Information System

Development

Chapter 2: Analyzing The Business

Case

Chapter 2: Analyzing The Business Case 1

Introduction
„ During the system planning phase, a system analyst
(SA) reviews a proposal to determine if it presents a
strong business case.
„ Business Case
‰ Refers to the reason, or justification, for a proposal.
‰ To produce business case, SA must consider company’s
overall mission, objectives, and IT needs
„ System Development start with:
‰ System request
‰ Preliminary investigation
‰ Preliminary report

Chapter 2: Analyzing The Business Case 2

Strategic Planning—A Framework for IT System
Development
„ Strategic Planning
‰ Is the process of identifying long-term organizational goals,
strategies, and resources
„ Use SWOT (Strength, Weaknesses, Opportunities, and
Threats) Analysis
„ Mission Statement
‰ Describes a company for its stakeholders and briefly states the
company overall purpose, products services, and values
‰ Stakeholders include anyone affected by the company
operations, such as customers, employees, suppliers,
stockholders and members of the communities.
„ Goals – a sets of goals that will accomplish mission
„ To achieve those goals the company develops a list of
shorter-term objectives.

Chapter 2: Analyzing The Business Case 3

Information System Projects
„ Reason for System „ Factors that affects system
projects
Projects
‰ Internal Factors
‰ Improve service „ Strategic plan
‰ Better performance „ Top Managers
„ User Request
‰ More information
„ IT Department
‰ Stronger controls „ Existing System
‰ Reduce Cost ‰ External Factors
„ Technology
„ Suppliers
„ Customers
„ Competitors
„ The economy
„ government

Chapter 2: Analyzing The Business Case 4

Project Management Tools
„ All IT projects, large and small, must be managed and
controlled.
„ A project start with system request and will continue until
completed.
„ A project is manage by project manager.
„ Project management tools - Microsoft Project.
„ Help manage & control project effectively and efficiently.
„ Project Management Tools contains:
‰ Project schedule
‰ Project task
‰ List of activities & participants
‰ Estimates project milestone dates
‰ Track all cost.

Chapter 2: Analyzing The Business Case 5

Evaluation of System Requests
„ System request must be evaluated by a group of key
managers and users called system review committee or
computer resources committee.
„ System Request Forms
‰ Fill the form and send it to system analyst (SA)
‰ SA will do preliminary investigation.
‰ System review committee will make decision for next action.
„ System Review Committee
‰ Consist of IT directors and managers from other departments.
‰ Some company, system request is evaluated by one person.
‰ To evaluate the system request and set priorities.

Chapter 2: Analyzing The Business Case 6

Overview of Feasibility
„ Feasibility study is a set of test to see
whether it is worthwhile to proceed further.
„ Four types of feasibility study to measure a
proposal:
‰ Operational feasibility
‰ Technical feasibility
‰ Economic feasibility
‰ Schedule feasibility

Chapter 2: Analyzing The Business Case 7

Operational Feasibility
„ Means that a proposed system will be used/operate
effectively after it has been developed.
„ Key issues
‰ User & management support and will be effectively use by them.
‰ Workforce reduction
‰ Training
‰ User involvement in the system planning
‰ Changes on any operation, information accessibility, and
performance
‰ Effects on customers, either temporary or permanent.
‰ Risk to the company image
‰ Schedule conflict with other activities
‰ Legal and ethical issue

Chapter 2: Analyzing The Business Case 8

Technical Feasibility
„ Refers to the technical resources needed to
develop, purchase, install, or operate the
system.
„ Key issues:
‰ Have hardware, software, and network
resources?
‰ Technical expertise
‰ Have sufficient capacity for future needs
‰ Reliability, integration
‰ Performance

Chapter 2: Analyzing The Business Case 9

Economic Feasibility
„ Means that the projected benefits of the proposed
system outweigh the estimated costs usually
considered the total cost of ownership (TCO)
„ Include ongoing support, maintenance cost, and
acquisition cost.
„ Also assess tangible and intangible benefits
‰ Tangible benefits are benefits that can be measured in
dollars.
‰ Result from a decrease and increase in revenues or
expenses.
‰ Intangible benefits are advantages that are difficult to
measure in dollars.

Chapter 2: Analyzing The Business Case 10

Evaluating Feasibility & Setting Priorities
„ Identify and weed out system request that are not feasible.
„ Evaluate alternatives solution.
„ Evaluate against development efforts, cost, and requirement
changes.
„ Set priorities to all system request.
„ System request that have highest priority should be
implemented first.
‰ Reduce cost, increase revenue, produce better result, serve
customer better, serve organization better, implemented in
resonable time period, and available resources.
„ Projects where management has a choice in implementing
them is called discretionary project.
„ Projects where no choice exists are called non-discretionary
project.

Chapter 2: Analyzing The Business Case 11

Preliminary Investigation
„ A system analyst conducts a preliminary investigation to study
the system request and recommend specific action.
„ Before investigation, contact key managers and users to notify
about the investigation and your role.

Project Scope
& Constraint

Problem or Project
Opportunity Fact-Finding Benefits Report to
management

Development
Time and Cost

Chapter 2: Analyzing The Business Case 12

Planning the Preliminary Investigation
Step 1: Understand the problem or opportunity
Step 2: Define the project scope and constraint
Step 3: Perform fact finding
Step 4: Evaluate Feasibility
Step 5: Estimate project development time and
cost
Step 6: Present results and recommendations
to management.

Chapter 2: Analyzing The Business Case 13

Step 1: Understand the problem or opportunity
„ Understand the business profile that describes
business process and functions.
„ Identify problem or symptom
„ Fishbone diagram or Ishikawa diagram is a popular
technique to investigate causes and effects.
environment workers

Too hot training Unhappy

workers

old
management machine

Chapter 2: Analyzing The Business Case 14

Step 2: Define the project scope and constraint

„ Project scope means to define the boundaries, or extent, of

the project—being as specific as possible.
‰ General statement: Payroll is not being produced accurately
‰ More specific statement: Overtime pay is not calculated
accurately for the production workers on the second shift at the
Yorktown plant.
‰ General scope: to modify the account receivable system.
‰ More specific scope : to allow customers to inquire online
account balances and recent transaction.
„ A constraint is a requirement or condition that the system
must satisfy or an outcome that the system must achieve. For
example:
‰ System must operate with existing IBM mainframe server.
‰ The order entry must accept input from 15 remote sites.
‰ The new website must operate by March 1, 2004.

Chapter 2: Analyzing The Business Case 15

Step 3: Perform fact finding
„ Fact-finding involves various techniques,
depending on what information is needed.

1. Analyze organization charts

2. Conduct interviews
3. Review documentation
4. Observe operation
5. Conduct a user survey

Chapter 2: Analyzing The Business Case 16

Step 4: Evaluate Feasibility
„ Evaluate the project’s operational, technical,
economic, and schedule feasibility.
„ May use financial analysis tool.
„ See previous slide (Evaluating Feasibility & Setting
Priorities)
Step 5: Estimate project development time and
cost
„ To develop specific time and cost estimates for the
next development phase.

Chapter 2: Analyzing The Business Case 17

Step 6: Present results and recommendations to
management.
„ Prepare report to management which may include
the following section:
1. Introduction
2. System Request
3. Findings
4. Recommendation
5. Time & Cost Estimates
6. Expected Benefits
7. Appendix

Chapter 2: Analyzing The Business Case 18

Review Questions
„ What is business case?
„ What is SWOT analysis and why it is important?
„ What are five common reasons for systems projects?
„ What are some internal and external factors that affects
system projects?
„ What is feasibility? List and briefly discuss four feasibility
tests.
„ How do tangible benefits differ from intangible benefits?
„ What are the steps in the preliminary investigation?
„ What is project scope and what is constraint? Give two
examples of each scope and constraint.

Chapter 2: Analyzing The Business Case 19