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

CHAPTER 5:CHAPTER 5:

Identifying and Selecting Identifying and Selecting Systems Development ProjectsSystems Development Projects

1.11.1

MSIS 5653MSIS 5653Advanced Systems DevelopmentAdvanced Systems Development

Dursun Delen, Ph.D.Dursun Delen, Ph.D.Department of ManagementDepartment of ManagementOklahoma State UniversityOklahoma State University

D. Delen MSIS 5653 – Advanced Systems Development

Learning ObjectivesLearning 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

5.25.2


Project Identification and Project Identification and Selection in SDLCSelection in SDLC

5.35.3


Identifying and Selecting IS Identifying and Selecting IS Development ProjectsDevelopment Projects

What derives IS development projects?

Who identifies the potential development projects?

5.45.4


Identifying and Selecting IS Identifying and Selecting IS Development ProjectsDevelopment 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

5.55.5


Classifying and Ranking IS Classifying and Ranking IS Development ProjectsDevelopment Projects

Performed by top management, steering committee, business units or IS development group

5.65.6


Classifying and Ranking IS Classifying and Ranking IS Development ProjectsDevelopment Projects

Organizational Value Chain


Process of considering short and long-term projects

Projects most likely to achieve business objectives are selected

5.85.8

Selecting IS Development Selecting IS Development ProjectsProjects


Deliverables and OutcomesDeliverables and Outcomes

5.95.9

Incremental commitment?Knowledge of overall organizational business strategy…

Improves project selection and identification process Provides sound guidance throughout the SDLC


Corporate and Information Corporate and Information Systems PlanningSystems 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

5.105.10

Improperly planned projects would result in systems that cannot be shared across an organization.



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

5.115.11



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

5.125.12


Corporate Strategic PlanningCorporate Strategic Planning


Information Systems Planning (ISP)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

5.145.14


Information Systems PlanningInformation Systems PlanningStep 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

5.155.15


Information Systems PlanningInformation Systems PlanningStep 1: Describing the Current Situation (Cont.)

Planning team is chartered to model existing situation

Identification of Organizational: Locations Units Functions Processes Data Information Systems

5.165.16



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

5.175.17



Analysis of Matrices: Affinity clustering

5.185.18

Data Entity-to-Function matrix


Information Systems PlanningInformation Systems PlanningStep 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

5.195.19



Step 3: Developing a Transition StrategyBroad, comprehensive document that looks at both short and long-term organizational development needsConsists of a series of projects

5.205.20


Electronic Commerce Electronic Commerce ApplicationsApplications

Development process for Internet projects is no different than other projectsElectronic 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, email, 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

5.215.21


Internet DevelopmentInternet DevelopmentInternet

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

5.225.22


Internet DevelopmentInternet DevelopmentInternet 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 5.235.23


SummarySummaryProject 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

5.245.24

CHAPTER 6:CHAPTER 6:

Initiating and Planning Initiating and Planning Systems Development ProjectsSystems Development Projects

2.252.25


Learning ObjectivesLearning 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

6.266.26


Project Initiation and Planning Project Initiation and Planning in SDLCin SDLC

5.275.27


Initiating and Planning System Initiating and Planning System Development ProjectsDevelopment 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

6.286.28


Initiating and Planning System Initiating and Planning System Development ProjectsDevelopment 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

6.296.29


PVF Statement of WorkPVF Statement of Work


Assessing Project FeasibilityAssessing Project FeasibilitySix Categories

1. Economic

2. Technical

3. Operational

4. Schedule

5. Legal and contractual

6. Political

6.316.31


Assessing Economic FeasibilityAssessing Economic FeasibilityCost – 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

6.326.32


Assessing Economic FeasibilityAssessing Economic FeasibilityDetermine Benefits (Cont.) Intangible Benefits

Cannot be measured easily Examples

Increased employee morale Competitive necessity More timely information Promotion of organizational learning and understanding

6.336.33


Assessing Economic FeasibilityAssessing Economic FeasibilityDetermine 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

6.346.34


Assessing Economic FeasibilityAssessing Economic FeasibilityDetermine 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

6.356.35


Assessing Economic FeasibilityAssessing Economic FeasibilityDetermine 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

6.366.36


Recurring and One-time Costs at PVFRecurring and One-time Costs at PVF


Time Value of Money (TVM)Time Value of Money (TVM)The method of comparing present cash flow to future expected returnsDiscount rate: The rate of return used to compute the present value and future cash flows

Present Value Calculations:

PVn = Y * [ 1/(1 + i)n]WherePV: Present value of future cash flowY: Future cash flown: Number of years from present timei: Discount rate


TVM Calculations - ExampleTVM Calculations - ExampleWhat is the present value of three yearly payments of $1500 each for the next three consecutive years?

Time 0 1 2 3|-------------|-------------|-------------|-------

Cash Flow 0 $1500 $1500 $1500

i = 10%

PV1 = 1500 * [ 1/(1 + 0.10)1] = 1500 * 0.9091 = 1363.65

PV2 = 1500 * [ 1/(1 + 0.10)2] = 1500 * 0.8264 = 1239.60

PV3 = 1500 * [ 1/(1 + 0.10)3] = 1500 * 0.7513 = 1126.95

NPV = PV1 + PV2 + PV3 = $3730.20


Cost Benefit Calculations for PVFCost Benefit Calculations for PVF

Net Present ValueNPV is the current value of all costs and benefits associated with the projectReturn on InvestmentROI is the ratio of the net benefits divided by total cost of the projectBreak-Even AnalysisBEA is method used to calculate the amount of time required to recover the project cost.


Assessing Technical FeasibilityAssessing Technical FeasibilityTechnical Feasibility

Assessment of the development organization’s ability to construct the proposed system

Project risk can be assessed based upon:

6.416.41


Assessing Technical FeasibilityAssessing Technical FeasibilityEffects of degree of project structure, project size, and familiarity with the application area on project implementation risk

6.426.42


Assessing Other Project Assessing Other Project Feasibility ConcernsFeasibility 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

6.436.43


Building the Baseline Project PlanBuilding the Baseline Project PlanObjectives

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

6.446.44


Baseline Project Plan ReportBaseline Project Plan Report


Building the Baseline Project PlanBuilding the Baseline Project PlanIntroduction 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

6.466.46


Building the Baseline Project PlanBuilding the Baseline Project PlanSystem 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

6.476.47


Building the Baseline Project PlanBuilding the Baseline Project PlanManagement Issues

Outlines concerns that management may have about the project

Team composition Communication plan Project standards and procedures

6.486.48


Reviewing the Baseline Project PlanReviewing the Baseline Project PlanObjectives

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

6.496.49


Reviewing the Baseline Project PlanReviewing the Baseline Project PlanWalkthrough (continued)

1. Assignment of coordinator

2. Assignment of individuals to roles using the walkthrough review form

3. Presentation

4. Individuals are polled for their opinions (good/minor/major revision)

Walkthrough Review Form

6.506.50


Reviewing the Baseline Project PlanReviewing the Baseline Project PlanWalkthrough (continued)

Walkthrough Action List


SummarySummaryProject 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

Tangible vs. Intangible One-time vs. Recurring

6.526.52

Documents

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