Systems Analysis and Design Systems Analysis and Design ROJECT INITIATION Chapter 2 Alan Dennis, Barbara Wixom, and David Tegarden John Wiley & Sons, Inc.

Systems Analysis and DesignSystems Analysis and DesignROJECT INITIATION

Chapter 2

Alan Dennis, Barbara Wixom, and David Tegarden

John Wiley & Sons, Inc.

Slides by Fred NiedermanEdited by Solomon Negash

Slide 2

Key Ideas

IS projects begin when someone sees an opportunity to create business value from using information technology.Feasibility analysis is used to aid in the decision of whether or not to proceed with the IS project.The project sponsor is a key person proposing development or adoption of the new information technology .The approval committee reviews proposals from various groups and units in the organization and decides which project to commit to developing.

Slide 3

Defining the Problem/Opportunity

The problem statement should address: A description of the problem, need, or opportunityGoals and objectives of the systemA general indication of the range of possible actions

A good problem statement is: focused (not broad), descriptive, and based on an examination of the problem

Slide 4

Examples of Problem definition

Bad problem definition A photographer wants to computerize his business

Inadequate problem statement The Allstar Sportwears Company wants to make more money and thinks a Web site will be the answer

Better problem definition A photographer who owns a studio has grown his business to the point that it is difficult to keep track of his customers, the orders they place, and the invoices that need to be sent. The owner of the studio desires a system that will assist him and his employees with the management of customer information, orders, and billing.

Slide 5

Good problem statements—1

Currently, the Allstar Sportswear company employs a database system that stores customer information and account information. This information is entered manually, and the database is updated when a customer notifies the company of a change of address for billing, or shipping information.

The update process is time-consuming and inefficient.The turnaround time of ordering an item, mailing the order, processing the order, and receiving an order needs to be decreased.The company would like to expand its market share.The company would like to establish a relationship with customers, and offer services that the customer can access on-line.Existing competitors have already entered the e-commerce market.

Allstar needs to improve its efficiency and competitive strategies to remain a viable player in the sportswear retail marketplace. Employing better use of technology and exploring e-commerce options present avenues which will help Allstar achieve its goals.

Slide 6

Good problem statements—2

Human Resources is responsible for the selection, screening, and hiring of employees for ABC Airlines, in this case pilots, in conjunction with representatives from the pilot group's recommendations. The initial candidate selection phase is based on manual and computerized processes. The following specific problems have also been noted.

Qualified applicants are no longer available when finally notified for an interview. The input of the high volume of applicant information is very time consuming.Inputting of the applicant information is resource intensive. Other areas of airline employment are often ignored in order to take care of the pilot group.Finding personnel to handle this position in human resources is becoming more difficult.Many of the pilot candidates who are interviewed/hired only meet minimum standards. A more experienced group is desired.Questions of discrimination and also reverse discrimination are often raised about the hiring process.

The existing computer and manual processes are not adequate for the volume of applications that ABC Airlines receives and the growing number of pilots necessary to maintain operations. The Human Resources department for ABC Airlines desires to improve the system it uses for pilot candidate selection.

Slide 7

Business Case ScenarioThe Business Case Scenario gives a view on what will happen in the future within the context of achieving business goals.This vision of the future can be described by answering the question, "How will things be different when this problem is solved?" A complete business case scenario includes the:

problem to be solved and the desired end state participants and their roles customers or beneficiaries and how they will be affected methods and strategies to be used innovations and other changes needed to solve the problem

Referenceshttp://www.spacefuture.com/habitat/businesscase.shtmlhttp://www.newgrange.org/white_papers/business_case_analysis.htm

Slide 8

Scope

Definition: scope sets the boundaries of the project providing rules for what belongs and what does not belong to the project.

Dimensions: time, requirements, budget, and skills

Time: How long does it take? When can we start?Budget: Can we afford it? Can we do part of it?Skills: Do our employees know how to do it? Should we hire consultants?

time

Reso

urce

s

(skills &

budget)

requir

em

ents

SCOPE

Slide 9

System Request

Lists key elements of the projectProject nameProject sponsorBusiness needFunctionalityExpected valueSpecial issues or constraints

Slide 10

Feasibility

Feasibility studies look at the viability of the project and the ability to successfully complete a proposed projectFeasibility studies often provide justification for the business caseThey answer the question: Is the project worth doing?

Slide 11

Categories of Feasibility

Feasibility is often divided into categories such as:

Technical feasibilityOrganizational feasibilityEconomic feasibilityOperational ScheduleLegal and contractualPolitical

Slide 12

Technical Feasibility:Can We Build It?

Technical feasibility is often viewed in relation to technical risk. Technical risk is contingent on:

project size number of people, time, and features)maturity (and standardization) of the hardware, software, development tools, etc. development group's experience with the application and technology areauser group's experience with development projects and application area.

Slide 13

Organizational Feasibility

Organizational feasibility is assessing the likelihood that the project will attain its desired objectives.It addresses whether the problem is worth solving and whether there is 'buy in' from the user community and project champion. It also assesses the impact the proposed system will have on the organization (is it too big a change, is the organizational environment supportive of the impact the system will have....).

Slide 14

Organizational FeasibilityIf we build it, will they come?

Stakeholder analysis considers:Project champion(s)Organizational managementSystem users

Slide 15

Economic FeasibilityShould We Build It?

Economic feasibility is the financial assessment of the benefits of the project. Economic factors:

Development costsAnnual operational costsAnnual benefitsIntangible costs and benefit

Slide 16

Economic Feasibility - Tangible vs Intangible

In economic feasibility, there are two areas that should be considered: tangible benefits and intangible benefits. Tangible benefits can be measured in dollars. Intangible benefits can't be measured with certainty and are hard to quantify (employee morale, customer satisfaction, customer loyalty, waste reduction, etc.). Most feasibility studies focus on tangibles but include some form of narrative statement related to intangible benefits.

Slide 17

Methods to assess Economic Feasibility

Expected value: cost benefit analysis for tangibles and intangibles

Return on Investment (ROI)ROI = (benefits-costs)/total cost

Net Present Value (NPV)NPV=PV / (1+rate)n

n=number of periodsExample: NPV=$100,000/(1+.05)5=$95,242.63The value of $100k in 5 years at 5% annual interest

Slide 18

Cost-Benefit Analysis

The best way to start an economic feasibility study is to list all the benefits of the proposed system and then all the costs. Certain costs are known (hardware, etc.), while others are estimated (development costs). Quantifiable benefits are usually estimated (reduced personnel measured by salary and benefit costs). The final goal is to compare the estimated costs to the estimated benefits. The process involves much estimation but you try to use the best educated (or informed) analysis that you can.

Slide 19

Cash Flow Method for Cost Benefit Analysis

Slide 20

Return on Investment (ROI)

ROI is the ratio of cash receipts divided by cash outlaysPredicts a rate of return for the investmentOften the goal is for the ROI to be above the rate at which the money would earn if invested in other opportunities

Slide 21

ROI Example

Slide 22

Break-Even Analysis

Projects the time it takes for the cumulative cash flow from a project to equal the investmentThe time at which the system pays for itself, identified by the first year of Overall Positive Cash FlowUse the figures for the year with first positive overall NPV cash flow (the first year where benefits exceed costs)

Slide 23

Project success/failureFactors for a successful system:

System meets users needSystem completed on timeSystem cost within budget

Factors for system failure:Technical issuesBusiness issuesData integrityIneffective teams

Common team problems*:Ineffective leadershipFailure to compromise or cooperateLack of participationProcrastination, Scope creepIneffective peer evaluation, Lack of confidence

*Humphrey, W. Introduction to the Team Software Process

Slide 24

SummaryProject initiation involves creating and assessing goals and expectations for a new system

Identifying the business value of the new project is a key to successThe system request describes an overview of the proposed system.The feasibility study is concerned with insuring that technical, economic, and organizational benefits outweigh costs and risksImportant to include problem statement, business case scenario, and scope statement