Chapter 2 Analyzing Business Case Phase 1 Systems

Chapter 2: Analyzing Business Case Phase 1: Systems Planning ● Systems planning is the first of five phases in the systems development life cycle (SDLC) ● In this phase, you will learn how IT projects get started and how a systems analyst evaluates a proposed project and determines its feasibility 1

Chapter Objectives ● Learn 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 ● Explain the purpose of a mission statement ● Describe the SDLC, and explain how it serves as a framework for systems development and business modeling 2

Chapter Objectives ● List the reasons for information systems projects and the factors that affect such projects ● 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 3

Chapter Objectives ● Describe the steps in a preliminary investigation and the end product of an investigation 4

Introduction ● The term business case refers to the reasons, or justification, for a proposal ● System development typically starts with a system request (how requests originate, and evaluated), followed by a preliminary investigation(feasibility study) and how to conduct a report to mgr which concludes the planning phrase. 5

Strategic Planning – A framework for IT development ● Strategic Planning Overview – SWOT • Examines a company’s Strengths, Weaknesses, Opportunities, and Threats • A SWOT analysis benefits planning process by identify Figure 2 -2 technical, human and financial resources. 6

Strategic Planning ● From Strategic Plans to Business Results – A company develops a mission statement based on the firm’s purpose, vision, and values Purpose, vision, and values shape its mission statement, which in turn leads to goals, objectives, and Figure 2 -3 business 7

Strategic Planning ● A mission statement briefly states the company’s overall purpose, products, services, and values. Figure 2 -4 8

Strategic Planning ● Based on a mission statement, a company must identify a set of goals (long term) that will accomplish the mission. To achieve goals, objectives (short term) must be defined too. Figure 2 -4 9

Strategic Planning A Business Example Popkin. com (p. 51) Business Enterprise Direction Model: analyze strategy, covers future vision, ID key business policy, contains following components: mission statement; Business objective: specific measurement for long term results; Specific strategies for achieve objectives; Critical Success Factors (CSFs) to fulfill its mission; Critical Business Issues (CBIs) that must be dealt with; Balanced Scorecard- a short summary of most Figure 2 -5 10 critical measures;

Information Systems Projects: reasons, internal/external factors affecting sys projects ● Starting point of a project: Systems request for IT support (reasons) Figure 2 -6: 5 reasons 11

Information Systems Projects Top Managers Strategic Plan Technology Factors that affect system projects: Suppliers Internal: strategic plan, top mgr; inside User Requests user requests; IT sys change; existing Customers sys. External: technology; suppliers; customers; competitors, economy, and Competitors Information government. Technology Department Existing Systems Government The Economy Figure 2 -8 12

Information Systems Projects ● Project Management Tools – All IT projects must be managed and controlled – Begins with a systems request, and continues until the project is completed or terminated Figure 2 -11 13

Evaluation of Systems Requests ● Systems Requests Forms – Many organizations use a special form for systems requests – A properly designed form streamlines the request process and ensures consistency – Must be easy to understand include clear instructions – Should include enough space for all required information and should indicate what supporting documents are needed 14

Evaluation of Systems Requests ● Systems Requests Forms (p. 57) Figure 2 -12 15

Evaluation of Systems Requests ● 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 16

Overview of Feasibility study: several tests before further proceed. Four main yardsticks to measure a proposal: operational, technical, economic, schedule 17 Figure 2 -13

Overview of Feasibility ● A systems request must pass several tests, called a feasibility study, to see whether it is worthwhile to proceed further ● Operational Feasibility – A proposed system will be used effectively after it has been developed – Consider questions like: new system reduce workforce? Require training? Require operating change? Legal/ethical? 18

Overview of Feasibility ● Technical Feasibility – Refers to the technical resources needed: Need to upgrade or purchase new HW, SW? New technical expertise? will new system be able to handle future transaction volume and growth? 19

Overview of Feasibility Economic Feasibility –Total cost of ownership (TCO), including ongoing support and maintenance. –Tangible benefits: benefits can be measured in dollars, new scheduling sys that reduce overtime. online package tracking sys that decreases the need for clerical staff –Intangible benefits: advantages that hard to measure in dollars but significant to company. A new Web site that enhances company’s image. A user-friendly sys that improves user satisfaction. 20

Schedule Feasibility Means that a project can be implemented in an acceptable time frame, consider interaction of time and cost Will a speedy schedule pose any risk? Need to appoint a new project mgr? Timetable is strict? More critical, time or user satisfaction? 21

Evaluating Feasibility ● 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 22

Setting Priorities ● Factors that Affect Priority – Will the systems project result in more information or produce better results? How? Are the results measurable? – Will the proposed system reduce costs? Where? When? How much? – Will the system increase revenue for the company? Where? When? How much? 23

Setting Priorities ● Factors that Affect Priority – 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? 24

Setting Priorities ● Factors that Affect Priority – Whenever possible, the analyst should evaluate a proposed project based on tangible costs and benefits that represent actual (or approximate) dollar values 25

Setting Priorities ● 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 26

Preliminary Investigation Overview ● Interaction with Managers and Users Fact-Finding Figure 2 -14 27

Preliminary Investigation Overview ● Planning the 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 28

Preliminary Investigation Overview ● Step 1: Understand the Problem or Opportunity – When you analyze a systems request, you need to determine which departments, users, and business processes are involved 29

Preliminary Investigation Overview ● Fishbone diagram (Ishikawa diagram) 30 Figure 2 -17

Preliminary Investigation Overview ● Step 2: Define the Project Scope and Constraints – Project scope – Project creep – Constraint 31

Preliminary Investigation Overview ● Step 2: Define the Project Scope and Constraints – Means to define the boundaries, or extent, of the project – Being as specific as possible 32

Preliminary Investigation Overview Each constrain has three characteristics Figure 2 -18 33

Preliminary Investigation Overview ● Step 3: Perform Fact-Finding May require long or short time depending on the nature of the investigation. 34

Preliminary Investigation Overview ● Analyze Organization Charts for whom should you interview. 35 Figure 2 -19

Preliminary Investigation Overview ● Step 3: Perform Fact-Finding – Steps for conducting interviews: 1. determine who to interview 2. Establish objectives for interview 3. Prepare interview questions 4. Conduct interview 5. Document interview 6. Evaluate interview Figure 2 -20 36

Preliminary Investigation Overview Alternative Fact-Finding methods: – Review documentation – Observe current sys. in operations – Conduct a user survey 37

Preliminary Investigation Overview ● Step 4: Evaluate Feasibility After analyzing the problem, defining the project scope and constrains, and performing fact-finding, you must: – Evaluate the project’s operational, technical, economic, and schedule feasibility eg. can use financial analysis tools in Part 3 of Toolkit to evaluate economic feasibility 38

Preliminary Investigation Overview ● Step 5: Estimate Project Development Time and Cost, consider issues: – 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? 39

Preliminary Investigation Overview ● Step 5: Estimate Project Development Time and Cost – 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? 40

Preliminary Investigation Overview ● Step 5: Estimate Project Development Time and Cost – How much will it cost to analyze the information gathered and to prepare a report with findings and recommendations? – You should provide an estimate for the overall project, so managers can understand the full cost impact and timetable 41

Preliminary Investigation 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 42

Preliminary Investigation Report: preparing a formal document to mgr. 43 Figure 2 -21

Preliminary Investigation Overview ● Step 6: Present Results and Recommendations to Management: report format: – Introduction: overview of report – Systems request summary: request basis – Findings: results of preliminary investigation – Recommendations for future actions(critical decision making for mgr. ) – Time & cost estimates: total cost of ownership – Expected benefits(tangible and intangible, a timetable when to occur) – Appendix for supporting info. 44

Chapter Summary ● Strategic planning allows a company to examine its purpose, vision, and values and develops a mission statement ● Systems projects are initiated to improve performance, provide more information, reduce costs, strengthen controls, or provide better service ● In the preliminary investigation, the analyst evaluates the sys. request on operation, technical, economic, and schedule standpoint 45

Chapter Summary ● Analysts evaluate systems requests on the basis of their expected costs and benefits ● The steps in the preliminary investigation are to understand the problem or opportunity; define project scope and constrains; finding facts; estimate project’s benefit; estimate time and cost. ● Outcome of planning phase is to produce a report to mgr for recommendations. ● Chapter 2 Complete 46