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Lecture 2
Analyzing the Business Case
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Recap – Lecture 1
• Systems Analysis and Design (Software Engineering)
• Is a step-by-step process for developing high-quality information
systems (Software).
• What is an Information System?
• An Information System combines technology,
people, processes, and data to provide
support for business functions.
• Information is data that has been transformed
into output that is valuable to the user.
• Software
• System software – manages the hardware components. E.g. OS.
• Application software – programs that support business and user
requirements.
• Horizontal system, Vertical system, and Legacy systems.
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Recap – Lecture 1
• Types of business information systems:

• Enterprise computing systems

• support company-wide operations and data management
requirements.
• E.g. inventory control.
• Transaction processing systems
• process data generated by day-to-day business operations.
• E.g. customer order processing.
• Business support systems
• Provide job-related information support to users at all levels of a
company.
• E.g. part tracking.
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Recap – Lecture 1
• Types of business information systems:
• Knowledge management systems
• allows users to find information.
• E.g. Google search engine.
• User productivity systems
• Technology that improves productivity.
• E.g. e-mail, word processing.
• Systems integration systems
• Systems that combine transaction processing, business support,
knowledge management, and user productivity features.
• E.g. Moodle
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Recap – Lecture 1
• System Development Tools:
• Modeling
• Produces a graphical representation of a concept that systems analysts
can analyze, test, and modify.
• E.g. Object model, network model.
• Prototyping
• Is an early working version of an information system
• Computer-Aided Systems Engineering (CASE) Tools
• Can generate program code, which speeds the implementation process
• E.g. IBM Rational Software Architect, ArgoUML, etc.
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Recap – Lecture 1
• System Development Methods:
• Structured Analysis
• Traditional method for developing systems
• Organized into phases
• Object-Oriented Analysis
• More recent method for developing systems
• Objects represent actual people, things, or events
• Agile/Adaptive Methods
• Latest trend in software development
• Team-based effort broken down into cycles

• This course will use the structured analysis method in

combination with object oriented analysis.
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Recap – Lecture 1
• Structured Analysis
• The Waterfall model includes five steps:
• Systems Planning
• Describe problem and perform feasibility study.
• Systems Analysis
• Functional/non-functional requirements and
build logical models.
• Systems Design
• Create a physical model.
• Systems Implementation
• Systems Security and Support
• This phase is responsible for security, reliability,
maintainability, and scalability.
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Introduction
• During the systems planning phase (i.e. phase 1 of the waterfall
model), analysts review a proposal to determine if it presents a
strong business case.
• Business case refers to the reasons, or justifications, for a proposal

1. Process starts with a systems request

• We will learn how to evaluate a request through SWOT analysis.

2. Preliminary investigation follows to evaluate the request

further.
• Using feasibility study
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A Framework for IT Systems

Development
• All successful companies create strategic plans to identify
long-term organizational goals, strategies, and resources.
• Strategic Planning
• Starts with a mission statement
• It reflects the firm’s vision, purpose, and
values.
• Continues with goals and objectives
• Both short- and long-term goals are
identified.
• High priority objectives (critical success
factors) must be achieved to fulfill the
company’s mission.
• Finally, objectives translate into day-to-
day business operations.
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A Framework for IT Systems

Development
• To avoid seeking goals that
are unrealistic, unprofitable,
or unachievable, a
mechanism called SWOT
Analysis is used.
• Strengths
• Weaknesses
• Opportunities
• Threats.
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A Framework for IT Systems

Development
• An enterprise SWOT analysis usually begins with these
questions:
• What are our strengths, and how can we use them to achieve our
business goals?
• What are our weaknesses, and how can we reduce or eliminate
them?
• What are our opportunities, and how do we plan to take advantage
of them?
• What are our threats, and how can we assess, manage, and
respond to the possible risks?
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A Framework for IT Systems

Development (Cont.)

Example of a SWOT analysis.

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A Framework for IT Systems

Development (Cont.)

FIGURE 2-5 This SWOT analysis example focuses on a specific asset,

such as a company patent.
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A Framework for IT Systems

Development (Cont.)

Strategic Planning can also be applied for small IT

Projects and not just at the enterprise level to assure
that:
• The project supports overall business strategy and operational
needs

• The project scope is well-defined and clearly stated

• The project goals are realistic, achievable, and tied to specific

statements, assumptions, constraints, factors, and other inputs
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A Framework for IT Systems

Development (Cont.)

• Planning Tools

• Some analysts use traditional text-based methods like Microsoft

Word

• Some analysts prefer a spreadsheet method like Microsoft Excel

• The most effective approach is to use a CASE tool such as

Visible Analyst.
A Framework for IT Systems
Development (Cont.)

FIGURE 2-6 The Visible Analyst

CASE tool supports strategic
planning and allows a user to
enter many kinds of planning
statements. Notice the four 16
SWOT categories highlighted in
the list.
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What Is a Business Case?

• A business case refers to the reasons, or justification, for
a proposal
• Should be comprehensive, yet easy to understand

• Should describe the project clearly, provide the justification to

proceed, and estimate the project’s financial impact
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What Is a Business Case? (Cont.)

• A business case should answer the following

questions:
• Why are we doing this project?
• What is the project about?
• How does this solution address key business issues?
• How much will it cost?
• How long will it take?
• Will we suffer a productivity loss during the transition?
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What Is a Business Case? (Cont.)

• A business case should answer the following

questions: (cont.)
• What is the return on investment and payback period?
• What are the risks of doing the project?
• What are the risks of not doing the project?
• How will we measure success?
• What alternatives exist?
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Information Systems Projects

Main Reasons for Systems Requests (i.e. new project
request):
• Improved Service
• Improving service to customers or users within the company
• Support for New Products and Services
• New products and services often require new types or levels of IT support
• Better Performance
• Current system might not meet performance requirements
• More Information
• Current system may produce incomplete information. Ex. Shipment tracking
• Stronger Controls
• More security and privacy. Ex. Add encryption to files.
• Reduced Cost
• Current system might be expensive to maintain or operate.
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Information Systems Projects (Cont.)

Factors That Affect Systems Projects

• Internal and external factors affect every business decision that a
company makes.

FIGURE 2-10 Internal and external factors that affect IT projects.

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Information Systems Projects (Cont.)

Factors That Affect Systems Projects

• Internal Factors
• Strategic Plan
• Company’s goals and objectives generate such systems requests.
• Top Managers
• Managers have ideas to expand a company.
• User Requests
• E.g. sales rep might request improvement to the company’s website.
• Information Technology Department
• Make recommendations based on their knowledge of technology trends.
• Existing Systems and Data
• Errors or problems in existing systems can trigger requests for systems
projects.
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Information Systems Projects (Cont.)

Factors That Affect Systems Projects

• External factors
• Technology
• Changing technology is a major force affecting business and society in general.
E.g. bar code scanners
• Suppliers
• E.g. GM requests its suppliers to suppliers to code their parts to match their
inventory control system.
• Customers
• E.g. introduce RFID tracking for shipment to please customers needs for up-to-
date tracking.
• Competitors
• E.g. Apple’s iPhones triggered other companies to introduce touch phones also.
• The Economy
• Government
• Government regulations affect the design of information systems. E.g. IRS reporting.
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Evaluation of Systems Requests

 So how do we evaluate a systems

request?
1. Starts off with a “Systems Request
Form”
◦ Streamlines the request process
◦ Ensures consistency
◦ Easy to understand
◦ Includes clear instructions
◦ Indicates what supporting documents are
needed
◦ Submitted electronically

FIGURE 2-13 Example of an online

systems request form.
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Evaluation of Systems Requests (Cont.)

2. Systems Review Committee

• With a broader viewpoint, a committee can establish priorities more
effectively than an individual

• One person’s bias is less likely to affect the decisions

• Disadvantages:
• Action on requests must wait until the committee meets
• Members might favor projects requested by their own
departments
• Internal political differences could delay important decisions

• ***Which projects should the firm pursue? What criteria should be

applied? How should the priorities be determined? are all answered
by assessing the feasibility of each request***
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Overview of Feasibility
• A feasibility study uses four
elements to measure a
proposal:
• Operational feasibility

• Technical feasibility

• Economic feasibility

• Schedule feasibility
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Overview of Feasibility
• Is the proposal desirable in an operational sense?
• Is it a practical approach that will solve a problem or take advantage of an
opportunity to achieve company goals?

• Is the proposal technically feasible?

• Are the necessary technical resources and people available for the
project?

• Is the proposal economically desirable?

• What are the projected savings and costs?

• Can the proposal be accomplished within an acceptable

time frame?
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Overview of Feasibility (Cont.)

• Operational Feasibility
• Does management support the project?
• Do users support the project?
• Is the current system well liked and effectively used?
• Do users see the need for change?

• Will the new system result in a workforce reduction?

• If so, what will happen to affected employees?

• Will the new system require training for users?

• If so, is the company prepared to provide the necessary resources for
training current employees?

• Will users be involved in planning the new system right from the
start?
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Overview of Feasibility (Cont.)

• Operational Feasibility (Cont.)

• Will the new system place any new demands on users or require any
operating changes?
• For example:
• Will any information be less accessible or produced less frequently?
• Will performance decline in any way? If so, will an overall gain to the
organization outweigh individual losses?

• Will customers experience adverse effects in any way, either

temporarily or permanently?
• Will any risk to the company’s image or goodwill result?

• Does the development schedule conflict with other company

priorities?
• Do legal or ethical issues need to be considered?
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Overview of Feasibility (Cont.)

• Technical Feasibility
• Does the company have the necessary hardware, software, and
network resources?
• If not, can those resources be acquired without difficulty?

• Does the company have the needed technical expertise?

• If not, can it be acquired?

• Does the proposed platform have sufficient capacity for future

needs?
• If not, can it be expanded?

• Will a prototype be required?

• Will the hardware and software environment be reliable?

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Overview of Feasibility (Cont.)

• Technical Feasibility (Cont.)

• Will it integrate with other company information systems, both now and in
the future?

• Will it interface properly with external systems operated by customers

and suppliers?

• Will the combination of hardware and software supply adequate

performance?

• Do clear expectations and performance specifications exist?

• Will the system be able to handle future transaction volume and

company growth?
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Overview of Feasibility (Cont.)

• Economic Feasibility
• Costs for people, including IT staff and users

• Costs for hardware and equipment

• Cost of software, including in-house development as well as purchases

from vendors

• Cost for formal and informal training, including peer-to-peer support

• Cost of licenses and fees

• Cost of consulting expenses

• Facility costs

• The estimated cost of not developing the system or postponing the project
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Overview of Feasibility (Cont.)

• Tangible Costs/Benefits • Intangible Costs/Benefits

• A new scheduling system that • A user-friendly system that
reduces overtime improves employee job
satisfaction
• An online package tracking
system that improves service and • A sales tracking system that
decreases the need for clerical supplies better information for
staff marketing decisions

• A sophisticated inventory control • A new Web site that enhances

system that cuts excess the company’s image
inventory and eliminates
production delays
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Overview of Feasibility (Cont.)

• Schedule Feasibility
• Can the company or the IT team control the factors that affect
schedule feasibility?

• Has management established a firm timetable for the project?

• What conditions must be satisfied during the development of the

system?

• Will an accelerated schedule pose any risks?

• If so, are the risks acceptable?

• Will project management techniques be available to coordinate and

control the project?

• Will a project manager be appointed?

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Evaluating Feasibility

• Identify and weed out systems requests that are not

feasible
• Even if the request is feasible, it might not be necessary
• Requests that are not currently feasible can be
resubmitted as new hardware, software, or expertise
becomes available
• After eliminating unnecessary requests, priorities are set
for the remaining requests.
• Many factors influence project evaluation.
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Setting Priorities
• Factors That Affect Priority
• Will the proposed system reduce costs?
• Where? When? How? How much?

• Will the system increase revenue for the company?

• Where? When? How? How much?

• Will the systems project result in more information or produce better

results?
• How? Are the results measurable?

• Will the system serve customers better?

• Will the system serve the organization better?

• Can the project be implemented in a reasonable time period?

• How long will the results last?

• Are the necessary financial, human, and technical resources available?

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Setting Priorities (Cont.)

• Discretionary Projects • Nondiscretionary Projects

• Projects where management • Projects where management
has a choice in implementing must implement them
them • E.g. Adding a report required by
• E.g. Creating a new report for federal law
a user
• Most of these projects are
predictable
• Annual updates to payroll
• Tax percentages
• Quarterly changes
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Preliminary Investigation Overview

• A system analyst conducts a
preliminary investigation to study the
systems request and recommend
specific action.
• Gather facts about the project.
• The end product of the investigation is a
report to management.
• Interaction with Managers and Users
• Meet with key managers, users, and IT
staff to describe the project, explain
responsibilities, answer questions, and
invite comments
• Focus on improvements and
enhancements, not problems
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Preliminary Investigation Overview (Cont.)

• There are six main steps in a

typical preliminary investigation
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Preliminary Investigation Overview (Cont.)

• Step 1: Understand the Problem or Opportunity

• Develop a business profile that describes business processes and
functions

• Understand how modifications will affect business operations and

other information systems

• Determine which departments, users, and business processes are

involved

• Systems request may not reveal an underlying problem

• Consider using a fishbone diagram

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Preliminary Investigation Overview (Cont.)

• A fishbone diagram displays the causes of a problem. Typically, you must

dig deeper to identify actual causes rather than just symptoms.
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Preliminary Investigation Overview (Cont.)

• Step 2: Define the Project Scope and Constraints

• Define the specific boundaries, or extent, of the project

• Define project scope by creating a list with sections called Must Do,
Should Do, Could Do, and Won’t Do

• Identify Constraints
• A constraint is a requirement or condition that the system must satisfy or an
outcome that the system must achieve
• When examining constraints you should identify their characteristics as
follows:
• Present vs. Future
• Internal vs. External
• Mandatory vs. Desirable
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Preliminary Investigation Overview (Cont.)

FIGURE 2-18 Examples of various types of constraints.

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Preliminary Investigation Overview (Cont.)

• Step 3: Perform Fact-Finding

• Gather data about project usability, costs, benefits, and schedules

• Analyze organization charts

• Understand the functions and identify people you want to
interview

• Conduct Interviews
1. Determine the people to interview
2. Establish objectives for the interview
3. Develop interview questions
4. Prepare for the interview
5. Conduct the interview
6. Document the interview
7. Evaluate the interview
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Preliminary Investigation Overview (Cont.)

• Step 3: Perform Fact-Finding (Cont.)

• Review Documentation
• Investigate the current system documentation
• Check with users to confirm that you are receiving accurate and
complete information.

• Observe Operations
• See how workers carry out
typical tasks
• Sample inputs and outputs
of the system

FIGURE 2-20 Sometimes, an analyst can get

a better understanding of a system by
watching actual operations.
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Preliminary Investigation Overview (Cont.)

• Step 3: Perform Fact-Finding (Cont.)

• Conduct a User Survey
• A survey is not as flexible as a series of interviews, but it is less
expensive, generally takes less time, and can involve a broad
cross-section of people

• Analyze the Data

• Systems analyst might use a Pareto chart
• Analysts may use an XY chart to identify if there is a correlation of
variables
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Preliminary Investigation Overview (Cont.)

FIGURE 2-21 A Pareto chart displays the causes of a

problem, in priority order, so an analyst can tackle the most
important causes first. In this example, the part number issue
would be the obvious starting point.

FIGURE 2-22 An XY chart shows correlation between variables, which

is very important in problem solving. Conversely, a lack of correlation
suggests that the variables are independent, and that you should look
elsewhere for the cause.
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Preliminary Investigation Overview (Cont.)

• Step 4: Analyze Project Usability, Cost, Benefit, and

Schedule Data
• What information must you obtain, and how will you gather and
analyze the information?
• Will you conduct interviews? How many people will you interview,
and how much time will you need to meet with the people and
summarize their responses?
• Will you conduct a survey? Who will be involved? How much time
will it take people to complete it? How much time will it take to
tabulate the results?
• How much will it cost to analyze the information and prepare a report
with findings and recommendations?
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Preliminary Investigation Overview (Cont.)

• Step 5: Evaluate Feasibility

• OPERATIONAL FEASIBILITY
• Review of user needs, requirements, and expectations
• Look for areas that might present problems for system users and how
they might be resolved
• TECHNICAL FEASIBILITY
• Identify the hardware, software, and network resources needed to
develop, install, and operate the system
• Develop a checklist that will highlight technical costs and concerns
• ECONOMIC FEASIBILITY
• Apply the financial analysis tools
• The cost-benefit data will be important
• SCHEDULE FEASIBILITY
• Include stakeholder expectations regarding acceptable timing and
completion dates
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Preliminary Investigation Overview (Cont.)

• Step 6: Present Results and Recommendations to

Management
• Typical Report Includes:
• Introduction
• Systems Request Summary
• Findings
• Case for Action
• Project Roles
• Time and Costs Estimates
• Expected Benefits
• Appendix
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