Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Chapter 12:Initiating,1,Opening Case,Chapters 12-15 are all based on a real case study,Fay,Beauchine,VP of Reservations at Northwest Airlines(NWA),sponsored the,ResNet,projects,Peeter,Kivestu,a marketing director,was the project manager for,ResNet,ResNet,was the first information technology project led by non-technical managers at NWA,2,What Is Involved in Project Initiation?,Initiating is the process of recognizing and starting a new project or project phase,It is critical to ensure that the right kinds of projects are being initiated for the right reasons,It is better to have moderate or even a small amount of success on an important project than huge success on an unimportant one,3,Supporting Explicit Business Objectives,The most important reason for initiating IT projects is to support explicit business objectives,NWA was having financial difficulties in the early 1990s,so reducing costs was a key business objective,ResNet,would help stop the financial drain caused by the reservation call centers,4,Table 12-1.Initiating Processes and Outputs,5,Background on Northwest Airlines(NWA),Northwest Airlines is the worlds fourth largest airline and Americas oldest carrier,In 2001,NWA had over 53,000 employees worldwide,The reservation system used 3,000 dumb terminals in the early 1990s,The reservation process was becoming more complex,and the call centers were losing money,6,Background on,ResNet,The reservation system before,ResNet,was PARS,Reservation agents had to use cryptic commands to use the old system,All information was on one character-based screen,Deregulation and new marketing initiatives complicated the reservation process,Call times were increasing,7,Figure 12-1.Sample Reservation Screen Before,ResNet,8,Focus on Making Direct Sales,Fay,Beauchines,vision was to change the focus of the call centers from just information and service to sales,Making a direct sale saved NWA commission fees of 13%plus 18%in overhead cost savings,A new reservation system was needed to help agents make direct sales,9,Staffing a New Project,Fay selected,Peeter,Kivestu,a marketing director at NWA,as the,ResNet,project manager,Peeters,strategy was to prove the concept of,ResNet,first with a prototype,Peeter,asked,Arvid,Lee,a senior member of the IS department,to lead the IS team on the,ResNet,projects,Kathy(,Krammer,)Christenson,a marketing analyst,become the,ResNet,application development manager,10,Table 12-2.Three Main,ResNet,Projects,11,What Went Wrong?,After finishing the,ResNet,beta project,Peeter,and his team saw the rest of,ResNet,as one large project to implement the new reservation system in all of the call centers.Senior management,however,broke the rest of,ResNet,into two separate projects,ResNet,1995 and,ResNet,1996.Their goals were to avoid a huge investment commitment and to provide further incentives for the,ResNet,team to produce successful results.If the 1995,ResNet,project was not successful,senior management could decide not to fund the 1996 project.Although this strategy reduced financial risk,Peeter,and his team did not like the decision.If,ResNet,1996 were not approved for some reason,they would be stuck with two totally different reservations systems in different sales offices.This situation would cause huge management,technical,and support problems.The,ResNet,1995 team was under a lot of pressure to do a good job or the,ResNet,1996 project would not be funded.,12,Selecting the Project Manager,An important part of project initiation is selecting a project manager.Fay selected,Peeter,because,he knew the airline business,he understood the technology,he knew that technologies could improve business productivity,Peeter,used his passion for the project to convince Fay and others that he should be the project manager,13,Preparing Business Justification for the Projects,For the Beta project,Fay convinced senior managers to invest$500,000 into developing a prototype system,Peeter,emphasized his track record as a leader and what the competition was doing,Arvid,was well-known and respected for his IS expertise,14,Preparing Business Justification for the Projects,For the,ResNet,1995 and 1996 projects,Very strong justification was needed to make major investments,Peeter,prepared detailed plans and focused on,key business objectives of the project,impressive results from the beta project,the opportunity to make money with the new system(NPV estimate of$37.7M),15,What Went Right?,Peeter,and the,ResNet,team prepared outstanding business justification for all of the,ResNet,projects.Using his strong technical and business skills,Peeter,wrote persuasive documents justifying,ResNet,and he made his case well in presentations.,Peeters,justification strategy for the 1995 and 1996,ResNet,projects included very strong financial analysis,which greatly impressed the finance committee.,Peeter,knew that the decisio