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INF10009 INTRODUCTION TO BUSINESS INFORMATION SYSTEMS Tutorial: Managing IS Infrastructure and Outsourcing

A.Closing Case Study 6.2 Myki: an integrated travel card for Victoria (Baltzan, Lynch, Fisher 2015) myki: an integrated travel card for Victoria MARIE VAN DER KLOOSTER, FORMERLY OF DEAKIN UNIVERSITY UPDATED BY DR JULIE FISHER, MONASH UNIVERSITY Closing Case Study 6.2 The myki system was designed to allow public transport travellers in regional and metropolitan Victoria, Australia, to pay for their travel using a rechargeable myki card. This could be used at Melbourne’s 216 railway stations, on trams and on buses. The card replaced all the ticketing options previously available on Victorian public transport, including paper and magnetic-strip tickets. myki cards contain a microprocessor that allows users to pay for travel and recharge their cards while communicating user details back to centralised backoffice systems. Kamco (Keane Australia Micro-payment Consortium) won the $494 million contract to build and operate the myki system in 2005 and have it operating by 2007. The parent corporation of Kamco, Keane International Inc, is a software engineering, application maintenance, program management and consulting services company that had extensive experience in overseeing and project-managing transport and technology companies to produce integrated systems, and had implemented similar systems in Singapore, Hong Kong, Taipei, the Netherlands and the US. Kamco supervised four technology and infrastructure companies and their subcontractors, and provided the back-end financial system. The Kamco companies provided the terminal management system and fare collection equipment; communication systems installation and maintenance; automated fare collection systems; and smart cards and related card-fulfilment systems. Kamco’s project management of the myki system required oversight of four companies and attention to a range of different problems and unique challenges. Some of these problems were described as ‘technical gremlins’, while other problems involved inadequate resources and slow resolution of software problems. The myki system functions over long distances, far from centralised support services and in sometimes rough and dusty environments, while communicating user information to centralised servers. It has been designed from the ground up, and its specifications make it one of the most sophisticated smart card systems planned. Other problems related to the unique Melbourne trams. Trams are essentially large heavy steel boxes powered by electricity and operating in urban canyons of tall buildings. Any of these factors can cause the myki wireless signals to drop out of connection with central servers during operation. Melbourne’s transport system also functions on zones, passengers being charged according to how far they travel, so myki had to be designed to manage this. Governance, project management and effective financial controls were identified by the Victorian Government as areas causing delays in the development and implementation of the system In comparison, Hong Kong has a widely admired smart card system for public transport users and the highest rate of public transport use in the world. Public transport travellers there use the Octopus smart electronic money card in place of conventional tickets. Hong Kong is 1095 sq km in size with 2050 km of public roads and 83 railway stations and the fare is calculated based on the number of stops, not the distance travelled. In contrast, Victoria covers 227 600 sq km, has 151 000 km of roads and 216 railway stations. In order to operate successfully, myki needed a reliable GPS system to track and record the correct fares and zones, and the ability to supply a real-time data feed to the servers that run myki. i There were initial issues with the roll-out of the ticketing system. There were delays at station gates, the touching on and off in buses caused delays, setting buses behind schedule, and some stations lacked machines to allow users to top up their cards. Visitors to Melbourne are forced to buy a myki card if they want to use public transport because the government abandoned the planned single journal ticket. The system went live in 2009 and by 2011 the cost of the system had blown out to $1.35 billion, including additional start-up costs and an extra $216 million to keep the old system running. Approximately $50–55 million dollars per year is being spent on the running of the myki system, as well as $350 million to buy extra equipment for the trains, buses and trams.ii Changes to the myki contract were announced in June 2011 by the State Government of Victoria. These included: ©Copyright: 2019 Swinburne University of Technology Tutorial Managing IS Infrastructure and Outsourcing V4 Author: Josephine Pow

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INF10009 INTRODUCTION TO BUSINESS INFORMATION SYSTEMS Tutorial: Managing IS Infrastructure and Outsourcing improvements in project management, governance and key performance measures the appointment of a third-party certifier to monitor the remaining development and ensure the system fully meets the state’s and the public’s requirements a rigorous testing and project-oversight regime to be introduced to inform the third-party certifier at critical evaluation points up to the end of the delivery phase complexity of the project to be reduced (where possible) to provide a reliable ticketing system and reduce the risk of further cost increases.

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In 2013 there were still more than 600 complaints about myki made to the Transport Ombudsman. The complaints were around faulty equipment, incorrect charges and slowness of moving through barriers at stations. Changes have been made to the station gates at the major city stations so they now operate more quickly. By 2014 most of the initial teething problems had been addressed and the number of complaints has declined significantly. Currently the myki system processes more than eight million transactions per week. The system has now expanded, with paper tickets replaced by myki for the major Victorian country train services. iii Questions 1. Suggest three reasons for the blow out in costs for the myki system   

Delayed project: supposed to be finished in 2007 but finished it at 2009 Poor project management: the operation of manege is not effectively Poor planning: high complex issues in future need to be solved

2. Investigate and comment on the tendering process for the myki system using the following web links: www.premier.vic.gov.au www.ptua.org.au   

Transportation: no experience in developing ticket system Previous vendor system was not considered ERG not be considered Conflict of interest http://www.theage.com.au/victoria/outsmarted-victoria-pays-the-price-20100223-p0tw.html

B. PROJECT II The travel store (Baltzan 2019) The Travel Store is facing a dilemma because it tripled in size over the past 3 years and finds its online sales escalating beyond a billion dollars. The company is having a hard time continuing with operations because its business processes can’t scale to meet the new demand. In the past six months, sales and profits have dropped and the stock price is plummeting. The Travel Store is determined to take quick and decisive action to restore profitability and improve its credibility in the marketplace. One of its top priorities is to overhaul its inventory management system in an effort to create optimal levels of inventory to support sales demand. This would prevent higher-volume stores from running out of key sale items while also ensuring that lower-sales stores would not be burdened with excess inventory that could be moved only at closeout prices. The company would like to outsource this function but is worried about the challenges of transferring the responsibility of this important business function as well as the issues surrounding confidentiality and scope definition. Questions

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1. List the competitive advantages outsourcing Reduce costs to manage stock management system Maintain operational levels 2. Outsourcing disadvantages

©Copyright: 2019 Swinburne University of Technology Tutorial Managing IS Infrastructure and Outsourcing V4 Author: Josephine Pow

CRICOS: 073432E TOID: 3059

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INF10009 INTRODUCTION TO BUSINESS INFORMATION SYSTEMS Tutorial: Managing IS Infrastructure and Outsourcing Threat of competitive advantage Security/private issues The duration of time: choosing time period 3. recommendations for addressing the company’s outsourcing concerns.  Identify a reliable outsourcing service company  Not outsource main inportant business function  Find a legal framework   

©Copyright: 2019 Swinburne University of Technology Tutorial Managing IS Infrastructure and Outsourcing V4 Author: Josephine Pow

CRICOS: 073432E TOID: 3059

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INF10009 INTRODUCTION TO BUSINESS INFORMATION SYSTEMS Tutorial: Managing IS Infrastructure and Outsourcing

Extra Activity C. PROJECT SIX Keeping time (Baltzan, Lynch, Fisher 2015) Time Keepers Inc is a small firm that specialises in project management consulting. You are a senior project manager, and you have recently been assigned to the Tahiti Tanning Lotion account. The Tahiti Tanning Lotion company is currently experiencing a 10 per cent success rate (and a 90 per cent failure rate) on all internal IT projects. Your first assignment is to analyse one of the current project plans being used to develop a new customer relationship management (CRM) system (see Figure 6.13).

FIGURE 6.13 CRM project plan

Review the project plan. 1.

Create a document listing the numerous errors in the plan.

©Copyright: 2019 Swinburne University of Technology Tutorial Managing IS Infrastructure and Outsourcing V4 Author: Josephine Pow

CRICOS: 073432E TOID: 3059

8/06/2021 Page 4 of 4...