THE FEASIBILTY STUDY LECTURE-5

FEASIBILITY STUDY The examination of the existing system was completed in Preliminary Survey. In Feasibility Study various possibilities are evaluated in which the existing system can be changed. Here the Objectives and Scope of the system are specified. Objectives of the System Scope of the System Determining Feasibility Determining Economic Feasibility Report to Management Outcomes of Systems Analysis

OBJECTIVES OF THE SYSTEM A successful IS must achieve all its stated objectives. During the preliminary survey, if it is found that objectives are not clearly defined, then these are specified here. While considering each alternative, it is examined whether a specific alternative can be supportive in achievement of objectives or not.

SCOPE OF THE SYSTEM Scope defines the limits or boundaries of the system. Scope definition is necessary so that study team can restrict their analysis to only problem-related factors. Without defining the scope, the energy and resources may get wasted.

DETERMINING FEASIBILITY During Preliminary Survey, various options are identified as the solutions to the problem. The feasibility of these alternative solutions need to be thoroughly evaluated. These alternative solutions are analyzed with respect to following four factors. TECHNICAL FEASIBILTY OPERATING FEASIBILITY TIME FEASIBILTY ECONOMIC FEASIBILTY

TECHNICAL FEASIBILTY It is related to technical aspect of the solution TECHNICAL FEASIBILTY It is related to technical aspect of the solution. If the software and hardware required for the solution is easily available, then it is a technically feasible solution.

OPERATING FEASIBILTY Operating feasibility of a solution shows that it achieves its operational objectives. Operating feasibility can best be determined by user satisfaction. Another important factor is operational performance.

TIME FEASIBILTY Basic yard stick for determining this feasibility is the time allowed by the company. A time feasible solution can be implemented within the specified time. Time is affected by four factors:- Equipment delivery time Software delivery time Training Time Conversion Time

ECONOMIC FEASIBILTY Whether this solution offers financial benefits to the organization? Preliminary calculations are done to determine that the benefits obtained worth the costs.

DETERMINING ECONOMIC FEASIBILITY Economic feasibility is the most important factor for determining the feasibility of an alternative solution. Hence it requires a special and in-depth analysis. The study team compares the projected Costs with projected Benefits. Annual Costs and Onetime costs Annual Benefits

DETERMINING COSTS Expected costs can be projected with some accuracy DETERMINING COSTS Expected costs can be projected with some accuracy. Previous projects estimates can be helpful. Old estimates can be modified on the basis of:- scope, technology, experience, inflation If no relevant previous project is available, then hire a consultant.

DETERMINING BENEFITS Benefits are easily identified in qualitative terms but require to be specified more quantitively for the satisfaction of study team. For this purpose it is tried to relate benefits with three-levels of decision-making activity. Strategic Planning Management Control Operational Control

COMPARING COSTS & BENEFITS Three methods can be used to compare Costs & benefits. Net Cost or Benefit: - Also called cost-benefit analysis. - appropriate for comparing Annual/onetime cost with Annual/onetime benefit - ignores time value of money Return on Investment - a popular measure - Discounted Cash Flow Methods - These methods consider the time value of money. - Includes techniques such as Internal rate of return , net present value , present value index Annual Benefits Annual Costs Onetime Development costs ROI = -

REPORT TO MANAGEMENT At the conclusion of the Feasibility Study, the system study team prepares a report describing its findings. May be smaller or larger in volume. Copies provided to top management, long-range systems planning group and user departments Report form may vary: . Detailed report . Executive Summary and Details

ILLUSTRATION: Contents of a System study Report Describe the Problem, information need, or desired technology. State the objective of the system study. Describe procedures followed in the preliminary survey. Identify the constraints on the problem solution. Discuss the two or three best system alternatives: Identify the solution, its objectives, and its scope. Describe advantages and disadvantages. Summarize financial costs and benefits. State major assumptions. 6. Make a recommendation.

OUTCOMES OF SYSTEMS ANALYSIS Three possible outcomes of System Analysis phase:- Do nothing Modify an Existing system Design a New System