CHAPTER 2

ANALYZING THE
BUSINESS CASE
 Chapter Objectives
2

 Explain the concept of a business case and how a

business case affects an IT project
 Describe the strategic planning process and why it
is important to the IT team
 Conduct a SWOT analysis and describe the four
factors involved
 Chapter Objectives
3

 Explain the purpose of a mission statement

 Describe the SDLC, and explain how it serves as a
framework for systems development and business
modeling
 List the reasons for information systems projects
and the factors that affect such projects
 Chapter Objectives
4

 Explain the initial review of systems requests and

the role of the systems review committee
 Define operational feasibility, technical feasibility,
economic feasibility, and schedule feasibility
 Describe the steps in a preliminary investigation
and the end product of an investigation
 Introduction
5

 The term business case refers to the reasons, or

justification, for a proposal
 A strong business case suggests that the company
should pursue the alternative, above other options,
because it would be in the firm’s best interest to do
so
 Systems development typically starts with a
systems request, followed by a preliminary
investigation, which includes a feasibility study
 Strategic Planning – A Framework for
6
IT Systems Development
 Strategic planning is the process of identifying
long-term organizational goals, strategies, and
resources
 Strategic Planning Overview
 SWOT analysis
 Strategic Planning – A Framework for
7
IT Systems Development
 From Strategic Plans to Business Results
 Mission statement
 Stakeholders
 Goals
 Objectives
 Strategic Planning – A Framework for
8
IT Systems Development
 A CASE Tool Example
 You are a systems analyst
 You research the Visible Analyst CASE tool
 Planning statements can include assumptions, goals,
objectives, and critical success factors, and many other
types of statements
 Strategic Planning – A Framework for
9
IT Systems Development
 The Role of the IT Department in Project
Evaluation
 Management leadership and information
technology are linked closely, and remarkable
changes have occurred in both areas
 Today, systems development is much more team
oriented
 Although team-oriented development is the norm,
some companies see the role of the IT department
as a gatekeeper
 Strategic Planning – A Framework for
10
IT Systems Development
 The Future
 If you could look into the future, here is what you
might see: new industries, products, and services
emerging from amazing advances in information
technology, customers who expect world-class IT
support, a surge in Internet-based commerce, and a
global business environment that is dynamic and
incredibly challenging
 What Is a Business Case?
11

 Should be comprehensive, yet easy to understand

 Should describe the project clearly, provide the
justification to proceed, and estimate the project’s
financial impact
 ProSci’s BPR Online Learning Center offers a
Business Case Tutorial Series
 Information Systems Projects
12

 Main Reasons for Systems Projects

 Systems request
 Improved service
 Support for new products and services
 Better performance
 More information
 Stronger controls
 Encryption and biometric devices
 Reduced cost
 Information Systems Projects
13

 Factors that Affect Systems Projects

 Internal and external factors affect every business
decision that a company makes, and IT systems
projects are no exception
 Information Systems Projects
14

 Internal Factors
 Strategic plan
 Top managers
 User requests
 Information technology department
 Existing systems and data
 Information Systems Projects
15

 External Factors
 Technology
 Electronic product code (EPC)
 Suppliers
 Critically important
 Just-in-time (JIT)
 Information Systems Projects
16

 External Factors
 Customers
 Customer Relationship Management (CRM)
 Electronic proof of delivery (EPOD)
 Competitors
 The economy
 Government
 Information Systems Projects
17

 Project Management
 If the project is approved, it can be planned,
scheduled, monitored and controlled, and reported
upon
 Individual analysts or IT staff members often
handle small projects, but companies usually
designate a project manager to coordinate the
overall effort for complex projects
 Evaluation of Systems Requests
18

 Systems review committee or a computer

resources committee evaluate systems requests
 Systems Requests Forms
 A properly designed form streamlines the request
process and ensures consistency
 Occasionally a situation will arise that requires an
immediate response
 Evaluation of Systems Requests
19

 Systems Review Committees

 Most large companies use a systems review committee
to evaluate systems requests
 Many smaller companies rely on one person to
evaluate system requests instead of a committee
 The goal is to evaluate the requests and set priorities
 Overview of Feasibility
20

 A systems request must pass several tests, called a

feasibility study, to see whether it is worthwhile to
proceed further
 Overview of Feasibility
21

 Operational Feasibility
 Operational feasibility means that a proposed system
will be used effectively after it has been developed
 Depends on several vital issues
 Technical Feasibility
 Technical feasibility refers to technical resources
needed to develop, purchase, install, or operate the
system
 Overview of Feasibility
22

 Economic Feasibility
 Total cost of ownership (TCO)
 assessing costs, which includes ongoing support and
maintenance costs, as well as acquisition costs
 Tangible benefits
 E.g. decrease in expenses, an increase in revenues
 Intangible benefits
 E.g. Web site that improves a company's image
 Schedule Feasibility
 Evaluating Feasibility
23

 The first step in evaluating feasibility is to identify

and weed out systems requests that are not feasible
 Even if the request is feasible, it might not be
necessary
 Feasibility analysis is an ongoing task that must be
performed throughout the systems development
process
 Setting Priorities
24

 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?
 Setting Priorities
25

 Factors that Affect Priority

 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?
 Setting Priorities
26

 Factors that Affect Priority

 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?
 Whenever possible, the analyst should evaluate a
proposed project based on tangible costs and
benefits that represent actual (or approximate)
dollar values
 Setting Priorities
27

 Discretionary and Nondiscretionary Projects

 Projects where management has a choice in
implementing them are called discretionary projects
 Projects where no choice exists are called
nondiscretionary projects
 Preliminary Investigation
28
Overview
 Preliminary investigation
 An initial investigation to clearly identify the nature and
scope of the business opportunity or problem
 Interaction with Managers and Users
 Let people know about the investigation and explain your
role
 Employee attitudes and reactions are important and must
be considered
 Be careful in your use of the word problem
 Question users about additional capability they would like
to have
 Preliminary Investigation
29
Overview
 Planning the Preliminary Investigation
 During a preliminary investigation, a systems analyst
typically follows a series of steps
 The exact procedure depends on the nature of the
request, the size of the project, and the degree of
urgency
 Preliminary Investigation
30
Overview
 Step 1: Understand the Problem or
Opportunity
 A popular technique for investigating causes and
effects is called a fishbone diagram, or Ishikawa
diagram
 Pareto chart
 Preliminary Investigation
31
Overview
 Step 2: Define the Project Scope and
Constraints
 Project scope
 specific determination of a project's boundaries or extent
 Project creep
 project with very general scope, without specific
authorization
 Constraint
 Condition/requirement that the system must satisfy or an
outcome that the system must achieve
 Preliminary Investigation
32
Overview
 Step 2: Define the Project Scope and
Constraints
 Present versus future
 Internal versus external
 Mandatory versus desirable
 Regardless of the type, all constraints should be
identified as early as possible to avoid future problems
and surprises
 Preliminary Investigation
33
Overview
 Step 3: Perform Fact-Finding
 Fact-finding involves various techniques
 Depending on what information is needed to
investigate the systems request, fact-finding might
consume several hours, days, or weeks
 Analyze Organization Charts
 Obtain organization charts to understand how the
department functions and identify individuals you might
want to interview
 Preliminary Investigation
34
Overview
 Step 3: Perform Fact-Finding
 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
 Preliminary Investigation
35
Overview
 Step 3: Perform Fact-Finding
 Review documentation
 Observe operations
 Conduct a user survey
 Preliminary Investigation
36
Overview
 Step 4: Analyze Project Usability, Cost, Benefit
and Schedule Data
 Before you can evaluate feasibility, you must analyze
this data carefully
 What information must you obtain, and how will you
gather and analyze the information?
 What sources of information will you use, and what
difficulties will you encounter in obtaining
information?
 Preliminary Investigation
37
Overview
 Step 4: Analyze Project Usability, Cost,
Benefit and Schedule Data
 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 prepare it and
tabulate the results?
 Preliminary Investigation
38
Overview
 Step 4: Analyze Project Usability, Cost, Benefit
and Schedule Data
 How much will it cost to analyze the information
gathered and to prepare a report with findings and
recommendations?
 Preliminary Investigation
39
Overview
 Step 5: Evaluate Feasibility
 Start by reviewing the answers to the questions you
asked
 Operational feasibility
 Technical feasibility
 Economic feasibility
 Schedule feasibility
 Preliminary Investigation
40
Overview
 Step 6: Present Results and Recommendations
to Management
 The final task in the preliminary investigation is to
prepare a report to management
 The format of the preliminary investigation report
varies from one company to another
 Preliminary Investigation
41
Overview
 Step 6: Present Results and Recommendations
to Management
 Introduction
 Systems request summary
 Findings
 Case for action
 Project Roles
 Time & cost estimates
 Expected benefits
 Appendix
 Chapter Summary
42

 Systems planning is the first phase of the systems

development life cycle
 Effective information systems help an organization
support its business process, carry out its mission,
and serve its stakeholders
 Chapter Summary
43

 Strategic planning allows a company to examine its

purpose, vision, and values and develops a mission
statement, which leads to goals, objectives, day-to-
day operations, and business results that affect
company stakeholders
 Systems projects are initiated to improve
performance, provide more information, reduce
costs, strengthen controls, or provide better service
 Chapter Summary
44

 Various internal and external factors affect

systems projects, such as user requests, top
management directives, existing systems, the IT
department, software and hardware vendors,
technology, customers, competitors, the economy,
and government
 During the preliminary investigation, the analyst
evaluates the systems request and determines
whether the project is feasible from an operation,
technical, economic, and schedule standpoint
 Chapter Summary
45

 Analysts evaluate systems requests on the basis

of their expected costs and benefits, both tangible
and intangible
 The steps in the preliminary investigation are to
understand the problem or opportunity; define the
project scope and constraints; perform fact-
finding; analyze project usability, cost, benefit,
and schedule data; evaluate feasibility; and
present results and recommendations to
management
 Chapter Summary
46

 The last task in a preliminary investigation is to

prepare a report to management
 The report must include an estimate of time,
staffing requirements, costs, benefits, and expected
results for the next phase of the SDLC