Z556 Systems Analysis & Design Session 11 ILS Z556 1

Announcement Teamwork Presentation next week ILS Z556 2

Evaluating Alternative Designs Provide clients with some alternatives: Expensive …. Inexpensive Short-term …. Long-term

Evaluating Alternative Designs Consistent with Strategic Plan Available Funds Schedule and Resources Technology Required Organizational Culture

Cost-Benefit Analysis 1. Identify the problem clearly 2. Explicitly define the set of objectives to be accomplished 3. Generate alternatives that satisfy the stated objectives 4. Identify clearly the constraints (e.g., technological, political, legal, social, financial ILS Z556 5

Cost-Benefit Analysis 5. Determine and list the benefits and costs associated with each alternative 6. Calculate the benefit/cost ratios and other indicators (e.g., present value, payback period) for each alternatives 7. Prepare the final report, comparing the results ILS Z556 6

Cost-Benefit Analysis TitleBudget (Million) Domestic BO (M) World BO (M) The Lord of the Rings: The fellowship of the ring $109$313.8$860.7 The Two Towers $94$340.5$920.5 The Return of the king $94$377$ ILS Z

Cost-Benefit Analysis TitleBudget (Million) Domestic BO (M) World BO (M) The Lord of the Rings: The fellowship of the ring $109$313.8$860.7 The Two Towers $94$340.5$920.5 The Return of the king $94$377$ Star Wars $11$460.9$797.9 ILS Z

Shortcomings of the B/C Methodology Doesn’t identify the scale of the projects (ratio only) Do not assess unquantifiable items in financial terms Introduce biases in the approaches to a problem ILS Z556 9

Cost-Effectiveness Effectiveness: Value Worth Benefit Utility Gain Performance Establish criteria & use weight (see Shtub, et al., 1994, Figure 3-3) ILS Z556 10

Selecting Alternatives (Satzinger, et al., 2009) Identifying criteria: General requirements (Fig. 8-7, p. 308) Functional requirements (Fig. 8-8, p. 309) Technical requirements (Fig. 8-9, p. 310) ILS Z556 11

Requirements Weight (1-5) Option #1Option #2 RawExtendedRawExtendedRawExtended Requirements as determined by client or thru analysis Importance of requirement 1= low, 5= high Raw Score = How well option meets requirement. 0-not at all, 1-partially, 2-fully Extended = Weight X Raw score Evaluating Alternative Designs

Requirements Weight (1-5) Option #1Option #2 RawExtendedRawExtendedRawExtended Total Staff Comfort External Support Quick Release Expandable Evaluating Alternative Designs

Positives Objective – Surprise Results Easy to read & understand Can be shared with client Modifiable based on client input Negatives Subjective weighting Must know all requirements Lengthy process if one solution is obvious ILS Z556 14

Risk-payoff Analysis (Yen & Davis, 1999) Area 3: advance immediately Area 4: do nothing until resources or the expected payoff increases Area 1: wait until additional analysis reduces the risk Area 2: stop immediately ILS Z payoffs risks Area 1 high payoff high risk Area 3 high payoff low risk Area 2 low payoff high risk Area 4 low payoff low risk

Risk-Benefit Analysis (Shtub, et al., 1994, p. 134) Formulations Problem (or risk) definition Value system design System synthesis Analysis Forecast failures Optimization and refinement of alternatives Interpretation Decision making Planning for action Implementation ILS Z556 16

Analyzing Forces: Force Field Analysis Is a method used to get a whole view of all the forces for or against a plan, so that Helps decision making which takes into account all interests. Is a specialized method of weighing pros and cons Where a plan has been decided on, FFA allows you to look at all the forces for or against the plan. It helps you to plan or reduce the impact of the opposing forces, and strengthen and reinforce the supporting forces. ILS Z556 17

Force Field Analysis ILS Z forces opposing forces supporting Project Implementation

Analyzing Forces List all forces for change in one column, and all forces against change in another column. Assign a score to each force, from 1 (weak) to 5 (strong). Draw a diagram showing the forces for and against, and the size of the forces ILS Z556 19

Force Field Analysis ILS Z556 20

Information available more quickly Accuracy and consistency of information Free up people’s time to do more interesting tasks Cost of technology Staff dislike automated processes Disruption during change Complicate d to implement TOTAL: 13 TOTAL: 12 Plan: Upgrade company wide information gathering process from manual to automated Forces for Change Forces against Change ILS Z556 21

Forces for Change Forces against Change Information available more quickly Accuracy and consistency of information Free up people’s time to do more interesting tasks Cost of technology Staff dislike automated processes Disruption during change Complicate d to implement TOTAL: 13 TOTAL: 8 Plan: Upgrade company wide information gathering process from manual to automated ILS Z556 22

Eliminates re- keying errors Online documentation eliminates paper Reduces need for clerical staff Managers unhappy with “clerical work Cost of eliminating clerical staff Start-up costs TOTAL: 10 TOTAL: 8 INITIATIVE Implement a Self-Service HR System Enables employees to self-manage their personal information, such as vacation time, payroll deductions, benefit participation, etc Forces for Change Forces against Change Faster execution of administrative work 1 Increases control/auditin g capabilities 1 Requires training of more people 2 Some activity costs shift to high-paid staff 2 Relative Force Strength ILS Z556 23

Eliminates re- keying errors Online documentatio n eliminates paper Reduces need for clerical staff Managers unhappy with “clerical work Cost of eliminating clerical staff Start-up costs TOTAL: 15 TOTAL: 7 INITIATIVE Implement a Self-Service HR System Enables employees to self-manage their personal information, such as vacation time, payroll deductions, benefit participation, etc Forces for Change Forces against Change Faster execution of administrative work 3 Increases control/auditing capabilities 2 Requires training of more people 1 Some activity costs shift to high-paid staff 2 Relative Force Strength ILS Z556 24

Return on Investment (RoI) 1.Define Unit of Measure Usually money, but could be other things such as time, energy usage, etc. 2. Itemize tangible costs One-time costs (ie. equipment, moving, hardware) On-going costs (ie. wages, taxes, utilities, rent) 3. Itemize intangible costs Time and energy to complete project, can’t actually be bought ie. cost of time on project, lost business during implantation 4. Projected benefits Educated estimates ie. Money made, time saved, effort saved. 5. Compare Costs to benefits 6. Calculate Payback Amount of time to recoup investment

Return on Investment (RoI) Lemonade Example

Return on Investment (RoI) On-going Benefits On-going CostsProfit $130/day - $60/day = $70/day Investiment Costs ProfitPayback Time $355 ÷ $70/day = 5 days

Time