System Analysis and Design/ Feasibility analysis … · System Analysis and Design/ Feasibility analysis Learning Objectives ... System Analysis and Design/ Feasibility analysis Motivation

System Analysis and Design Prof. V.Rajaraman

Indian Institute of Science Bangalore

System Analysis and Design/ Feasibility analysis Learning Objectives

Learning Objectives

How to formulate the goals to be met by the information system to be designed

How to quantify the goals

How to obtain alternative solutions to satisfy the goals

How to assess the feasibility of implementing alternative solutions.

How to compute cost vs benefits of each alternative feasible solution

How to prepare a system proposal for the potential users of the system

V. Rajaraman/IISc. Bangalore //V1/June 04/1



System Analysis and Design/ Feasibility analysis Motivation

Motivation

Before a management decides to implement a computer based system they should

know the goals which will be met by the system

These goals should primarily be quantitative goals so that when the system is

implemented it is possible to compare quantitatively the achievements with the

original goals set.

Analysts should also be able to estimate what hardware and human resources will

be needed to implement a system to meet the goals

Analyst must examine alternative methods to implement the system and their

resource needs.

A cost-benefit analysis should be carried out for each alternative and given to the

management

This analysis will be essential for a management to decide which solution they

would like to implement

Feasibility of meeting goals with available technology and human resource and

cost/benefit are important parameters for informed management decision making.

V. Rajaraman/IISc, Bangalore //V1/July 04/1

FEASIBILITY ANALYSIS

The following are the results of the Information gathering phase:

Deficiency of the current system are found

Consensus is arrived at on requirements

SRS Document is prepared

V.Rajaraman M4/LU1/V1/2004 1

STEPS IN FEASIBILITY ANALYSIS

• Note down deficiencies in current system found while

preparing SRS Document

• Set goals to remove deficiencies

• Quantify Goals

• Find alternative solutions to meet goals


• Evaluate feasibility of alternative solutions taking into account constraints on resources.

• Rank order alternatives and discuss with user.

• Prepare a system proposal for management approval

STEPS IN FEASIBILITY ANALYSIS


FEASIBILITY ANALYSIS

Define the goals and sub-goals of the proposed system

Quantify the goals and sub-goals from the verbal statement of goalFor example: Send bill soon after month endQuantified statement of the same goal:


Send bill within 5 days of month end

• Find out whether it is possible to meet these goals.

• Determine the cost of meeting each goal

• Find cost benefit if quantified

FEASIBILITYANALYSIS (Contd.)


GUIDELINES FOR SEARCHING GOALS

Identify the deficiency by pinpointing

-Missing Functions

-Unsatisfactory performance

-Excessive cost of operations

Set Goals to remove deficiency and provide competitive advantage


CHARACTERSTICS OFA GOAL

Must be quantified

Realizable with the constraints of the organization and the system

Broken down into Sub-Goals

Agreeable to all concerned

In general goals must not only remove deficiency but also give a system which is superior to those of the competitors of the organization


CASE STUDY-HOSTELINFORMATION SYSTEM

DEFICIENCIES OF CURRENT SYSTEM IDENTIFIED

MISSING FUNCTIONS

1.1 Stores requirement not forecast

1.2 Purchases not consolidated

1.3 Daily rate calculation not frequently updated

1.4 Menu not planned for balanced nutrition and low cost

(Detailed description of case is given in module3)



DEFICIENCIES (BAD PERFORMANCE) UNSATISFACTORY PERFORMANCE

2.1 Billing not accurate and prompt

2.2 Student bills not itemized

2.3 Stores issue to cooks arbitrary

2.4 Payments to vendors not prompt

2.5 Large variations in mess bills every month



DEFICIENCIES (HIGH OPERATIONAL COST)

3.1Unpaid and long outstanding bills from students

3.2 Extras and rebates not reflected in stores issues

3.3 Frequent small purchases at high cost

3.4 High transport cost due to not consolidating stores requirements


CASE STUDY-HOSTELINFORMATION SYSTEMFORMULATIOIN OF GOALS

MAIN GOALS

Ml . Send bill to students within 5 days of the end of month

M2. Control inventory of items in stores & issues to cooks to bring down mess bill by 10%

M3. Balance menu to meet nutritional requirements

M4. Cost of new menu not to exceed current cost



FORMULATIOIN OF SUB-GOALS

S1.1 Itemize bills showing extras and rebates with dates

S1.2 Ensure less than 5% variations of bills from month to month

SI.3 Bills not paid within 10 days of issue brought to the attention of chief warden

S1.4 Update daily rates every day

Main goals M1 and sub-goals S1.1,S1.2,S1.3 remove deficiencies 1.3,2.1,1.2.2,2.5,3.1



FORMULATION OF SUB-GOALS

S2.1 Ensure payment to vendors within five days of

supply of items

S2.2 Maximum 4 trips per month for purchases.

Cartage less than 1% of item cost


• S2.3 Reduce inventory level. Level not more than 10% of requirements in a month

• 52.4 Issue to cooks every day not to exceed 5% of calculated values

• Main goals M1& sub-goals above remove deficiencies1.1,1.2,2.3,2.4,3.2,3.3,3.4


(Contd.)


EXAMININGALTERNATIVE SOLUTIONS

HOSTEL INFORMATION SYSTEM

ALTERNATIVE SOLUTIONS

A: Improve manual system

B: Use PC based periodic update system

C: An on-line system with server and several clients


SOLUTION A:MANUAL SYSTEM

Manual System may be improved as follows

• Keep up-to-date running total of extras and rebates for each

student

• Use look up table to find material needed each day based on

number of extras

• Cost each day's issue and keep running total


• Calculate standard quantities needed and use for vendor order

• Track student payments to find overdue payments

• Solution does not ensure reduction in bill variations and prompt payment to vendors

• Solution not scalable to large student population

SOLUTION A:MANUAL SYSTEM (CONTD.)


SOLUTION B

Use a single PC to

• Prepare students bills-itemize bills

• Prepare number of members who will eat for next two days

• Alert warden when bill not paid within 10 days of issue

• Vendor order generation

• Inventory control of store

• Menu planning


SOLUTION B (Contd.)

• PC configuration needed based on data base sizes • PC with 20 MB disk, 1.2 MB floppy sufficient• However minimum configuration available today(2004) is PC

with 128 MB main memory, 40 GB disk 1.2MB floppy & CD R/W costs Rs. 25,000.Systems software(Windows XP+MSOffice+anti-virus) will cost around Rs.25,000.

• Total cost=Rs 50,000• Need PC+ printer+uninterrupted power supply cost Rs. 70,000


SOLUTION C

• Use a server which is accessed by 3 clients one each in the mess, the stores and the accounts sections; perform on-line transaction processing.

• Advantage: Up to the minute status can be found

• Number of transactions small and does not justify 4 computers

• Solution unnecessarily expensive and rejected 0


EVALUATING ALTERNATIVE SOLUTIONS

• Determine Technical feasibility of each solution,in other words is technology mature to implement a solution

• Determine Operational feasibility of each solution.In other words,for a given organizational structure will the solution fit in.Will it provide right information at the right time to users


• Determine Economic feasibility of each solution.In other words, are finances available to implement system?Will it be cost effective?Will the money spent be recovered by savings or by better services to users

EVALUATINGALTERNATIVE SOLUTIONS (Contd.)


TECHNICAL ANDOPERATIONAL FEASIBILITY

• Solution B is selected for further consideration

• It is technically feasible as PC of necessary configuration is easily available.

• It is also operationally feasible as clerks in hostel office can be easily trained to use a PC. The necessary problems will be written by system analyst/ programmer hired for this purpose.


COST-BENEFITANALYSIS

• Needed to find economic feasibility of proposed solution• Objective to find whether returns by implementing a system

justify the cost• Found by listing all costs direct and indirect


COST-BENEFITANALYSIS (Contd.)

•Direct cost- Cost of computer, software, space, human resource,material, travel, training etc.

• Indirect cost- Time spent by persons and data gathering• Benefit- Tangible- measurable

Intangible - better management- better user satisfaction


BENEFITS

Direct - Savings due to reduced inventory, early collection of outstanding payments, reduced wastage,faster production, increased production

Indirect –Increased work done with same human resource

Intangible - better service to customers

- superior product quality

- accurate,reliable,timely and up-to-date

strategic,tactical and operational information to

management



COST – BENEFITSANALYSIS

CASE STUDY OF HOSTEL INFORMATION SYSTEM

COST : PC,UPS,Printer+Systems analyst+programmer

Capital 70,000 +60,000 =1,30,000

Cost(Recurring) : Stationery, maintenance,floppy etc.

Rs. 2000 per month


• Benefits : - Inventory reduction 5% of mess bill of 400 students

Daily rate=Rs 45Savings= 45*0.05*30*400=Rs 27,000- Transport cost saving=Rs 800 per month- Savings due to early payment=material cost*1.2%=37.5*400*30*0.012=Rs 5400 - Savings due to early collection =40*1350*0.01=Rs 540

COST – BENEFITSANALYSIS (Contd.)

COST – BENEFITSANALYSIS

Direct saving=33740

Indirect benefit : student satisfaction due to itemized bill,

predictable daily rate,better menu

Net Direct Saving per month= 33740-2000

=R31740

Total capital cost=l,30,000


PAY BACK PERIOD

SIMPLE: Cost 1,30,000

Saving 31,740 per month

Cost recovered in 130000/31740 = 4.1 months

Using interest on capital:

Monthly interest=0.015* 1,30,000

=Rs 1950 per month

Saving per month=31740-1950=29790

Cost recovered in 130000/29790 = 4.4 months


PRESENTVALUE METHOD

Accounts for the fact that a benefit accruing n months later will be lower today as the money if available today would have earned interest

If r = Interest rate in % per month.

n = number of months

x = benefit

Present value of benefit accruing n months later is:

Present value = x/(1+r)n


COST-BENEFITPresent Value method

This account for the fact that benefits each month will also earn interest

Month Cost Net-Benefit present value cumulative Benefit

of Benefit

0 1,30,000 0 0

1 31,740 31271 31271

2 31,740 30809 62080

3 31,740 30354 92434

4 31,740 29905 122339

5 31,740 29463 151802

This also give us less than 5 months as pay back periodV.Rajaraman M4/LU3/V1/2004 9

STRUCTURE OFEXCUTIVE SUMMARY

Feasibility report

• What the proposed system will achieve

• Who will be involved in operating the system

• Organizational changes to implement system

• List of benefits of the system

• Cost of system - Capital +Recurring

• Cost-benefit analysis


SYSTEM PROPOSALSTRUCTURE

• Introduction with outline of proposal

• Data flow diagram of existing system

• Modified DFD of proposed system

• Discuss alternative solutions

• List new equipment to be installed (if any)


• Technical, operational feasibility of analysis

• Cost-Benefit analysis

• New procedures, human resources and training needed

• Anticipated problems

• Implementation plan

SYSTEM PROPOSALSTRUCTURE (Contd.)




System Analysis and Design/Feasibility Analysis Case Study

CASE STUDY – System Proposal On a request from the Chief Warden of the student hostel, a study was initiated to find

out how the operation of the hostel could be improved by implementing better

information system. After lengthy discussion with various personnel in the hostel, it was

concluded that the problem which had to be tackled on a high priority basis was a better

information system for billing, accounting, inventory control and stores issues in the

students' mess. The deficiencies identified in the current system are as given below.

1. Missing functions.

1.1 Forecasting of stores requirements not done.

1.2 Purchases not consolidated.

1.3 Daily rate calculation not updated frequently.

1.4 Menu not planned for balanced nutrition and low cost.

2. Unsatisfactory performance.

2.1 Billing not accurate and prompt.

2.2 Student bills not itemized.

2.3 Stores issues to cooks not systematic.

2.4 Payments to vendors not prompt.

2.5 Large variations in mess bills every month.

3. Excessive cost of operations due to the following:

3.1 Unpaid long outstanding bills from students.

3.2 Extras and rebates not reflected in stores issues.

3.3 Frequent unplanned visits to city to buy out-of-stock items.

3.4 High transport cost (small purchases at high cost) due to not consolidating

stores requirements.

V. Rajaraman/IISc. Bangalore M4//V1/July 04/1




These deficiencies are to be removed in the proposed information system.

Goals of the proposed system. The main quantified goals and the sub-goals of the

proposed system are as given below:

Main goal

M1 Send the bills to students within 5 days of the end of the month.

Sub-goals

S1.1 Itemize bills indicating extras and rebates with dates.

S1.2 Ensure less than 5% variation of bills from month to month.

S1.3 Bring to the attention of the Chief Warden the bills which are not paid within 10

days of issue.

S1.4 Update daily rate. Calculate bills every day.

The main goals and sub-goals to remove deficiencies 1.1, 1.2, 2.3, 2.4 and 3.2-3.4

(mentioned above) are given below:

Main goal

M2 Control inventory of items and issues to cooks so as to bring down mess bill by

10%.

Sub-goals

S2.1 Ensure payment to vendors within five days of supply of items.

S2.2 Make sure that at most four trips per month are made to the town for purchase and

consequently transport cost is less than 1% of item cost.

S2.3 See that inventory levels are not more than 10% of monthly requirements.

S2.4 Make sure that cooks do not get more than 5% of calculated requirements.

Goals to add function 1.4.





Main Goals

M3.1 Balanced menu to meet nutritional requirements.

M3.2 Cost of food not to exceed current cost.

Sub-goal

S3.1 Randomize menu.

Alternative solutions examined. Three alternative solutions were examined. These are

given below:

Solution A: Improve the current manual system by improving procedures.

Solution B: Use a single PC in the hostel office

Solution C: Use three small client computers in the mess, stores and accounts office and

connect to a server in the hostel office.

Comparison of Solutions:

Solution A is feasible but is not scalable. In other words if the number of students

increase the system will be difficult to implement. It requires meticulous attention to

details by clerks. It is thus rejected.

Solution C is very expensive as it needs four computers. It does provide on-line updates

but this is not necessary in this problem.

Selected solution. Solution B is selected as it is technically and operationally feasible.

The cost/benefit of Solution B to assess economic feasibility is given below:

Consider Solution B of the hostel mess management problem. The direct costs are:

1. Cost of PC, printer, uninterrupted power supply and system software (Windows

XP Office 2000, anti virus and Turbo C) = Rs.70,000.

2. Cost of space (nil). No extra space allocated.





3. Cost of systems analysts/Programmers/Consultants for 3 months = Rs.60,000/-

4. Recurring costs:: Stationery cost, floppy cost, Maintenance/Electricity =

Rs.2000/- per month).

5. One time cost = Rs.1,30,000/-

Benefits (Direct savings)

1. Savings per month due to inventory reduction and wastage

= 5% of mess bill of 400 students

= 2.25 * 400 * 30

= Rs.27,000/-

(Assume Rs.45 bill per day per student. Savings per day is 2.25 per student. 30

days in a month).

2. Savings in transport cost (estimate) Rs.800 per month.

3. Savings due to early payment to vendors

= 1.2% of total billing to vendors

=37.5 * 400 * 30 * 0.012

= Rs.5400/- per month

(Rs.37.50 per day is assumed to be material cost in mess bill)

4. Savings due to better collection (40 defaulting students, 1% interest per month)

= 40 * 1350 * 0.01

= Rs.540 per month

Intangible benefits

1. Student satisfaction due to itemized bills and less variation.





2. Better menu planning

Total benefits = Rs.33740 per month

Recurring cost = Rs.2000 per month

Net benefit per month = Rs.31,740

Total capital cost = Rs.1,30,000/-

New equipment to be installed. PC and printer with the following features:

Hardware

IBM compatible PC

256 MB main memory

1.2MB floppy drive

40 GB hard disk

15" colour monitor

132 character 80 cps dot printer

Software Windows XP Operating System

MS Office 2000

antivirus software

Turbo C

Infrastructure 500 VA, Uninterrupted Power Supply

Need a dust-free room to locate PC

Benefits expected. (These were as given earlier)

Cost of the system. As calculated earlier, the cost of the new system will be

Capital cost hardware system software = Rs. 70,000

System analysis/design cost = Rs.60,000





Recurring cost = Rs. 2000 per month

New procedures to be implemented. Using simple pay back method and assuming 1%

interest per month we obtain the Table 4.1

Table 4.1 Cost-benefit –Present value method

Month Cost Net Benefit Present Value of benefit

Cumulative Present Value

0 1,30,000 - - - 1 31740 31426 31426 2 31740 31115 62541 3 31740 30806 93347 4 31740 30502 123849 5 31740 30200 154049

We see that the cumulative benefit exceeds cost of the system by the fifth month.

Thus we conclude that the proposed system is economically beneficial.

The subsystems involved in this solution are now described.

(i) Billing subsystem. An extras/rebates register will be maintained in the mess

for students to enter the requests. One page per student is assigned. The

register entries are codified for the use of computer processing. The register

pages are printed on the computer each month and stapled together and kept

in the mess for entries by students. Entries in the register are keyed into the

PC each day by the mess clerk. A program will check whether sufficient

notice has been given for rebates, whether number of days rebate asked is as

per rules. The data entered is used by a program to create a summary

statement giving expected number of meals to be prepared 48 hours from

now. This is passed on to the mess manager to control issues. This program

also updates each students' record with details of extras and dates of absence.





(ii) Subsystems in billing system. Subsystem for finding meals to be cooked.

INPUT: Extras/rebate requests of each student each day.

PROCEDURE

• Check each input record to see if rebate is admissible and extras are

correct.

• Enter admissible rebates and extras in student billing file.

• Find number of meals to be cooked two days from now. Print note to mess

manger.

OUTPUT: Note to mess manager giving number of members and meals to be

cooked 48 hours from now. (This subsystem runs daily on the PC)

(iii) Subsystem for mess bill calculation.

INPUT: Items issued each day (perishable and non-perishable)

PROCEDURE:

• From items issued each day find total expenses each day.

• Accumulate daily expense and add fixed overhead (salaries etc.)

• Using number of members calculate up-to-date daily rate.

• Using student billing information file an expense file, calculate the

itemized bill for each student at the end of the month.

• Enter in student billing file.

OUTPUT: Itemized bills to students.

(Updating daily rate is run each day whereas student billing system is run

once a month).





(iv) Subsystem for unpaid bills

INPUT: Payments information.

PROCEDURE

•

•

•

•

Enter all payments in student billing file.

Five days after last date for payment, examine this file and create a list of

students with unpaid bills.

OUTPUT: List of overdue bills sent to Chief Warden

(This system runs once a month)

The billing system described above satisfies main goal M1 and sub-goals S1.1

and S1.3. To satisfy sub-goal S1.2, the mess secretary who gets an updated

daily rate each day must adjust menu, using a menu planning system.

(i) System for stores issue and control

Subsystem for stores issues to cooks

INPUT

Menu for (today's date + 2 i.e., if today's date is 20.04.03 menu is given

for 22.04.03).

Number of meal to be cooked for (today's date + 2).

PROCEDURE: Using inputs find items to be issued on (today's date + 2).

OUTPUT: Items to be issued on (today's date + 2) sent to mess manager.

Subsystem for inventory control

INPUT: Daily use of stores items, perishables and vendor supplies.

PROCEDURE





•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

Based on past month's total consumption of each item, estimate

consumption of current month. Add 2 days consumption as buffer.

Work out minimum amount (=4 days needs) of all critical items.

Decide on order quantities, and place orders.

When goods come in, check in order file and update inventory if items

accepted.

Send the cheques to vendors on item acceptance.

Update stores inventory after each issue.

When critical items go below minimum level inform mess manager

OUTPUTS

Orders to vendors

Cheques to vendors

Low item stock message to mess manager

(This system is run once a day)

This system satisfies main goal M2 and sub-goals S2.1-S2.4.

ii. System for menu planning

INPUT

No. of items in menu

Alternative for each item

Cost of each item

Maximum cost.

PROCEDURE

Reduce total cost by trying alternative items in menu.





•

•

•

Try an optimization package such as Linear Programming.

Rank menus by cost and keep 14 different menus for each meal.

Randomize menus each week.

OUTPUT: Balanced menu at reduced cost.

(This system is run once a month)

This system satisfied main goals M3.1, M3.2 and sub-goal S3.1.

Anticipated problems. Procedures should be set up to regularly back up all files and

store billing information on floppy disks. Power failure may lead to difficulties, if it is

very frequent. Hostel management may consider installing higher capacity batteries for 1

hour back up for the uninterrupted power supply system.

Implementation plan. Implementation may begin with the billing system first. It may be

followed by stores issues and inventory control and finally menu planning (see Table

below).

Table 4.2 Implementation Plan Start Time Time

Schedule in weeks

Design Implement Test Parallel Run Manual System

0 Billing system

3 3 1 4

0+3 week Stores issue system

4 3 2 3

0+6 week Inventory system

4 3 2 3

0+12 week Menu planning

5 3 2 2





Conclusions The proposed system will cost Rs.1,30,000 capital cost and will pay for itself within the

first five months of operation. It will meet all the main goals approved by the wardens

and can be implemented within 3 months. We are confident that it will fully meet the

expectations of the management.




System Analysis and Design /Feasibility Analysis Worked Examples

4. 1 What is the difference between main goals and sub-goals? Illustrate with an

example.

Main goal is based on a primary objective and sub-goals are secondary or subsidiary

which is related to the main objective.

For example, the main goal and sub-goals of an inventory control system may be as

follows:

Main goal: Reduce total inventory cost by 10%

Sub-goals:

• Find out items which are 50% above buffer level to take appropriate action.

• Find out items whose cost is 50% above average cost for closer control.

4. 2 Is it essential to use computers in all information systems?

No. Better systematization may sometimes be adequate to meet goals. However with

the reduction in the cost of computers most organizations use computers

4. 3 Distinguish between technical, operational, and economic feasibility.

A solution is technically feasible if technology is available to implement it. It is

operationally feasible if it can fit in within the existing organization with only small

changes. It is economically feasible if the investment made leads to adequate returns.

A solution which requires, say, a large mainframe computer available in the market is

technically feasible but may not be economically feasible due to high cost of the

computer relative to expected benefits. It may not be operationally feasible due to lack

of trained people to program the computer.

4. 4 Give an example of a solution which is technically feasible, but not operationally

feasible.

It is technically feasible to computerize services in a bank by installing PCs with clerks

who can be trained to operate it. It is operationally not feasible in certain banks due to

agreement between management and union which do not allow use of computers for

certain customer services.

V. Rajaraman/IISc. Bangalore //V1/July 04/1




4. 5 Is it essential that an operationally feasible solution should be technically

feasible? Discuss with examples.

No. A computerized enquiry system where enquiries are made using a telephone and

answers are automatically spoken out is operationally feasible. It is not technically

feasible due to non-availability of speaker independent natural speech recognition

technology.

4. 6 Is it essential to have tangible benefits to justify an information system? If your

answer is no, justify your answer by giving an example.

No. A ticket reservation system in railways has not much tangible benefits. However,

intangible benefits such as customer satisfaction, and ease of checking daily cash

collection are sufficient reasons to implement the system.

4. 7 A project costs Rs. 2 lakhs and the net benefits are Rs. 50,000 (1st year), Rs.80,000

(2nd year), Rs. 90,000 (3rd year), Rs. 70,000 (4th year), Rs. 50,000 (5th year) and Rs.

30,000 (6th year). Assuming 10% interest rate, would you proceed with your

project if your criterion is cost-benefit?

Year Cost Benefit Current value Cumulative

benefit

0 200,000 – – –

1 – 50,000 45,454 45,454

2 – 80,000 66,116 111,570

3 – 90,000 67,618 179,188

4 – 70,000 47,811 226,999

As payback period is 4 years, it is decided to proceed with the project.

4. 8 A manager states the following as goals of a production planning system:

1. Reduce stocks of semi-finished products.

2. Provide better information for the production planning

3. Prevent overproduction.





How would you quantify the goals? How would you obtain sub-goals and

quantify them if appropriate?

(i) Goal: Reduce stocks of semi-finished products by 10%.

Sub-goal: Classify semi-finished products as due to non-availability of

part, non-availability of machine, non-availability of tool.

(ii) Goal: Give a table giving requirement of each product.

Sub-goal: Prepare list of tools needed and when they will be needed.

Prepare maintenance schedules of machines.

(iii) Goal: Ensure that production is not more than 5% of estimated demand

of each item.

4. 9 A university administrator calls a systems analyst to improve the administration

of sponsored research projects. The main problems are delay in obtaining latest

financial position to project coordinators, reconciliation of advances given to

coordinators, prompt demands not sent to sponsors to collect promised grants

and lack of information to answer following questions:

• Which areas of research get maximum grants?

• Which agency aids which type of projects?

• What trends can be seen in the nature of grants?

Now:

1. Classify the above problems into missing functions, unsatisfactory

performance and excessive cost of operation.

2. How would you set the goals to meet the deficiencies?

3. How would you quantify them?

1.

(i) Missing Function: Analysis of types of grants and grant-giving

agencies.

(ii) Unsatisfactory Performance: Delay in obtaining financial statements;

non-reconciliation of advances.





(iii) Excessive cost: Loss due to delay in receipt of grants (loans may have to

be taken to meet expenses).

2.

(i) Goals to improve performance

— Ensure financial statements are sent each month.

— Ensure reminders on advances are sent each month.

(ii) Goals to reduce cost

— Bring to the attention of accounts officer grants overdue by 10

days.

— Send reminder ad pre-receipt 10 days before grant is due.

(iii) Goals to incorporate missing functions

— Codify research areas and granting agencies.

— Introduce uniform formats to classify grants.

— Create a database of all possible granting agencies and their areas

of research.

3. All goals are quantified in 2.

Sub-goals

— Send list of periodicals received to interested readers within 2

days of arrival of periodicals.

— Send for binding loose periodicals within 4 weeks of arrival of

last issue.

(ii) A Fully manual using cardex system.

B Using a PC and a periodicals management information system.

C Using the central computing in the university and a remote terminal

system in the library dedicated to periodicals management.





4. 10 What operational, tactical and strategic information should be provided by the

mess billing system mentioned in the text (case study)?

The information that will be provided to management by the mess billing system is:

Operational

– Each student’s bill details.

– Details of inventory held.

– Details of issues to stores.

– Details of trips to town.

– Details of expenses each day.

Tactical

– Number of days taken to dispatch bills after end of month.

– Variation of daily rate from month to month.

– Bills to students unpaid for 10 days after issue.

– Bills from vendors unpaid for 5 days.

– Inventory level of an item if 10% above average

– Issues to cooks if 5% above normal.

– Nutrition values of menus.

Strategic

– Daily rate seasonal trends.

– Extras/rebates and trends to enable better inventory planning.

– Information on menu preferences.




System Analysis and Design/ Feasibility Analysis Multiple Choice Questions

4.1 Pick quantified goals from those given below

(i) payment should be made promptly

(ii)payment should be made before 5th of every month

(iii) the age of the persons should be below 35

(iv)the person to be recruited should be middle age

a. i and ii

b. i and iii

c. ii and ii

d. ii and iv

4.2 Quantification of goals is required because

a. without quantification no work can be done

b. When goals are quantified it is possible to verify unambiguously whether

they have been fulfilled

c. Goals have to be quantified for a good system

d. it facilitates designing a good system

4.3 Quantification of goals is done by

a. converting subjective goal statements to ones with numbers

b. converting subjective goal statements to objective goal statements

c. converting objective goal statements to subjective goal statements

d. removing all adjectives in a goal statement

4.4 Quantified version of the statement: “The inventory should be reduced

substantially“ is

a. the inventory should be reduced effectively

b. the inventory should be reduced significantly

c. the inventory should be reduced very much

d. the inventory should be reduced by 25%

4.5 Goals are identified by

a. finding the deficiencies in the current system

b. observing the current system

c. analyzing competitor’s system

d. finding the advantages in the current system

4.6 Deficiencies in a system are pinpointed by identifying

(i)missing function

V. Rajaraman/IISc. Bangalore M4/V1/July 04/1




(ii)excessive cost of operation

(iii)poor management

(iv)poor operation

a. i and iii

b. i and ii

c. i and iv

d. ii and iii

4.7 Goals are identified by

a. discussion with all concerned

b. pinpointing unsatisfactory performance

c. finding poor management

d. examining a variety of documents

4.8 Characteristics of good goals are that they

(i)are quantified

(ii)improve quality

(iii)are realizable within the constraints of the organization

(iv)aim at an ideal system

a. i and ii

b. ii and iv

c. ii and iii

d. i and iii

4.9 Goals should be agreeable to

a. top management

b. project leader

c. all concerned, both management and operational staff

d. programmers

4.10 Goals should be broken down to sub-goals as it

a. expedites system design

b. provides a convenient target to aim at during system design

c. is recommended by experienced analysts

d. is good idea to use

4.11 During feasibility analysis it is necessary to examine several alternative

solutions because





(i)a comparison of alternatives will lead to a cost-effective

solution

(ii)a pre-conceived single solution may turn out to be

unimplementable

(iii)it is always good to examine alternatives

(iv)management normally looks at alternatives

a. i and iii

b. i and iv

c. i and ii

d. ii and iv

4.12 A computer-based information system

a. may require some tasks to be done manually

b. should not have any manual tasks

c. is always fully automated

d. may use only computers

4.13 Among alternative solutions for an information system one may consider

a. PC based solutions only

b. an improved manual system

c. only client-server based solutions as they are popular now-a-days

d. whatever management decides

4.14 By technical feasibility of a solution we mean that

a. technology is available to implement it

b. persons are available to implement it

c. persons have technical ability to implement it

d. funds are available to implement it

4.15 By operational feasibility we mean

a. the system can be operated nicely

b. the system is unusable by operators

c. the system can be adapted by an organization without major disruptions

d. the system can be implemented

4.16 By economic feasibility of a system we mean that

a. it is economical to operate

b. it is expensive to operate





c. it will be cost-effective if implemented

d. finances are available to implement the system and it will be cost-

4.17 A solution is said to be feasible for implementation if

(i)it is cost-effective and finance is available to implement it

(ii)technology is available to implement it

(iii)it can be adapted to work in an organization’s environment

(iv)it has been implemented in another organization

a. ii and iii

b. i, ii and iii

c. i and iv

d. i, ii and iv

4.18 A cost-benefit analysis is performed to assess

a. economic feasibility

b. operational feasibility

c. technical feasibility

d. all of the above

4.19 The primary objective of cost-benefit analysis is

a. to find out direct and indirect cost of developing the information system

b. to determine the tangible benefits of the information system

c. to determine if it is economically worthwhile to invest in developing the

information system

d. to determine the intangible benefits of the information system

4.20 A cost-benefit analysis is performed as a part of

a. system design

b. system specification

c. system performance assessment

d. feasibility analysis

4.21 A cost benefit analysis consists of

(i)finding the direct and indirect cost of developing,

implementing and running the system





(ii)finding out the tangible and intangible benefit of the system

(iii)finding the investment to be made in the system

(iv)finding the profit which will accrue from the system

a. iii and iv

b. i and iv

c. ii and iii

d. i and ii

4.22 The tangible benefits in the following list are

(i)savings due to reducing investment

(ii)savings due to sending bills faster and consequent early

collection

(iii)providing better service to the customers

(iv)improving quality of company’s products

a. i and ii

b. ii and iii

c. iii and iv

d. i and iii

4.23 The intangible benefits in the following list are

(i)savings due to reducing investment

(ii)savings due to sending bills faster and consequent early

collection

(iii)providing better service to the customers

(iv)improving quality of company’s products

a. i and ii

b. ii and iii

c. iii and iv

d. i and iii

4.24 Intangible benefits are

a. not very important

b. as important as tangible benefits

c. the most important benefits

d. irrelevant in feasibility study

4.25 Pick the indirect cost from the following





a. cost of new forms

b. cost of training analysts and users

c. cost of software to be brought

d. cost of fact gathering

4.26 In payback method one finds out

a. the period necessary to invest the cost of the system

b. the time required for the full benefits to accrue

c. the time at which benefits exceed cost

d. whether the system is able to payback amount invested

4.27 In simple payback method one

a. accounts for interest payments on benefits

b. ignores interest payments

c. only accounts for interest on capital investments

d. only accounts for interest on recurring expenses

4.28 In designing a system it is found that the cost of the system was Rs

1,50,000 and the benefit is Rs 10,000 per month. The interest is 1% per

month; the payback period using payback method with interest is

a. 14 months

b. 17 months

c. 15 months

d. 20 months

4.29 In designing a system it is found that the cost of the system was Rs

1,50,000 and the benefit is Rs 10,000 per month. The interest is 1% per

month; the payback period using the present value method is

a. 14 months

b. 17 months

c. 15 months

d. 20 months

4.30 In present value method one has to account for

a. interest rate prevalent at a given time

b. exchange rate prevalent at a given time

c. sales tax rate prevalent at a given time

d. both income and sales tax rates prevalent at a given time





4.31 At the end of the feasibility study the systems analyst

a. meets the users for a discussion

b. gives a summary feasibility report to the management

c. gives a systems proposal to management

d. tells the top management if the system is not feasible

4.32 The most important parts of a feasibility report are

(i)cost-benefit analysis

(ii)statement of the objective of the proposed system

(iii)who will supply equipment for implementing the system

(iv)organizational changes needed to successfully implement the

system

a. i and ii

b. i, ii and iii

c. i and iv

d. i, ii and iv

4.33 A detailed system proposal is prepared by a systems anal

a. management is not clear about what the system will do

b. the analysts feels it is necessary to convince the management

c. management approves the feasibility report

d. the analyst feels it will be a challenging system to implement

4.34 The main objectives of a detailed system proposal are to

(i)convince management about the benefits of the proposed

system

(ii)explain in detail to the management what to expect from the

system and at what cost

(iii)have a detailed plan on what the system will do and how it will

be implemented

(iv)make sure that it is possible to implement the system

a. i and ii

b. ii and iii

c. i and iv

d. ii and iv





4.35 The following are the most important points of a detailed system

proposal

(i)who will supply and install the required equipment

(ii)cost-benefit analysis

(iii)comparison of alternative solutions

(iv)implementation plan

a. i, ii and iii

b. i, iii and iv

c. ii, iii and iv

d. ii and iii





Key to Objective Questions

4. 1 c 4.2 b 4.3 a 4.4 d 4.5 a 4.6 b

4.7 b 4.8 d 4.9 c 4.10 b 4.11 c 4.12 a

4.13 b 4.14 a 4.15 c 4.16 d 4.17 b 4.1 8 a

4.19 c 4.20 d 4.21 d 4.22 a 4.23 c 4.24 b

4.25 d 4.26 c 4.27 b 4.28 c 4.29 b 4.30 a

4.31 b 4.32 d 4.33 c 4.34 b 4.35 c




System Analysis and Design/Feasibility Analysis Question Bank

QUESTION BANK 4

4.1 When are the goals of a project specified?

4.2 How are goals determined?

4.3 What should be the characteristics of goals?

4.4 What is the difference between main goals and sub-goals? Illustrate with an example.

4.5 Once the goals are formulated, what is the next step followed by a system analyst?

4.6 Is it essential to use computers in all information systems?

4.7 Distinguish between technical, operational and economic feasibility.

4.8 What do you understand by the term feasibility study of a solution?

4.9 Give an example of a solution which is technically feasible, but not operationally

feasible.

4.10 Give an example of a technically feasible solution which is not economically

feasible.

4.11 Give an example of an operationally feasible solution which is not economically

feasible.

4.12 Is it essential that an operationally feasible solution should be technically feasible?

Discuss with examples.

4.13 What is the difference between tangible and intangible benefits?

4.14 Give examples of tangible and intangible benefits.

4.15 For the problem of periodical information system (Exercise 4.23 below), specify

tangible and intangible benefits.

4.16 What is meant by cost-benefit analysis?

4.17 A system costs Rs.1 lakh to install and Rs.10,000 per month as recurring expenses.

The benefit per year is Rs.1.5 lakhs. Assuming an interest rate of 12%, what is the

pay back period of the investment?





How does inflation affect pay back period?

Is it essential to have tangible benefits to justify an information system? If you

answer is no, justify your answer by giving an example.

4.18 A project costs Rs.2 lakhs and the net benefits are Rs.50,000 (1st year), Rs.80,000 2nd

year),Rs.90,000 (3rd year), Rs.70,000 (4th year), Rs.50,000 (5th year), and Rs.30,000

(6th year). Assuming 10% interest rate, would you proceed with this project if your

criterion is cost/benefit?

4.19 A manager states the following as the goals of a production planning system:

1 Reduce stock of semi-finished products.

2 Provide better information for the production planning.

3 Prevent overproduction.

How would you quantify the goals? How would you obtain sub goals and quantify

them if appropriate?

4.20 A university administrator calls a systems analyst to improve the administration of

sponsored research projects. The main problems are delay in obtaining latest

financial position to project coordinators, reconciliation of advances given to

coordinators, prompt demands not sent to sponsors to collect promised grants and

lack of information to answer following questions:

Which areas of research get maximum grants?

Which agency aids which type of projects?

What trends can be seen in the nature of grants?

Now:

1. Classify the above problems into missing functions, unsatisfactory performance

and excessive cost of operation.

2. How would you get goals to meet the deficiencies?





3. How would you quantify them?

4.21 A library receives 1300 journals of varying periodicities. The journals received have

to be recorded and displayed. Action has to be taken when journals are not received

in time or lost in mail. Unless request for replacement is sent quickly, it may not be

possible to get the replacement. Periodicals have to be ordered at different times

during the year and subscriptions renewed in time. Late payment of subscription may

lead to non-availability of earlier issues or paying higher amounts for those issues.

Current manual system is not able to meet these requirements.

1. Specify what should be the goals and sub-goals of an information system for

ordering periodicals.

2. Quantify these goals.

3. Suggest alternative means of achieving the goals specified by you.

4.22 What operational, tactical, and strategic information should be provided by the mess

billing system mentioned in the text? (Case study).

4.23 When is a detailed system proposal prepared? What are the contents of a system

proposal?




System Analysis and Design/Feasibility Analysis Pointers

References

1. This module is based on Chapter 6, “Feasibility Analysis”, of the book Analysis and Design of Information Systems by V.Rajaraman, Prentice Hall of India. Parts of the the book have been used in case studies.

2. J.E.Kandall and J.E.Kandall, Systems Analysis and Design, 5th Edition, Pearson Education (Asia) 2003. Part of Chapter 3 pp.55-63 deal with feasibility analysis. It is reasonably well treated but does not have any quantitative examples.

3. R.Schultheis and Mary Summer, Management Information Systems, Tata McGraw Hill, 1999. Very short treatment of feasibility analysis as part of system Life Cycle (pp.544-545).

4. S.Alter, Information Systems, 4th Edition, Pearson Education Asia, New Delhi, 2002. A brief discussion of feasibility analysis presented on pp.481 as part of traditional life cycle method. In the same chapter there is a brief discussion of prototype method which is used when users are not able to state their requirements clearly.

5. K.C.Laudon and J.P.Laudon, Management Information Systems, Pearson Education Asia, New Delhi, 2004. Very brief discussion (one para only) on p.390)

6. J.A.Hoffer, J.F.George and J.S.Valacich, Modern Systems Analysis and Design, Pearson Education Asia, New Delhi 2002. Has a good discussion of feasibility. Study on pp.168 to 181. Besides Technical, operational and Economic feasibility they also include other parameters which are schedule, legal/contractual and political feasibility which arise when one tries to develop a system.


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