5. Planning Phase System Analysis And Design Program: BSCS II (Advent Semester – 2014) Lecturer: Rebecca Asiimwe

Introduction The planning phase is composed of two major activities: 1.Project Initialization 2.Project Management 2

Introduction New systems start from some business need or opportunity. An opportunity to create business value from using information technology initiates a project (A project is a set of activities with a starting and ending point meant to create a system that brings value to a business) Proposed project is described through a system request and submitted to an approval committee. Feasibility analysis helps determine whether or not to proceed with the IS Project. 3

Introduction Projects are selected by weighing the risks and returns and looking at the business needs. The project sponsor is a key person who identifies the business need and the business value to be gained from using information technology. Is the primary point of contact of the system The Approval committee reviews system requests throughout the organization and selects projects for the benefit of the business 4

How do Projects Begin? Business needs should drive projects Project sponsor recognizes business need for new system and desires to see it implemented Business need determines the systems functionality Project business value should be clear 5

Project Initialization –Someone/ business unit in the organization identifies a business need to build a system –Through Pain e.g drop in sales, recommendation from external consults(audit) –Realizing the opportunity of IT and emerging technologies to gain competitive advantage –Directive 6

System Request It’s a document that describes the business reasons for building a system and the systems expected value Project sponsor completes this form as part of the project selection process The System Request has 5 key elements; –Project sponsor –Business need –Business requirement –Business value –Special issues 7

System Request Form Project Sponsor; Initiates the project and serves as the primary contact for the project Business need; business related reason for initiating the system. Reason prompting the project Business requirement; the business capability that the system will need to have Business value; the benefits that the system will create for the organization Special issues or constraints; caters for other issues that should be considered when assessing the project. 8

System Request Example Project sponsor- Vice President marketing Business need- reach new customers and improve service to existing customers Business requirements- provide web based shopping capability Business Value-$750,000 in new customer sales;$1.8Min existing customer sales Special issues- system must be operational by holiday shopping season 9

System Request The system request is then reviewed by the committee and assessed based on what is provided If accepted that it’s worth undertaking, then additional investigation is done- feasibility analysis Refer to figuer 3-1: Elements of the system Request form, pp 61 of the SAD book. 10

Feasibility Analysis Feasibility Analysis guides the organization in determining whether to proceed with the project or not. Answers questions like “Can we really build this system/ can we undertake this project given certain circumstances?” Identifies risks associated with the project that must be addressed if the project is approved. Different organizations have their own process and format for feasibility analysis, but most include: –Technical feasibility –Economic feasibility –Operational feasibility 11

Why Feasibility Study? Objectives –To find out if a system development project can be done: Is it possible? Is it justified? –To suggest possible alternative solutions –To provide management with enough information to know: –Whether the project can be done –Whether the final product will benefit its intended users –What the alternatives are & –Whether there is a preferred alternative 12

Why Feasibility Study? A management- oriented activity –After a feasibility study, management makes a “go or no go” decision –Need to examine the problem in the context of broader business strategy 13

Technical Feasibility- Can we build it? Technical Feasibility is a technical risk analysis that strives to answer the question: “Can we build it?” Familiarity with the technology- –Is the proposed technology practical/realistic? –Do we have necessary technical expertise? –Is technology mature enough for use and available? 14

Project size- larger projects present more risks- they are more complicated to manage and there’s a greater chance that some requirements may be overlooked or misunderstood, integration with other systems also brings in complexity or may hamper operation of existing systems. So given the complexity, can the system still be built? What alternatives are there? Compatibility of new system with technology that already exists in the organization should be considered. 15 Technical Feasibility- Can we build it?

Economic Feasibility- Should we build it? Also called a cost-benefit analysis – An analysis and decision of whether solving the problem is worthwhile is done. Identifies financial risks associated with the project Attempts to answer the question: “should we build the system?” Cost-benefits of each alternative solution can be calculated. 16

Economic Feasibility- Should we build it? Cost-benefit analysis answers questions like: –Is the project justified? –What is the minimal cost to attain a certain system? –How soon will the benefits accrue/accumulate? –Which alternative offers the best return on Investment? 17

Economic Feasibility Involves the following : –Identify costs and benefits –Assign values to costs and benefits –Determine cash flow –Assess financial viability Net present value(NPV) Return on Investment ( ROI) Break even point (BEP) 18

1. Identify Costs and Benefits Costs –Development costs- tangible expenses incurred during construction of the system like salaries for project team, HW, SW expenses, training, equipment, consultation fees etc. –Operational costs- tangible costs required to operate the system like salaries of operations staff, upgrades, SW licensing, etc. Benefits –Tangible- increased sales, reduction in staff and inventory –Intangible- increased market share, and brand recognition, improved customer service, etc 19

2. Assign Values to Costs and Benefits Assign values (dollar or UGX) to the costs and benefits. Work with business users and IT Professionals to create numbers for each of the costs and benefits. Best way to do it is to rely on people who have the best understanding of them. If Intangible cannot be quantified, list it as supporting material. 20

3. Determine Cash Flow Project what the costs and benefits will be over a period of time, usually 3 to 5 years. The problem with cash flow is that it does not consider the time value of money. A dollar today is not worth a dollar tomorrow, thus addition of other calculations. 21

4. Assess Financial Viability Determine Net Present Value (NPV) PV determines what the value of the future costs and benefits are, if measured by today's standard. NPV=∑ PV( future cash inflows) - ∑PV( future cash outflows) PV= Cash flow amount (1+ interest rate) n Where Interest rate is Rate of growth/return and n is number of years in future If NPV>=0, Project is ok (making profits) otherwise it is not ok (accrues losses) 22

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Determine Return on Investment ROI is a calculation that is used to measure the amount of money an organization receives in return for money it spends. ROI= NPV ∑PV( Cash outflows) The higher the percentage the better the ROI 24

Determine Break Even Point This is when the returns will match the amount invested in the project BEP = Yearly NPV – Cumulative NPV Yearly NPV The longer it takes to break even, the higher the project risks. 25

Operational Feasibility If we build it,will they come? Strategic alignment- Project goals with business objectives Conduct stakeholder analysis How do end-users and managers feel about it (the system)? Does management support it? How do end users feel about it? Who may resist the new system and how do you over come that resistance? 26

Project Selection After feasibility analysis is complete, the analysis is submitted back to the approval committee along with the revised system request The approval committee will then select a project, once it approves. A number of criteria are used, some of which include; –Quality of product –Ease of use –Vendor support –Cost of Maintenance –Load on system 27

Project Management Project management begins in the planning phase and continues through out the SDLC. Project manager estimates the size of the project and identifies the tasks that need to be performed. The project manager then staffs the project and puts several staff/personnel in place to coordinate project activities. The activities produce important project management deliverables, including a work plan, a staffing plan etc. 28

Q & A 29