3Systems Analysis – ITEC 3155Feasibility Analysis

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What is Feasibility Analysis?

Feasibility A measure of how beneficial or practical the development of

an information systems will be to an organization.

Feasibility Analysis The process by which feasibility is measured.

The goal of feasibility analysis:

To enable the organization to determine whether or no to proceed with a project

To identify any important risks associated with the project

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Confirming Project Feasibility

Risk management

Economic feasibility

Cost/benefit analysis

Sources of funds (cash flow, long-term capital)

Organizational and cultural feasibility

Technological feasibility

Schedule feasibility

Resource feasibility

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Risk Management

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Economic Feasibility

An economic feasibility analysis (or cost-benefit analysis) should be performed to identify the financial risk associated with the project

Estimate project development costs

Estimate operational costs after project

Estimate financial benefits based on annual savings and increased revenues

Calculate using table of costs and benefits

Uses net present value (NPV), payback period, return on investment (ROI) techniques

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Supporting Detail for Salaries and Wages for RMO (Figure 3-16)

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Summary of Development Costs for RMO (Figure 3-17)

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Summary of Annual Operating Costsfor RMO (Figure 3-18)

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Sample Benefits for RMO (Figure 3-19)

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RMO Cost Benefit Analysis (Figure 3-20)

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Intangibles in Economic Feasibility

Intangible benefits cannot be measured in dollars Increased levels of service

Customer satisfaction

Survival

Need to develop in-house expertise

Intangible costs cannot be measured in dollars Reduced employee morale

Lost productivity

Lost customers or sales

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Organizational and Cultural Feasibility

Each company has own culture

New system must fit into culture

Evaluate related issues for potential risks Low level of computer competency Computer phobia Perceived loss of control Shift in power Fear of job change or employment loss Reversal of established work procedures

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Technological Feasibility

The goal to assess the extent to which the system can be

successfully designed, developed and installed

Does system stretch state-of-the-art technology?

Does in-house expertise presently exist for development?

Does an outside vendor need to be involved?

Solutions include Training or hiring more experienced employees

Hiring consultants

Changing scope and project approach

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Schedule Feasibility

Estimates needed without complete information

Management deadlines may not be realistic

Project managers Drive realistic assumptions and estimates Recommend completion date flexibility Assign interim milestones to periodically reassess

completion dates Involve experienced personnel Manage proper allocation of resources

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Resource Feasibility

Team member availability

Team skill levels

Computers, equipment, and supplies

Support staff time and availability

Physical facilities

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Summary

Feasibility analysis

aims to determine whether an organization should proceed with a project; identify important risks.

Feasibility has many facets

technical, economic, organizational/cultural, schedule, resource.