Chapter 2: Analyzing Business Case
Phase 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
3
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
Figure 2-2
technical, human and
financial resources.
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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
Figure 2-3
business
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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 Planning
A 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
Figure 2-5
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critical measures;
Information Systems Projects:
reasons, internal/external factors
affecting sys projects
● Starting point of a project: Systems
request for IT support (reasons)
Figure 2-6:
5 reasons
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Information Systems Projects
Top
Managers
Strategic
Plan
Technology
Factors that affect system projects:
Suppliers
Internal:
strategic plan, top mgr; inside
User
Requests
user requests; IT sys change; existing
Customers
sys.
External: technology; suppliers;
customers; competitors, economy, and Competitors
Information
government.
Technology
Department
Existing
Systems
Government
The
Economy
Figure 2-8
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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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Evaluation of Systems Requests
● Systems Requests Forms (p. 57)
Figure 2-12
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Evaluation of Systems Requests
● 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
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Figure 2-13
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 Feasibility
Economic 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
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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Setting Priorities
● Factors that Affect Priority
– 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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Setting Priorities
● Factors that Affect Priority
– 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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Preliminary Investigation Overview
● 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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Preliminary Investigation Overview
● 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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Preliminary Investigation Overview
● Fishbone diagram (Ishikawa diagram)
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Figure 2-17
Preliminary Investigation Overview
● Step 2: Define the Project Scope and
Constraints
– Project scope
– Project creep
– Constraint
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Preliminary Investigation Overview
● 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 Overview
Each constrain has has three characteristics
Figure 2-18
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Preliminary Investigation Overview
● Step 3: Perform Fact-Finding
May require long or short time
depending on the nature of the the
investigation.
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Preliminary Investigation Overview
● Analyze Organization Charts for whom
should you interview.
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Figure 2-19
Preliminary Investigation Overview
● Step 3: Perform Fact-Finding
– Steps for conducting interviews:
1.determine who to interview
2. Establish objectives for interview
3. Prepare interview questions
4. Conduct interview
5. Document interview
6. Evaluate interview
Figure 2-20
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Preliminary Investigation Overview
Alternative Fact-Finding methods:
– Review documentation
– Observe current sys. in operations
– Conduct a user survey
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Preliminary Investigation Overview
● Step 4: Evaluate Feasibility
After 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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Preliminary Investigation Overview
● 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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Preliminary Investigation Overview
● 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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Preliminary Investigation Overview
● 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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Preliminary Investigation Overview
● 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.
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Figure 2-21
Preliminary Investigation Overview
● 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
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