance,

an end users would ask How quickly can I access data while How many line of

programming code will be needed?, obviously there is a chasm between two different



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point of view and this communication gap will probably caused completed system does

not meet users requirement. Finally, the possible outcome is, end users deterred further

away and implementation process fail.

2.5 Incident Management

It is definitely something unrealistic for a CIO to expect a new information system to be

flawless and it can work well for years, especially under the context of building such

highly personalized and complicated IT solution. Even if the design was done excellently

and the system was done by top-notch programmer in the world, there are certainly some

foreseeable/unforeseeable factors that could disrupt the system, it could be external

factors like inter-omitted feeding of internet connection, or problem from the system

itself like virus/bugs, and factual evidence had shown that sometimes bugs can came outof nowhere even the system is isolated from any network, just like memory card of a

hand phone, very often, some unidentified program file will exist after a period of time

even it has never connected to any network.

Therefore, the sustainability of the new system is heavily depend on how IT manager

carry out incident management, the objective of incident management was to ensure the

system is continually operated at standard level, and reacts instantly to any incident that

could cause interruption to the system. Many organizations had fully digitalized its

operation nowadays, especially financial institution like bank, tens of thousands of

transaction could be processing in a moment, and the amount could easily reach tens of

millions, imagine what will happen if the system broke down for few minutes, they could

suffer very huge loss.

According to ITIL (Information Technology Infrastructure Library) a standard model

developed by OGC (Office of Government Commerce) of UK, the process of incident

management are as stated below:

i) Incident detection and recording

ii) Classification and initial support

iii) Investigation and diagnosis



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iv) Resolution and recovery

v) Incident closure

vi) Incident ownership, monitoring, tracking and communication

(Incident Management, 2003)

Differed from other IT management, input of incident management will come from

system users, while IT manager play a role of analyzing error history and proposed for

changes and improvement of the system.

2.6 Security Management

After all, the most important and challenging task for IT management was to deal with

the potential problem that underlie in the vulnerabilities of the system. Cyber crime andsecurities issues had been escalating in parallel with the advancement of technology

through these years, as information system growing in size and intricacy, it inevitably

exposed more leakage and weaknesses of the system, hence it open up new chances for

the opportunist. At these era of digitalized and automation process, multinational

corporate confidential data is often safeguard centrally, once it is broken, the losses could

be far beyond what the corporate can bear, probably bankrupt for the worst case scenario.

(OBrien & Marakas, 2006) had clarified that the main objective of Security management

was to ensure the accuracy, integrity, and safety of all information system processes and

resources, in other words, McDonald online system must be free/minimized from errors,

frauds, and losses. Generally, incidents that are deemed harmful to the system can be

categorized as below:

2.6.1 Network Intrusion

Network intrusion is the utmost threat that put corporate bottom line at risk as

assessing corporate confidential data could bring a fortune for those malicious entities,

this crime might also be done by its competitor to cause havoc. As information system

grown sophisticated, the heavily coded program inevitably exposed/magnified some

leakage between code lines, and the incompatible that might arise due to the increasing



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use of divergent hardware/software had open up plenty opportunity for malicious

network penetration, making network intrusion more undetectable.

Hacking is the most common type of network intrusion, theoretically any electronic

devices that is connect to public network is exposing itself to hacker, especially

connected to a wireless network, as wireless signal can be easily sensed. This mean,

proposed McDonald system is at high risk of being intruded as connection must be

made through public network with its consumers. Many organization has opted for

developed VPN (virtual private network) to hedge its network from risk, however, it is

learnt that many cases were done by insider, as they had certain level of access to the

system, they can sometimes sniff something out like passwords or leakage of the

system. Hacking methods had also been transformed dynamically, from conventionalmethod like DOS (Denial of Service) and Trojan Horse, to Social Engineering today,

which deliberate conversation will be conduct with company staff to sniff out useful

information.

Instead of obtaining corporate information, cyber theft involve in cyber crime that

involving theft of money from bank, normally they will broke into banks network and

transfer whatever amount of money they like away, they will also fraudulently

modified the database so that such crime would not be discovered. Many cases had

happened in the past and it has no sign of extinction, it was also believed that

victimized Bank always reveal a lower figure on losses to comfort their customers as

well as shareholders.

There are tons of anti-intrusion and software safeguard system in the market, with

vigilant planning, an information system is theoretically hardly been hacked into.

However past cases had clearly stated that the real headache of Security Management

is intrusion from insider, especially in multinational corporation that has tens of

thousands employees. The cases that happened recently in France is had clarified that

what a leakage in a system cost, Socit Gnrale had loss a staggering $7 billion over

the cases. Clearly the greatest challenge for Security management now was to prevent



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insider from committing crime, or on how to detect insider fraudulent before loss

severely.

2.6.2 Piracy Issues

Piracy is always the utmost concern of people on virtual world, it is also the factor that

hinder the development of e-commerce, included McDonald online ordering system,

bolstering users confident on using the web portal emerge as a new role of IT manager,

if it is not done well probably the new system will not be widely use and eventually the

whole project fail. However, this task can comfortably be complete comparing with

those problems discussed earlier, obtaining a certificate from TRUSTe and educate

users with adopted preventive measures should be sufficed.

However, the core responsibility of IT management should lied on the enforcement,

how they ensure leakage/misuse of customers information would not happen, and what

measure to take when acquiring sensitive info like credit card number, also how to

prevent future conflict with customers. It is simple and direct, which is adopting secure

transaction system and have an agreement with user upon signup, nevertheless, an

survey on 20 local companies web site had reveal a surprisingly 90% of local website

did not practice secure transaction. (Daniel M., 2008, Pg. WE2)

This will surely further worried people that are already fearful of identity theft,

although it is not common in Malaysia, yet they are still case of phishing site that

caused huge loses and panic to customers of a particular bank before. Extra attention

must be given to this as McDonald will inevitably send out e-letters as part of

promotion, this could likely be exploited by hackers to coax customer exposed their

personal information. It could have huge impact on credibility of the system.

In brief, at this digitalized era, IT had play increasingly important role in business,

managing an Information system was always a tough task, however as the technology

develop, the job scope had been broaden, the responsibility is much heavier, and more

challenges is waiting ahead.



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3.0 Information Technology Financial Management Linda Yuni Tan (TP013160)

3.1 Business Value of Information Technology

The role of IT in an organization has changed drastically, as described earlier. However,

there is a need to measure the important and value of the IT investment. Here, financial

management roles come in.

Laudon & Laudon (2006) states that any classification of IT investment are carried out in

adding value to the business; by improving the current business process or by improving

the management decision making. In which, this improvements resulted from IT

investment can be measured using the traditional capital budgeting that will be described

later on.

The investment in IT always concerns on the issue of how the investment is going to

benefit and bring more profits or other advantages to the organization. Therefore, the

financial management assists in determining value of the investment, whether it is worthy

to invest.

.

3.1.1 Objectives of the IT financial management

In understanding on what actually IT financial management refers to, it can be seen from

the objectives and responsibilities it caters.

Here are some of the IT investment managements objectives and responsibilities:

- Provide better cost information to assist the management

In order to see clearer on how the investment will benefit the company, this is when

budgeting models can show on the details. It shows the costs, benefits as well as

comparison on the decision to do in-house development or outsource it to developers. By

having this detail, thus it helps higher management level to consider and decide on the

investment.



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In the case of McDonalds investment in online ordering system will be using one of

the budgeting models, the Payback Method. In fact, there are more budgeting models

that can be used, which each of them carries different objectives.

- Encourage more efficient use of resources

Financial management also assists in considering the efficient use of the resources, such

as; labor, hardware, software, etc. It aims to save costs in the investment, whenever it is

possible.

Online ordering system for McDonalds will be using the infrastructure that has already

existed. By doing this, McDonalds will be able to fully utilize the use of the resource,

such as the website as well as the investment made earlier in the call centre.

- Account fully for the cost recovery, via charging

Financial management has the responsibilities to control and manage the recovery of

the cost spend in the investment via charging to the relevant customers. In McDonalds

online ordering, the cost recovery management might be gained back by setting up

minimum purchase. At the end, the objective is to increase sales and gain more profits.

3.2 Application of Financial Management in McDonalds

In the proposed online ordering system for McDonalds, here are how the financial

management are going to be applied to assist the decision making and value

measurement:

3.2.1 Assist the management decision making on in-house development or outsource

One of the objectives of the IT financial management is to help in decision making on

whether to build the system in-house or outsource it to the expert. This is a very crucial

decision to be made. As when the wrong decision is made, it will not only cause

delivering non-interactive system but also loses to the organization, in term of time as

well as money.



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In this case, McDonalds online ordering system will be outsourced. The considerations

in making this decision are:

Focus of business : Firstly to allow McDonalds stay focus in their core business. By

maintaining good services or coming out with other business strategies.

Lack of technical expertise : As mentioned in the book written by Starbucks, W. H

(2006), it is stated that McDonalds is described as the firm with low technical expertise.

Therefore, it might be risky to do the development in-house, as experience will be very

important in the system development process.

Flexibility in Technology : By outsourcing the project, McDonalds eliminates baring

risk of possibilities of loses to keep up with the changing technology. In this case,

developer company will be the one who responsibles to adapt with the changing

technology and deliver up-to-date system.

3.2.2 Support the use of capital budgeting

According to Laudon & Laudon (2002) capital budgeting model is one of several

techniques used to measure the value of investing in long term capital investment

projects. Here, the investment in IT is considered as long-term project as it is hoped in

long run this investment can benefit the organization in certain ways.

There are few capital budgeting method that can actually be used, they are;

- The payback method

- Return on investment

- The cost benefit ratio

- The net present value

- The profitability index

- The internal rate of return

The objective of each method above is to know whether the project is worth to invest.

Again, as mentioned earlier, for the investment in McDonalds online ordering system,

the Payback Method will be used. The idea of Payback method model is to measure the



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time required to pay back the investment spent on the project. Therefore, McDonalds

management can have the roughly picture on whether the money invest here is worthy.

3.3 The cost benefits analysis

Before coming out with the final result of the Payback Method, identifying cost and

benefits would be important. Cost and benefits are two elements that are highly taken into

account in the traditional capital budgeting.

3.3.1 Cost

Cost is the total spent for goods or services including money and time and labor.

(WordWeb Dictionary, 2007) In this case, cost is the expenses that McDonalds needs to

spend in order to succeed the implementation of the online ordering system. Below arethe specifications on the costs that are going to be spent in the development of the

proposed online ordering system.

Direct Cost

Direct cost is costs that can be allocated accurately and is directly linked in the process of

delivering out the whole project. As the system is going to be outsourced, therefore, the

development cost will be as described below:

- Outsourcing Cost

When a system is outsourced, most probably it comes as a package. In which,

organization will only gives the specification of the system. In this case, the rest of the

development that includes labor costs, infrastructure upgrading, hardware, software, even

maintenance will be handled by the system developer. Here are some of the details on

what services are included in the agreement with the developer company.

- Direct Labor Cost

Direct labor cost refers the cost spent on those people who involved directly in the setting

up of the system. Here, it includes webpage designers, database and system

administrators.



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- Infrastructure Upgrading

In this case, McDonalds has already the basic infrastructure that links its restaurants with

the call centre. Therefore, there will be a need for the developer company to upgrade the

existing infrastructure, by setting up connection from the online ordering system handling

centre to the call centre server. It also includes the design of the data structure and

development of the server side as well as installation of groupware that are needed to run

the system. Furthermore, the database management is needed in order to store the

customers information and orders made.

- Service

In term of service, training will come as a package. The first initial training will be given

to McDonalds employees who will be the users of the system.

- Hardware

Hardware refers to all physical parts that allow users to interact with the system. In the

online ordering system, there is a need for the centre, where the orders are handled, to

setup Local Area Network that will involve the setting up of PCs and storage. In addition,

PCs also will be placed in the McDonalds restaurants that open for 24 hours and provide

the delivery service.

All around East Malaysia, there are approximate of 40 restaurants that operate 24 hours

and providing McDelivery. However, as some of them has already has PCs, therefore,

roughly it needs only 30 PCs for the restaurants and 10 PCs for the online ordering

center, make it total of 40 PCs to be purchased. And in setting up this network, there is a

need for cabling.

.

- Software

In order for the PCs to be able to run, and Windows will be installed as the basic

operating system. In assuring the credibility of the OS, McDonalds has to buy a software

license from Microsoft or its legal dealer. Here, McDonalds might consider to purchase

the full package with perpetual licensing that offers unlimited used period as well as



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lower maintenance and upgrading costs. Software will also include the installation of

firewall for security purposes.

- Feasibility study

Before passing the project to be built by the developer, McDonalds needs to do

feasibility study to specify the requirement and specifications of the system. In which,

Mitchell (2005) from Internationalstaff.net stated that the study will cover the scope of

the system, time frame, and performance indicators that used to monitor the project. This

study will include the market research that will require the company to spend big budget

on it.

Indirect Costs

According to the IT service centre in The University of Melbourne (2006), Indirect cost

refers to cost incurred which cannot be directly allocated in full to a single product,

service, customer, cost centre or business activity; incurred on behalf of a number of cost

units or centers to which the cost may be apportioned.

Below are the indirect costs that are incurred in the investment of McDonalds online

ordering system:

- Maintenance fee

In order for a system to run smoothly, there is a need for good maintenance. This is

applied in the online ordering system as well. To keep the website and the system run

24/7, it needs good maintenance support. This system maintenance covers server,

gateway, groupware, website and database maintenance. However, as the system is

outsourced, the maintenance will be done by the developer company as well. Moreover,

maintenance includes the upgrading and maintenance of the software and software used.



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- Continuous Employee Training

Training will be important area to invest as good human resource as valuable as the good

system. Therefore, training will be carried out for those employees who are new, as well

as training on the updated information for the current employees.

- Building Rent

In operating the new system, it is required a single centre that in charge only in handing

the customers online orders. Here, all the technical parts are located. Thus, there is a need

for McDonalds to rent an office building for this purposes.

The total cost is shown below. It covers the 5 years period of time, thus it can show how

the system can benefit the organization in the long run.



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McDonald's CorporationOnline Ordering SystemEstimated Cost (2008-2012)

Year: 0 1 2 3 4Direct Costs 2008 2009 2010 2011 2012Initial outsourcing cost

File servers 2@10,000 20,000Gateway and its security 8,000 8,000Database design 20,000 20,000Network software 10,000 10,000Groupware 40@400 16,000Webpage design 1,000 1,000Direct Labor Cost 80,000 80,000First training 20,000 20,000

HardwarePCs 40@3,000 120,000Cabling 10,000 10,000Storage 60,000 60,000

SoftwareFirewall 4,000 4,000Windows 40@900 36,000

Feasibility study 100,000 100,000

Indirect Costs

Indirect Labor Cost 10@18,000 180,000 180,000 180,000 180,000 180,000System maintenance

Server maintenance 2@2000 4,000 4,000 4,000 4,000Gateways maintenance 800 800 800 800 800

mailto:2@10,000mailto:40@400mailto:40@3,000mailto:40@900mailto:10@18,000mailto:2@2000mailto:40@400mailto:40@3,000mailto:40@900mailto:10@18,000mailto:2@2000mailto:2@10,000


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Database maintenance 5,000 5,000 5,000 5,000 5,000Groupware maintenance & upgrades 40@200 8,000 8,000 8,000 8,000Website maintenance 1,200 1,200 1,200 1,200 1,200

Software maintenance & upgrades 15,000 15,000 15,000 15,000 15,000Hardware maintenance & upgrades 20,000 20,000 20,000 20,000 20,000Web Hosting 600 600 600 600 600Continuous Training 10,000 10,000 10,000 10,000 10,000Building Rent & Electricity 36,000 36,000 36,000 36,000 36,000 36,000

Total Cost 721,000 280,600 280,600 280,600 280,600 1,843,400

Assumption:

* All figures above are taken from some other resources and adapt in approximation value

** All costs are in Ringgit Malaysia (RM) currency

mailto:40@200mailto:40@200mailto:40@200mailto:40@200


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3.3.2 Benefits

Glossary by ACF (2006) states that benefits are the qualitative and quantitative

improvement expected or resulted from a system investment. There are two different

benefits that can be acquired from an information technology investment. It can be in

form of;

- Tangible benefits

- Intangible benefits

Tangible Benefits

Again, Laudon & Laudon (2006) defines tangible benefits as the benefit that can be

quantified and assigned in monetary value. In this case, the tangible benefits of having

the online ordering system are:

- Improved productivity and business operation

As mentioned in earlier, one of the problems with the phone ordering, there might be

wrong ordering taking or wasted time in delivery. By using this online ordering system, it

decrease the chance doing wrong in order taking, in addition, the system can be designed

to find the best route to be followed by the deliveryman. At the end, it improves

employees productivity as well as business operations.

- Increase in sales

Increment in sales will be definite. Changing society and the statistic provided by

MCMC, higher the chances for the system success. This system especially targeting large

group of people who are packed with their daily activities, thus delivery services to their

front doors might seem to provide convenience. And it is supported with the fact that

customers need only registered once, and then log in to order, for the next transaction.

This simplicity will be the main attraction to success this investment.

- Reduced in marketing cost

Online advertising has been a trend nowadays. By having online ordering system, it

attracts more people to visit McDonalds website. Therefore, at the same time,



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McDonalds promotion can reach more people through this website. Consequently,

McDonalds can reduce the marketing cost by fully utilizing the website.

Intangible Benefits

Laudon & Laudon (2006) defines intangible benefit as benefits that cannot be

immediately quantified but may lead to quantifiable gains in the long run. There are

some intangible benefits that can be identified from the investment on the online ordering

system for McDonalds.

- Customers satisfaction and loyalty

The implementation of online ordering system might be able to improve the services by

offering convenience, accuracy of orders and saving in cost of phone credits for customers. This satisfaction of customers might benefit the company, as it will result in

customers retention. In addition, it will be a medium in attracting other potential target

markets to purchase the companys product and services.

- Competitive advantage

This investment can add value to the company. As in Malaysia online ordering system

has become a trend for some huge fast-food restaurant, such as: Pizza Hut and Domino

Pizza. In addition, against the competitors who have the same product line, such as: KFC

and Burger King, this system will be McDonalds competitive advantage.

- Customers information

By having this online ordering system, McDonalds can also acquire the important

information of the customers for the legal use in business forecast and for marketing

purposes. Thus, McDonalds can reduce the costs spent in the market research. However,

the use of that information must be still in legal boundary, so that company and

customers can build a long term relationship.

Here are the details on the amount of benefit that McDonalds might be gaining back

from the investment that has been made in the online ordering system.



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McDonald's CorporationOnline Ordering SystemEstimated Benefit (2008-2012)

Year: 0 1 2 3 42008 2009 2010 2011 2012

BenefitsIncreased sales 100,000 750,000 750,000 840,000 900,000Saving in market research 70,000 70,000 70,000 70,000Reduce marketing expenses 40,000 40,000 40,000 40,000

Total Benefit 100,000 860,000 860,000 950,000 1,010,000 3,780,000

Assumption:

* The figures above are in estimation value which is based on the original data from McDonalds Corporation, globally, with some

modifications and assumptions to adapt with the situation in McDonalds Malaysia.

** All the value are in Ringgit Malaysian (RM) Currency

** To be clearer on how the estimation of benefit is carried out, please refer to Appendix I



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3.4 The Payback Method

From the specification of the cost and benefits above, payback method calculation can be

carried out, as below:

Initial Investment 721,000

Year 1 (2008)

-

621,000 -621,000Year 2 (2009) 579,400 -41,600Year 3 (2010) 579,400 537,800Year 4 (2011) 669,400 1,207,200Year 5 (2012) 729,400 1,936,600

Payback Period 2,086 (2 years, 1 month)

From the cash flows and calculation above, thus this investment can achieve it payback

period in 2 year and 1 month. Along with that, the total benefit from this investment is

RM. 1,936,600 at the end of the fifth year.

3.5 IT Cost Recovery

IT cost recovery refers to how the organization recovers the cost that has been invested in

the IT project by charging it to the customers or in some other possible ways. In this case,for customers to do transaction online they need to make minimum purchase, by doing

this; it will increase the sales and revenue gains. Another policy is that, if customers do

not reach certain minimum purchase, then they will be charged a delivery cost.

But at the end, the goal in this project is to increase sales, so that company can raise their

revenue, indirectly makes more profits.

In summary, going through some considerations, the financial management assists the

management of McDonalds in deciding to outsource the project. In addition, financial

management analysis also provides the information on how this system is going to

benefit McDonalds, such as; increased sales, productivity and business operation and at

the same time, it helps the organization to reduce cost spent on marketing and market

research. Finally, from the approximate calculation of the Payback Method, it is shown



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that McDonalds is going to gain back the invested money within 2 years and 1 month. In

addition, the high increased in sales every following year and cost saving in other areas

resulted from this system implementation make this project worth to invest.



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4.0 Managing Computer Security - Chiong You Hoe (TP010944)

4.1 Introduction to Security Management

On April 24, 1982 McDonald opened its first restaurant in Kuala Lumpur, till now

McDonald has more than 8000 employees, with the expansion of 10 to 12 restaurants

annually, as written in The Star Online (2007). First for all, McDonald is fast food

restaurant which serve customer with the hamburger, French fries, soft drink, desserts

and also breakfast meal. Generally, McDonald provide to customer with fresh, healthy

products in shorter of a period time while customer ordered. Last year, McDonald (M)

has invested RM300 Million for the following five years. Due to the huge business

expand, here a proper and well organizes security will be needed in order to manage and

protected the Technology for the future.

Security refers to process for ensuring that confidentiality, availability of computer

hardware devices, data, and hardware. Mostly security involves data to be encryption,

password protection, double lock to prevent hardware to get stolen. Encryption enables

data to translate data into form which is unintelligible without a deciphering mechanism,

and password enable the user to login before access the data. Lack of security will results

of the theft of data; attract attention of hacker, leakiness of data to third parties and so on.

4.2 Current Situation of Security Management

Nowadays the internet usage keeps increasing from year to year. Due to the huge usage

of internet and it also brings up cases of infect of viruses, spyware, Trojan, and Hacker.

According to survey, it found over the last two years Americans have lost approximately

$8 billion at the hands of computer viruses, spyware and phishing scams. Computer

Crime Research Center, 2006

They are several ways to prevent such as installing Anti-Virus to scan removable drive

before open it, implement Firewall to block up unnecessary advertisement, keep updating

operating system, and strict the network service to avoid harmful website.



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Each company should take serious and must have strong protection to protect their data,

company profile under secure environment. As the information is private and confidential

to the competitors, this is because some of the competitor may be hire hacker to steal the

information and re-modify and sell it under their brand.

Based on the research, there are three main issues needed to be considerate in order to

protect information being stolen.

Intrusion

Denial of Service

Information Theft

4.2.1 Intrusion

Intrusion refers to the tools to monitor the most vulnerable points in a network to detect

and deter unauthorized intruders. (Kenneth C. Laudon, 2002, Page 446). An instruction

of alert will be send to IT professionals or System Admin within the organization to

inform the weaknesses of the network security. Admin can shut down the particular

device, hardware or sensitive part if receives unauthorized traffic affect the network.

Information can leak, or stole easily if admin didnt monitor the network. MacDonaldestablish its business on 1982, till now, MCD has been came out a few idea to attract

customer attention. For instance, prosperity hamburger during Chinese New Year, small

packet during Chinese New Year and Hari Raya , 24hrs drive thru service and also Mini

Toy during debut of new Movie. New product, new service, and also new design of the

outlook of the branch, those information must be keep in secret to prevent competitor to

go after. By the way, some competitors would like to obtain what their want either with

the legal or illegal way.

Last year, McDonald just launched its 24hours business on the selected location with the

mission to provide best quality of service to satisfy the customer. During Football

Season, McDonald also comes out plan which is Football fans can watch their football

match in McDonald. Those events which could not being found with the rest of fast food

restaurant in Malaysia. McDonald marketing department plays very important role in



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design, market survey the customer needs and wants, and also marketing to create

awareness of the product. Here, internet and computer are the main component will be

use to create, generate, and data gathering process.

4.2.2 Denial of Service

Denial of Service happens when hackers flood up network server or Web Server with

requests for information or other data in order to crash down the network. This happens

when hacker wants to stealing the company data, as result to slow down the responds

time from the server and to cover up hacker by detect from the admin department.

Recently, Website becomes more important and more useful for the computer users.

Everything can be done with just a finger click, and all will be settle immediacy with inshorten of period. Every company has their own website or server to provide updated on-

line information, and also provide on-line transaction. Because of the fast growth of

internet in Malaysia and also high criminal cases in Malaysia, people tend to do on-line

banking more than go out.

McDonalds does participating in Charities Fund, which is Ronald McDonald Childrens

Charities Fund of Malaysia (RMCC), this website enables the customer to fill up the

personal detail, and also amount of the donation. At the same time, this website also

remind the customer dont forget to share the happiness together with those who need

helps from community society. A strong security protection must be needed, as useful

customer personal detail can be obtained from this website during transaction.

Since we are going to implementing Online Ordering System to McDonald at the end of

this assignment, this will be another one of the risky problems need to be considers.

Basically on-line transaction involves payment networking, which involve vital customer

credit-card information and also security pin code number during transaction. Denial of

service could be happens at this level as attackers will send some other advertisement to

slow down the network performance and



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4.2.3 Information Theft

Information Theft, reference to a process which some one steals the information from

your computer, or company database from server without any notification from third

parties. This will be another theft for McDonald as every month they need to generate a

monthly summary report, and the report needs to be sending to headquarter for update

any business result in particular location within the month. Information theft will accrue

if they didnt have strong security. For instance, Spyware will be needed to steal the data,

and copy it into removable drive or CD and sell it to the buyer which looking for the

information of competitor.

Virus is the more popular term but technically, a virus is a program code that cannot

work without being inserted into another program. (James OBrien, Pg.503)

Anything can be happen in this world, imagining if McDonald system break down for a

few hours because of hacking. What will happen to them? Everything will be gone

within few hours, customer information, company information, suppliers information

and so on.

There are three main type of information theft which needs to be concern on if going for

online Ordering System.

Trojans A program that appears legitimate, but

performs some illegal activity when it is

run. It stays in the computer and doing

damage or allows someone from removable

site to take control of the computer.

For instance, Backdoor, ArcBoombs, etc

Viruses A program which runs into the program

files to execute and by the same time also



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attaches copies of itself to other programs

in the system, as result to infect other

For Instance, Macro viruses, logic Bombs,

boot Sector Viruses and so on.. Worms A destructive program that replicates itself

throughout a single computer or network. It

can do damage by sheer reproduction,

consuming internet disk within a single

computer.

For instance, Morris Worm

4.3 Solution of Computer Security Management System

Every company has their own IT department to protect and implement to make it more

successful for the future. Prevention is very important to McDonald, since we are going

to suggest of Online Ordering System, which its linking to the entire entire network.

James OBrien (2006, p.517) states that As today few professionals facing greater

challenges than those IT managers whore developing Internet security policies for

rapidly changing network infrastructures. How can they balance the need for internetsecurity and internet access? Are the budgets for internet security adequate? What impact

will intranet, extranet, and web application development have on security architectures?

How can they come up with best practices for developing internet security policy?

There are a lot of way to protect Viruses from attract the system, but at the end just few

ways which is suitable and useful against malicious attack. Those will be:-

4.3.1 Firewall



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According to James OBrien (2006, p. 518) Firewall serves is a gatekeeper system that

protects a companys intranets and other computer networks from intrusion, typically a

router or a dedicated server

Firewall is useful for monitoring or controls any network traffic during transaction.

Basically firewall use to prevent unauthorized network access to the server or computer,

but some error can be happen at the end due to user mistake. For instance, user can allow

or deny any network communicate from outside by click on the warning massage appear

on the screen.

McDonald IT department can monitor or place rule and regulation notice on checking

each network transaction for each staff during working hours. Is importance for OnlineOrder System as inside contain private information when customer doing online payment.

By educating employees regarding the Computer Security will bring in more benefit as

this department is helping and also developing the networking.

4.3.2 Antivirus Software

It is software which designed to keep your PC free of these computer viruses and Worms,

it does so by scanning of the Computer file system looking for virus, if a virus found it

will inform you and then take steps to remove the virus threat.

Antivirus is useful in detection, reaction and preventive from viruses attack. Nowadays,

antivirus is must software not only for IT Department but also for single PC user around

the world. The software must keep updating from time to time which can be protecting

the computer or server by hack. McDonald Online Ordering System is needed updated

version of antivirus, to prevent or protect the client information for the time been.

For instance, Nov. 2005, during Thanksgiving Holiday a fast moving virus called Sober

Virus has attacked UC Computers in Worldwide. For the first hour after attacks, 50% of

the anti-Virus vendors able to recover the damage and also released security update to

protect customers from virus variants.



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4.3.3 Encryption Code

Nowadays, Encryption Code is wide used by all amount Company. This is because

encryption able to change the code into some format which cant be read or break easily

by the attackers even if they got their hands on the information. For MacDonald, it will

be useful as it use to protect customer information from stealing. Encryption Key is very

important as it use to decode the encrypted message, without it the person not able to read

the information. So the key should be given to a specific employee to ensure the safety of

the information.

Encryption process is needed as daily information is circulating around their network,

attackers can steal information just to plug in the cable and access it without notification.

According to James OBrien (2006, p. 517) Encryption involves using special

mathematical algorithms or keys to transform digital data into a scrambled code before

they are transmitted and decode the data when they are received

4.3.4 Strong Authentication

Authentication is a process of proving the identity of user to logging into network, user

ID and Password, smart card and Biometrics can be used to prove the identity of user.

Mostly this security apply in server room, which they need to key in their identity before

enter the room, as server room is the place which store any private information regarding

company, employees data, client information, project detail, and some other daily data, so

a strict process must be apply in order to prevent data licking out to third parties.

McDonald must have strict policies and also strong security control before implement

Online Ordering System, because any uncontrollable security system will bring up some

other harmed to the company, no any in customer policies but also reputation since

McDonald is World Wide fast food restaurant.

4.3.5 Security Management Policy



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Policy is black and white written agreement form which must be following by each

employee in the whole organization. The purpose is to protect the organization interest,

employee behavior in organization, what can and cant do in organization, network

access and some others. Policy was created to protect organization and staff of the

company, as basically employees will do something surprising to the organization at the

end.

McDonald does have their policy based on the requirements with their supplier, and also

within department itself. For instance, each department must have their own rule and

regulation to protect their right, as Account Department must keep the lost and profit

amount of company within their own department, and their must not tell it with other

department.

Wrapping this up, security is very important to McDonald Corporation, as it use to

protect company right and client benefit to avoid data for licking out. Basically,

employees are responsibility to protect the data as they are the person who gets in touch

with the data daily.

Many organizations did not take seriously in data security, as their did not put so much

efforts in the security, so that is why at the end we have hacker who able intruders to the

organization network and do on what the hacker want. Prevention is better than cure,

Strong Authentication, Security Policy, Antivirus Software, Firewall and Encryption

Code; those will give some other protection to the company.

Knowing the possible risk and finding out the ways to overcome from time to time being

must take for each organization as we still have some other disasters which are waiting

for us to solve.



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5.0 Managing Project Development Naranbadral. L(TP010847)

5.1 Project Definitions

Here are some definitions of a Project:

A project is a temporary effort to create a unique product or service. Projects usually

include constraints and risks regarding cost, schedule or performance outcome.

(Organizing for Project Management, 1997)

Project is a process of selection and reduction of the ideas and perspectives of those

involved into a set of clearly defined objectives , key success criteria and evaluated

risks .

(Project Definition, 2001)

Thus, it is concluded that a project is a set of tasks set and agreed by a team of people who

will execute them within a planned time frame. The team will be utilizing software project

management concepts to ensure the successful completion of the tasks.

5.2 Project management

Project management is a methodical approach to planning and guiding project processes

from start to finish. According to the Project Management Institute, the processes areguided through five stages: initiation, planning, executing, controlling, and closing.

Project management can be applied to almost any type of project.

The project management concepts include setting objective, planning the tasks to be done,

set initiation and dead line, creating milestones, and manage resources, evaluating and

closing the project.

Usually a group of people with complimenting skills and a leader will be gathered to start

working on the project. In order for the project to be successful the team must have

elaborate understanding of the system which is going to be built, what is the scope of the

project, what features it should have and what it shouldnt have, user requirements set by



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the study group which will plot out the main requirements, how much of resource is

available and timeline in with the project must be completed.

All the above is highly dependent on the skills and abilities of the project Manager.

Since McDonalds is not an expert in the field the project will have to be outsourced. The

above details will be handled by the outsourced company; McDonalds will participate as

a sponsor and provide all the needed details of the day to day operation to insure the

success of the project.

Objective

The main objectives of the Online ordering system for McDonalds would be:

- User friendly interface- Provide effective means to make online orders

- Provide accurate information

- Provide on time information delivery

- Provide interactive marketing

- Provide information

o Provide nutritional information

o

Suggest Mac meal diet information- Provide help

- Provide Feedback system

- Enable possibility for future enhancements

Setting a clear cut objective allows for the developers to have clear cut set of tasks to be

accomplished

5.3 Project Managers Roles

Project manager is a person who oversees the whole project. He/she selects the team

members with relevant skills to ensure the success of the project. Project manager is

basically a person, who points what the team members should do, manages the timing,

motivates the members, ensures productivity, deals with external vendors/suppliers, and

deals with administration by reporting to them periodically.



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5.3.1 Project Managers Responsibilities

- Scheduling

Detailed schedule specifying who is doing what and when is it supposed to start and

when is it supposed end.

- Cost control and budget management

Make sure the project funds are not over or under utilized. Over utilization of funds could

cause the sponsor to stop funding the project. Under utilization of funds could make the

sponsors to lose fate in the project by assuming the project manager is cutting corners to

save cost. Therefore the budget should be properly utilized within given parameters.

- Resource allocationPrioritize the tasks based on the value and allocate resources based on the priority. For

instance user friendly system development has higher priority than ----- therefore must

allocated more resource.

- Collaboration software

Project manager must specify and list the software which will be working together with

the online ordering system for McDonalds. For example the web browsers such as

Mozilla Firefox, Internet Explorer, Safari, and Netscape which will be working together

with the system.

- Communication

Project manager will be the middle man for communication between the team and the top

management and also the user or sponsors. Project manager will have regular interactions

with the team, other managers, and customer to update them on the progress as well as

notify the team of the user specified changes the system and etc.



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- Quality management

It is the duty of the project manager to do checkup on the teams work and evaluate them

based on the quality. Low quality work from the team will affect the outcome of the

whole project.

- Documentation.

Project manager is responsible for the making detailed documentation of the tasks,

events, and other relevant details.

5.3.2 Setting goals

Breakdown and Categorize the project tasks

Setting long-term and short-term achievable goals. Break the goals down to tasks basedon the team members individual skills and allocate them accordingly. This will show the

team members a clear cut task to be performed thus improving the productivity.

Critical point in the system development is to set the goals. Correctly set goals

can determine the success or the failure of the project. If the goals are set wrongly the

whole project could become halt and ultimately scrapped. Making changes in main goals

of the project is usually costly and wasteful. The whole system might have to be remade

based on the magnitude of the problem.

5.3.3 Setting Start and Deadline

Setting start date and deadline for the specified tasks, the project will have a preset

deadline by which the system must be ready for delivery. Project managers skills will

determine the successful delivery of the system within designated period. Mainly

everything depends on putting the tasks reasonable time and allocating more time for the

most important tasks without forgoing the simple but beneficial tasks.

5.3.4 Evaluating accomplished task

When a milestone is achieved project managers must evaluate the task performed against

the overall goal, customer requirements, and system requirements and determine the



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advancement made towards next milestone. This will keep the project within the given

specifications and prevent wearing off.

5.3.5 Working with a team

- Leadership

Project manager must show leadership by example, ethically, and morally.

- Team building

Project managers are required to break the ice for the new group members so that the

team could function effectively.

- Motivation

Motivation is important for the teams for their daily performance. Providing

encouragements and rewards will help the team perform better than usual. Nowadays

many companies utilize competition and reward concepts to help motivate the teams who

are working on the project.

For Example: McDonalds nominates Employee of the Month the criteria is based on

the number of customers served by an individual employee as well as customer feedback

provided.

5.3.6 Working with target group

Working with a target group is one of the best ways to ensure the success of the project.

The software company should work with McDonalds as well as their customer target

group. This will provide better understanding for the project manager on exactly what the

customers want, and ways to improve. Project manager would have to relay this to the

team and work towards the requirements.

5.3.7 Allocating resources

Project managers are the ones who will handle the resource allocation. They usually do it

based on the priority of the task and goals. The resources available to project manager

are:



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- Time

- Team member time

- Funds provided by sponsor

- Target group time

Correct allocation of resources requires detailed information on the tasks. Effective

allocation will keep the project within budget. Project managers should allocate some

portion of the resources for

5.3.8 Dealing with Conflict

Conflict comes in many types, example:- Software conflict

- Requirement conflict

- Budget conflict

- Specification conflict

5.3.9 Dealing with Vendors and Subcontractors

Project manager deals will have to dealers and subcontractors on the scheduling and

delivery. Example:

- Software providers

- Hardware suppliers

- Unique hardware developers

McDonalds will probably have to have customized equipment to be used at the branches.

Therefore the project manager will have to deal with subcontractor to develop a

compatible hardware for the system.

For example: The online orders must be relayed to the kitchen staff via network and be

available for viewing in the system. So a LCD display would be required to make to



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information available for the cook, a specially built terminal will have to be developed to

automate the process.

The project manager will have to give the specifications for the terminal to be built to

subcontractor.

5.4 Project Planning and Specification

According to National Park Service Glossary (2008), project planning is:

The second step of the planning-design-construction program. Following the elements

of advance planning, it covers the design function, including working drawings and

specifications for the construction of or improvement to a facility.

The project planning will include all the parts of the system will have to be planned,

specified, sampled, and agreed upon. Only after the agreement has been reached by the

customer, project team and project leader the system get the Go ahead.

5.5 Project control

Nowadays companies utilize the many methods to control the project progress. First

would be setting milestones of which the project manager assesses the progress by

evaluating the work done.

Setting deadlines control the project timeline by assigning deadline by which the task

must be completed. Having target groups to test the system. Testing will help discover

inadequacies as well as the achieved goals.

5.6 Staff management

Staff management is important since the project developer team members are the oneswho build up the system. Individual skills, character, abilities, personal communication

skills, and shortfalls will be the main influence in the system development.



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Staff management is important because it can compensate for the individual

disadvantages with the advantages of the other members in the team.

There are number of techniques used in managing staff such as team building, job

matching, moral building, and cross training and etc. these are all the techniques which

help overcome individual members disadvantages, increase productivity, and provide

better quality.

5.7 Wrong project

There comes a time when there sudden realization that the project which is been

undertaken has gone out of the budget, scope, not able to satisfy the user requirements,

and gone obsolete. The project could face any of the above problems as soon as one of above problem is discovered the developer should put a full stop to the development and

assess the likelihood of system still been salvageable. This can be done through

environmental studies, opportunity and cost analysis. Depending on the analysis the

developer group must take decision if to continue or not.

The choice will result in one of the following two:

1. They will manage to salvage the operation thus inquiring small amount of extra

cost.

If this is feasible the developer should make necessary adjustments to the system and

make it fit the changed criteria.

2. Even thou it was delivered on time and within the given budget the system could

be obsolete thus rendering it useless.

If this scenario is likely to happen the developer must discontinue the system thus

preventing it from further inquiring cost.

5.8 Risk management

5.8.1 Risk Definition

According to the Shari Lawrences Software engineering theory and practice risk is A

loss associated with the event, the event which creates a situation where something



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negative happens to the project: a loss of time, quality, money, control, and

understanding.

There are many types of risks according to Boehm:

- Personnel shortfalls

Individual or group disadvantages.

- Unrealistic budgeting and scheduling

Too ambitious scheduling as well as too much cost saving.

- Developing wrong software functionDue to lack of communication between developer and study group as well as customer,

wrong software functions might be developed.

- Developing wrong user interface

Due to misunderstanding the wrong or inadequate user interface can be developed.

- Continuing stream of requirement changes

Constant changes made in the requirements by the customer or the study group.

- Straining computer science capabilities

Pushing the limits of computer science too much and set a goal which is not achievable

by the current technology, or the technology would cost too much.

- Key personnel loss

Key personnel loss could put the project under a risk.

There are many methods to prevent the above risks but McDonalds should be prepared

to face some of these risks might affect the company.



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5.8.2 Reduce risk and risk control

The main goal would be to reduce risk impact, reduce risk probability, and have more

risk control.

To reduce risk impact the developers must be flexible enough change and adapt to the

new parameters faced.

To reduce risk probability the developers must take into account the future possible risks

and adjust the development accordingly.

To increase risk control the developers must anticipate and preemptively prevent the risks

from ever arising

For McDonalds the risks involving could be probability of system been obsolete or not

provide competitive advantage over the competitor as well as competitors been able to

replicate similar system.

5.8.3 Contingency plan

According to www.pcmag.com A plan involving suitable backups, immediate actions

and longer term measures for responding to computer emergencies such as attacks or

accidental disasters. Contingency plans are part of business resumption planning. This

mainly concerns the developer to have safe guard from potential risks such as natural

disaster, accident and etc.

As for McDonalds they should make backup of orders, as well as safe guard from cyber

threats by having high security features.

In summary, the project development concepts will help McDonalds to obtain modern

Information System which will benefit the company reputation as well as the

performance. With development of internet each day many companies go online and

compete in the almost equally no matter the size of it. McDonalds should increase its

productivity by increasing the competiveness on the cyber grounds.



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6.0 Conclusion

Along with the changes in the society, the roles of information technology in an

organization have changed as well. For some industries, IT might be a key role in

succeeding the organizations, in which it works together with the main business units.

Therefore, development of IT to support the business might be a crucial area for the

organizations to invest in. And in identifying the value of the investment, the IT financial

management introduces method that can be used as the measurement, such as; Capital

budgeting method.

However, in this technology era, the implementation of IT is followed by consideration

on security management to ensure the security of the organizations system and data.There are so many types of security issues that may be faced by the organization.

However, there is security management that includes steps as well as policies to prevent

the issues from occurring.

In conclusion, after going through some analysis, the proposed online ordering system in

McDonalds may bring long term benefits for the firm. On the top of that, in order to

deliver a success online ordering system that is on schedule, within budget and as the

required, the project development process is a crucial part to work on. In which, the better

the planning, the higher chances to deliver a good and success system.



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7.0 References

Group References

Arndt, M. & Ghobrial, C. (2007), Knock knock, its your Big Mac , viewed 27

February 2008, < http://www.msnbc.msn.com/id/19748673/>

Fitzgerald, M. (2007) Making Fast Food Even Faster viewed 29 February 2008,

Internet World Stats (2007), Malaysia internet subscribers to double by 2012, viewed

27 February 2008, < http://www.internetworldstats.com/asia/my.htm >

Laudon, K. C. & Laudon, J. P. (2006) Management Information Technology Systems:

Managing the digital firm , 9 th edn, Pearson Education, New Jersey

Laudon, K. C. & Laudon, J. P. (2002), Management Information Technology Systems:


McDonalds Malaysia Sdn Bhd (2008), Our People & Restaurants

Viewed 25 February 2008, < http://www.mcdonalds.com.my/abtus/pplres/ourpeople.asp >

MCMC (2007), Malaysia Communication and Malaysia Commision viewed 27

February 2008, < www.mcmc.gov.my >

Rat Kroc (1996), McDOnalds and the fast food industry, viewed 20 February 2008,

Waste Reduction Resource Centre (2006), Food Service: Background and Overview,

viewed 18 February 2008, < http://wrrc.p2pays.org/p2rx/subsection.cfm?

hub=448&subsec=1&nav=1&CFID=1574313&CFTOKEN=74112287 >

http://www.nytimes.com/2007/10/28/technology/28proto.html?_r=1&oref=sloginhttp://www.internetworldstats.com/asia/my.htmhttp://www.mcdonalds.com.my/abtus/pplres/ourpeople.asphttp://www.mcmc.gov.my/http://www.wiley.com/legacy/products/subject/business/forbes/kroc.htmlhttp://wrrc.p2pays.org/p2rx/subsection.cfm?hub=448&subsec=1&nav=1&CFID=1574313&CFTOKEN=74112287http://wrrc.p2pays.org/p2rx/subsection.cfm?hub=448&subsec=1&nav=1&CFID=1574313&CFTOKEN=74112287http://www.nytimes.com/2007/10/28/technology/28proto.html?_r=1&oref=sloginhttp://www.internetworldstats.com/asia/my.htmhttp://www.mcdonalds.com.my/abtus/pplres/ourpeople.asphttp://www.mcmc.gov.my/http://www.wiley.com/legacy/products/subject/business/forbes/kroc.htmlhttp://wrrc.p2pays.org/p2rx/subsection.cfm?hub=448&subsec=1&nav=1&CFID=1574313&CFTOKEN=74112287http://wrrc.p2pays.org/p2rx/subsection.cfm?hub=448&subsec=1&nav=1&CFID=1574313&CFTOKEN=74112287


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IT Financial Management - Linda Yuni Tan (TP013160)

Administration for Children and Families (2006) Glossary, viewed 9 March 2008,

BrandRepublic (2005), Low Budget, Big Results, viewed 13 March 2008,

Internet World Stats (2007), Malaysia Internet Stats and Marketing Report, viewed 6

March 2008, < http://www.internetworldstats.com/asia/my.htm >

iStart (2004) Online orders delivering for Pizza Hut, viewed 12 March 2008,

Laudon, K. C. & Laudon, J. P. (2006) Management Information Technology Systems:


Laudon, K. C. & Laudon, J. P. (2002), Management Information Technology Systems:


Microsoft Corporation (2008), Full Package Software options from Microsoft Small

Business, Viewed 12 March 2006,

McDonalds Malaysia revised (2007), viewed 8 March 2008,

Mitchell, A. (2005), How to outsource, viewed 12 March 2008,

http://www.google.com.my/url?sa=X&start=2&oi=define&q=http://www.acf.hhs.gov/programs/cb/systems/sacwis/cbaguide/appendixb.htm&usg=AFQjCNG-lWXLp8SCY52RPzACBVQQVPiMtghttp://www.brandrepublic.com/bulletins/marketresearch/article/466487/market-research-low-budget-big-results/http://www.brandrepublic.com/bulletins/marketresearch/article/466487/market-research-low-budget-big-results/http://www.istart.co.nz/index/HM20/PC0/PVC197/EX286/CS25570http://www.microsoft.com/smallbusiness/buy/software/full-package-software.mspxhttp://www.mcdonalds.com.my/http://www.internationalstaff.net/Linked%20Files/Publications/Main_How2outsource.htmhttp://www.internationalstaff.net/Linked%20Files/Publications/Main_How2outsource.htmhttp://www.google.com.my/url?sa=X&start=2&oi=define&q=http://www.acf.hhs.gov/programs/cb/systems/sacwis/cbaguide/appendixb.htm&usg=AFQjCNG-lWXLp8SCY52RPzACBVQQVPiMtghttp://www.brandrepublic.com/bulletins/marketresearch/article/466487/market-research-low-budget-big-results/h

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