Systems Analysis ITEC 3155 Feasibility Analysis Systems Analysis
Systems Analysis – ITEC 3155 Feasibility Analysis Systems Analysis and Design in a Changing World, 4 th Edition 3
3 What is Feasibility Analysis? u Feasibility l A measure of how beneficial or practical the development of an information systems will be to an organization. u Feasibility Analysis l The process by which feasibility is measured. l The goal of feasibility analysis: u To enable the organization to determine whether or no to proceed with a project u To identify any important risks associated with the project Systems Analysis and Design in a Changing World, 4 th Edition 2
3 Confirming Project Feasibility u Risk management u Economic feasibility l Cost/benefit analysis l Sources of funds (cash flow, long-term capital) u Organizational u Technological and cultural feasibility u Schedule feasibility u Resource feasibility Systems Analysis and Design in a Changing World, 4 th Edition 3
3 Risk Management Systems Analysis and Design in a Changing World, 4 th Edition 4
3 Economic Feasibility u An economic feasibility analysis (or cost-benefit analysis) should be performed to identify the financial risk associated with the project l Estimate project development costs l Estimate operational costs after project l Estimate financial benefits based on annual savings and increased revenues l Calculate using table of costs and benefits u Uses net present value (NPV), payback period, return on investment (ROI) techniques Systems Analysis and Design in a Changing World, 4 th Edition 5
Supporting Detail for Salaries and Wages for RMO (Figure 3 -16) Systems Analysis and Design in a Changing World, 4 th Edition 3 6
Summary of Development Costs for RMO 3 (Figure 3 -17) Systems Analysis and Design in a Changing World, 4 th Edition 7
Summary of Annual Operating Costs for RMO (Figure 3 -18) Systems Analysis and Design in a Changing World, 4 th Edition 3 8
3 Sample Benefits for RMO (Figure 3 -19) Systems Analysis and Design in a Changing World, 4 th Edition 9
3 RMO Cost Benefit Analysis (Figure 3 -20) Systems Analysis and Design in a Changing World, 4 th Edition 10
3 Intangibles in Economic Feasibility u Intangible benefits cannot be measured in dollars l Increased levels of service l Customer satisfaction l Survival l Need to develop in-house expertise u Intangible costs cannot be measured in dollars l Reduced employee morale l Lost productivity l Lost customers or sales Systems Analysis and Design in a Changing World, 4 th Edition 11
3 Organizational and Cultural Feasibility u Each l company has own culture New system must fit into culture u Evaluate related issues for potential risks l Low level of computer competency l Computer phobia l Perceived loss of control l Shift in power l Fear of job change or employment loss l Reversal of established work procedures Systems Analysis and Design in a Changing World, 4 th Edition 12
3 Technological Feasibility u The goal l to assess the extent to which the system can be successfully designed, developed and installed u Does system stretch state-of-the-art technology? u Does in-house expertise presently exist for development? u Does an outside vendor need to be involved? u Solutions include l Training or hiring more experienced employees l Hiring consultants l Changing scope and project approach Systems Analysis and Design in a Changing World, 4 th Edition 13
3 Schedule Feasibility u Estimates needed without complete information u Management u Project deadlines may not be realistic managers l Drive realistic assumptions and estimates l Recommend completion date flexibility l Assign interim milestones to periodically reassess completion dates l Involve experienced personnel l Manage proper allocation of resources Systems Analysis and Design in a Changing World, 4 th Edition 14
3 Resource Feasibility u Team member availability u Team skill levels u Computers, equipment, and supplies u Support staff time and availability u Physical facilities Systems Analysis and Design in a Changing World, 4 th Edition 15
3 Summary u Feasibility l aims to determine whether an organization should proceed with a project; identify important risks. u Feasibility l analysis has many facets technical, economic, organizational/cultural, schedule, resource. Systems Analysis and Design in a Changing World, 4 th Edition 16
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