ITCO 603: System Analysis Modeling and Design

Analyzing The Business Case

College of Information Technology (CIT)

United Arab Emirates University
 Chapter Objectives
 Explain the concept of a system request and business case and how a
business case affects an IT project
 Describe the strategic planning process and why it is important to
the IT team
 Conduct a SWOT analysis and describe the four factors involved
 Explain the purpose of a mission statement
 Explain how the SDLC serves as a framework for systems
development
 List reasons for systems projects and factors that affect such projects
 Describe systems requests and the role of the systems review
committee
 Define operational, technical, economic, and schedule feasibility
 Describe the steps and the end product of a preliminary investigation

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Introductory Case

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Introductory Case (2)

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 Introduction
During the systems planning phase,
the IT team reviews a proposal to determine if it presents a strong business
case
To analyze the business case for a specific proposal
the analyst must consider the company’s overall mission, objectives, and IT
needs
Systems development typically starts
with a systems request followed by a preliminary investigation, which includes
a feasibility study

Note: Business case - Justification of the project.

1. A business case captures the reasoning for initiating a project or task.
2. The logic of the business case is that, whenever resources such as money or effort are
consumed, they should be in support of a specific business need
3. An example could be that a software upgrade might improve system performance, but the
"business case" is that better performance would improve customer satisfaction, require less
task processing time, or reduce system maintenance costs. A compelling business case
adequately captures both the quantifiable and unquantifiable characteristics of a proposed
project. Business case depends on business attitude and business volume 5
 Strategic Planning
Strategic planning is the process of
identifying long-term organizational goals, strategies,
and resources.
Strategic planning looks beyond day-to-day activities
and focuses on a horizon that is 3, 5, 10, or more years in
the future
What does a systems analyst need to know about
strategic planning?
Why are we doing it?

Note: Strategic planning is an organization's process of defining its strategy, or

direction, and making decisions on allocating its resources to pursue this strategy.
It is executed by strategic planners or strategists, who involve many parties and
research sources in their analysis of the organization and its relationship to the
environment in which it competes 6
 Strategic Planning (2)

SWOT Analysis
is the first step
in SP

FCC: Federal
Commerce
Commission

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 Strategic Planning (3)

SWOT Analysis asks questions on:

What are our strengths
 and how can we use them to achieve our business goals?

What are our weaknesses

 and how can we reduce or eliminate them?

What are our opportunities

 and how do we plan to take advantage of them?

What are our threats

 and how can we assess, manage, and respond to the
possible risks?

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 Strategic Planning (4)

SWOT analysis is a solid foundation

for the strategic planning process,
because it examines a firm’s technical human, and
financial resources.

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patent review might generate input like the
following:

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 Strategic Planning (5)
SP is a dynamic process
The mission statement reflects long term horizon
Sets forth goals that are achievable

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 What is a Business Case?
A Business case refers to
the reasons, or justification, for a proposal
 should be comprehensive, yet easy to understand
 describe the project clearly, provide the justification to
proceed, and estimate the project’s financial impact
Questions asked
 What & Why
 Time & Cost
 Transition effects
 ROI (return on investment) & payback period
 Risks (of doing and not doing)
 Success measurement
 Alternatives

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 Information System Projects
What are the main reasons for new/updated IS
Projects?

Stronger control
secures data &
user privileges

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 Main Reasons for IS Projects
Improved service and customer satisfaction
Customers check their account balances on a web site
Storing data on rental car customer preferences
creating an online college registration system
Support for new product and services
Requires new IT support
Example: company might add a special service for RFID-
tagged shipments - additional IT support will be
required
Product obsolescence can also be an important factor in
IT planning – support for older versions may stop

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 Main Reasons for IS Projects (2)

Current system might not meet performance:

requirements
 For example, it might respond slowly to data inquiries at
certain times
 or it might be unable to support company growth
 System may be designed for specific hardware configurations
More information
 system might produce information that is insufficient
 For example, a system that tracks customer orders might not
be capable of analyzing and predicting marketing trends
 Managers need the best possible info to make major decisions

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 Main Reasons for IS Projects (3)

Stronger controls
 Effective controls ensure security and integrity of data
 Security controls – password, user access levels, encryption
 Hardware based – biometric authentication
 Controls also minimize data entry errors
 However, too much data entry control may annoy the users

Reduced cost
 Current system may be expensive
 New system may be more cost effective and serve longer
time

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What are the factors affecting Systems Project?

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 Project Management
Business case analysis involves consideration of
project reasons, costs, benefits, and risks
Projects should be planned, scheduled, monitored
and controlled, and reported upon
Requires concepts, tools, skills, and techniques
Requires risk management
Identify, analyze risk
Create risk management and response plan

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 Evaluation of Systems Request
Evaluation of systems requests is done by group of key
managers and users
also called systems review committee or a
computer resources committee
Request Forms:
Structured application form
Steps after receiving the form
IT Manager – examines what resources needed for
preliminary investigation
Decision made – whether to proceed with the Preliminary
Investigation.

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System Request Form

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 Evaluation of Systems Request (2)

Systems review committee

Most large companies use a systems review committee to
evaluate systems requests.
Committee approach provides a variety of experience and
knowledge
Can establish priorities more effectively than an individual
Less biased
Disadvantages
 action requests must wait until meeting
 internal departmental interest

Goal is to evaluate the request and set priorities

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 Feasibility Study
Suppose four systems review requests must be reviewed:
Project 1: Customer Spending Habits Analyzer to forecast future
trends;
Project 2: Cellular link so that service representatives can download
technical data instantly;
Project 3: Redesign customer statements and allow Internet access;
Project 4: Inventory control system that can exchange data with
major suppliers.
Which projects should the firm pursue?
What criteria should be applied?
How should priorities be determined?

To answer those questions, the individual or the committee must

assess the feasibility of each request.
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Feasibility Study (2)

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 Feasibility Study (3)
The systems analyst asks these important questions:
1) Is the proposal desirable in an operational sense?
Is it a practical approach that will solve a problem or take advantage of an
opportunity to achieve company goals?
2) Is the proposal technically feasible?
Are the necessary technical resources and people available for the project?

3) Is the proposal economically desirable?

What are the projected savings and costs?
Are other intangible factors involved, such as customer satisfaction or
company image?
Is the problem worth solving, and will the request result in a sound
business investment?
4) Can the proposal be accomplished within an acceptable time
frame?
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 Operational Feasibility
Operational Feasibility: A proposed system will be used
effectively after it has been developed
Consider the following questions:
Does management support the project?
 Do users support the project?
 Is the current system well liked and effectively used?
 Do users see the need for change?
Will the new system result in a workforce reduction?
 If so, what will happen to affected employees?
Will the new system require training for users?
 If so, is the company prepared to provide the necessary resources for
training current employees?
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 Operational Feasibility (2)
 Will users be involved in planning the new system right from the
start?
 Will the new system place any new demands on users or require
any operating changes?
 For example, will any information be less accessible or

produced less frequently?

 Will performance decline in any way? If so, will an overall gain

to the organization outweigh individual losses?

 Will customers experience adverse effects in any way, either
temporarily or permanently?
 Will any risk to the company’s image or goodwill result?
 Does the development schedule conflict with other company
priorities?
 Do legal or ethical issues need to be considered?

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 Technical Feasibility
Technical Feasibility: Technical resources need to
develop, purchase, install, or operate the system
Analyst must consider the following points:
Does the company have the necessary hardware,
software, and network resources?
 If not, can those resources be acquired without difficulty?
Does the company have the needed technical expertise?
 If not, can it be acquired?

Does the proposed platform have sufficient capacity for

future needs?
 If not, can it be expanded?

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 Technical Feasibility (2)

Will a prototype be required?

Will the hardware and software environment be reliable?
Will it integrate with other company information systems,
both now and in the future?
Will it interface properly with external systems operated by
customers and suppliers?
Will the combination of hardware and software supply
adequate performance?
Do clear expectations and performance specifications exist?
Will the system be able to handle future transaction
volume and company growth?

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 Economic Feasibility
Economic Feasibility: Means that the projected benefits of the proposed
system outweigh the estimated costs
Usually considered the total cost of ownership (TCO)
To determine TCO the analyst must estimate costs in each of the
following areas:
People, including IT staff and users
Hardware and equipment
Software, including in-house development as well as purchases from
vendors
Formal and informal training
Licenses and fees
Consulting expenses
Facility costs
The estimated cost of not developing the system or postponing the project
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 Economic Feasibility (2)
 In addition to costs, we need to assess the tangible and intangible benefits
Tangible benefits
 A new scheduling system that reduces overtime
 An online package tracking system that improves service and decreases
the need for clerical staff
 A sophisticated inventory control system that cuts excess inventory and
eliminates production delays
Intangible benefits are
 advantages that are difficult to measure in dollars
 but are important to the company.
Examples of intangible benefits include the following:
 A user-friendly system that improves employee job satisfaction
 A sales tracking system that supplies better information for marketing
decisions
 A new Web site that enhances the company’s image

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 Schedule Feasibility
Schedule Feasibility: Means that a project can be implemented in an
acceptable time frame
Systems analyst must consider the interaction between time and costs (e.g.
speed vs cost)
Other issues that relate to schedule feasibility :
Can the company or the IT team control the factors that affect schedule
feasibility?
Has management established a firm timetable for the project?
What conditions must be satisfied during the development of the system?
Will an accelerated schedule pose any risks?
If so, are the risks acceptable?

Will project management techniques be available to coordinate and

control the project?
Will a project manager be appointed?
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 Evaluating Feasibility
The first step in evaluating feasibility is
to identify and weed out systems requests that are not
feasible
For example, a request would not be feasible if it required
hardware or software that the company already had rejected.
Even if the request is feasible,
it might not be necessary
Systems requests that are not currently feasible
can be resubmitted as new hardware, software, or expertise
becomes available
An infeasible project may later become feasible and vice-
versa
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 Setting Priorities
The highest priority goes to projects that
provide the greatest benefit, at the lowest cost, in the
shortest period of time
Consider the following:
Will the proposed system reduce costs? Where?
When? How? How much?
Will the system increase revenue for the company?
Where? When? How? How much?
Will the systems project result in more information or
produce better results?

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 Setting Priorities (2)
Will the system serve customers better?
Will the system serve the organization better?
Can the project be implemented in a reasonable time
period? How long will the results last?
Are the necessary financial, human, and technical
resources available?
Discretionary and Nondiscretionary Projects
Discretionary – has a choice. Eg: creating a new report
for user
Nondiscretionary – no choice other than
implementing. Eg: report required by federal law
Do we need review for nondiscretionary?
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Preliminary Investigation Overview
The preliminary investigation is a report to the
management

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Planning Preliminary Investigation

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Step 1: Understand the problem or opportunity
New system or substantial change - Develop a
business profile
Minor changes – still need to understand how it will
affect the business
Systems request may not reveal the problem, only
the symptom.
Investigate the root causes of the problem
Example: request to investigate mainframe
processing delays might reveal improper scheduling
practices rather than hardware problems.

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 Step 1: Understand the problem or opportunity (2)

Fishbone Analysis

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Step 2: Define the Project Scope and Constraints
Scope means defining specific boundaries, or extent of
the project
For Example: the statement, the project scope is to
modify the accounts receivable system, is not as specific
as the statement,
The project scope is to allow customers to inquire
online about account balances and recent transactions.

Note:
Project Creep: uncontrolled changes or continuous growth in a project's
scope. This can occur when the scope of a project is not properly defined,
documented, or controlled. It is generally considered harmful.
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Step 2: Define the Project Scope and Constraints (2)
Projects with very general scope definitions
 are at risk of expanding gradually, without specific authorization,
 in a process called project creep.
To avoid this problem,
 you should define project scope as clearly as possible.
Along with defining the scope of the project,
 you need to identify any constraints on the system.
 A constraint is a requirement or condition that the system must
satisfy or an outcome that the system must achieve.
Different types of constraints:
Present vs future, internal vs external, mandatory vs
desirable

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Step 2: Define the Project Scope and Constraints (3)

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 Step 3: Perform Fact Finding

The objective of fact-finding is to gather data about

project usability, costs, benefits, and schedules.
Tools
Analyze organization charts
Conduct interviews
Review documentation
Observe operations
Conduct a survey
Analyze the data

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Step 4: Analyze Project Usability, Cost, Benefit, and
Schedule Data
Develop time and cost estimates for the requirements
modeling tasks for the next SDLC phase
Specifically, you should consider the following:
Type of information to be gathered and analyzed
Will you conduct interviews?
Will you conduct a survey?
Analysis cost

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 Steps 5 & 6
Step 5: Evaluate feasibility

Step 6: Present Results and Recommendations to

Management
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