Chapter 5 (intro to systems analysis & design)

Economic Feasibility

-A process of identifying the financial benefits and costs associated with a development project -referred to as *cost-benefit analysis*

Assessing Project Feasibility

-Economic -Technical -Operational -Scheduling -Legal and contractual -Political

Sections of BPP

-Introduction -System description -Feasibility assessment -Management issues

Recurring Costs include:

-application software maintenance -incremental data storage expenses -incremental communications -new software/hardware leases -supplies

Fixed cost

-billed or incurred at a regular interval and usually at a fixed rate -Ex: facility lease payment

Walkthrough roles

-coordinator -presenter -user -secretary -standard-bearer -maintenance oracle

IS development tangible costs:

-hardware costs -labor costs -operational costs

Variable costs

-items that vary in relation to usage -Ex: long-distance charges

Intangible costs include:

-loss of customer goodwill -employee morale -operational inefficiency

Feasibility concerns

-operational -scheduling -legal and contractual -political

BPP Project Scope sections

-problem statement -project objectives -project description -business benefits -deliverables -expected duration

Tangible benefits

-refers to items that can be measured in dollars and with certainty -Ex: reduced personnel expenses, lower transaction costs, higher profit margins

One-time costs include:

-systems development -new hardware and software purchases -user training -site prep -data or system conversion

Tangible cost

A cost associated with an information system that can be measured in dollars and with certainty.

Intangible cost

A cost associated with an information system that cannot be easily measured in terms of dollars or with certainty

One-time cost

A cost associated with project start-up and development or system start-up.

Recurring Cost

A cost resulting from the ongoing evolution and use of a system.

Baseline Project Plan (BPP)

A document intended primarily to guide the development team

Project Scope Statement (PSS)

A document prepared for the customer that describes *what the project will deliver* and outlines generally at a high level *all work required* to complete the project.

Baseline Project Plan (BPP)

A major *outcome and deliverable from the project initiation and planning phase* that contains the best estimate of a project's scope, benefits, costs, risks, and resource requirements.

Technical Feasibility

A process of assessing the development organization's ability to construct a proposed system.

Risk assessment rule #4:

A project is less risky when the user group is familiar with the systems development process and application area than if unfamiliar.

Risk assessment rule #2:

A system in which the requirements are easily obtained and highly structured will be less risky than one in which requirements are messy, ill structured, ill defined, or subject to the judgment of an individual.

User group

Familiarity with IS development process, application area, use of similar systems

Development group

Familiarity with platform, software, development method, application area, development of similar systems

Risk assessment rule #1:

Larger projects are riskier than smaller projects

Project structure

New vs. renovated system, resulting organizational changes, management commitment, user perceptions

Net Present Value

PVn = present value of *Y* dollars *n* years from now based on a discount rate of *i*

Discount rate

The rate of return used to compute the present value of future cash flows (cost of capital)

Net Present Value (NPV)

Use discount rate to determine present value of cash outlays and receipts

Mangament issues

outlines a number of managerial concerns related to the project

Feasibility assessment

outlines issues related to project costs and benefits, technical difficulties, and other such conerns

System Description

outlines possible alternative solutions

Return on Investment (ROI)

ration of cash receipts to cash outlays

NPV

sum of PVs across years

Project size

team size, organizational departments, project duration, programming effort

Time value of Money (TVM)

the concept that money available today is *worth more than* the same amount tomorrow

Present value

the current value of a future cash flow

Intangible benefits

benefits derived from the creation of an information system that cannot be easily measured in dollars or with certainty

Break-even analysis

A type of cost-benefit analysis to identify at what point (if ever) benefits equal costs.

Break-Even Analysis (BEA)

Amount of time required for cumulative cash flow to equal initial and ongoing investment

Risk assessment rule #3:

The development of a system employing commonly used or standard technology will be less risky than one employing novel or nonstandard technology.

Business Case

The justification for an information system, presented in terms of the tangible and intangible economic benefits and costs and the technical and organizational feasibility of the proposed system.

Structured walkthroughs

a peer-group review of any product created during the system development process