Project Managemant

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After reading this chapter, you will be able to:
1. Understand the importance of initiating projects that add value to an organization
2. Discuss the background of ResNet at Northwest Airlines
3. Distinguish among the three major projects involved in ResNet 4. Appreciate the importance of top management support on ResNet 5. Discuss key decisions made early in the project by the project manager 6. Relate some of the early events in ResNet to concepts described in previous chapters

7. Discuss some of the major events early in the project that helped set the stage for project success
ay Beauchine became Vice President of Reservations at Northwest Airlines (NWA) in 1992. One area that had continually lost
money for the company was the reservations call center. Fay developed a new vision and philosophy for the reservations call center that was instrumental in turning this area around. She persuaded people to understand that they needed to focus on sales and not just service. Instead of monitoring the number of calls and length of calls, it was much more important to focus on the number of sales made through the call centers. If potential customers were calling NWA directly, booking the sale at that time was in the best interest of both the customer and the airline. Additionally, a direct sale with the customer saved NWA 13 percent on the commission fees paid to travel agents and another 18 percent for related overhead costs.

Fay knew that developing a new information system was critical to implementing a vision that focused on sales rather than service, and she wanted to sponsor this new information system. Although the Information Services (IS) Department had worked to improve the technology for call centers, past projects never went anywhere. The new reservation system project, ResNet, would be managed by business area leaders and not Information Services managers—a first in NWA’s history and a major culture change for the company. Fay made Peeter Kivestu, a marketing director, the project manager for the ResNet Beta project in 1993. NWA was going through tremendous business changes at that time, and the airline almost went

bankrupt in 1993. How could Fay and Peeter pull off the project? WHAT IS INVOLVED IN PROJECT INITIATION?
In project management, initiating is the process of recognizing and starting a new project or project phase. This process seems simple enough, but a lot of thought should go into it 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. The selection of projects for initiation, therefore, is crucial, as is the selection of project managers.

Recall from Chapter 4, Project Scope Management, that strategic planning serves as the foundation for deciding which of several projects to pursue. The organization’s strategic plan expresses the vision, mission, goals, objectives, and strategies of the organization. It also provides the basis for information technology project planning. Information technology is usually a support function in an organization, so it is critical that the people initiating information technology projects understand how those projects relate to current and future needs of the organization. For example, Northwest Airlines’ main business is providing air transportation, not developing information systems. Information systems, therefore, must support the airline’s major business goals, such as providing air transportation more effectively and efficiently.

Information technology projects are initiated for several reasons, but the most important one is to support explicit business objectives. As mentioned in the opening case, Northwest Airlines was having financial difficulties in the early 1990s, so reducing costs was a key business objective. Providing an information system to stop the financial...
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