Systems Analysis I Feasibility

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Systems Analysis IFeasibility Project
Management

• ISYS 200
• Glenn Booker

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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

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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

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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

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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

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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?

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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

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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

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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?

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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

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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.

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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

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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

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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

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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)

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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

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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

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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)

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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

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Gantt Chart Excerpt
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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

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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)

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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

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Sample PERT Diagram
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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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