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Dr. Honghui DengDr. Honghui Deng

Assistant ProfessorAssistant Professor

MIS DepartmentMIS Department

UNLVUNLV

MIS 370 System Analysis Theory

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Chapter 11Chapter 11

FEASIBILITY ANALYSIS AND FEASIBILITY ANALYSIS AND THE SYSTEM PROPOSALTHE SYSTEM PROPOSAL

MIS 370 System Analysis Theory

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Learning ObjectivesLearning Objectives

• Identify feasibility checkpoints in the systems life Identify feasibility checkpoints in the systems life cycle.cycle.

• Identify alternative system solutions.Identify alternative system solutions.• Define and describe six types of feasibility and Define and describe six types of feasibility and

their respective criteria.their respective criteria.• Perform various cost-benefit analyses using Perform various cost-benefit analyses using

time-adjusted costs and benefits.time-adjusted costs and benefits.• Write suitable system proposal reports for Write suitable system proposal reports for

different audiences.different audiences.• Plan for a formal presentation to system owners Plan for a formal presentation to system owners

and users.and users.

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Feasibility AnalysisFeasibility Analysis

• FeasibilityFeasibility – the measure of how beneficial or – the measure of how beneficial or practical an information system will be to an practical an information system will be to an organization. organization.

• Feasibility analysisFeasibility analysis – the process by which – the process by which feasibility is measured.feasibility is measured.

• Creeping CommitmentCreeping Commitment – an approach to feasibility – an approach to feasibility that proposes that feasibility should be measured that proposes that feasibility should be measured throughout the life cycle.throughout the life cycle.

• Feasibility CheckpointsFeasibility Checkpoints– Systems Analysis — Scope Definition

– Systems Analysis — Problem Analysis

– Systems Design — Decision Analysis

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Six Tests For FeasibilitySix Tests For Feasibility

• Operational feasibilityOperational feasibility – a measure of how well a solution will – a measure of how well a solution will work or be accepted in an work or be accepted in an organizationorganization..– Usability analysis – a test of the system’s user interfaces.

• Cultural (or political) feasibilityCultural (or political) feasibility - a measure of how well a solution - a measure of how well a solution will be accepted in an organizational climate.will be accepted in an organizational climate.

• Technical feasibilityTechnical feasibility – a measure of the practicality of a – a measure of the practicality of a technical solution and the availability of technical resources technical solution and the availability of technical resources and expertise. and expertise.

• Schedule feasibilitySchedule feasibility – a measure of how reasonable the project – a measure of how reasonable the project timetable is.timetable is.

• Economic feasibilityEconomic feasibility - a measure of the cost-effectiveness of a - a measure of the cost-effectiveness of a project or solution.project or solution.

• Legal feasibilityLegal feasibility - a measure of how well a solution can be - a measure of how well a solution can be implemented within existing legal/contractual obligations.implemented within existing legal/contractual obligations.

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Operational FeasibilityOperational Feasibility

• How well proposed system solves the How well proposed system solves the problems and takes advantage of problems and takes advantage of opportunities identified during the scope opportunities identified during the scope definition and problem analysis phasesdefinition and problem analysis phases

• How well proposed system satisfies How well proposed system satisfies system requirements identified in the system requirements identified in the requirements analysis phaserequirements analysis phase

• Is the problem still worth solving?Is the problem still worth solving?

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Cultural (or political) feasibilityCultural (or political) feasibility

• Does management support the system?Does management support the system?

• How do end users feel about their role in How do end users feel about their role in the system?the system?

• What end users may resist or not use the What end users may resist or not use the system? How can this be overcome?system? How can this be overcome?

• How will the working environment How will the working environment change? Can users and management change? Can users and management adapt to the change?adapt to the change?

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Technical feasibilityTechnical feasibility

• Is the proposed technology or solution Is the proposed technology or solution practical?practical?

• Do we currently possess the necessary Do we currently possess the necessary technology?technology?

• Do we possess the necessary technical Do we possess the necessary technical expertise?expertise?

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Schedule feasibilitySchedule feasibility

• Are specified deadlines mandatory or Are specified deadlines mandatory or desirable?desirable?

• Are mandatory deadlines realistic for Are mandatory deadlines realistic for proposed solution?proposed solution?

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Economic feasibilityEconomic feasibility

• During Scope DefinitionDuring Scope Definition– Do the problems or opportunities warrant the

cost of a detailed study and analysis of the current system?

• During Problem AnalysisDuring Problem Analysis– After a detailed study of the current system

– Better estimates of development costs and benefits

• During Decision Analysis During Decision Analysis – Requirements now defined

– Development costs can be better estimated

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Legal feasibilityLegal feasibility

• CopyrightsCopyrights

• Union contractsUnion contracts

• Legal requirements for financial Legal requirements for financial reportingreporting

• Antitrust lawsAntitrust laws

• National data and work lawsNational data and work laws

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Cost-Benefit Analysis TechniquesCost-Benefit Analysis Techniques

Costs:Costs:• Development costs are one time costs that will not Development costs are one time costs that will not

recur after the project has been completed.recur after the project has been completed.• Operating costs are costs that tend to recur Operating costs are costs that tend to recur

throughout the lifetime of the system. Such costs can throughout the lifetime of the system. Such costs can be classified as:be classified as:– Fixed costs — occur at regular intervals but at relatively fixed

rates.– Variable costs — occur in proportion to some usage factor.

Benefits:Benefits:• Tangible benefits are those that can be easily Tangible benefits are those that can be easily

quantified. quantified. • Intangible benefits are those benefits believed to be Intangible benefits are those benefits believed to be

difficult or impossible to quantify.difficult or impossible to quantify.

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Assess Economic FeasibilityAssess Economic Feasibility

• Payback AnalysisPayback Analysis

• Return On InvestmentReturn On Investment

• Net Present ValueNet Present Value

• The The Time Value of MoneyTime Value of Money is a concept that is a concept that should be applied to each technique. The time should be applied to each technique. The time value of money recognizes that a dollar today value of money recognizes that a dollar today is worth more than a dollar one year from now.is worth more than a dollar one year from now.

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Payback AnalysisPayback Analysis

• Payback analysisPayback analysis – a technique for determining – a technique for determining if and when an investment will pay for itself.if and when an investment will pay for itself.

• Payback periodPayback period – the period of time that will – the period of time that will lapse before accrued benefits overtake lapse before accrued benefits overtake accrued and continuing costs.accrued and continuing costs.

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Present Value FormulaPresent Value Formula

• Present valuePresent value – – the current value of a dollar at any the current value of a dollar at any time in the future.time in the future.

PVPVnn = 1/(1 + = 1/(1 + ii))nn

WhereWhere nn is the number of years and is the number of years and ii is the discount rate. is the discount rate.

• Discount rateDiscount rate – a percentage similar to interest – a percentage similar to interest rates that you earn on your savings. rates that you earn on your savings. – In most cases the discount rate for a business is the opportunity

cost of being able to invest money in other projects or investments

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Payback AnalysisPayback Analysis

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Return-on-Investment AnalysisReturn-on-Investment Analysis

• Return-on-Investment (ROI) analysisReturn-on-Investment (ROI) analysis – – a technique a technique that compares the lifetime profitability of alternative that compares the lifetime profitability of alternative solutions.solutions.

The ROI for a solution or project is a percentage rate that measures the relationship between the amount the business gets back from an investment and the amount invested.

Lifetime ROILifetime ROI = = (estimated lifetime benefits – (estimated lifetime benefits – estimated lifetime costs) / estimated lifetime costsestimated lifetime costs) / estimated lifetime costs

Annual ROIAnnual ROI = = lifetime ROI / lifetime of the systemlifetime ROI / lifetime of the system

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Net Present Value (NPV) AnalysisNet Present Value (NPV) Analysis

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Candidate Systems MatrixCandidate Systems Matrix

• Candidate Systems MatrixCandidate Systems Matrix – a tool used to – a tool used to document similarities and differences between document similarities and differences between candidate systems.candidate systems.

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Candidate Systems MatrixCandidate Systems Matrix

Characteristics

Portion of System ComputerizedBrief description of that portion of the system that would be computerized in this candidate.

BenefitsBrief description of the business benefits that would be realized for this candidate.

Servers and WorkstationsA description of the servers and workstations needed to support this candidate.

Software Tools NeededSoftware tools needed to design and build the candidate (e.g., database management system, emulators, operating systems, languages, etc.). Not generally applicable if applications software packages are to be purchased.

Candidate 1

COTS package Platinum Plus from Entertainment Software Solutions would be purchased and customized to satisfy Member Services required functionality.

This solution can be implemented quickly because it’s a purchased solution.

Technically architecture dictates Pentium III, MS Windows 2000 class servers and workstations (clients).

MS Visual C++ and MS Access for customization of package to provide report writing and integration.

Candidate 2

Member Services and warehouse operations in relation to order fulfillment.

Fully supports user required business processes for SoundStage Inc. Plus more efficient interaction with member accounts.

Same as candidate 1.

MS Visual Basic 5.0System Architect 2001Internet Explorer

Candidate 3

Same as candidate 2.

Same as candidate 2.

Same as candidate 1.

MS Visual Basic 5.0System Architect 2001Internet Explorer

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Feasibility Analysis MatrixFeasibility Analysis Matrix

• Feasibility Analysis Matrix Feasibility Analysis Matrix – a tool used to – a tool used to rank candidate systems.rank candidate systems.WeightingWeighting Candidate 1Candidate 1 Candidate 2Candidate 2 Candidate 3Candidate 3

DescriptionDescription

Operational FeasibilityOperational Feasibility

Cultural FeasibilityCultural Feasibility

Technical FeasibilityTechnical Feasibility

Schedule FeasibilitySchedule Feasibility

Economic FeasibilityEconomic Feasibility

Legal FeasibilityLegal Feasibility

RankingRanking

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The System ProposalThe System Proposal

• System proposalSystem proposal – a report or – a report or presentation of a recommended solution.presentation of a recommended solution.– Usually formal written report or oral

presentation

– Intended for system owners and users

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Organization of the Written ReportOrganization of the Written Report

• Primary elementsPrimary elements present the actual information that the present the actual information that the report is intended to convey.report is intended to convey.

• Secondary elementsSecondary elements package the report so the reader package the report so the reader can easily identify the report and its primary elements.can easily identify the report and its primary elements.

• Formats:Formats:– The factual format is traditional and best suited to readers who

are interested in facts and details as well as conclusions.– The administrative format is a modern, result-oriented format

preferred by managers and executives.

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Formats for Written ReportsFormats for Written Reports

Factual FormatFactual Format Administrative FormatAdministrative Format

I. IntroductionI. Introduction I. IntroductionI. Introduction

II. Methods and proceduresII. Methods and procedures II. Conclusions and II. Conclusions and recommendationsrecommendations

III. Facts and detailsIII. Facts and details III. Summary and discussion III. Summary and discussion of facts and detailsof facts and details

IV. Discussion and analysis IV. Discussion and analysis of facts and detailsof facts and details

IV. Methods and proceduresIV. Methods and procedures

V. RecommendationsV. Recommendations V. Final conclusionV. Final conclusion

VI. ConclusionVI. Conclusion VI. Appendixes with facts VI. Appendixes with facts and detailsand details

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Secondary Elements for a Written reportSecondary Elements for a Written report

Letter of transmittal

Title page

Table of contents

List of figures, illustrations, and tables

Abstract or executive summary

(The primary elements--the body of the report, in either the factual or administrative format--are presented in this portion of the report.)

Appendices

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Steps in Writing a ReportSteps in Writing a Report

• Paragraphs should Paragraphs should convey a single idea.convey a single idea.

• Sentences should not Sentences should not be too complex.be too complex.

• Write in active voice.Write in active voice.

• Eliminate jargon, big Eliminate jargon, big words, and deadwood.words, and deadwood.

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System Proposal – formal presentationsSystem Proposal – formal presentations

• Formal presentationFormal presentation – a special meeting used to sell – a special meeting used to sell new ideas and gain approval for new systems. They new ideas and gain approval for new systems. They may also be used for any of these purposes:may also be used for any of these purposes:– Sell new system– Sell new ideas– Head off criticism– Address concerns– Verify conclusions– Clarify facts– Report progress

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Outline for PresentationOutline for Presentation

I. Introduction (one-sixth of total time available)

A. Problem statement

B. Work completed to date

II. Part of the presentation (two-thirds of total time available)

A. Summary of existing problems and limitations

B. Summary description of the proposed system

C. Feasibility analysis

D. Proposed schedule to complete project

III. Questions and concerns from the audience (time here is not to be included in the time allotted for presentation and conclusion; it is determined by those asking the questions and voicing their concerns)

IV. Conclusion (one-sixth of total time available)

A. Summary of proposal

B. Call to action (request for whatever authority you require to continue systems development)

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Guidelines for Visual AidsGuidelines for Visual Aids

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Conducting the Formal PresentationConducting the Formal Presentation

• Dress professionally.Dress professionally.

• Avoid using the “I” word when making Avoid using the “I” word when making the presentation.the presentation.

• Maintain eye contact with the group and Maintain eye contact with the group and keep an air of confidence.keep an air of confidence.

• Be aware of your own mannerisms.Be aware of your own mannerisms.

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When Answering QuestionsWhen Answering Questions

• Always answer a question seriously, Always answer a question seriously, even if you think it is a silly question.even if you think it is a silly question.

• Answer both the individual who asked Answer both the individual who asked the question and the entire audience.the question and the entire audience.

• Summarize your answers.Summarize your answers.

• Limit the amount of time you spend Limit the amount of time you spend answering any one question.answering any one question.

• Be honest.Be honest.