chapter 2: analyzing business case phase 1: systems planning

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Chapter 2: Analyzing Business CasePhase 1: Systems Planning

● Systems planning is the first of five phases in the systems development life cycle (SDLC)

● In this phase, you will learn how IT projects get started and how a systems analyst evaluates a proposed project and determines its feasibility

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Chapter Objectives ● Learn the concept of a 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

● Explain the purpose of a mission statement

● Describe the SDLC, and explain how it serves as a framework for systems development and business modeling

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Chapter Objectives● List the reasons for information

systems projects and the factors that affect such projects

● Explain the initial review of systems requests and the role of the systems review committee

● Define operational feasibility, technical feasibility, economic feasibility, and schedule feasibility

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Chapter Objectives● Describe the steps in a

preliminary investigation and the end product of an investigation

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Introduction● The term business case refers to the

reasons, or justification, for a proposal

● System development typically starts with a system request (how requests originate, and evaluated), followed by a preliminary investigation(feasibility study) and how to conduct a report to mgr which concludes the planning phrase.

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Strategic Planning – A framework for IT development● Strategic Planning

Overview– SWOT

• Examines a company’s Strengths, Weaknesses, Opportunities, and Threats

• A SWOT analysis benefits planning process by identify technical, human and financial resources.

Figure 2-2

Reed Cotter

this may be difficult for this slide, i would include no only the slide heading and the SWOT bullet, but a bullet above the SWOT bullet (making SWOT a sub-bullet) for "Strategic Planning Overview." also, i would moce the figure to the right, and include a brief description of what SWOT does.

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Strategic Planning● From Strategic Plans

to Business Results– A company develops

a mission statement based on the firm’s purpose, vision, and values

Purpose, vision, and values shape its mission statement, which in turn leads to goals, objectives, and business operations. Business results directly affect stakeholders.

Figure 2-3

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Strategic Planning● A mission statement briefly states

the company’s overall purpose, products, services, and values.

Figure 2-4

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Strategic Planning● Based on a mission statement, a

company must identify a set of goals (long term) that will accomplish the mission. To achieve goals, objectives (short term) must be defined too.

Figure 2-4

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Strategic PlanningA Business Example Popkin.com (p.51)Business Enterprise Direction Model: analyze strategy,

covers future vision, ID key business policy, contains following components: mission statement;

Business objective: specific measurement for long term results;

Specific strategies for achieve objectives; Critical Success Factors (CSFs) to fulfill its mission;Critical Business Issues (CBIs) that must be dealt with; Balanced Scorecard- a short summary of most critical

measures;Case of actions: A clear summary of the primary

business issues;Business vision: What will be like when the

transformations are complete.

Figure 2-5

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● Starting point of a project: Systems request for IT support (reasons)

Information Systems Projects: reasons, internal/external factors affecting sys projects

Figure 2-6: 5 reasons for sys. request

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Factors that affect system projects: Internal: strategic plan, top mgr;

inside user requests; IT sys change; existing sys.

External: technology; suppliers; customers; competitors, economy, and government.

Information Systems Projects

Figure 2-8

Information Technology Department

Existing Systems The

EconomyGovernment

Competitors

Customers

Suppliers

Technology

Strategic PlanTop

Managers

User Requests

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Information Systems Projects● Project

Management Tools– All IT projects

must be managed and controlled

– Begins with a systems request, and continues until the project is completed or terminated

Figure 2-11

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Evaluation of Systems Requests

● Systems Requests Forms– Many organizations use a special form

for systems requests– A properly designed form streamlines

the request process and ensures consistency

– Must be easy to understand and include clear instructions

– Should include enough space for all required information and should indicate what supporting documents are needed

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● Systems Requests Forms (p. 57)

Figure 2-12

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● Systems Review Committees– Most large companies use a

systems review committee to evaluate systems requests

– Many smaller companies rely on one person to evaluate system requests instead of a committee

– The goal is to evaluate the requests and set priorities

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Overview of Feasibility

Feasibility study: several tests before further proceed. Four main yardsticks to measure a proposal: operational, technical, economic, schedule

Figure 2-13

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Overview of Feasibility● A systems request must pass several

tests, called a feasibility study, to see whether it is worthwhile to proceed further

● Operational Feasibility– A proposed system will be used

effectively after it has been developed– Consider questions like: new system

reduce workforce? Require training? Require operating change? Legal/ethical?

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Overview of Feasibility● Technical Feasibility

– Refers to the technical resources needed:

Need to upgrade or purchase new HW, SW?

New technical expertise? will new system be able to handle

future transaction volume and growth?

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Overview of FeasibilityEconomic Feasibility–Total cost of ownership (TCO), including ongoing support and maintenance. –Tangible benefits: benefits can be measured in dollars, new scheduling sys that reduce overtime. online package tracking sys that decreases the need for clerical staff–Intangible benefits: advantages that hard to measure in dollars but significant to company. A new Web site that enhances company’s image. A user-friendly sys that improves user satisfaction.

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Schedule Feasibility:

Schedule Feasibility

Means that a project can be implemented in an acceptable time frame, consider interaction of time and cost

Will a speedy schedule pose any risk?Need to appoint a new project mgr?Timetable is strict?More critical, time or user satisfaction?

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Evaluating Feasibility● The first step in evaluating

feasibility is to identify and weed out systems requests that are not feasible

● Even if the request is feasible, it might not be necessary

● Feasibility analysis is an ongoing task that must be performed throughout the systems development process

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Setting Priorities● Factors that Affect Priority

– Will the systems project result in more information or produce better results? How? Are the results measurable?

– Will the proposed system reduce costs? Where? When? How? How much?

– Will the system increase revenue for the company? Where? When? How? How much?

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– 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?

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– Whenever possible, the analyst should evaluate a proposed project based on tangible costs and benefits that represent actual (or approximate) dollar values

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Setting Priorities● Discretionary and

Nondiscretionary Projects– Projects where management has a

choice in implementing them are called discretionary projects

– Projects where no choice exists are called nondiscretionary projects

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Preliminary Investigation Overview

● Interaction with Managers and Users

Fact-Finding

Figure 2-14

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● Planning the Preliminary Investigation– A systems analyst typically follows

a series of steps– The exact procedure depends on

the nature of the request, the size of the project and the degree of urgency

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● Step 1: Understand the Problem or Opportunity– When you analyze a systems

request, you need to determine which departments, users, and business processes are involved

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● Fishbone diagram (Ishikawa diagram)

Figure 2-17

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● Step 2: Define the Project Scope and Constraints– Project scope – Project creep– Constraint

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● Step 2: Define the Project Scope and Constraints– Means to define the boundaries, or

extent, of the project– Being as specific as possible

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Preliminary Investigation OverviewEach constrain has has three characteristics

Figure 2-18

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● Step 3: Perform Fact-Finding May require long or short time

depending on the nature of the the investigation.

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● Analyze Organization Charts for whom should you interview.

Figure 2-19

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● Step 3: Perform Fact-Finding– Steps for conducting interviews:1.determine who to interview2. Establish objectives for interview3. Prepare interview questions4. Conduct interview5. Document interview6. Evaluate interview

Figure 2-20

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Alternative Fact-Finding methods:

– Review documentation– Observe current sys. in operations– Conduct a user survey

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● Step 4: Evaluate FeasibilityAfter analyzing the problem, defining the

project scope and constrains, and performing fact-finding, you must: – Evaluate the project’s operational,

technical, economic, and schedule feasibility

eg. can use financial analysis tools in Part 3 of Toolkit to evaluate economic feasibility

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● Step 5: Estimate Project Development Time and Cost, consider issues:– What information must you obtain,

and how will you gather and analyze the information?

– What sources of information will you use, and what difficulties will you encounter in obtaining information?

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● Step 5: Estimate Project Development Time and Cost– Will you conduct interviews? How

many people will you interview, and how much time will you need to meet with the people and summarize their responses?

– Will you conduct a survey? Who will be involved? How much time will it take people to complete it? How much time will it take to prepare it and tabulate the results?

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● Step 5: Estimate Project Development Time and Cost– How much will it cost to analyze the

information gathered and to prepare a report with findings and recommendations?

– You should provide an estimate for the overall project, so managers can understand the full cost impact and timetable

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● Step 6: Present Results and Recommendations to Management– The final task in the preliminary

investigation is to prepare a report to management

– The format of the preliminary investigation report varies from one company to another

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Preliminary Investigation Report: preparing a formal document to mgr.

Figure 2-21

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● Step 6: Present Results and Recommendations to Management: report format:– Introduction: overview of report– Systems request summary: request basis– Findings: results of preliminary investigation– Recommendations for future actions(critical

decision making for mgr.)– Time & cost estimates: total cost of

ownership– Expected benefits(tangible and intangible, a

timetable when to occur)– Appendix for supporting info.

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Chapter Summary● Strategic planning allows a company to

examine its purpose, vision, and values and develops a mission statement

● Systems projects are initiated to improve performance, provide more information, reduce costs, strengthen controls, or provide better service

● In the preliminary investigation, the analyst evaluates the sys. request on operation, technical, economic, and schedule standpoint

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Chapter Summary● Analysts evaluate systems requests on the

basis of their expected costs and benefits● The steps in the preliminary investigation

are to understand the problem or opportunity; define project scope and constrains; finding facts; estimate project’s benefit; estimate time and cost.

● Outcome of planning phase is to produce a report to mgr for recommendations.

● Chapter 2 Complete

chapter 2: analyzing business case phase 1: systems planning

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