IMPROVING INFORMATION SYSTEM SUPPORTING MONITORING AND EVALUATION OF GREATER MEKONG SUBREGION SUSTAINABLE TOURISM DEVELOPMENT PROJECT IN VIET NAM

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MINISTRY OF EDUCATION AND TRAINING
NATIONAL ECONOMICS UNIVERSITY
NEU BUSINESS SCHOOL
---------------------
LE NA
IMPROVING INFORMATION SYSTEM
SUPPORTING MONITORING AND EVALUATION OF GREATER
MEKONG SUBREGION SUSTAINABLE TOURISM
DEVELOPMENT PROJECT
IN VIET NAM
MASTER OF BUSINESS ADMINISTRATION THESIS
Ha Noi - 2010
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2
MINISTRY OF EDUCATION AND TRAINING
NATIONAL ECONOMICS UNIVERSITY
NEU BUSINESS SCHOOL
---------------------
LE NA
IMPROVING INFORMATION SYSTEM
SUPPORTING MONITORING AND EVALUATION OF GREATER
MEKONG SUBREGION SUSTAINABLE
TOURISM DEVELOPMENT PROJECT
IN VIET NAM
MASTER OF BUSINESS ADMINISTRATION THESIS
SUPERVISOR: PHAN THI THUC ANH, PHD
Ha Noi - 2010
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ACKNOWLEDGEMENT

The Final Thesis on “Improving Information System supporting Monitoring and
Evaluation (M&E) of Greater Mekong Subregion Sustainable Tourism Development
Project in Viet Nam” has received valuable assistance and cooperation from many
people, whom I am sincerely grateful for. The first person that I would like to express
my gratitude is Dr. Phan Thi Thuc And for her valuable guidance that enable me to
complete the Thesis.
The second one I wish to give my thanks is a group of lecturers of the Business
School of the National Economic University. I would like to particularly acknowledge
Dr. Le This My Linh, lecturer of the Research Methodology subject for her
fundamental research methods and much experience, and the competent instructors
and coordinators of this EMBA course for the knowledge they have shared.
Sincere thanks to Dr. Tran Van Ngoi – Director of Project Coordination Unit (PCU)
and colleagues at the PCU for sharing their experience and helpful data on the current
Information System supporting M&E in the project.
I also would like to thank the respondents from the Project Implementation Unit
(PIUs) at the provincial, district and communal levels and other stakeholders: ADB’s
assistants, the GoV and related agencies’ officers for their extensive knowledge and
experience shared as well as their concerns on issues of M&E Information System.
TABLE OF CONTENTS
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ABBREVIATION
ADB Asian Development Bank
CTGs Community Tourism Groups
CPCs Communal People Committee
GoV The Government of Viet Nam
LAN Local Area Network
MCTO Mekong Tourism Coordination Office
NPSC National Project Steering Committee
ODA Official Development Assistance

PC Personal Computer
PCU Project Coordination Unit
PIU Project Implementation Unit
PPC Provincial People’ Committee
PPSC Provincial Project Steering Committee
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SPSC Sub regional Project steering Committee
STDPVN Greater Mekong Subregion Sustainable Tourism
Development Project in Viet Nam
MCST Ministry of Culture, Sports and Tourism
IS Information System
IT Information Technology
M&E Monitoring & Evaluation
MPI Ministry of Planning and Investment
MOF Ministry of Finance
MBA Master of Business Administration
VLAP Viet Nam Land Administration Project
WB World Bank
LIST OF TABLES
Table 1. Positive and negative impacts of information systems:.......................19
Table 2. Comparison of Systems-Development Methods...................................22
Table 3. Differences between Monitoring and Evaluation.................................27
Table 4. M&E classification.................................................................................30
Table 5. STDPVN’s reporting arrangement.......................................................51
Table 6. Frequency of use of main information sharing methods.....................60
Table 7. Level of using various tools and technologies.......................................61
Table 8. Perception of respondents on IS contents’ quality...............................62
Table 9. Respondents’ assessment on training course........................................67
Table 10. STDPVN’s IS SWOT............................................................................71

Table 11. Gaps between key requirements and current IS situation................73
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Table 12. Summary of recommendations for improving STDPVN’s IS...........83
Table 13. Action plan to improve STDPVN’s IS................................................84
Table 14. Cost estimate for building and installing STDPVN_M&E_IS ........87
LIST OF FIGURES
Figure 1. Research phases....................................................................................12
Figure 2. The MTO model - Information system perspective............................17
Figure 3. The IPO model - Functions of IS in organization...............................19
Figure 4. M&E data process.................................................................................32
Figure 5. The model of supportive relationship between IS and M&E.............33
Figure 6. RNIP’s AMT.........................................................................................35
Figure 7. Sample of VLAP_M&E_IS formats....................................................39
Figure 8. Demonstrations on IS facilities.............................................................40
Figure 9. Demonstrations on the use of IS as a management tool.....................41
Figure 10. The overall information architecture................................................42
Figure 11. Project Organizational Char..............................................................48
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Figure 12. Summary of STDPVN’ IS functions supporting PPMS...................52
Source: STDPVN’s IS...........................................................................................54
Figure 13. Input sheets of STDPVN’ IS ..............................................................54
Figure 14. Frequency of use of each storage method..........................................58
Figure 15. IS flow from PIUs to PCU...............................................59
Figure 16. Users’ satisfaction levels to IS phases and factors............................62
Figure 17. Chart of information updating level of the current IS.....................65
Figure 18. Survey on the organized training courses.........................................66
Figure 19. Respondents’ ideas for IS improvement............................................70
Figure 20. Support level of IS to M&E................................................................70

Figure 21. Proposed chart of function and responsibilities of people involved in
STDPVN’s IS performan.......................................................................................82
EXECUTIVE SUMMARY
Greater Mekong Subregion Sustainable Tourism Development in Viet Nam
(STDPVN) is financed by Asian Development Bank (ADB) with total amount of US
$11.792.000 million toward sustainable development and contribution to the
country’s eco-socio development, hunger elimination, poverty reduction and tourism
infrastructure development. It has five components carried out in five provinces (Cao
Bang, Bac Kan, Quang Binh, Quang Tri, Hue). The project’s duration is 5 years
(2009-2013) and it is in it’s second year.
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Under ADB and the Government (GoV)’s regulations, the project has set up a Project
Performance Monitoring System (PPMS) including Information System (IS) building.
However, the IS supporting PPMS has not effectively functioned causing delay in
project implementation.
The main objective of this research is to assess the current situation of IS supporting
M&E activities in STDPVN. Specifically, to determine the problems and recommend
solutions for improving it in reference with the experience in successful application of
IS in another ODA projects.
To conduct the research, the author has combined the methods of desk research,
observation, in-depth interview to 12 people who are almost leaders, managers, and
M&E staffs in STDPVN and other projects which have applied the IS supporting
M&E as well as survey 30 STPDN’s offiers. The followings are main findings:
- Information produced by the current IS are inconsistent, inaccurate and
unexhausted;
- The current IS has too many sheets with complicated formats and too many items
in each sheet leading to difficulties in extracting needed information;
- Untimely information aggregation and slowly information
updating/disseminating;

- Unskillfull M&E staff and unclear cut responsibilities and functions of people
involved;
- The project has lacked of appropriate technology: No full internal network, not
standardized software used for M&E, limited storage volume and no good anti-
virus system
The reasons for above weaknesses are
- Low managers’ awareness on the role of IS in supporting M&E at all levels
causing the loose coordination among units/departments in IS operation and IS has
not been set up since the project inception;
- Lack of appropriate investment in IT leading to irrelevant and unsustainable IS
applied;
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- Not good M&E staffing, lack of relevant training courses, lack of mechanism to
motivate M&E staff, almost M&E staff work in pluralism
The followings are the author’s recommendations to improve IS supporting M&E in
STDPVN:
Management
- Increase managers’ awareness on the importance and issues related to the IS
supporting M&E;
- Promote the use of IS as a management tool.
Technology
- Refresh and strengthen hardware to serve the current IS’ s improvements;
- Setting up the internal network (LAN/WAN) to all PCU, PIUs;
- Selecting relevant method to develop the IS - Application Software Package to
improve the technology infrastructure: large database system; Frequent and
automatic storage and backup; Using firewall or some proper anti-virus program
for secure.
Organization
- Good M&E staffing at all levels: Professional M&E staff at all levels for separate

tasks of M&E; Organizing relevant training courses; Creating suitable policies to
motivate M&E staff;
- Building a well-organized system with clear functions and responsibilities of
people involved.
INTRODUCTION
1. RATIONALE
Official Development Assistance (ODA) is one of official funds from developed
countries to developing countries with aim at supporting the economic development
and social welfare for these countries. Over the last 15 years, Viet Nam has
significantly mobilized all resources and taking advantages of this fund for socio-
economic development, poverty reduction and hunger mitigation. However, due to
limited management capacity, bureaucratic mechanism, and corruption, projects are
often stuck with challenges, and not really effectively operated. Delays in ODA
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project progress are the main challenge for Viet Nam to reach the target timely.
According to the World Bank (WB), general project progress is often slower than
expected plan about 3 years. Disbursement rate of Viet Nam is also considered the
lowest in the region.
Outstanding reason for limited management capacity in project is the lack of good
operation of monitoring and evaluation (M&E). In addition to that, one of the most
important factors affecting effectiveness of M&E is the support of Information
System (IS). In project management, M&E plays a determined role to success of
project. It is highly required to consistently and effectively do those activities under
the Donor and the Government’s requirements, however awareness of IS in project
management and the interrelation between IS and M&E is inadequate causing
ineffectiveness of M&E, and making delays in project management. This is also the
case of Greater Mekong Subregion Sustainable Tourism Development Project
(STDPVN).
STDPVN is financed by Asian Development Bank (ADB) with total amount of US

$12 million toward sustainable development and contribution to eco-socio
development, especially focusing on hunger elimination and poverty reduction,
tourism infrastructure development…It has 5 components carried out in 5 provinces
(CIO Bang, Bac Kan, Quang Binh, Quang Tri, Hue). The project lasts in a period of 5
years (2009-2013) and is now being in the early of second year. A lot of stakeholders
involved in project implementation such as National Steering Committee - Ministry of
Culture, Sports and Tourism (Executing Agencies), Project Coordination Unit and
five Provincial Implementing Unit (PIUs), beneficiaries, tourism community groups.
In term of project M&E, STDPVN must follow the requirements of both ADB and the
Government of Viet Nam. A Project Performance Monitoring System (PPMS) been
systematically set up with M&E purposes: IMPLEMENTATION, COMPLIANCE
AND IMPACTS M&E. However, the Project does not have a clear and proper IS for
effectively supporting the PPMS (M&E system). Problems happen in almost phases
of information management. The IS is a simple excel file which supply a manual way
to aggregate information instead of an automatic way. Accordingly, information
processing also takes much time and the storage takes much space. It has been found
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difficult to collect, analyze and manage information causing inconsistence in project
management and implementation from the central to provincial levels. Therefore,
M&E operation has also not well operate under ADB and Government’s
requirements. That is main reason which creates delays in project progress. Currently,
progress rate only reaches 14% compared with that in initial plan (Aide Memoire,
ADB Loan Review Mission, 5.2010).
In that context, basing on the theory of IS, M&E in ODA project and in reference with
some successful applications of IS in another projects, I decided to undertake a
research on IS supporting M&E in STDPVN with aim at reviewing the real situation
of STDPVN’s IS and find out the gaps between the requirements and the real status.
A better IS will be suggested to be applied for STDPVN.
2. RESEARCH OBJECTIVES:

The thesis focused on the findings of current STDPVN’s IS and proposing solutions
for improving the IS supporting M&E in STDPVN. Hereafter are the specific
objectives:
- To review the theories of IS, M&E IS in ODA project.
- To assess the current situation of IS supporting M&E activities in STDP Viet
Nam to find out the gaps between the expected requirements and the actual
situation
- To propose recommendations to improve the current IS for better supporting
the M & E of STDP Viet Nam.
3. RESEARCH QUESTIONS:
Basing on the objectives, the thesis has been developed to answer the questions:
- What theories of IS, IS supporting M&E in ODA project can be applied to
solve the selected research problem?
- What are requirements for IS supporting M & E in STDPVN?
- What is the state of IS supporting M & E in STDPVN?
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- What is the gap between requirements and state of IS supporting M & E in
STDPVN?
- What are solutions to improve IS supporting M & E activities in STDPVN?
4. RESEARCH METHODOLOGY
Research phases
Three main duties focused on the thesis are the theoretical background of IS,
M&E, the relationship between IS and M&E in ODA project, the findings on the
current STDPVN’s IS supporting M&E and the solutions for improving the IS for
better supporting M&E in STDPVN. Therefore a careful research plan was
prepared with milestones and specific activities to be done. The thesis has been
carried out in three specific phases as discribed in the following figure.
Source: Author’s analysis
Figure 1. Research phases

All phases were conducted using various data collection methods. The secondary
data on theoretical background and experience have been collected based on desk
research method. Data from in-depth interview, survey questionnaire and
observation are used to evaluate current situation of IS and recommendations are
proposed accordingly.
Methods of data collection
Desk research
The following data sources have been collected:
- The IS textbooks from the training course of EMBA
- Documents of guidelines and regulations on ODA project M&E by the
Ministry of Investment and Planning (MPI)
- Documents on M&E system from the sponsors, especially ADB
- STDPVN’s materials, especially M&E system.
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Phase 1 - Secondary
data collection to
theoretical background
Phase 2 – Study
experience in other
projects
Phase 3 – Current IS
assesment and solution
for improvement
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- Relevant Websites (ADB, MPI, MOF, MARD, MCST…)
- Some ODA projects’ IS materials
- Other related newspapers, magazines
This data collection helps to make clear about:
- Definitions on IS, , ODA M&E and the supportive role IS to M&E
- IS development methods in general and in STDPVN in particular

- Good experience in IS application in other ODA projects
- M&E system in STDPVN and a part of STPDPVN’s IS
Observation
In this research, observation method is employed to help answer the following
questions:
- How is the information flow?
- How do the IS functions operate?
- How is M&E staffing in STDPVN?
- Whether the current IS is a well-organized system to support M&E?
- What does the IS infrastructure in STDPVN look like?
- How do STDPVN’s officers exchange or share information together or to
related agencies?
- What are the attitudes of users and stakeholders?
In-depth interviews
In-depth Interviews were carried out with focus on three main groups (managers at all
levels, key M&E specialists and staff and people who directly related to IS
performance supporting M&E). Total interviewees was 12 with detailed question
sample in Table 1 and list of interviewees in Appendix 3 and 4. The purpose of
interviews was to get their opinions on:
- Requirements for IS supporting M&E under managerial, organizational and
technical perspectives
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- IS performance and assessment (including difficulties and advantages)
- STDPVN objective and direction
- Interviewees’ suggestions to improve the current system
The author also did interviews to the managers and M&E staff in some other project
which applied IS supporting M&E to note down:
- Their current IS performance and finding out what will be the best practices from
each system that can be suitable to improve the STDPVN’s IS?

- Their suggestions on improving the STDPVN’s IS
Survey
Total people for the survey is 30 with detailed survey questionnaire and list of
respondents in Appendix 1 and 2. This method also focus on the following issues:
- IS performance and assessment (including IS functions, difficulties and
advantages in IS performance)
- Their suggestions to improve the current IS
The feedbacks are very useful for the author to have exhaustive and comprehensive
information to the realistic and qualified thesis.
5. RESEARCH SCOPE
The research scope are as follows:
- Research on IS supporting M&E system in STDPVN funded by ADB (under ADB
standard of M&E).
- Project areas: PCU (Ha No) and 05 PIUs (Cao Bang, Bac Kan, Quang Binh,
Quang Tri, Hue)
- Data used: Data was collected during project implementation from 2008 up to
now.
- IS referred in the thesis is in formal, organizational computer-based information
system setting on accepted and fixed definitions of data and procedures for
collecting, storing, processing, disseminating and using the data.
- The purpose of Information System is to serve and support M&E in project not for
general management.
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6. THESIS STRUCTURE
In order to match with the adequacy of the research contents and format, the author
designed the thesis structure as follows:
Chapter I: Theoretical background on Information System and Information System
development methods
Chapter II: Monitoring & Evaluation and Information System supporting M&E in

ODA project
Chapter III: Current situation of Information System supporting Monitoring &
Evaluation in STDPVN
Chapter IV: Recommendations for improving Information System supporting
Monitoring & Evaluation in STDPVN
CONCLUSION
BIOGRAPHIC REFERENCES
APPENDICES
CHAPTER 1: THEORETICAL BACKGROUND ON INFORMATION
SYSTEM (IS) AND INFORMATION SYSTEM
DEVELOPMENT METHODS
1.1. Theoretical background on Information System
1.1.1. Definition of Information System
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Source: (1,p10)
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Regarding to the IS, there are some concepts which need to be clarified to
exhaustively understand the nature of research problems, those concepts are
information and data.
“Data are streams of raw facts representing events occurring in organizations or the
physical environment before they have been organized and arranged into a form that
people can understand and use” (1,p7).
Information are “data that have been shaped into a form that is meaningful and useful
to human being” (1,p7).
An Information system can be defined as a set of interrelated components that collect
(or retrieve), process, store, and disseminate information to support decision making,
coordination, control, analysis and visualization in an organization (1,p7).
1.1.2. Information system perspectives
An information system represent an organizational and management solution, based
on information technology to a challenge posed by the environment. To fully

understand information systems, a manager must understand the broader organization,
management and information technology dimensions of systems (The MTO model)
(see Figure 2) and their power to provide solutions challenges and problems in the
environment.
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Organization
Information
System
- People
- Structure
- Operating
-Procedures
- Polotics
- Cultures
- Management
level
- Leadership
- Support
Hardware
Software
Storage
Communication
s
Technology
Management
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Source: (1,p10)
Figure 2. The MTO model - Information system perspective
Management perspective
Management’s job is to make sense out of the many situation faced by organizations,

making decision, and formulate action plans to solve organizational problems. A
substantial part of management responsibility is creative work driven by new
knowledge and information system. It is important to note that managerial roles and
decisions vary at different levels of organization. All level of management are
expected to be creative, to develop novel solutions to a broad range of problems.
Each level of management as different information needs and information
requirements. And information system used as an effective management tool to serve
decision-making.
Technology perspective
Information Technology is one of many tools managers use to cope with change.
Computer hardware is physical equipment used for input, processing and output
activities in an information system. It consists of the following: the computer
processing unit; various input, output and storage devices; and physical media to link
these devices together. Computer software consists of the detailed, preprogrammed
instructions that control and coordinate the computer hardware components in an
information system. Storage technology includes both the physical media for storing
data, such as magnetic or optical disk or tape, and the software governing the
organization of data on these physical media.
Communication technology, consisting of both physical devices and software, links
the various pieces of hardware and transfer data from one physical location to another.
Computers and communications equipment can be connected in networks for sharing
data or resources. Powerful computers, software and networks, including the Internet,
have helped organizations become more flexible, eliminate layers of management,
separate work from location, and restructure workflows, giving new powers to both
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line workers and management. Information technology provides managers with tools
for precise planning, forecasting and monitoring of operation. To maximize the
advantages if information technology, there is a much greater need to plan the
organization’s information architecture and information technology infrastructure.

Organizational perspective
The key elements of an organization are its people, structure, operating procedures,
politics and culture. An organization coordinates works through a structured hierarchy
and formal, standard operating procedures (SOPs) which has been developed for
accomplishing tasks, guiding employees in a variety of procedures. Organization
operation are based on this SOPs and they are corporate into information system.
Each organization has a unique culture, values and ways of doing things. They are
sometime found embedded in it’s information system. Different levels and specialties
in an organization create different interests and points of view. And also managers can
not successfully design new systems or understand existing systems without
understanding organizations.
1.1.3. Functions of IS in organization
According to Kenneth C. Laudon and Jane P.Laudon,2005, an information system
contains information about an organization and its surrounding environment. Three
basic activities – in an information system produce the information that organizations
need to make decisions, control operation, analyze problems. These activities are
Input, processing, and output (the IPO model) (see Figure 3).

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ORGANIZATION
INPUT
Processing
OUTPUT
INFORMATION SYSTEM
Storage
Information
sources
Users/
Receivers
Hardware Software

People
Feedback
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Source: (1,P7)
Figure 3. The IPO model - Functions of IS in organization
Input is “the capture or collection of raw data from within organization or from its
external environment for processing in an information system”.
Processing converts the raw input into a more meaningful form to human. This
meaningful information will be stored in standard formats and they are sometime the
base for making decision of the organizations.
Output transfers the processed information to the people who will use it or to the
activities for which it will be used.
Feedback is output that is turned to the appropriate members of the organization to
help them evaluate or correct input.
1.1.4. Impacts of information systems on organizations
Information systems and the organizations in which they are used interact with and
influence each other. The introduction of a new information system will affect
organizational structure, goals, work design, values, competition between interest
groups, decision making and day-to-day behavior. At the same time, information
systems must be designed to serve the needs of important organizational groups and
will be shaped by the organizational structure, task, goals, culture, politics and
management. Information technology can reduce transactions and agency costs, and
such changes have been accentuated in organization using the internet. The
information systems departments is the formal organizational unit that is responsible
for the organization’s information systems function. Organizational characteristics
and managerial decisions determine the role this group will actually play.
Table 1. Positive and negative impacts of information systems:
Benefits of information systems Negative impacts
Information systems can perform calculations
or process paperwork much faster than people

By automating activities that were previously
performed by people, information systems may
eliminate jobs.
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Information systems provide new efficiencies
through services such as telephone system or
computer-controlled process
Information Systems are used in so many aspects
of everyday life that systems outages can cause
shutdown of operations, paralyzing communities.
The internet distributes information instantly to
millions of people across the world.
The Internet can be used to distribute illegal copies
of software, books, articles and other intellectual
property.
Source: (1,P31)
1.2. Information system development methods
According to Laudon, systems differ in term of their size and technological
complexity and in term of the organizational problems they are meant to solve.
Hence, a number of methods have been developed to build systems: the traditional
system lifecycle; prototyping; Application Software packages; Internet connection;
End-user development; Outsourcing.
System Development Life Cycle (SDLC) is a traditional methodology for
developing an information system that partitions the system development process into
formal stages that must be completed sequentially with a very formal division of labor
between end users and information system specialists. The system lifecycle approach
can be costly, time consuming and inflexible. Although system builders can go back
and forth among stages in the lifecycle, the system lifecycle is predominantly a
“waterfall” approach in which tasks in one stage are completed before work for the

next stage begins. Activities can be repeated but volumes of new documents must be
generated and steps retraced if requirements and specifications need to be revised.
This encouragement freezing of specifications relatively early in the development
process. This approach is also not suitable for many small desktop systems, which
tend to be less structured and more individualized.
Prototyping is the process of building an experimental system quickly and
inexpensively for demonstration and evaluation so that users can better determine
information requirements. The prototype is the preliminary working version of an
information system for demonstration and evaluation purposes. Steps in prototyping:
Step 1: Identify the user’s basic requirements; Step 2: Develop an initial prototype;
Step 3: Use the prototype; Step 4; Revise and enhance the prototype.
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Prototyping is most useful when there is some uncertainty about requirements or
design solutions. Prototyping is especially useful in designing an information
system’s end-user interface (the part of an information system through which the end
users interact with the system, such as outline screens and commands). However,
rapid prototyping can gloss over essential steps in systems development. If the
completed prototype works reasonably well management may not see the need for
reprogramming, redesign, or full documentation and testing to build a polished
production system. Some of these hastily constructed systems may not easily
accommodate large quantities of data or large number of users in a production
environment.
Application software package
Information system can be build using software from application software packages.
If a software can fulfill most of an organization’s requirements, the company does not
have to write its own software. The company can save time and money by using the
prewritten, predesigned, pretested software programs from the packages. If an
organization has unique requirements that the package does not address, many
softwares include capabilities for customization. When a system is developed using

an application software package, the organization will issue a Request for proposal
(RFP) which is a detailed list of questions submitted to vendor of software or other
services to determine how well the vendor’s product will meet the organization’s
specific requirements. This method can save time and money but in case of great deal
of customization, this may become so expensive and time consuming. And when the
software selected, the organization no longer has total control over the system design
process. Instead of tailoring user requirements, the design efforts will consist of trying
to mold user requirements to conform the features of the package.
Outsourcing
Outsourcing is the process of turning over an organization’s computer center
operations, telecommunication networks or applications development to external
vendors. There are two forms of outsourcing, an organization can hire an external
vendor to design and create the software for its system, but the company can operate
the system on its own computer or left the operation to the vendor also.
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Outsourcing has become popular because some organizations perceive it as providing
more value than an in-house computer center or information system staff. Outsourcing
allow an organization with fluctuating needs for computer processing to pay for only
what it uses rather than to build its own computer center, which would be
underutilized when there is no peak load. And the disadvantage of outsourcing can
create serious problems for organization if they are not well understood and managed.
Many firm underestimate cost for identifying and evaluating vendors of information
technology services, for transitioning to a new vendor and for monitoring vendors to
make sure they are fulfilling the contractual obligations. These “hidden cost” can
easily undercut anticipated benefits from outsourcing. When a firm allocates the
responsibility for developing and operating its information system to another
organization, it can lose control over its information systems function. If the
organization lacks the expertise to negotiate a sound contract, the firm’s dependency
on the vendor could result in high costs or loss of control over technological direction.

An organization is most likely to benefit from outsourcing if it understands exactly
how the outsourcing vendor will provide value and can manage the vendor
relationship.
Table 2. Comparison of Systems-Development Methods
Method Features Advantages Disadvantage
System
lifecycle
- Sequential step-by-step
formal process
- Written specification
and approvals
- Limited role of users
- useful for large, complex systems
and project
- Slow and expensive
- Discourages changes
- Massive paperwork to
manage
Prototyping - Requirements specified
dynamically with
experimental system
- Rapid, informal and
iterative process
- User continually
interact with the
prototype
- Rapid and relatively inexpensive
- Useful when requirements
uncertain or when end-user
interface is very important

- Promotes user participation
- Inappropriate for
large, complex
systems
- Can gloss over steps
in analysis,
documentation and
testing
Application - Commercial software - Design, programming, installation - May not meet
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software
package
eliminates need for
internally developed
software programs
and maintenance work reduced
-- Save time, money when
developing common business
applications
- Reduce need for internal
information system resources
organization’s unique
requirements
- May not perform many
business functions well
- Extensive customization
raises development costs.
Outsourcing - Systems built and
sometimes operated by

external vendor
- Can reduce and control cost
- Can produce systems when internal
resources are not available to
technically deficient
- Loss of control over the
information system
functions
Source: (1,p470)
1.3. Criteria to evaluate an Information System
A lot of internal and external factors influencing on the IS design and use. In fact, it is
difficult to exactly measure the successful level of an IS. However, some criteria with
scientific basics for evaluating the success level also mentioned by Laudon which can
be used for evaluation:
(i) High levels of information system use: this criteria is mainly measured by
the number of system users.
(ii) User satisfaction with the information system: the satisfaction must be
derived from both internal and external users. Because an organization is
always in a close relationship with various stakeholders. The need for
information searching, sharing and exchanging is very high. And the users
often concern about the timeliness, content and format of processed
information. These are also three sub-criteria for measuring if an information
system is successful or not. In many researches on Information system, these
criteria are often be mentioned as main criteria for assessment on an
Information system. N.Ahituv and S.Neumann, 1979, also mention about
these criteria. The user satisfaction mainly depends on IS effectiveness in term
of timeliness, contents and formats:
Timeliness is a class of attributes all related to the time factor in information
update and retrieval. In term of timeliness, there are two concepts mentioned
those are currency and frequency. Currency is the time for recording,

processing the date and responding from the user. When this time is very short
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we describe the system as s real-time system. Real-time system are feasible
only if an online technology is adopted. Frequency is about the timing and
cyclicality of information which help us update the data and support decision
making.
Content attributes relate to the meaning of information to decision makers. For
top or middle level management, information content is more crucial than
timeliness. Hereafter are some content’s attributes:
+ Accuracy: Importance level of information varies with types of decisions.
Long-range strategic decision normally need less accurate than low – level
prompt decisions. Accuracy can be measured by comparing actual data to the
true events theoretically but it is not always applicable practically because we
do not often know “true” events and we prefer ex ante assessment in spite of
ex post evaluation. Overcoming this problem is by either taking sample of data
and performing statistical estimates or investigating the quality of the keying
and editing functions in information system. More accurate data can be
expected whenever a more comprehensive validation check is involved.
+ Relevance: Information is relevant if it leads to a different decision. It
might also be relevant it reaffirm a previous decision. If It does not have
anything to do with your problem, it is irrelevant. In practice, we try to design
relevant reports after performing a qualitative information requirement analysis
(Munro, 1978) and imposing the requirements on the reporting design.
+ Exhaustiveness: This feature goes further a relevance. It can fulfill one’s
need of information for better making decision. Information requirements
analysis may help to measure this feature although it is not the ultimate way.
+ Redundancy: Generally redundancy is not bad when we shed or stress
some data but it is boring and may cause negative reaction if we exaggerate.
The possible merits of redundancy can be measured by experiments.

+ Level of details: Too detailed data might confuse, mislead and prevent
the user from acquiring comprehensive knowledge of a problem area. It is
likely that for each decision problem there is an optimal level of detail (not too
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much and not too little). Theoretically the optimal level of detail is defined as
the level under which any more detailed information would not improve our
decision and above which any further aggregation would worsen the decision.
In practice it is difficult to qualitative analysis of aggregation requirements.
Format of reported information can be evaluated through the possible
attributes such as:
+ Medium: by which the report is provided, such as printed, visual
display, plotter (graphs), microfilm..ect.
+ Ordering: the way the data are arranged in the report, such as the order
of the columns (horizontal ordering), the sequencing of details and totals
(vertical ordering)…
+ Graphic design: the graphic setting of the report, such as colors, letter
sets, and font…
All above format attributes must satisfy the criteria of simple and friendly
format.
(iii) Favorable attitudes of users with the information system: In case of high
satisfaction of users, it often results in user’s favorable attitudes. However, for
many reasons, even high satisfaction of user they also do not show their
favorable attitudes. In that context, the Information system is not considered
successful.
(iv) Achieved objectives of information system: Each IS designed to serve a
certain managerial purpose and has different scope, some IS to serve the
overall management of an organization as ERP, but also there are some IS
serving a specific professional department or sections such as accounting
software, personnel management software…Thus, IS success level can be

measured in term of purpose achieved (scope of IS, information shared, the
number of users…)
(v) Financial payoff in application of the information system: It means that
the IS should be a cost – effective based system and in accordance with each
organization’s resources. Also the IS brinks economic benefits such as time-
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