Answer these three questions after reading the case study. Initial posts include answering the entire discussion board question(s) and must show depth and insight on
are the strengths and weaknesses of First National Bank? What is the major problem in the case?What are reasonable recommendations?
Reference and citation of other materials (journals, websites, etc.) in the post and responses
Unformatted Attachment Preview
First National Bank
During the last five years, First National Bank (FNB) has been one of the
growing banks in the Midwest. The holding company of the bank has been actively
involved in purchasing small banks thoughout the state of Ohio. This expansion
and the resulting increase of operations had been attended by considerable growth
in numbers of employees and in the complexity of the organizational structure. In
five years the staff of the bank has increased by 35 percent, and total assets have
grown by 70 percent.
management is eagerly looking forward to a change in
the Ohio banking laws that will allow statewide branch banking.
INFORMATION SERVICES DIVISION (ISD) HISTORY
Data processing at
has grown at a much faster pace than the rest of the bank.
The systems and programming staff grew from twelve in 1970 to more than
seventy-five during the first part of 1977. Because of several future projects, the
staff was expected to increase by 50 percent during the next two years.
Prior to 1972, the Information Services Department reported to the executive
vice president of the Consumer Banking and Operations Division. As a result, the
first banking applications to be computerized were in the demand deposit, savings, and consumer credit banking areas. The computer was seen as a tool to
Informatlon Services Division
speed up the processing of consumer transactions. Little effort was expended to
meet the informational requirements of the rest of the bank. This caused a highlevel conflict, since each major operating organization of the bank did not have
equal access to systems and programming resources. The management of
became increasingly aware of the benefits that could accrue from a realignment
of the bank’s organization into one that would be better attuned to the total information requirements of the corporation.
In 1982 the Information Services Division (ISD) was created. ISD was removed from the Consumer Banking and Operations Division to become a separate division reporting directly to the president. An organizational chart depicting
the Information Services Division is shown in Exhibit I.
During 1982 the Priorities Committee was formed. It consists of the chief executive officer of each of the major operating organizations whose activities are
MIS PROJECT MANAGEMENT AT FIRST NATIONAL BANK
First National Bank organizational chart
directly affected by the need for new or revised information systems. The
Priorities Committee was established to ensure that the resources of systems and
programming personnel and computer hardware would be used only on those information systems that can best be cost justified. Divisions represented on the
committee are included in Exhibit
The Priorities Committee meets monthly to
previously set priorities and
rank new projects introduced since the last meeting. Bank policy states that the only way
to obtain funds for an information development project is to submit a request to the
Priorities Committee and have it approved and ranked in overall priority order for the
bank. Placing potential projects in ranked sequenceis done by the senior executives. The
primary document used for Priorities Committee review is called the project proposal.
THE PROJECT PROPOSAL
When a user department
a need for the development or enhancement
of an information system, it is required to prepare a draft containing a statement
of the problem from its functional perspective. The problem statement is
the president of ISD, who authorizes Systems Research (see Exhibit
I) to prepare an impact statement. This impact statement will include a general
The Project Proposal Life Cycle
Conformity with long-range ISD plans
Estimated ISD resource commitment
Review of similar requests
Broad estimate of total costs
The problem and impact statements are then presented to the members of the
Priorities Committee for their review. The proposals are preliminary in nature, but
they permit the broad concept (with a very approximate cost attached to it) to be
reviewed by the executive group to see if there is serious interest in pursuing the
idea. If the interest level of the committee is low, then the idea is rejected.
However, if the Priorities Committee members feel the concept has merit, they
authorize the Systems Research Group of ISD to prepare a full-scale project proposal that contains:
A detailed statement of the problem
Identification of alternative solutions
Impact of request on:
Other operating divisions
Estimated costs of solutions
Schedule of approximate task duration
Cost-benefit analysis of solutions
Recommended course of action
After the project proposal is prepared by systems research, the user sponsor
must review the proposal and appear at the next Priorities Committee meeting to
speak in favor of the approval and priority level of the proposed work. The project proposal is evaluated by the committee and either dropped, tabled for further
review, or assigned a priority relative to ongoing projects and available resources.
The final output of a Priorities Committee meeting is an updated list of project
proposals in priority order with an accompanying milestone schedule that indicates
the approximate time span required to implement each of the proposed projects.
The net result of this process is that the priority-setting for systems development is done by a cross section of executive management; it does not revert by default to data processing management. Priority-setting, if done by data processing,
can lead to misunderstanding and dissatisfaction by sponsors of the projects that
did not get ranked high enough to be funded in the near future. The project proposal cycle at
is diagrammed in Exhibit
Once a project has risen to the
MIS PROJECT MANAGEMENT AT FIRST NATIONAL BANK
The project proposal cycle
top of the ranked priority list, it is assigned to the appropriate systems group for
systems definition, system design and development, and system implementation.
The time spent by systems research in producing impact statements and project proposals is considered to be overhead by ISD. No systems research time is
directly charged to the development of information systems.
As noted before, the systems and programming staff of ISD has increased in size
rapidly and was expected to expand by another 50 percent over the next two
years. As a rule, most new employees have previous data processing experience
and training in various systems methodologies. ISD management recently implemented a project management system dedicated to providing a uniform step-bystep methodology for the development of management information systems. All
project work is covered by tasks that make up the information project development life cycle at
The subphases used by ISD in the project life cycle are:
1. Systems definition
a. Project plan
b. User requirements
c. Systems definition
d. Advisability study
2. Systems design and development
a. Preliminary systems design
b. Subsystems design
c. Program design
d. Programming and testing
3. System implementation
a. System implementation
b. System test
c. Production control turnover
d. User training
e. System acceptance
The project management system contains a list of all normal tasks and
(over 400) to be performed during the life cycle of a development project. The
project manager must examine all the tasks to determine if they apply to a given
MIS PROJECT MANAGEMENT AT FIRST NATIONAL BANK
project. The manager must insert additional tasks if required and delete tasks that
do not apply. The project manager next estimates the amount of time (in hours)
of the project life cycle.
to complete each task of each
The estimating process of the project management system uses a “moving
window” concept. ISD management feels that detailed cost estimating and
of a project, where
time schedules are only meaningful for the next
the visibility of the tasks to be performed is quite clear. Beyond that subphase,
a more summary method of estimating is relied on. As the project progresses,
new segments of the project gain visibility. Detailed estimates are made for the
next major portion of the project, and summary estimates are done beyond that
until the end of the project.
Estimates are performed at five intervals during the project life cycle. When
the project is first initiated, the funding is based on the original estimates, which
are derived from the list of normal tasks and subtasks. At this time, the subphases
through the advisability study are estimated in detail, and summary estimates are
prepared for the rest of the tasks in the project. Once the project has progressed
through the advisability study, the preliminary systems design is estimated in detail, and the balance of the project is estimated in a more summary fashion.
Estimates are conducted in this manner until the systems implementation plan is
completed and the scope of the remaining subphases of the project is known. This
multiple estimating process is used because it is almost impossible at the beginning of many projects to be certain of what the magnitude of effort will be later
on in the project life cycle.
FUNDING OF PROJECTS
The project plan is the official document for securing funding from the sponsor
in the user organization. The project plan must be completed and approved by
the project manager before activity can begin on the user requirements
(lb). An initial stage in developing a project plan includes the drawing of a network that identifies each of the tasks to be done in the appropriate sequence for
their execution. The project plan must include a milestone schedule, a cost estimate, and a budget request. It is submitted to the appropriate general manager of
systems and programming for review so that an understanding can be reached of
how the estimates were prepared and why the costs and schedules are as shown.
At this time the general manager can get an idea of the quantity of systems and
programming resources required by the project. The general manager next sets
up a meeting with the project manager and the user sponsor to review the project plan and obtain funding from the user organization.
The initial project funding is based on an estimate that includes a number of
assumptions concerning the scope of the project. Once certain key milestones in
System Quality Reviews
the project have been achieved, the visibility on the balance of the project becomes much clearer, and reestimates are performed. The reestimates may result
in refunding if there has been a significant change in the project. The normal
milestone refunding points are as follows:
After the advisability study
After the preliminary systems design (2a)
After the program design
After system implementation (3a)
The refunding process is similar to the initial funding with the exception that
progress information is presented on the status of the work and reasons are given
to explain deviations from project expenditure projections. A revised project plan
is prepared for each milestone refunding meeting.
During the systems design and development stage, design freezes are issued by
the project manager to users announcing that no additional changes will be accepted
to the project beyond that point. The presence of these design freezes is outlined at
the beginning of the project. Following the design freeze, no additional changes will
be accepted unless the project is reestimated at a new level and approved by the user
SYSTEM QUALITY REVIEWS
The key element in ensuring user involvement in the new system is the conducting of quality reviews. In the normal system cycles at
there are ten quality
reviews, seven of which are participated in jointly by users and data processing
personnel, and three of which are technical reviews by data processing (DP) personnel only. An important side benefit of this review process is that users of a new
system are forced to become involved in and are permitted to make a contribution
to the systems design.
Each of the quality review points coincides with the end of a
project life cycle. The review must be held at the completion of one
of the project.
obtain authorization to begin work on the tasks of the next
assigned to members of the project team should end
All tasks and
in some “deliverable” for the project documentation. The first step in conducting
a quality review is to assemble the documentation produced during the
for distribution to the Quality Review Board. The Quality Review Board consists
of between two and eight people who are appointed by the project manager with
the approval of the project sponsor and the general manager of systems and programming. The minutes of the quality review meeting are written either to express “concurrence” with the subsystem quality or to recommend changes to the
MIS PROJECT MANAGEMENT AT FIRST NATIONAL BANK
system that must be completed before the next
can be started. By this
process the system is fine-tuned to the requirements of the members of the review
group at the end of each
in the system. The members of the Quality
Review Board charge their time to the project budget.
Quality review points and review board makeup are as follows:
Preliminary systems design
Programming and testing
Production control turnover
Users and DP
To summarize, the quality review evaluates the quality of project
results, including design adequacy and proof of accomplishment in meeting project objectives. The review board authorizes work to progress based on their detailed knowledge that all required tasks and
successfully completed and documented.
PROJECT TEAM STAFFING
Once a project has risen to the top of the priority list, the appropriate manager of
systems development appoints a project manager from his or her staff of analysts.
The project manager has a short time to review the project proposal created by
systems research before developing a project plan. The project plan must be approved by the general manager of systems and programming and the user sponsor before the project can be funded and work started on the user requirements
The project manager is “free” to spend as much time as required in reviewing the project proposal and creating the project plan; however, this time is
“charged to the project at a rate of $26 per hour. The project manager must negotiate with a “supervisor,” the manager of systems development, to obtain the required systems analysts for the project, starting with the user requirements subphase. The project manager must obtain programming resources from the
manager of systems support. Schedule delays caused by a lack of systems or
resources are to be communicated to the general manager by the project manager. All ISD personnel
on a project charge their time at a rate of
$26 per hour. All computer time is billed at a rate of $64 per hour.
There are no user personnel on the project team; all team members are from
John Hart had for several years seen the need to use the computer to support the
corporate marketing effort of the bank. Despite the fact that the majority of the
bank’s profits were from corporate customers, most information systems effort
was directed at speeding up transactions handling for small unprofitable accounts.
Mr. Hart had extensive experience in the Corporate Banking Division of the
bank. He realized the need to consolidate information about corporate customers
from many areas of the bank into one corporate database. From this information
corporate banking services could be developed not only to better serve the corporate customers, but also to contribute heavily to the profit structure of the bank
through repricing of services.
The absence of a corporate database meant that no one individual knew
what total banking services a corporate customer was using, because corporate
departments. It was also impossible to
services were provided by many
determine how profitable a corporate customer was to the bank. Contact officers
did not have regularly scheduled calls. They serviced corporate customers almost on a hit-or-miss basis. Unfortunately, many customers were “sold” on a
service because they walked in the door and requested it. Mr. Hart felt that there
was a vast market of untapped corporate customers in Ohio who would purchase
services from the bank if they were contacted and “sold” in a professional manner. A corporate database could be used to develop corporate profiles to help
contact officers sell likely services to corporations.
Mr. Hart knew that data about corporate customers was being processed in
many departments of the bank, but mainly in the following divisions:
He also realized that much of the information was processed in manual systems,
some was processed by time-sharing at various vendors, and other information
was computerized in many internal information systems.
must have agreed with Mr. Hart because in
The upper management of
December of 1986 the Corporate Marketing Division was formed with John Hart
MIS PROJECT MANAGEMENT AT
as its executive vice president. Mr. Hart was due to retire within the year but was
honored to be selected for the new position. He agreed to stay with the bank until “his” new system was “off the ground.” He immediately composed a problem
statement and sent it to the ISD. Systems Research compiled a preliminary impact statement. At the next Priorities Committee meeting, a project proposal was
authorized to be done by Systems Research.
The project proposal was completed by Systems Research in record time.
Most information was obtained from Mr. Hart. He had been thinking about the
systems requirements for years and possessed vast experience in almost all areas
of the bank. Other user divisions and departments were often “too busy” when approached for information. A common reply to a request for information was,
“That project is John’s baby; he knows what we need.”
The project proposal as prepared by Systems Research recommended the
Interfaces should be designed to extract information from existing computerized systems for the corporate database (CDB).
Time-sharing systems should be brought in-house to be interfaced with
Information should be collected from
systems to be integrated
into the CDB on a temporary basis.
Manual systems should be consolidated and computerized, potentially
causing a reorganization of some departments.
Information analysis and flow for all departments and divisions having
contact with corporate customers should be coordinated by the Corporate
All corporate database analysis should be done by the Corporate
Marketing Division staff, using either a user-controlled report writer or
The project proposal was presented at the next Priorities Committee meeting
where it was approved and rated as the highest priority MIS development project
in the bank. Mr. Hart became the user sponsor for the CDB project.
The project proposal was sent to the manager of corporate development, who
appointed Jim Gunn as project manager from the staff of analysts in corporate development. Jim Gunn was the most experienced project manager available. His
prior experience consisted of successful projects in the Financial Division of the
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