systems analysis and design project initiation€¦ · systems analysis and design alan dennis,...

Systems Analysis and DesignSystems Analysis and Design

Alan Dennis, Barbara Haley Wixom, and Roberta RothJohn Wiley & Sons, Inc.

Slides by Candace S. Garrod Red Rocks Community College

Project InitiationProject Initiation

Chapter 2

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Key IdeasAn opportunity to create businessvalue from using informationtechnology initiates a project.Feasibility analysis helps determinewhether or not to proceed with theIS project.Projects are selected based onbusiness needs and project risks.

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Key IdeasThe project sponsor is a key person whoidentifies business value to be gainedfrom using information technology.The approval committee reviews systemrequests from groups throughout theorganization and selects projects for thebenefit of the business.

IDENTIFYING PROJECTSIDENTIFYING PROJECTSWITH BUSINESS VALUEWITH BUSINESS VALUE

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How Do Projects Begin?

Business needs should drive projects.Project sponsor recognizes businessneed for new system and desires to seeit implemented.Business needs determine the system’sfunctionality (what it will do).The project’s business value should beclear.

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System Request

A document describing businessreasons for project and system’sexpected value.Lists project’s key elements

Project sponsorBusiness needBusiness requirementsBusiness valueSpecial issues or constraints

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System Request Examples

Project sponsor – VP of MarketingBusiness need – Reach new customers andimprove service to existing customersBusiness requirements – Provide web-basedshopping capabilityBusiness value - $750,000 in new customersales; $1.8M in existing customer salesSpecial issues or constraints – System mustbe operational by holiday shopping season

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Preliminary Project Acceptance

System request is reviewed byapproval committeeBased on information provided,project merits are assessed.Worthy projects are accepted andundergo additional investigation –the feasibility analysis.

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Your TurnIf you were building a web-based systemfor course registration,

What is the business need?What would be the business requirements?What would be the business value (tangibleand intangible)?What special issues or constraints wouldyou foresee?

FEASIBILITY ANALYSISFEASIBILITY ANALYSIS

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Feasibility Analysis

Detailed business case for the projectTechnical feasibilityEconomic feasibilityOrganizational feasibility

Compiled into a feasibility studyFeasibility is reassessed throughoutthe project

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Technical Feasibility:

Users’ and analysts’ familiarity withthe business application areaFamiliarity with technology

Have we used it before? How new isit?

Project sizeNumber of people, time, and features

Compatibility with existing systemsPowerPoint Presentation for Dennis, W ixom & Roth Systems Analysis and Design, 3rd Edition

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Economic FeasibilityShould We Build It?

Identify costs and benefitsAssign values to costs and benefitsDetermine cash flowAssess financial viability

Net present value (NPV)Return on investment (ROI)Break even point (BEP)

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Example Costs and Benefits forEconomic Feasibility

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Assign Cost and Benefit Values

Difficult, but essential to estimateWork with people who are mostfamiliar with the area to developestimatesIntangibles should also be quantifiedIf intangibles cannot be quantified,list and include as part of supportingmaterial

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Determine Cash Flow:Assign Values to Costs and Benefits –

Simple Cash Flow Method

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Assess Financial Viability – Net Present Value

NPV = ∑ PV(future cash inflows) – ∑ PV(future cash outflows)

PV = Cash flow amount (1 + interest rate)n , where

interest rate = required return n = number of years in future

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Determine NPV

If NPV >= 0,

Project is OK

If NPV < 0,

Project is unacceptable

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Assess Financial Viability –Return on Investment

ROI = NPV ∑PV(cash outflows)

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Assess Financial Viability –Break Even Point

How long before the project’sreturns match the amount investedThe longer it takes to break even,the higher the project’s risk.

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Organizational FeasibilityIf we build it, will they come?

Strategic alignmentHow well do the project goals alignwith business objectives?

Stakeholder analysisProject champion(s)Organizational managementSystem users

PROJECT SELECTIONPROJECT SELECTION

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Project Selection Issues

Approval committee works from thesystem request and the feasibility study

Project portfolio – how does the project fitwithin the entire portfolio of projects?Trade-offs must be made to select projectsthat will form a balanced project portfolioViable projects may be rejected or deferredbecause of project portfolio issues.

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SummaryProject initiation involves creating andassessing goals and expectations for a newsystemIdentifying the business value of the newproject is a key to successFeasibility study is concerned with insuringthat technical, economic, and organizationalbenefits outweigh costs and risksProject selection involves viewing the projectwithin the context of the entire projectportfolio, and selecting those projects thatcontribute to balance in the portfolio

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