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Systems Analysis I Feasibility

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Title: Systems Analysis I Feasibility


1
Systems Analysis IFeasibility Project
Management
  • ISYS 200
  • Glenn Booker

2
Feasibility
  • Every organization which performs system
    development, or has it done for them, needs a way
    to choose which projects are worth the effort
  • Feasibility study is a common approach to make
    such decisions thoughtfully
  • Basis for feasibility study is generally the
    problems and opportunities analysis

3
Problems Opportunities
  • We can look for problems and opportunities in
    many parts of our organization, and the existing
    systems which are supported
  • Track maintenance costs for existing systems
  • Measure existing processes to determine their
    cost, and compare to industry standards
  • Monitor availability of support for existing
    system components
  • Look for signs of unhappy employees

4
Problems Opportunities
  • Check quality of work products (outputs)
  • Listen to customers, vendors, and suppliers
  • Both complaints and suggestions
  • Measure customer satisfaction
  • Monitor competitors offerings and plans
  • Monitor changes in technology which could help
  • Dont forget obvious measures of success, like
    sales, profit, or number of contracts awarded

5
Project Selection
  • Selection of projects is based on many factors
    cost, urgency, the systems affected, etc.
  • From the organizations perspective, choosing
    projects is kind of like shopping
  • Theres generally a limited amount of funds and
    people available to work on the possible
    projects, and management needs to choose which
    projects to support

6
Project Selection
  • There are five typical requirements for a project
    to be supported
  • Management support for the project
  • Appropriate timing of commitment to the project
  • Relevance to helping meet organizational goals
  • Project must be practical and feasible
  • Project must be worthwhile compared to other
    possible expenditures
  • Are we getting enough bang for our buck?

7
Project Objectives
  • Based on the problems and opportunities
    identified for a project, we can set objectives
    for the project
  • These not only help the feasibility study which
    follows, but set goals against which we can later
    test the system
  • Objectives should not only address the type of
    improvement sought, but set a desired level of
    improvement

8
Project Objectives
  • Examples of objectives might include
  • Improve customer satisfaction 10 within 1 year
  • Reduce the response time for customer complaints
    by 15
  • Get a new feature to market before competitors
  • Reduce error rate for data entry from 2 to 0.5
  • Improve sales to new customers by 5
  • Reduce voluntary employee turnover by 10

9
Feasibility Analysis
  • Feasibility consists of several types we want to
    assess for each candidate project
  • Technical feasibility
  • Can the project be done with existing technology?
  • Are people available to use the technologies
    needed?
  • Economic feasibility
  • How much does the system cost to develop?
    Maintain? How long will it be usable?
  • Some add schedule feasibility how long will it
    take to create the system?

10
Feasibility Analysis
  • Operational feasibility
  • What impact will the new system have on how we do
    business? Will there be changes to where or how
    processes are performed?
  • Will there be changes to employee skills needed?
    Changes to employee training?
  • Are existing users amenable to a new system?
  • These types of feasibility can be measured for
    each project, and compared to determine which is
    most feasible

11
Feasibility Analysis
  • Like voting or buying a car, feasibility analysis
    is rarely completely logical or quantifiable
  • Many other issues can also affect it
  • Political climate
  • State of the US and/or global economy
  • Preferences of the decision makers favored
    vendors, technologies, types of projects, etc.

12
Planning Activities
  • Once a project has been selected for funding, its
    detailed planning generally begins
  • Key project management perspective is to look at
    a project in terms of a set of tasks to be
    accomplished, and managing the resources (people,
    tools) needed to perform those tasks
  • Management focuses on effort (by people),
    (calendar) schedule, cost, and resources

13
Planning Activities
  • Cost for software-related system development is
    mostly due to the labor effort of the people
    needed to create it
  • Other costs, such as hardware, software,
    training, etc. are relatively small for most
    systems
  • The start of planning for a project is to
    identify the time needed for various activities
    needed to create the system

14
Planning Activities
  • To help structure development activities, we use
    a life cycle model to identify the major sets of
    activities, called life cycle phases
  • There are many kinds of life cycle models
  • The Waterfall model is the oldest, and uses
    phases like Requirements Analysis, High Level
    Design, Low Level Design, Coding, and Testing
  • The Rational Unified Process has Inception,
    Elaboration, Construction, and Transition phases

15
Planning Activities
  • The life cycle used here has three phases
  • The Analysis phase includes data gathering, data
    flow and decision analysis, and proposal
    preparation activities
  • The Design phase includes data organization, and
    design of data entry, inputs, and outputs
  • The Implementation phase includes creating the
    system (implementation) and evaluation (testing)

16
Planning Activities
  • Each life cycle phase is broken down into more
    and more specific activities, until the time
    needed for each activity can be reliably
    estimated
  • Then the tasks are put into a Gantt chart or Pert
    chart to show when they occur relative to each
    other
  • Tasks might occur sequentially, have to start or
    end together, or wait for some other tasks to be
    completed

17
Planning Activities
  • Tasks for a project often include the acts of
    creating specific documents or work products,
    approving things or making decisions such as
  • Prepare system test plan
  • Approve system release
  • Conduct user satisfaction survey
  • Approve system requirements specification
  • So the life cycle model provides guidance on the
    types of activities needed, but the tasks provide
    authority for people to do them

18
Gantt Chart
  • The Gantt chart shows tasks graphically
  • Time moves forward from left to right
  • Each task is a bar, whose length is the task
    duration, and position shows when it starts and
    stops
  • Above the bars are 1-3 timelines, which can show
    actual time (e.g. calendar weeks and months) or
    relative time (weeks or months since the start of
    the project)

19
Gantt Chart
  • Decisions are shown by a milestone diamond they
    are tasks of zero duration
  • Tasks and decisions are grouped together into
    activities and life cycle phases
  • The higher level tasks are shown as summary tasks
    a different style of bar
  • Once the project starts, another style of bar can
    be used to show progress toward completing tasks

20
Gantt Chart Excerpt
21
PERT Diagrams
  • PERT diagrams, or PERT charts, are primarily used
    to help identify the critical path for a project
  • The critical path is the sequence of tasks which,
    if any tasks were changed, would also change
    the completion date of the project
  • Tasks on the critical path tend to get
    preferential treatment for getting resources

22
PERT Diagrams
  • A PERT diagram consists of labeled circles,
    connected by lines (other formats exist)
  • The circles are points in time on the project
    schedule (not tasks) the labels are sequential
    tens (10, 20, 30, etc.)
  • Each line is a task, labeled with the task
    identifier and its duration in some consistent
    units (weeks in the text, days here)

23
PERT Diagrams
  • A split in tasks after some circle means that two
    or more tasks start at the same time
  • Conversely, two or more lines entering a circle
    means that ALL of those tasks have to finish
    before the project can move forward
  • Dummy lines can be added to connect tasks which
    have no previous or following task

24
Sample PERT Diagram
25
PERT Diagrams
  • PERT is therefore useful for
  • Identifying the order in which tasks take place
  • Finding the critical path
  • Finding slack time (open areas in the schedule)

26
Timeboxing
  • Timeboxing refers to creating short, well defined
    iterations in which to perform project tasks
  • Each time box has clearly stated objectives and
    deliverables (work products due)
  • Used to avoid long, ill-defined tasks which dont
    produce anything
  • The Rational Unified Process uses timeboxing
    throughout the life cycle

27
Teamwork
  • Teams are groups of people who
  • 1) are working to achieve a common goal, and
  • 2) whose activities are interdependent
  • Teams need to have clear objectives
  • Teams need a way to resolve conflicts
  • Teams may have specifically defined roles, and
    one or more leaders
  • Teams should set their own goals

28
E-Commerce Management
  • Management of e-commerce projects are frequently
    similar to any other development effort
  • Might have greater geographic range of locations
  • Typically need diverse skill sets
  • May be very politically driven projects with
    tight schedule
  • And obvious security concerns

29
Systems Proposals
  • Many organizations obtain new work by bidding on
    projects using some kind of proposal document
  • Proposals could be used internally within your
    organization, or sent to an external customer
  • A proposal outlines their proposed solution to
    the customers problem, and gives estimates of
    the cost, schedule, and risks associated with the
    project

30
Candidate Solutions
  • Key to a good feasibility analysis is to choose
    an appropriate set of candidate solutions
  • Each candidate solution is one way to approach
    structuring the solution
  • They might differ in the
  • Type of network architecture ( of tiers),
  • Extent of automation (which processes are
    automated vs. stay manual),
  • Use of push vs. pull technologies

31
Candidate Solutions
  • Brand of commercial components (UNIX vs VMS
    operating system),
  • Types of hardware technology (e.g. typed vs. RFI
    vs. barcode input devices),
  • Use of custom vs. commercial vs. outsourced
    software components
  • For each candidate solution, need to
  • Identify the hardware and software needs to
    implement it
  • Estimate the labor effort to implement it

32
Candidate Solutions
  • Estimate the maintenance costs
  • Select appropriate options for buying vs leasing
    equipment, and options for commercial software
    maintenance contracts
  • Determine facility needs for each solution
  • Then you can choose the tool for making the
    choice among the candidate solutions

33
Decision Tools
  • Tools for making decisions include
  • The spreadsheet approach assign a value to each
    aspect of feasibility, and rate each solution on
    those aspects
  • More formal tools can use analytical hierarchy
    processing (AHP), neural nets, expert systems,
    or other techniques

34
Cost-Benefit Analysis
  • As part of the cost feasibility, a formal
    cost-benefit analysis can be performed
  • This is weighing the costs of developing and
    maintaining a new system, against the benefits
    that system should provide
  • This is why quantifying system objectives was
    important
  • The tangible benefits of the new system can be
    the value of improvements

35
Cost-Benefit Analysis
  • For example, the benefit from saving four minutes
    on generating a form thats used 50,000 times per
    year might be
  • (4 min/form)/(60 min/hr)(50000 form/yr)40/hr
  • Equals 100,000 per year, assuming the cost of an
    employee, with benefits, is 30/hr
  • Similar approaches can be used to estimate
    benefits of bringing in new customers, increasing
    sales, reducing errors, etc.

36
Cost-Benefit Analysis
  • Analytical approaches for predicting trends from
    past behavior can use several methods
  • Regression analysis (statistical curve fitting)
  • Moving averages
  • Graphic judgment (visual curve fitting)
  • Intangible benefits are also important improved
    employee morale, good company reputation,
    customer satisfaction

37
Cost-Benefit Analysis
  • Costs associated with creating a system are also
    tangible or intangible
  • Tangible costs include the development and
    maintenance costs of the new system
  • Intangible costs are hard to measure, e.g. the
    cost of making poor decisions
  • All costs over the life of the system should
    first be converted to their present value

38
Time Value of Money
  • All cost benefit analyses assume that money is
    worth more over time, since it can be invested
  • As a result, these analyses depend VERY STRONGLY
    on the interest rate which could be obtained
    from saved money a critical assumption

39
Present Value
  • The present value of money, some time in the
    future, is
  • 1 of money today (1i)-n
  • Where i is the interest rate, and n is the
    number of time periods over which that rate was
    collected
  • The interest rate is how much you could earn on
    investing that money some way other than this
    system
  • The number of time periods is generally in years,
    but the formula still works if you divide the
    interest rate accordingly

40
Present Value
  • So the present value of 30,000 five years from
    now at an 8 interest rate is30,000 (1
    0.08)-5 20,417
  • That means if we invest 20,417 at 8 interest
    for five years, wed have 30,000
  • The same problem with months used instead of
    years gives us a slightly different answer
  • PV 30,000(1 0.08/12)-60 20,136
  • How often the interest is obtained is a small
    factor

41
Present Value
  • Notice that the present value of 1.00 is always
    less than or equal to 1.00
  • If you invest 50 cents now, at some point in the
    future it will be worth 1.00
  • When that happens depends on how well that 50
    cents could be invested (the interest rate)
  • Very short term projects dont need to use
    present value analysis, but most information
    systems are long term investments

42
Break Even Analysis
  • One way to analyze cost effectiveness is to
    determine how much business volume is needed for
    the new system to pay for itself
  • Determine the costs and benefits as a function
    of system output
  • Look for when benefits exceed costs thats the
    breakeven point
  • A good method if cost is the main concern, not
    benefits

43
Return On Investment (ROI)
  • Lifetime ROI is a percentage comparing the total
    costs and benefits from a project
  • Lifetime ROI(total benefit - total cost)/(total
    cost)
  • Lifetime ROI may be divided by project duration
    to get a ROI per year (annual ROI)
  • Want high ROI (lifetime and annual)
  • A low ROI ( under 10/yr) might indicate the
    benefits are too little to be worthwhile

44
Cash Flow Analysis
  • Look at the costs and benefits from the system
    over time (e.g. each year)
  • Convert costs and benefits to present value
  • Add up the total costs and total benefits
  • When the total benefits are greater than total
    costs, you have reached the breakeven point (out
    of the red)
  • Good for projects that are a substantial
    investment for the organization

45
The Systems Proposal
  • Based on all the nifty stuff weve covered, we
    can now put together a systems proposal
  • Executive summary (execs dont read much)
  • Describe the methods used to study the existing
    system and the business environment
  • Describe the candidate solutions and the
    feasibility analysis results for each
  • Provide a recommendation on the preferred solution

46
The Systems Proposal
  • Most people who receive a systems proposal are
    looking at many of them and need to choose the
    ones to receive funding
  • Hence theres a noticeable amount of sales pitch
    in many proposals
  • Consider appropriate graphics to make the data
    more interesting

47
Types of Graphs
  • Pie chart
  • Bar or column graph
  • Bars can be stacked, or clustered next to each
    other
  • Line graph
  • Scatter plot
  • Histogram
  • A bar chart with ranges of X values, like ages
    15-24, 25-39, 40-54, etc.

48
The Systems Proposal
  • An oral presentation may be needed for the
    systems proposal
  • Make sure your voice is loud enough to be heard
  • Look at your audience they wont bite!
  • Keep visual aids large enough to be read
  • Avoid filler words errr, um, yknow
  • A little silence can be a good pause between
    topics, and give you time to think
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