1. CHAPTER 5: Identifying and Selecting Systems Development Projects
MSIS 5653 Advanced Systems Development Dursun Delen, Ph.D. Department of Management Oklahoma State University
CHAPTER 5:
Identifying and Selecting Systems Development Projects
1.1

2. Learning Objectives
Describe the project identification and selection process
Describe the corporate strategic planning and information systems planning process
Explain the relationship between corporate strategic planning and information systems planning
Describe how information systems planning can be used to assist in identifying and selecting systems development projects
Describe the three classes of Internet electronic commerce applications:
Internet, Intranets and Extranets
5.2

3. Project Identification and Selection in SDLC
5.3

4. Identifying and Selecting IS Development Projects
What derives IS development projects?
Who identifies the potential development projects?
5.4

5. Identifying and Selecting IS Development Projects
Top-Down Identification
Senior management or steering committee
Focus is on global needs of organization
Bottom-up Identification
Business unit or IS group
Don’t reflect overall goals of the organization
5.5

6. Classifying and Ranking IS Development Projects
Performed by top management, steering committee, business units or IS development group
5.6

7. Classifying and Ranking IS Development Projects
Organizational Value Chain

8. Selecting IS Development Projects
Process of considering short and long-term projects
Projects most likely to achieve business objectives are selected
5.8

9. Deliverables and Outcomes
Incremental commitment?
Knowledge of overall organizational business strategy…
Improves project selection and identification process
Provides sound guidance throughout the SDLC
5.9

10. Corporate and Information Systems Planning
Traditional Project Identification and Selection
Solves isolated problems
Focuses on business processes
Does not allow for organizational change
Planning-Based Approach to Project Identification and Selection
Focuses on present and future information needs
Information needs change slower than business processes
Improperly planned projects would result in systems that cannot be shared across an organization.
5.10

11. Corporate and Information Systems Planning
Corporate Strategic Planning
Process of developing and refining models of the current and future enterprise as well as a transition strategy
Planning results in several outcomes
Mission Statement
Objective Statement
Competitive Strategy
5.11

12. Corporate and Information Systems Planning
Corporate Strategic Planning
Mission Statement
A statement that makes it clear what business a company is in
Objective Statement
A series of statements that express an organization’s qualitative and quantitative goals for reaching a desired future position
Objectives are critical success factors
Competitive Strategy
The method by which an organization attempts to achieve its mission and objectives
5.12

13. Corporate Strategic Planning

14. Information Systems Planning (ISP)
An orderly means of assessing the information needs of an organization and defining the systems and technologies that will best satisfy those needs
5.14

15. Information Systems Planning
Step 1: Describing the Current Situation
Top-down Planning
Generic methodology that attempts to gain a broad understanding of the information system needs of the entire organization
Bottom-up Planning
Generic methodology that identifies and defines IS development projects based upon solving operational business problems or taking advantage of some business opportunities
5.15

16. Information Systems Planning
Step 1: Describing the Current Situation (Cont.)
Planning team is chartered to model existing situation
Identification of Organizational:
Locations
Units
Functions
Processes
Data
Information Systems
5.16

17. Information Systems Planning
Step 1: Describing the Current Situation (Cont.)
Matrices are developed to cross-reference units
Location-to-Function
Location-to-Unit
Unit-to-Function
Function-to-Objective
Function-to-Process
Function-to-Data Entity
Process-to-Data Entity
Process-to-Information System
Data Entity-to-Information System
Information System-to-Objective
5.17

18. Information Systems Planning
Step 1: Describing the Current Situation (Cont.)
Analysis of Matrices: Affinity clustering
Data Entity-to-Function matrix
5.18

19. Information Systems Planning
Step 2: Describing the Target Situation
Update list of organizational locations, units, functions, etc. to reflect desired locations, units, functions, etc.
Matrices are updated to reflect future states
Planners focus on differences between current lists and matrices and future lists and matrices
5.19

20. Corporate and Information Systems Planning
Step 3: Developing a Transition Strategy
Broad, comprehensive document that looks at both short and long-term organizational development needs
Consists of a series of projects
5.20

21. Electronic Commerce Applications
Development process for Internet projects is no different than other projects
Electronic Commerce (e-Commerce) vs Electronic Business (e-Business)
Internet based communication designed to support business activities
Means to execute business transactions without the traditional paper-based systems
Includes EDI, , electronic publishing, electronic bulletin boards, shared data bases, etc.
Internet-based retailing (e.g., Amazon.com)
Catalog shopping vs. Web-based retailing
B-to-C vs. B-to-B
5.21

22. Internet Development Internet Intranet Extranet
Worldwide network of networks used for electronic commerce
Intranet
Internet-based communication to support business activities within a single organization
Extranet
Internet-based communication to support business-to-business activities
5.22

23. Internet Development Internet vs. Intranet/Extranet Apps
Intranet/Extranet – Developer knows how application will be run and used
Internet – Developer faces various unknowns
EDI vs. Web-based Transaction Processing
5.23

24. Summary Project Identification and Selection
Identifying Potential Development Projects
Classifying and Ranking Projects
Selecting Projects for Development
Corporate strategic planning
Process of identifying the mission, objectives and strategies of an organization
Information Systems Planning
Orderly means for assessing the information needs of an organization and defining the systems and databases that will best satisfy those needs
Electronic Commerce
Internet, Intranets, Extranets, and EDI
5.24

25. CHAPTER 6: Initiating and Planning Systems Development Projects
2.25

26. Learning Objectives
Describe steps involved in the project initiation and planning process
Explain the need for and the contents of a Statement of Work and Baseline Project Plan
List and describe various methods for accessing project feasibility
Describe the differences between intangible and tangible costs and benefits and between recurring and one-time costs and benefits
Detail various methods of cost/benefit analysis
Describe the activities and participant roles within a structured walkthrough
6.26

27. Project Initiation and Planning in SDLC
5.27

28. Initiating and Planning System Development Projects
Project Initiation
Establishment of project team
Development of relationship with customer
Project Initiation Plan
Establishment of Management Procedures
Establishment of Project Workbook and Project Management Environment
Project Planning
Defining clear, discrete activities and the work needed to complete each activity
6.28

29. Initiating and Planning System Development Projects
Deliverables and Outcomes
Baseline Project Plan (BPP)
Scope
Benefits
Costs
Risks
Resources
Statement of Work (SOW)
Describes deliverables
Outlines work needed to be performed
Prepared for the customer
6.29

30. PVF Statement of Work

31. Assessing Project Feasibility
Six Categories
Economic
Technical
Operational
Schedule
Legal and contractual
Political
6.31

32. Assessing Economic Feasibility
Cost – Benefit Analysis
Determine Benefits
Tangible Benefits
Can be measured easily
Examples
Cost reduction and avoidance
Error reduction
Increased flexibility
Increased speed of activity
Improved management planning and control
Opening new markets and increasing sales opportunities
6.32

33. Assessing Economic Feasibility
Determine Benefits (Cont.)
Intangible Benefits
Cannot be measured easily
Examples
Increased employee morale
Competitive necessity
More timely information
Promotion of organizational learning and understanding
6.33

34. Assessing Economic Feasibility
Determine Costs
Tangible Costs
Can easily be measured in dollars
Example: Hardware
Intangible Costs
Cannot be easily measured in dollars
Examples:
Loss of customer goodwill
Loss of employee morale
6.34

35. Assessing Economic Feasibility
Determine Costs (Cont.)
One-Time Costs
Associated with project startup, initiation and development
Includes
System Development
New hardware and software purchases
User training
Site preparation
Data or system conversion
6.35

36. Assessing Economic Feasibility
Determine Costs (Cont.)
Recurring Costs
Associated with ongoing use of the system
Includes:
Application software maintenance
Incremental data storage expense
New software and hardware releases
Consumable supplies
Incremental communications
6.36

37. Recurring and One-time Costs at PVF

38. Time Value of Money (TVM)
The method of comparing present cash flow to future expected returns
Discount rate: The rate of return used to compute the present value and future cash flows
Present Value Calculations:
PVn = Y * [ 1/(1 + i)n]
Where
PV: Present value of future cash flow
Y: Future cash flow
n: Number of years from present time
i: Discount rate

39. TVM Calculations - Example
What is the present value of three yearly payments of $1500 each for the next three consecutive years?
Time
| | | |
Cash Flow $ $ $1500
i = 10%
PV1 = 1500 * [ 1/( )1] = 1500 * =
PV2 = 1500 * [ 1/( )2] = 1500 * =
PV3 = 1500 * [ 1/( )3] = 1500 * =
NPV = PV1 + PV2 + PV3 = $

40. Cost Benefit Calculations for PVF
Net Present Value
NPV is the current value of all costs and benefits associated with the project
Return on Investment
ROI is the ratio of the net benefits divided by total cost of the project
Break-Even Analysis
BEA is method used to calculate the amount of time required to recover the project cost.

41. Assessing Technical Feasibility
Assessment of the development organization’s ability to construct the proposed system
Project risk can be assessed based upon:
6.41

42. Assessing Technical Feasibility
Effects of degree of project structure, project size, and familiarity with the application area on project implementation risk
6.42

43. Assessing Other Project Feasibility Concerns
Operational Feasibility
Assessment of how a proposed system solves business problems or takes advantage of opportunities
Schedule Feasibility
Assessment of time frame and project completion dates with respect to organization constraints
Legal and Contractual Feasibility
Assessment of legal and contractual ramifications of the new information system
Political Feasibility
Assessment of key stakeholders in the organization’s view toward proposed system
6.43

44. Building the Baseline Project Plan
Objectives
Assures that the customer and the development group have a complete understanding of the proposed system and the requirements
Provides sponsoring organization with a clear idea of scope, costs, benefits and duration of the project
Four Sections
Introduction
System Description
Feasibility Assessment
Management Issues
6.44

45. Baseline Project Plan Report

46. Building the Baseline Project Plan
Introduction
Brief overview
Project scope defined
Units affected
Who inside and outside the organization would be involved
Interaction with other systems
Range of system capabilities
Recommended course of action
6.46

47. Building the Baseline Project Plan
System Description
Outline of possible alternative solutions
Description of the selected solution in a narrative format
Feasibility Assessment
Project costs and benefits
Technical, operational, legal, contractual and political assessments
Project schedule, timeline and resource analysis
6.47

48. Building the Baseline Project Plan
Management Issues
Outlines concerns that management may have about the project
Team composition
Communication plan
Project standards and procedures
6.48

49. Reviewing the Baseline Project Plan
Objectives
Assure conformity to organizational standards
All parties agree to continue with the project
Walkthrough
Peer group review
Participants
Coordinator
Presenter
User
Secretary
Standards Bearer
Maintenance Oracle
6.49

50. Reviewing the Baseline Project Plan
Walkthrough (continued)
Assignment of coordinator
Assignment of individuals to roles using the walkthrough review form
Presentation
Individuals are polled for their opinions (good/minor/major revision)
Walkthrough Review Form
6.50

51. Reviewing the Baseline Project Plan
Walkthrough (continued)
Walkthrough Action List

52. Summary Project Initiation Baseline Project Plan (BPP)
Created during project initiation and planning
Statement of Work (SOW)
Describes what project will deliver
Lists all work to be performed
Project Feasibility
Benefits
Tangible vs. Intangible
Costs
One-time vs. Recurring
6.52