Chapter 13 - Minicase 1

Intranets: Invest First, Analyze Later?

In preparation for answering the questions, enter the search term "Intranet development strategy" into Google and review some of the articles returned by Google.

1. Where and under what circumstances is the “invest first, analyze later” approach appropriate? Where and when is it inappropriate? Give specific examples of technologies and other circumstances.

   Invest first is appropriate or unavoidable if a new technology is required for the project. There may not even be data to base an analysis on.

   Invest first is inappropriate if the investment is big, and could financially ruin the firm. If data is available for analysis it should be used.

   Pre-1999, t he Internet pre-1999 was such a newtechnology. Wireless Internet is a current example, as is l-commerce.

2. How long do you think the “invest first, analyze later” approach will be appropriate for Intranet projects? When (and why) will the emphasis shift to traditional project justification approaches? (Or has the shift already occurred?)

   It was appropriate until 1999. The shift to anlayze first should occur when data for analysis is available. For dotcoms or Internet-based businesses, the awakening came in March 2000 when the stock values of the dotcoms crashed.

3. What are the risks of going into projects that have not received a thorough financial analysis? How can organizations reduce these risks?

   The risk of insufficient or no payback is big for a project undertaken with no analysis. By assessing project status at several points during the project, the risk can be reduced. Managers need to take advantage of such review points to kill projects where costs and benefits have become doubtful.

4. Based on the numbers provided for Candence Design System’s Intranet project, use a spreadsheet to calculate the net present value of the project. Assume a five-year life for the system.

   Answer: $ 8,104,691.08 at 8%

5. Do you see any relationship between the “invest first, analyze later” approach to financial analysis and the use of behavior-oriented charge back systems?

   A behavior-oriented approach encourages experimentation. But its second step is to determine measures for the users. Consequently, the thing to do is to change to the behavior-oriented way as soon as possible.

6. Relate the Needham case to knowledge base

   There are several issues in the Needham case, including populating a knowledge base with ideas, then making the knowledge accessible to all that may profit from it. The Internet is and effective communication tool for this purpose.