ISYS 200 Week #8 1

Systems Analysis IFeasibility & Project Management

ISYS 200

Glenn Booker

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Feasibility

Every organization which performs system development, or has it done for them, needs a way to choose which projects are worth the effort

Feasibility study is a common approach to make such decisions thoughtfully

Basis for feasibility study is generally the problems and opportunities analysis

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Problems & Opportunities

We can look for problems and opportunities in many parts of our organization, and the existing systems which are supported Track maintenance costs for existing systems Measure existing processes to determine their

cost, and compare to industry standards Monitor availability of support for existing

system components Look for signs of unhappy employees

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Problems & Opportunities

Check quality of work products (outputs) Listen to customers, vendors, and suppliers

Both complaints and suggestions Measure customer satisfaction Monitor competitor’s offerings and plans Monitor changes in technology which could help Don’t forget obvious measures of success, like

sales, profit, or number of contracts awarded

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Project Selection

Selection of projects is based on many factors – cost, urgency, the systems affected, etc.

From the organization’s perspective, choosing projects is kind of like shopping There’s generally a limited amount of funds

and people available to work on the possible projects, and management needs to choose which projects to support

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Project Selection

There are five typical requirements for a project to be supported Management support for the project Appropriate timing of commitment to the project Relevance to helping meet organizational goals Project must be practical and feasible Project must be worthwhile compared to other

possible expenditures Are we getting enough ‘bang for our buck?’

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Project Objectives

Based on the problems and opportunities identified for a project, we can set objectives for the project These not only help the feasibility study which

follows, but set goals against which we can later test the system

Objectives should not only address the type of improvement sought, but set a desired level of improvement

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Project Objectives

Examples of objectives might include Improve customer satisfaction 10% within 1 year Reduce the response time for customer

complaints by 15% Get a new feature to market before competitors Reduce error rate for data entry from 2% to 0.5% Improve sales to new customers by 5% Reduce voluntary employee turnover by 10%

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Feasibility Analysis

Feasibility consists of several types we want to assess for each candidate project Technical feasibility

Can the project be done with existing technology? Are people available to use the technologies needed?

Economic feasibility How much does the system cost to develop?

Maintain? How long will it be usable? Some add schedule feasibility – how long will it take

to create the system?

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Feasibility Analysis

Operational feasibility What impact will the new system have on how we do

business? Will there be changes to where or how processes are performed?

Will there be changes to employee skills needed? Changes to employee training?

Are existing users amenable to a new system?

These types of feasibility can be measured for each project, and compared to determine which is most feasible

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Feasibility Analysis

Like voting or buying a car, feasibility analysis is rarely completely logical or quantifiable

Many other issues can also affect it Political climate State of the US and/or global economy Preferences of the decision makers – favored

vendors, technologies, types of projects, etc.

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Planning Activities

Once a project has been selected for funding, its detailed planning generally begins

Key project management perspective is to look at a project in terms of a set of tasks to be accomplished, and managing the resources (people, tools) needed to perform those tasks Management focuses on effort (by people),

(calendar) schedule, cost, and resources

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Planning Activities

Cost for software-related system development is mostly due to the labor effort of the people needed to create it Other costs, such as hardware, software, training,

etc. are relatively small for most systems The start of planning for a project is to identify

the time needed for various activities needed to create the system

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Planning Activities

To help structure development activities, we use a life cycle model to identify the major sets of activities, called life cycle phases

There are many kinds of life cycle models The Waterfall model is the oldest, and uses

phases like Requirements Analysis, High Level Design, Low Level Design, Coding, and Testing

The Rational Unified Process has Inception, Elaboration, Construction, and Transition phases

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Planning Activities

The life cycle used here has three phases The Analysis phase includes data gathering,

data flow and decision analysis, and proposal preparation activities

The Design phase includes data organization, and design of data entry, inputs, and outputs

The Implementation phase includes creating the system (implementation) and evaluation (testing)

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Planning Activities

Each life cycle phase is broken down into more and more specific activities, until the time needed for each activity can be reliably estimated

Then the tasks are put into a Gantt chart or Pert chart to show when they occur relative to each other Tasks might occur sequentially, have to start

or end together, or wait for some other tasks to be completed

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Planning Activities

Tasks for a project often include the acts of creating specific documents or work products, approving things or making decisions; such as ‘Prepare system test plan’ ‘Approve system release’ ‘Conduct user satisfaction survey’ ‘Approve system requirements specification’

So the life cycle model provides guidance on the types of activities needed, but the tasks provide authority for people to do them

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Gantt Chart

The Gantt chart shows tasks graphically Time moves forward from left to right Each task is a bar, whose length is the task

duration, and position shows when it starts and stops

Above the bars are 1-3 timelines, which can show actual time (e.g. calendar weeks and months) or relative time (weeks or months since the start of the project)

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Gantt Chart

Decisions are shown by a milestone diamond – they are tasks of zero duration

Tasks and decisions are grouped together into activities and life cycle phases The higher level tasks are shown as summary

tasks – a different style of bar Once the project starts, another style of bar

can be used to show progress toward completing tasks

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Gantt Chart Excerpt

Notice that tasks 3-5 are sequential, tasks 7 and 8 end together, tasks 1, 2, 6, and 9 are summary tasks, and tasks 12 and 15 are decisions.

Detailed activities of design and implementation phases are not shown.Each level of indenting task names indicates a new level of detail.

ID Task Name Duration Start Finish

1 Analysis Phase 30 days Mon 8/18/03 Fri 9/26/03

2 Data Gathering 10 days Mon 8/18/03 Fri 8/29/03

3 Plan interviews 5 days Mon 8/18/03 Fri 8/22/03

4 Conduct interviews 3 days Mon 8/25/03 Wed 8/27/03

5 Analyze interview results 2 days Thu 8/28/03 Fri 8/29/03

6 Data Flow and Decision Analysis 20 days Mon 9/1/03 Fri 9/26/03

7 Conduct data flow analysis 20 days Mon 9/1/03 Fri 9/26/03

8 Conduct decision analysis 10 days Mon 9/15/03 Fri 9/26/03

9 Proposal Preparation 8 days Mon 8/25/03 Wed 9/3/03

10 Write Proposal 6 days Mon 8/25/03 Mon 9/1/03

11 Review proposal 2 days Tue 9/2/03 Wed 9/3/03

12 Approve proposal 0 days Wed 9/3/03 Wed 9/3/03

13 Design Phase 20 days Mon 9/29/03 Fri 10/24/03

14 Implementation Phase 50 days Mon 10/27/03 Fri 1/2/04

15 Approve system release 0 days Fri 1/2/04 Fri 1/2/04

9/3

1/2

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul AugQ3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04

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PERT Diagrams

PERT diagrams, or PERT charts, are primarily used to help identify the critical path for a project The critical path is the sequence of tasks which,

if any tasks were changed, would also change the completion date of the project

Tasks on the critical path tend to get preferential treatment for getting resources

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PERT Diagrams

A PERT diagram consists of labeled circles, connected by lines (other formats exist)

The circles are points in time on the project schedule (not tasks); the labels are sequential tens (10, 20, 30, etc.)

Each line is a task, labeled with the task identifier and its duration in some consistent units (weeks in the text, days here)

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PERT Diagrams

A split in tasks after some circle means that two or more tasks start at the same time

Conversely, two or more lines entering a circle means that ALL of those tasks have to finish before the project can move forward

‘Dummy’ lines can be added to connect tasks which have no previous or following task

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Sample PERT Diagram

This is the Gantt example on slide 20, omitting the lowest level tasks. Tasks 13 and 14 are, for example, the design and implementation phases.

10

20 40

30

50 60

2, 10d

6, 20d

9, 8d

13, 20d 14, 50d

Dummy

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PERT Diagrams

PERT is therefore useful for Identifying the order in which tasks take place Finding the critical path Finding slack time (open areas in the schedule)

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Timeboxing

Timeboxing refers to creating short, well defined iterations in which to perform project tasks Each time box has clearly stated objectives and

deliverables (work products due) Used to avoid long, ill-defined tasks which

don’t produce anything The Rational Unified Process uses

timeboxing throughout the life cycle

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Teamwork

Teams are groups of people who 1) are working to achieve a common goal, and 2) whose activities are interdependent

Teams need to have clear objectives Teams need a way to resolve conflicts Teams may have specifically defined roles,

and one or more leaders Teams should set their own goals

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E-Commerce Management

Management of e-commerce projects are frequently similar to any other development effort Might have greater geographic range of locations Typically need diverse skill sets May be very politically driven projects with

tight schedule And obvious security concerns

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Systems Proposals

Many organizations obtain new work by bidding on projects using some kind of proposal document Proposals could be used internally within your

organization, or sent to an external customer A proposal outlines their proposed solution to

the customer’s problem, and gives estimates of the cost, schedule, and risks associated with the project

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Candidate Solutions

Key to a good feasibility analysis is to choose an appropriate set of candidate solutions Each candidate solution is one way to approach

structuring the solution They might differ in the

Type of network architecture (# of tiers), Extent of automation (which processes are

automated vs. stay manual), Use of push vs. pull technologies

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Candidate Solutions

Brand of commercial components (UNIX vs VMS operating system),

Types of hardware technology (e.g. typed vs. RFI vs. barcode input devices),

Use of custom vs. commercial vs. outsourced software components

For each candidate solution, need to Identify the hardware and software needs to

implement it Estimate the labor effort to implement it

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Candidate Solutions

Estimate the maintenance costs Select appropriate options for buying vs leasing

equipment, and options for commercial software maintenance contracts

Determine facility needs for each solution Then you can choose the tool for making the

choice among the candidate solutions

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Decision Tools

Tools for making decisions include The spreadsheet approach – assign a value to

each aspect of feasibility, and rate each solution on those aspects

More formal tools can use analytical hierarchy processing (AHP), neural nets, expert systems, or other techniques

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Cost-Benefit Analysis

As part of the cost feasibility, a formal cost-benefit analysis can be performed This is weighing the costs of developing and

maintaining a new system, against the benefits that system should provide

This is why quantifying system objectives was important

The tangible benefits of the new system can be the value of improvements

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Cost-Benefit Analysis

For example, the benefit from saving four minutes on generating a form that’s used 50,000 times per year might be (4 min/form)/(60 min/hr)*(50000 form/yr)*$40/hr Equals $100,000 per year, assuming the cost of

an employee, with benefits, is $30/hr Similar approaches can be used to estimate

benefits of bringing in new customers, increasing sales, reducing errors, etc.

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Cost-Benefit Analysis

Analytical approaches for predicting trends from past behavior can use several methods Regression analysis (statistical curve fitting) Moving averages Graphic judgment (visual curve fitting)

Intangible benefits are also important – improved employee morale, good company reputation, customer satisfaction

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Cost-Benefit Analysis

Costs associated with creating a system are also tangible or intangible Tangible costs include the development and

maintenance costs of the new system Intangible costs are hard to measure, e.g. the

cost of making poor decisions All costs over the life of the system should

first be converted to their present value

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Time Value of Money

All cost benefit analyses assume that money is worth more over time, since it can be invested

As a result, these analyses depend

VERY STRONGLY on the interest rate which could be obtained from saved money –

a critical assumption

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Present Value

The present value of money, some time in the future, is $1 of money today = $(1+i)-n Where ‘i’ is the interest rate, and ‘n’ is the number

of time periods over which that rate was collected The interest rate is how much you could earn on

investing that money some way other than this system The number of time periods is generally in years,

but the formula still works if you divide the interest rate accordingly

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Present Value

So the present value of $30,000 five years from now at an 8% interest rate is$30,000 * (1 + 0.08)-5 = $20,417 That means if we invest $20,417 at 8% interest

for five years, we’d have $30,000 The same problem with months used instead

of years gives us a slightly different answer PV = $30,000*(1 + 0.08/12)-60 = $20,136 How often the interest is obtained is a small factor

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Present Value

Notice that the present value of $1.00 is always less than or equal to $1.00 If you invest 50 cents now, at some point in

the future it will be worth $1.00 When that happens depends on how well that

50 cents could be invested (the interest rate) Very short term projects don’t need to use

present value analysis, but most information systems are long term investments

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Break Even Analysis

One way to analyze cost effectiveness is to determine how much business volume is needed for the new system to pay for itself Determine the costs and benefits as a function

of system output Look for when benefits exceed costs – that’s

the breakeven point A good method if cost is the main concern,

not benefits

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Return On Investment (ROI)

Lifetime ROI is a percentage comparing the total costs and benefits from a project:Lifetime ROI=(total benefit - total cost)/(total cost)

Lifetime ROI may be divided by project duration to get a ROI per year (annual ROI) Want high ROI (lifetime and annual) A low ROI (~ under 10%/yr) might indicate

the benefits are too little to be worthwhile

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Cash Flow Analysis

Look at the costs and benefits from the system over time (e.g. each year) Convert costs and benefits to present value Add up the total costs and total benefits When the total benefits are greater than total

costs, you have reached the breakeven point (“out of the red”)

Good for projects that are a substantial investment for the organization

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The Systems Proposal

Based on all the nifty stuff we’ve covered, we can now put together a systems proposal Executive summary (execs don’t read much) Describe the methods used to study the existing

system and the business environment Describe the candidate solutions and the

feasibility analysis results for each Provide a recommendation on the preferred

solution

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The Systems Proposal

Most people who receive a systems proposal are looking at many of them and need to choose the ones to receive funding

Hence there’s a noticeable amount of sales pitch in many proposals

Consider appropriate graphics to make the data more interesting

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Types of Graphs

Pie chart Bar or column graph

Bars can be stacked, or clustered next to each other

Line graph Scatter plot Histogram

A bar chart with ranges of X values, like ages 15-24, 25-39, 40-54, etc.

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The Systems Proposal

An oral presentation may be needed for the systems proposal Make sure your voice is loud enough to be heard Look at your audience – they won’t bite! Keep visual aids large enough to be read Avoid filler words: errr, um, y’know

A little silence can be a good pause between topics, and give you time to think