Justifying Information Justifying Information Systems ProjectsSystems Projects

IS 460 NotesIS 460 Notes

by Thomas Hiltonby Thomas Hilton

TopicsTopics

Why Develop Information Systems

Cost-Justification

Non-cost Justification

Why Develop Information Systems?Why Develop Information Systems?

Information is the intended output Data is the main input Is there a difference?

There had better be!

Data: Objective Measures of Traits of Real-World Objects

Objective• Not subjective• Replicable

Measures• Values• Quantitative• Qualitative

Traits• Characteristics• Attributes

Real-World Objects• Entities or Classes• Tangible• Intangible

Information: Data Aggregated and Placed in a Useful Context

Data• see prior

Aggregation• Groups• Calculations• Manipulations

Context• Titles• Labels• Rows• Columns

Usefulness• Decision-Making• Judged by User

Information QualitySix Traits

Accuracy

Timeliness

Relevance

Verifiability

Accessibility

Security

Cost-JustificationCost-Justification

“Is the system worth its cost?” Compare “worth” with “cost” Various Methods

• ROI• Present Value• Cost-Benefit Analysis

Cost-Benefit AnalysisCost-Benefit Analysis

Conceptually Simple

Quantify all Costs Quantify all Benefits Divide Costs by Benefits If C/B Ratio < 1, then Proceed

Cost-Benefit AnalysisCost-Benefit Analysis

Complex in Practice

System Lifespan

Tangibles vs. Intangibles

Future Orientation

Costs

PeopleFacilitiesSuppliesDataHardware

SoftwareTrainingProceduresOpportunitiesConfusion

BenefitsBenefits

Cost Elimination• Worker• Process• Carrying Cost

Cost Reduction• Efficiency• Productivity• Maintenance

Cost Shifting• Inventory• Labor• Debt

Profit Generation• Product• Service

Cost-Benefit Analysis TableCost-Benefit Analysis Table

Costs BenefitsTangible Intangible Tangible Intangible

Name Quantity Name Quantity Name Quantity Name Quantity

Tangible Cost

Subtotal

Intangible Cost

Subtotal

Tangible Benefit

Subtotal

Intangible Benefit

Subtotal

Cost Subtotal Benefit Subtotal

Cost-Benefit Ratio:

An ExampleAn Example

Network Design Proposal

Non-Cost Justifications

Cost-benefit analysis is not iron-cladCost-benefit analysis is not iron-clad Often, detractors can discredit itOften, detractors can discredit it Therefore, it Therefore, it must must be accompanied be accompanied

by non-cost justificationsby non-cost justifications• Organizational cultureOrganizational culture• Strategic directionStrategic direction• Potential competitive advantagePotential competitive advantage• Environmental ImperativesEnvironmental Imperatives• Top Management SupportTop Management Support

Now You Do It!Now You Do It!