7 FEASIBILITY

ANALYSIS AND
THE SYSTEM
PROPOSAL
Learning Objectives
• Identify feasibility checkpoints in the systems life
cycle.
• Identify alternative system solutions.
• Define and describe four types of feasibility and their
respective criteria.
• Perform various cost-benefit analyses using time-
adjusted costs and benefits.
• Write suitable system proposal reports for different
audiences.
• Plan for a formal presentation to system owners and
users.
Chapter Map
Feasibility Analysis

Feasibility – the measure of how beneficial or practical

an information system will be to an organization.

Feasibility analysis – the process by which feasibility is

measured.

Creeping Commitment – an approach to feasibility that

proposes that feasibility should be measured throughout
the life cycle.
Feasibility Checkpoints

• Systems Analysis — Scope Definition

• Systems Analysis — Problem Analysis
• Systems Design — Decision Analysis
Feasibility Checkpoints During Systems Analysis
Four Tests For Feasibility

Operational feasibility – a measure of how well a

solution will work or be accepted in an organization.
Usability analysis – a test of the system’s user
interfaces.

Technical feasibility – a measure of the practicality of a

technical solution and the availability of technical
resources and expertise.
Schedule feasibility – a measure of how reasonable the
project timetable is.
Economic feasibility - a measure of the cost-
effectiveness of a project or solution.
Cost-Benefit Analysis Techniques

Costs:
• Development costs are one time costs that will not recur after
the project has been completed.
• Operating costs are costs that tend to recur throughout the
lifetime of the system. Such costs can be classified as:
– Fixed costs — occur at regular intervals but at relatively fixed
rates.
– Variable costs — occur in proportion to some usage factor.

Benefits:
• Tangible benefits are those that can be easily quantified.
• Intangible benefits are those benefits believed to be difficult or
impossible to quantify.
Costs for a Proposed Systems Solution
Three Popular Techniques to Assess Economic Feasibility

• Payback Analysis
• Return On Investment
• Net Present Value

The Time Value of Money is a concept that should be

applied to each technique. The time value of money
recognizes that a dollar today is worth more than a dollar
one year from now.
Payback Analysis

Payback analysis – a technique for determining if and

when an investment will pay for itself.

Payback period – the period of time that will lapse

before accrued benefits overtake accrued and continuing
costs.
Present Value Formula

Present value – the current value of a dollar at any

time in the future.

PVn = 1/(1 + i)n

Where n is the number of years and i is the discount rate.

Discount rate – a percentage similar to interest rates that you

earn on your savings.
In most cases the discount rate for a business is the opportunity
cost of being able to invest money in other projects or
investments
Payback Analysis for a Project
Return-on-Investment Analysis (ROI)

Return-on-Investment (ROA) analysis – a technique

that compares the lifetime profitability of alternative
solutions.

The ROI for a solution or project is a percentage rate that

measures the relationship between the amount the business gets
back from an investment and the amount invested.

Lifetime ROI = (estimated lifetime benefits –

estimated lifetime costs) / estimated lifetime costs

Annual ROI = lifetime ROI / lifetime of the system

Net Present Value (NPV) Analysis

Net present value – an analysis technique that compares the

annual discounted costs and benefits of alternative solutions.
Candidate Systems Matrix

Candidate Systems Matrix – a tool used to

document similarities and differences between
candidate systems;.
 Sample Candidate Systems Matrix
Characteristics Candidate 1 Candidate 2 Candidate 3
Portion of System COTS package Platinum Member Services and Same as candidate 2.
Computerized Plus from Entertainment warehouse operations in
Brief description of that portion of Software Solutions would relation to order
the system that would be be purchased and fulfillment.
computerized in this candidate. customized to satisfy
Member Services required
functionality.
This solution can be Fully supports user Same as candidate 2.
Benefits implemented quickly required business
Brief description of the business because it’s a purchased processes for SoundStage
benefits that would be realized for solution. Inc. Plus more efficient
this candidate. interaction with member
accounts.
Technically architecture Same as candidate 1. Same as candidate 1.
Servers and Workstations dictates Pentium III, MS
A description of the servers and Windows 2000 class
workstations needed to support servers and workstations
this candidate. (clients).

MS Visual C++ and MS MS Visual Basic 5.0 MS Visual Basic 5.0

Software Tools Needed Access for customization System Architect 2001 System Architect 2001
Software tools needed to design of package to provide Internet Explorer Internet Explorer
and build the candidate (e.g., report writing and
database management system, integration.
emulators, operating systems,
languages, etc.). Not generally
applicable if applications software
packages are to be purchased. (Continued)
 Sample Candidate Systems Matrix (continued)

Characteristics Candidate 1 Candidate 2 Candidate 3

Application Software Package solution Custom solution Same as candidate 2.
A description of the software to be
purchased, built, accessed, or
some combination of these
techniques.
Method of Data Processing Client/Server Same as candidate 1. Same as candidate 1.
Generally some combination of:
on-line, batch, deferred batch,
remote batch, and real-time.
Output Devices and (2) HP4MV department (2) HP4MV department Same as candidate 2.
Implications laser printers laser printers.
A description of output devices (2) HP5SI LAN laser (2) HP5SI LAN laser
that would be used, special output printers printers
requirements, (e.g., network, (1) PRINTRONIX bar-
preprinted forms, etc.), and output code printer (includes
considerations (e.g., timing software & drivers)
constratints)
Web pages must be
designed to VGA
resolution. All internal
screens will be designed
for SVGA resolution.

(Continued)
 Sample Candidate Systems Matrix (concluded)

Characteristics Candidate 1 Candidate 2 Candidate 3

Input devices and Implications Keyboard & mouse. Apple “Quick Take” Same as candidate 2.
A description of input methods to digital camera and
be used, input devices (e.g., software
keyboard, mouse, etc.), special (15) PSC Quickscan laser
input requirements (e.g., new or bar-code scanners
revised forms from which data (1) HP Scanjet 4C Flatbed
would be input), and input Scanner
considerations (e.g., timing of Keyboard and mouse
actual inputs).
Storage Devices and MS SQL Server DBMS Same as candidate 1. Same as candidate 1.
Implications with 1000GB arrayed
Brief description of what data capability.
would be stored, what data would
be accessed from existing stores,
what storage media would be
used, how much storage capacity
would be needed, and how data
would be organized.
Feasibility Analysis Matrix

Feasibility Analysis Matrix – a tool used to rank

candidate systems.

Candidate 1 Name Candidate 2 Name Candidate 3 Name

Description
Operational
Feasibility
Technical
Feasibility
Schedule
Feasibility
Economic
Feasibility
Ranking
 Sample Feasibility Analysis Matrix
Feasibility Criteria Wt. Candidate 1 Candidate 2 Candidate 3
Operational Feasibility 30% Only supports Member Fully supports user required Same as candidate 2.
Services requirements and functionality.
Functionality. A description of to what current business processes
degree the candidate would benefit the would have to be modified to
organization and how well the system take advantage of software
would work. functionality.
Political. A description of how well
received this solution would be from
both user management, user, and
organization perspective. Score: 60 Score: 100 Score: 100
Technical Feaasibility 30% Current production release of Although current technical Although current technical
Platinum Plus package is staff has only Powerbuilder staff is comfortable with
Technology. An assessment of the version 1.0 and has only been experience, the senior analysts Powerbuilder, management is
maturity, availability (or ability to on the market for 6 weeks. who saw the MS Visual Basic concerned with recent
acquire), and desirability of the Maturity of product is a risk demonstration and presentation acquisition of Powerbuilder by
computer technology needed to support and company charges an have agreed the transition will Sybase Inc.
this candidate. additional monthly fee for be simple and finding MS SQL Server is a current
technical support. experienced VB programmers company standard and
Expertise. An assessment of the will be easier than finding competes with SYBASE in the
technical expertise needed to develop, Required to hire or train C++ Powerbuilder programmers and client/server DBMS market.
operate, and maintain the candidate expertise to perform at a much cheaper cost. Because of this we have no
system. modifications for integration MS Visual Basic is a mature guarantee future versions of
requirements. technology based on version Powerbuilder will “play well”
number. with out current SQL Server.
Score: 50 Score: 95 Score: 60
Economic Feasibility 30%
Cost to develop: Approximately $350,000. Approximately $418,040. Approximately $400.000.
Payback period (discounted): Approximately 4.5 years. Approximately 3.5 years. Approximately 3.3 years.
Net present value: Approximately $210,000. Approximately $306,748. Approximately $325,500.
Detailed calculations: See Attachment A. See Attachment A. See Attachment A.
Score: 60 Score: 85 Score: 90
Schedule Feasibility 10% Less than 3 months. 9-12 months. 9-12 months.
An assessment of how long the solution
will take to design and implement. Score: 95 Score: 80 Score: 85
Ranking 100% 60.5 92 85
The System Proposal

System proposal – a report or presentation of a

recommended solution.
– Usually formal written report or oral presentation
– Intended for system owners and users
Formats for Written Reports

Factual Format Administrative Format

I. Introduction I. Introduction

II. Methods and procedures II. Conclusions and

recommendations
III. Facts and details III. Summary and discussion of
facts and details
IV. Discussion and analysis of facts IV. Methods and procedures
and details
V. Recommendations V. Final conclusion

VI. Conclusion VI. Appendixes with facts and

details
Organization of the Written Report

• Primary elements present the actual information that

the report is intended to convey.
• Secondary elements package the report so the reader
can easily identify the report and its primary elements.
• Formats:
– The factual format is traditional and best suited to
readers who are interested in facts and details as well
as conclusions.
– The administrative format is a modern, result-
oriented format preferred by managers and executives.
Secondary Elements for a Written report

Letter of transmittal

Title page

Table of contents

List of figures, illustrations, and tables

Abstract or executive summary

(The primary elements--the body of the report, in either the factual

or administrative format--are presented in this portion of the report.)

Appendices
Steps in Writing a Report
System Proposal – formal presentations

Formal presentation – a special meeting used to sell

new ideas and gain approval for new systems. They may
also be used for any of these purposes:
– Sell new system
– Sell new ideas
– Head off criticism
– Address concerns
– Verify conclusions
– Clarify facts
– Report progress
Typical Outline and Time Allocation for an Oral Presentation

I. Introduction (one-sixth of total time available)

A. Problem statement
B. Work completed to date
II. Part of the presentation (two-thirds of total time available)
A. Summary of existing problems and limitations
B. Summary description of the proposed system
C. Feasibility analysis
D. Proposed schedule to complete project
III. Questions and concerns from the audience (time here is not to be
included in the time allotted for presentation and conclusion; it is
determined by those asking the questions and voicing their concerns)
IV. Conclusion (one-sixth of total time available)
A. Summary of proposal
B. Call to action (request for whatever authority you require to
continue systems development)
Guidelines for Visual Aids

Source: Copyright Keith

London