424 Part III • Acquiring Information Systems
Avoidance Strategy: An alternative technical approach to a problem may be chosen in order to avoid risk exposure.
Exchange Strategy: An unknown risk or known critical risk is exchanged for a more acceptable level of risk. For example, the
risk can be shifted to a third party by subcontracting with another organization under a fixed-cost contract for a specific project
deliverable.
Reduction Strategy: A specific project risk can be reduced by assigning the best human resources available.failure. Sometimes the project budget includes monetary
resources allocated to a contingency fund that can be used
at the discretion of project team members to resolve antic-
ipated thorny problems that cannot be specifically defined
at the outset of the project.
The highest level of project risk typically occurs at
the project’s outset. Once the project is underway and the
team members learn more about a business unit’s needs, a
new technology, or a vendor’s software package, the proj-
ect risks will typically decrease. After more resources have
been invested, the organization’s stake in the project also
increases and thus its risk exposure also increases: More
will be lost if things go wrong. Good risk management
depends on accurate and timely information on project
characteristics that managers view as likely indicators of
risk (Hamilton, 2000). Deviations from expectations need
to be clearly highlighted, and this information needs to
reach the right people at the right time in order for further
investigation and corrective actions to be taken. One of the
major pitfalls in monitoring the risks of projects that are
already underway is to ignore negative feedback: Project
managers need to be careful not to “turn a deaf ear” to bad
news or to downplay symptoms of what could be major
problems (Keil and Robey, 1999). An outside consultant
may be needed to evaluate a troubled project and to help
devise alternative courses of action.
Managing Business Change
When new systems are implemented, they typically in-
volve major changes in business processes, which in turn
require changes in the way employees do their work and
information flows into and out of their work activities.
Change management, or the ability to successfully
introduce change to individuals and organizational
units, is therefore key to successfully implementing a
new system.
When a new information system will affect organi-
zational power structures, strategies and tactics to deal
with these political aspects of the project need to be
explicitly developed. According to Markus (1983), the
sources for resistance to the implementation of a new in-
formation system can often be anticipated by comparing
the distribution of power implied by the new system and
the distribution of power existing in the organization
prior to the new system. Faced with potential shifts in
organizational responsibilities, key stakeholders could
consciously, or unconsciously, employ counterimplemen-
tation tactics that result in preventing or delaying the
completion of a new system or in modifying its initial
requirements. Examples of explicit or implicit resistance
tactics include:- withholding the people resources needed for a task
(including designating a representative who is not
qualified to make the decisions needed) - raising new objections about the project require-
ments, resulting in schedule delays - expanding the size and complexity of the project
(rescoping)
Recognizing from the beginning of a project the
potential political implications and then devising solutions
to avoid them is usually more effective than overtly trying
to overcome resistance tactics. Devising system solutions
that will be viewed as desirable by all stakeholders is of
course an ideal outcome. One key way to achieve this type
of win-win situation is to involve potential objectors in the
implementation process so that they participate in negotiat-
ing the requirements as well as the implementation sched-
ule for a new system. However, it should also be kept in
mind that sometimes resistance also can occur postimple-
mentation not only at the individual level but also at a
department level (Lapointe and Rivard, 2005).
As business managers have come to recognize the
importance of change-management practices in general,
researchers have proposed multistage models for man-
aging changes in organizations. Most of these change
models have their roots in a simple three-stage model
(originally proposed by Lewin/Schein)as described
below.
- Unfreezing stage: Those individuals who will be
significantly affected by the new system must
FIGURE 11.11 Common Risk Avoidance and Mitigation Strategies [Based on Roman, 1986; Brewer and Dittman, 2010]