PHASE 1 SYSTEMS

PLANNING
 business case
strategic planning
business operations
preliminary investigation
feasibility study
Business Case
Refers to the reasons, justification, for a proposal.
◦ A strong business case means that a proposal will add substantial value to the
organization and support strategic planning.
Strategic Planning
The process of identifying long-term organizational goals,
strategies, and resources.
It looks beyond day-to-day activities and focuses on a horizon that
is 3, 5 years or even 10 yeas in the future.

SWOT analysis
Strengths
Weaknesses
Opportunities
Threats
Strategic Planning Process
Strategic Planning Process
Mission
◦ statement
Describes the company for its stakeholders
and briefly states the company’s overall
purpose, products, services and values
Goals
◦ Company identifies a set of goals that
accomplish the mission
Objectives
◦ Has shorter time frame

Stakeholders
◦Include anyone affected by the
company’s performance (customers, employees,
suppliers, stockholders and members of the
community)
Systems Requests
Starting point for a project
Formal way of asking for IT support

Might propose
1. enhancements for an existing system
2. correction of problems
3. development of entirely new information system
Systems Request Forms
◦ Streamlines the process
◦ Ensures consistency
◦ Must be easy to understand and use
◦ Must include clear instructions
◦ Include enough space for all required
information
◦ Indicate what supporting documents are
needed
Sample System Request Form
Reasons for Systems Projects
Factors Affecting Systems Projects
Evaluation of Systems Requests
Systems Review Committee / Computer Resources Committee
1. Evaluate requests
2. Set priorities
3. Assess feasibility
Criteria used to evaluate systems
requests
Reduce costs
Increase revenue
Produce more information or better results
Serve customers and the organization better
Reasonable time frame and lasting results
Resources available
Purpose of Feasibility Study
To determine
quickly and at
minimum
expense, if the
problem can be
solved
System Analysts asked the following
questions:
Is the proposal desirable in an operational sense?
Is the proposal technically feasible? Are the necessary technical resources and people available
for the project?
Is the proposal economically desirable?
Can the proposal be accomplished within an acceptable time frame?
Operational Feasibility
A system that has operational
feasibility is one that will be used
effectively after it has been
developed.
Technical Feasibility
A systems request has technical
feasibility if the organization has the
resources to develop or purchase,
install, and operate the system.
When assessing technical feasibility, an analyst must
consider the following points:
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?
Will the system be able to handle future transaction volume and company growth?
Economic Feasibility
A systems request has economic feasibility if
the projected benefits of the proposed system
outweigh the estimated cost involved in
acquiring, installing, and operating it
Economic Feasibility
“Do benefits outweigh cost?”
Cost
Money flowing from the organization
The sum value of costs of items needed to implement the system
Total Cost of Ownership
Ongoing support and maintenance costs as well as the acquisition costs
To determine the TCO analyst must estimate the following costs:
◦ People, including IT staff and users
◦ Hardware and equipment
◦ Software
◦ Formal and informal training
◦ Licenses and fees
◦ Consulting expenses
◦ Facility costs
◦ Estimated cost of not developing the system or postponing the project
Tangible Benefits
Advantages measured in terms of dollar saved,
resources saved, or time saved
1. increase of speed of processing
2. getting information on a more timely basis
3. take advantage of computer’s calculating power
4. lower amount of employee time to update specific task
Intangible Benefits
Benefits difficult to measure but are
important
1. improve decision making
2. enhance accuracy
3. Increase level of service
4. more competitive in customer satisfaction
5. increase job satisfaction
Cost Categories
Cost associated with developing the system (development cost)
◦ Hardware and software, as well as training fee

Cost associated with operating a system (operational cost)

◦ Example
◦ Electricity bill
◦ Office supplies
◦ Salaries
◦ Equipments
 Benefit
◦ The sum value of the savings made
◦ Categories
◦ Tangible
◦ Intangible
Cost Benefit Analysis
The costs and benefits are used to determine whether a project is economically feasible.

Two Ways:
◦ Payback method
◦ Present value method
Methods
Payback Method
◦ the process of determining how long it takes an information system to pay for itself. It defines the time required to
recover the money spent on a project
◦ Payback period = Investment Required/Net annual cash flow

Present Value Method

◦ Determine how much money it is worthwhile investing now in order to receive a specific return in a
particular period
◦ Present Value = Future Value/(1+r)n

Return on Investment (ROI)

◦ Percentage rate that measures profitability by comparing the total net benefits received from a project to the total
cost of the project
◦ ROI= (Total Benefits / Total Cost) – Total Cost
Methods
Payback Method Example
◦ Delta Company is planning to purchase a machine known as Machine X. Machine X would cost $25,000
and would have a useful life of 10 years with zero salvage value. The expected annual cash inflow of the
machine is $10,000.
◦ Required: Compute the payback period of machine X and conclude whether or not the machine would
be purchased if the maximum desired payback period of Delta company is 3 years.
◦ Solution:
◦ Since the annual cash inflow is even in this project, we can simply divide the initial investment by the annual cash inflow to
compute the payback period. It is shown below:
◦ Payback period = $25,000/$10,000
◦ = 2.5 years
◦ According to the payback period analysis, the purchase of machine X is desirable because its payback
period is 2.5 years which is shorter than the maximum payback period of the company.
Methods
Present Value Method
1. Input the future amount that you expect to receive in the numerator of the formula.
2. Determine the interest rate that you expect to receive between now and the future and plug the rate
as a decimal in place of "r" in the denominator.
3. Input the time period as the exponent "n" in the denominator. So, if you want to calculate the present
value of an amount you expect to receive in three years, you would plug in the number three.
Methods
Present Value Method Example
◦ Let's say you have the choice of being paid $2,000 today earning 3% annually or $2,200 one year from
now. Which is the best option?

◦ Using the present value formula, the calculation is $2,200 / (1 +. 03) 1 = $2,135.92
◦ PV = $2,135.92, or the minimum amount that you would need to be paid today to have $2,200 one year
from now. In other words, if you were paid $2,000 today and it could earn a 3% interest rate, the
amount would not be enough to give you $2,200 one year from now.
◦ Alternatively, you could calculate the future value of the $2,000 today in a year's time: 2,000 x 1.03 =
$2,060.
Schedule Feasibility
Likelihood of a project being completed within
its scheduled time frame
Other issues that relate to schedule feasibility include the
following:
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?
Discretionary vs. non-discretionary projects

Discretionary projects
◦ Projects where management has a choice in
implementing them.
them

Nondiscretionary projects
◦ Projects where no choice exists.
exists
Staffing and Launching the Project
Develop a resource plan for the project
Identify and request specific technical staff
Identify and request specific user staff
Organize the project into workgroups
Conduct preliminary training and team-building exercises
Model of a Preliminary Investigation
Preliminary Investigation
Purpose
◦ To decide whether to continue the project
Objectives for a preliminary investigation
1. Understand the problem
2. Define the project scope and constraints
3. Identify the benefits
4. Estimate the time and costs
5. Report to management
Step 1: Understand the problem
Identify the true nature of the problem and the reason for
the systems request
Stated problem might not be the real problem
Ishikawa or Fishbone diagram
◦ A popular technique for investigating causes and effects. It
is an analysis tool that represents the possible causes of a
problem as a graphical outline
Step 2: Define the project scope & constraints
Project scope
◦ Define the range or extent of the project
◦ Set project boundaries

Constraints
◦ Conditions, restrictions, or requirements that the system must satisfy or achieve. It also
define the project scope
◦ Example
◦ The order entry system must accept input from 15 remote sites
◦ The new web site must be operational by March 1
◦ The human resource information system must produce statistics on hiring practices
Step 3: Perform fact finding

The objective of fact-finding is to gather data about project usability,

costs, benefits, and schedules.
◦ Analyze organization charts
◦ Conduct interviews
◦ Review documentation
◦ Observe operations
◦ Carry out a user survey
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?
–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?
–How much will it cost to analyze the information gathered and to prepare a report
with findings and recommendations?
Step 5: Evaluate feasibility
Determine operational, technical, economic and
schedule feasibility
Step 6: Present results & recommendations to
management
Final task in the preliminary investigation
Key elements
◦ Evaluation of systems request
◦ Estimate of costs and benefits
◦ Recommendations
Oral and written presentations
Sample of Preliminary investigation report
Contents
I. Introduction
Overview of the report (brief description of the system, name of persons/group who
performed the investigation & initiated the investigation)

II. Systems Request Summary

Describes the basis of the systems request

III. Findings
Results of preliminary investigation (description of project’s scope, constraints, and feasibility)
Contents
IV. Recommendations
Recommendations for further action, with specific reasons and justification.

V. Time and Cost Estimates

Describe the cost of acquiring and installing the system.

VI. Expected Benefits

Anticipated tangible and intangible benefits, and timetable.

VIII. Appendix
Attach supporting information