Justifying Information Systems Projects IS 460 Notes by Thomas Hilton

Topics Why Develop Information Systems Cost-Justification Non-cost Justification

Why Develop Information Systems? Information is the intended output Data is the main input Is there a difference? There had better be!

Data: Objective Measures of Traits of Real-World Objects Objective Not subjective Replicable Measures Values Quantitative Qualitative Traits Characteristics Attributes Real-World Objects Entities or Classes Tangible Intangible

Information: Data Aggregated and Placed in a Useful Context Data see prior Aggregation Groups Calculations Manipulations Context Titles Labels Rows Columns Usefulness Decision-Making Judged by User

Information Quality Six Traits Accuracy Timeliness Relevance Verifiability Accessibility Security

Cost-Justification “Is the system worth its cost?” Compare “worth” with “cost” Various Methods ROI Present Value Cost-Benefit Analysis

Conceptually Simple Quantify all Costs Quantify all Benefits Divide Costs by Benefits If C/B Ratio < 1, then Proceed

Cost-Benefit Analysis Complex in Practice System Lifespan Tangibles vs. Intangibles Future Orientation

Costs People Facilities Supplies Data Hardware Software Training Procedures Opportunities Confusion

Benefits Cost Elimination Worker Process Carrying Cost Cost Reduction Efficiency Productivity Maintenance Cost Shifting Inventory Labor Debt Profit Generation Product Service

Cost-Benefit Analysis Table CostsBenefits TangibleIntangibleTangibleIntangible NameQuantityNameQuantityNameQuantityNameQuantity Tangible Cost Subtotal Intangible Cost Subtotal Tangible Benefit Subtotal Intangible Benefit Subtotal Cost SubtotalBenefit Subtotal Cost-Benefit Ratio:

An Example Network Design Proposal

Non-Cost Justifications Cost-benefit analysis is not iron-clad Cost-benefit analysis is not iron-clad Often, detractors can discredit it Often, detractors can discredit it Therefore, it must be accompanied by non-cost justifications Therefore, it must be accompanied by non-cost justifications Organizational cultureOrganizational culture Strategic directionStrategic direction Potential competitive advantagePotential competitive advantage Environmental ImperativesEnvironmental Imperatives Top Management SupportTop Management Support

Now You Do It!