Review Questions What is the difference between a tangible and an intangible benefits? Tangible benefits are benefits that can be easily quantified like increased sales, reduced expenses, etc. Intangible benefits are benefits that are difficult or impossible to quantify like improved customer goodwill, better employee morale, etc.

Review Questions What are the three popular techniques to assess economic feasibility? Which one is the most preferred by managers today? Payback analysis, return-on-investment, and net present value. Net present value

Review Questions Identify two formats for a written report? Should the length of a written report vary by audience? A written report may be either factual or administrative in format. Both formats contain primary and secondary elements. The higher a person is in an organization, the shorter and more summarized report is appropriate. The lower the person is, the longer and more detailed the report can be

Review Questions Systems analysts tend to generate large written reports. How would you handle a size problem with a technical report? One possibility is to organise a larger report to include sub-reports for different managers. A suggested guideline for restricting the size of report subsections is: To executive-level managers - one or two pages To middle-level managers - three to five pages To supervisory-level managers - less than 10pages To clerk-level personnel - less than 50 pages

Review Questions Operational feasibility is a measure of how well a specific alternative solution will work within the organization. It is measured by two aspects - is the problem worth solving or how well will the solution work (the PIECES framework is useful here) and how do the end-users and management feel about the problem? How is operational feasibility measured?

Review Questions Technical feasibility looks at what is practical and reasonable. Is the proposed technology or solution practical? Do we possess the necessary technology? Do we have the necessary technical expertise? How is technical feasibility measured?

Payback Analysis for a Project YearDiscount Estimated Costs Estimated Benefits 01125, ,50026, ,70034, ,50041, ,30070, ,00080,000

ROI Formulas Lifetime ROI =(estimated lifetime benefits – estimated lifetime costs) / estimated lifetime costs Annual ROI = lifetime ROI / lifetime of the system Annual ROI = 17/5 = 3.4 % per year Lifetime ROI = (169, ,763.20)/143,763.20= 17% Year Discount (12%) CostsTime adjusted cost (cost * discount) Accumulated cost BenefitsTime adjusted benefits (benefit*discount) Accumulated benefits Accumulated life time adjusted cost and benefits (Accum. Benefit - Accum.cost) ,000125, , ,5003, , ,00023, , ,7003, , ,00027, , , ,5003, , ,00029, , , ,3004, , ,00044, , , ,0003, , ,00045, , ,624.80