Systems Analysis and Design Chapter 2 (1)

Chapter 2: Analyzing the Business Case

• Systems Analysis and Design 11th Edition, Chapter 2
• This chapter focuses on analyzing the business case for IT projects.

Chapter Objectives

• Explain the concept of a business case and how it affects IT projects
• Describe the strategic planning processes and their importance to the IT team
• Explain the purpose of a mission statement
• Conduct a SWOT analysis and describe the four factors involved (Strengths, Weaknesses, Opportunities, and Threats)
• Explain how the Systems Development Life Cycle (SDLC) serves as a framework for systems development
• List reasons for systems projects and factors affecting them
• Describe systems requests and the role of the systems review committee
• Define operational, technical, economic, and schedule feasibility
• Explain factors affecting project priorities
• Describe steps and outcome of a preliminary investigation

Introduction

• Business case: Justification for a proposal
  • Considers the organization's overall mission, objectives, and IT needs
• Systems development process
  • Systems request, Preliminary investigation, and Management submission of findings

A Framework for IT Systems Development

• Strategic Planning Overview
  • Strategic planning: Process of identifying long-term organizational goals, strategies, and resources
  • Starts with a mission statement
    • Reflects the firm's vision, purpose, and values
    • Critical success factor: High-priority objective
• What is SWOT Analysis?
  • Examines a firm's technical, human, and financial resources
  • Identifies Strengths, Weaknesses, Opportunities, and Threats

A Framework for IT Systems Development (Cont.)

• Strengths, weaknesses, opportunities, and threats (SWOT) analysis example for a corporate patent
  • Strengths: Valuable technology covered by a patent usable in popular products
  • Weaknesses: Patent has a limited life; technology becomes unprotected when the patent expires
  • Opportunities: Technology can be used in more products, licensed to others, or patented more
  • Threats: Competitors may develop similar technology that doesn't infringe on the patent

A Framework for IT Systems Development (Cont.)

• Strategic planning for IT projects
  • Careful planning ensures the project supports overall business strategy and operational needs
  • Project scope is clearly defined and stated
  • Project goals are realistic and tied to statements, assumptions, constraints, factors, and other inputs
  • Planning tools: Microsoft Word, Excel, CASE tools (like Visible Analyst)

A Framework for IT Systems Development (Cont.)

• Strategic planning overview: Planning and requirements identification often initial phases of an enterprise engineering project
  • Development of a comprehensive strategic business plan to meet identified mission and purpose of the organization
    • Linking these statements to other objects in a repository allows tracking of software development
• Visible Analyst CASE tool supports strategic planning and allows a user to enter different types of planning statements
• SWOT categories are supported by the tool.

The Changing Role of the IT Department

• Management and IT departments are closely linked
• Systems development is more team-oriented
• IT department responsible for screening and evaluating systems requests
• Larger firms may use an evaluation team or systems review committee.

What is a Business Case?

• Comprehensive and easy to understand
• Clearly describe the project, justify it, and estimate its financial impact
• Answers questions like:
  • Why are we doing this project?
  • How much will it cost and how long will it take?
  • Are there any risks involved?
  • How will we measure success?
  • What alternatives exist?

Information Systems Projects

• Six main reasons for systems requests: Stronger controls, more support, improved service, better performance, reduced cost, and more information

Information Systems Projects (Cont.)

• Internal and external factors affecting IT projects
  • Internal: Technology, User Requests, IT Department, Existing Systems and Data, Company Finances, Competitors
  • External: Government, Strategic Plan, Top Managers, The Economy, Customers, Suppliers

Evaluation of Systems Requirements

• Systems requests evaluated by a systems review committee or a computer resources committee
• Systems Request Forms
  • Streamline the request process
  • Ensure consistency
  • Easy to understand
  • Include clear instructions
  • Indicate required supporting documents
  • Submitted electronically

Evaluation of Systems Requirements (Cont.)

• Online systems request form example (Figure 2-10)
  • Fields for first name, last name, telephone, email, description of the problem (with character limit), critical date, submit call ticket.

Systems Review Committee

• Broader viewpoint for effective priority establishment
• Advantages: Lessens individual bias
• Disadvantages: Committee meetings, potential favoritism by members, and internal political differences can delay decisions

Overview of Feasibility

• Feasibility studies vary in complexity
• Initial fact-finding involves:
  • Studying organizational charts
  • Performing interviews
  • Reviewing current documentation
  • Observing operations
  • Surveying users
• A feasibility study examines operational, technical, economic, and schedule factors

Overview of Feasibility (Cont.)

• Operational feasibility: System usability and learning ease
• Schedule Feasibility: Time frame for implementation, managing factors affecting schedule, management timetable for the project, conditions for system development during the process, potential risks in accelerating schedule
• Technical Feasibility: Sufficient hardware, software, and network resources, and expertise
• Economic Feasibility: Benefits outweigh the total cost of ownership (TCO)
  • TCO aspects: People (staff and users), hardware and equipment, software, formal and informal training, licenses and fees, consulting expenses, facility costs

Overview of Feasibility (Cont.)

• Tangible costs are measured in dollars
• Intangible costs significantly affect organizational performance
• Tangible benefits result from expenses decrease or revenue increase
• Intangible benefits are important despite lacking dollar measurement

Overview of Feasibility (Cont.)

• Technical feasibility: Technical resources needed to acquire and use the system
  • Company's hardware, software, network resources, and expertise assessment
  • Proposed platform capacity for future needs (important)
  • If needed, prototype requirement consideration

Setting Priorities

• Factors affecting project priority: Cost reduction, revenue generation, better information and results, improved customer and organizational service, reasonable time for implementation, and sufficient resources

Setting Priorities (Cont.)

• Discretionary projects: Management has a choice in implementation
• Nondiscretionary projects: Management has no choice, often predictable
  • Examples: Annual payroll updates, tax percentages, and quarterly regulatory changes.

Preliminary Investigation Overview

• Interaction with managers and users
  • Meet with key managers, users, and IT staff to describe the project, explain responsibilities, answer questions, and invite comments
  • Focus on improvements, enhancements, not problems

Preliminary Investigation Overview (Cont.)

• Six-step model for preliminary investigation:
  • Understanding the problem or opportunity
  • Defining project scope and constraints
  • Performing fact-finding (organizational charts, documents, interviews, observations, user surveys)
  • Studying usability, cost, benefits, and schedule data
  • Evaluating feasibility (operational, technical, economic, and schedule)
  • Presenting findings and recommendations to management

Preliminary Investigation Overview (Cont.)

• Steps for planning preliminary investigation:
  • Understanding the problem or opportunity
  • Developing a business profile
  • Understanding business process modifications and how they impact information systems
  • Identifying departments, users, and business processes
  • Using a fishbone diagram
  • Defining scope and constraints (must do, should do, could do, won't do)
  • Identifying project creep and avoiding it
  • Identifying constraints

Preliminary Investigation Overview (Cont.)

• Analyzing project usability, cost, benefit, and schedule data: Detailing required information, methods of gathering and analyzing it, conducting interviews, surveys, analyzing the data (using Pareto and XY charts)

Preliminary Investigation Overview (Cont.)

• Evaluating project feasibility (operational, technical, economic, and schedule), preparing a report covering systems request, cost-benefit estimate, and a case for action

Preliminary Investigation Overview (Cont.)

• Report format for preliminary investigation: Introduction, systems request summary, findings, recommendations, project roles, time/cost estimates, expected benefits, appendix

Chapter Summary

• Systems planning in systems development life cycle
• Business case description, justification, and financial impact estimation
• Factors that affect systems projects: User requests, top management, existing systems, IT, software/hardware vendors, competitors, the economy, government, and technology
• Analyst evaluates systems request feasibility from multiple standpoints and presents results to management.