Feasibility and Cost-Benefit Analysis
Introduction

The chapter will address the following questions:



What are the feasibility checkpoints in the systems development
life cycle?
What are the four types of feasibility and what is the description of
each?
How do you perform various cost-benefit analyses using timeadjusted costs and benefits?
1
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle


Feasibility is the measure of how beneficial or practical the
development of an information system will be to an organization.
Feasibility analysis is the process by which feasibility is
measured.
 Feasibility should be measured throughout the life cycle.
 The scope and complexity of an apparently feasible project can
change after the initial problems and opportunities are fully
analyzed or after the system has been designed.
 Thus, a project that is feasible at one point in time may become
infeasible at a later point in time.
2
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle


Feasibility is the measure of how beneficial or practical the
development of an information system will be to an organization.
Feasibility analysis is the process by which feasibility is
measured.
 Feasibility should be measured throughout the life cycle.
 The scope and complexity of an apparently feasible project can
change after the initial problems and opportunities are fully
analyzed or after the system has been designed.
 Thus, a project that is feasible at one point in time may become
infeasible at a later point in time.
3
Feasibility and Cost-Benefit Analysis
1
2
Survey
Study
3
Definition
End-users
4
Configuration
9
5
6
Support
Design
Procurement
8
7
Delivery
Construction
Vendors
4
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Survey Phase Checkpoint
 At this early stage of the project, feasibility is rarely more than
a measure of the urgency of the problem and the first-cut
estimate of development costs.
• It answers the question: ``Do the problems (or opportunities)
warrant the cost of a detailed study of the current system?''

Realistically, feasibility can't be accurately measured until the
problems (and opportunities) and requirements (definition
phase) are better understood.
5
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Study Phase Checkpoint
 Because the problems are better understood, the analysts can
make better estimates of development costs and of the benefits
to be obtained from a new system.
 The minimum value of solving a problem is equal to the cost of
that problem.
 Development costs, at this point, are still just guesstimates.
 If the cost estimates significantly increase from the survey
phase to the study phase, the likely culprit is scope.
• Scope has a tendency to increase in many projects.
• If increased scope threatens feasibility, then scope might be
reduced.
6
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Definition Phase Checkpoint
 The next checkpoint occurs after the definition of user
requirements for the new system.
• These requirements frequently prove more extensive than
originally stated.
• For this reason, the analyst must frequently revise cost estimates
for design and implementation.
• Once again, feasibility is reassessed.
• If feasibility is in question, scope, schedule, and costs must be
rejustified.
7
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Selection Phase Checkpoint
 The selection phase represents a major feasibility analysis
activity since it charts one of many possible implementations as
the target for systems design.
 During the selection phase, alternative solutions are defined in
terms of their input/output methods, data storage methods,
computer hardware and software requirements, processing
methods, and people implications.
8
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Selection Phase Checkpoint
 The following list presents the typical range of options that can
be evaluated by the analyst.
• Do nothing! Leave the current system alone.
• Reengineer the (manual) business processes, not the computerbased processes.
• Enhance existing computer processes.
• Purchase a packaged application.
9
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Selection Phase Checkpoint
 The following list presents the typical range of options that can
be evaluated by the analyst. (continued)
• Design and construct a new computer-based system. This option
presents numerous other options:
– Centralized versus distributed versus cooperative processing
– On-line versus batch processing
– Files versus database for data storage
– Of course, an alternative could be a combination of the
preceding options.

After defining these options, each option is analyzed for
operational, technical, schedule, and economic feasibility.
10
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Procurement Phase Checkpoint
 Because the procurement of hardware and applications software
involves economic decisions that may require sizable outlays of
cash, it shouldn't surprise you that feasibility analysis is
required before a contract is extended to a vendor.
 It should be noted that the procurement phase may be
consolidated into the selection phase because hardware and
software selection may have a significant impact on the
feasibility of the solutions being considered.
11
Feasibility and Cost-Benefit Analysis
Feasibility Analysis - A Creeping
Commitment Approach

Feasibility Checkpoints in the Life Cycle

Systems Analysis - A Design Phase Checkpoint
 Because implementation is often the most time-consuming and
costly phase, the checkpoint after design gives us one last
chance to cancel or downsize the project.
• Downsizing is the act of reducing the scope of the initial version of
the system.
• Future versions can address other requirements after the system
goes into production.
12
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Most analysts agree that there are four categories of
feasibility tests:
Operational feasibility is a measure of how well the solution
of problems or a specific solution will work in the organization.
It is also a measure of how people feel about the
system/project.
 Technical feasibility is a measure of the practicality of a
specific technical solution and the availability of technical
resources and expertise.
 Schedule feasibility is a measure of how reasonable the project
timetable is.
 Economic feasibility is a measure of the cost-effectiveness of a
project or solution. This is often called a cost-benefit analysis.

13
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility


Operational feasibility criteria measure the urgency of the problem
(survey and study phases) or the acceptability of a solution
(definition, selection, acquisition, and design phases).
There are two aspects of operational feasibility to be considered:
 Is the problem worth solving, or will the solution to the
problem work?
 How do the end-users and management feel about the problem
(solution)?
14
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

Is the Problem Worth Solving, or Will the Solution to the Problem
Work?
 PIECES can be used as the basis for analyzing the urgency of a
problem or the effectiveness of a solution. The following is a
list of the questions that address these issues:
• Performance. Does the system provide adequate throughput and
response time?
• Information. Does the system provide end-users and managers
with timely, pertinent, accurate, and usefully formatted
information?
• Economy. Does the system offer adequate service level and
capacity to reduce the costs of the business or increase the profits
of the business?
15
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

Is the Problem Worth Solving, or Will the Solution to the Problem
Work?
 PIECES can be used as the basis for analyzing the urgency of a
problem or the effectiveness of a solution. The following is a
list of the questions that address these issues: (continued)
• Control. Does the system offer adequate controls to protect against
fraud and embezzlement and to guarantee the accuracy and
security of data and information?
• Efficiency. Does the system make maximum use of available
resources including people, time, flow of forms, minimum
processing delays, and the like?
• Services. Does the system provide desirable and reliable service to
those who need it? Is the system flexible and expandable?
16
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

How do End-Users and Managers Feel about the Problem
(Solution)?
 It's not only important to evaluate whether a system can work
but also evaluate whether a system will work.
 A workable solution might fail because of end-user or
management resistance. The following questions address this
concern:
• Does management support the system?
• How do the end-users feel about their role in the new system?
• What end-users or managers may resist or not use the system?
People tend to resist change. Can this problem be overcome? If so,
how?
17
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

How do End-Users and Managers Feel about the Problem
(Solution)?
 A workable solution might fail because of end-user or
management resistance. The following questions address this
concern: (continued)
• How will the working environment of the end-users change? Can
or will end-users and management adapt to the change?
18
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

Usability Analysis:
 Usability analysis is often performed with a working prototype
of the proposed system.
• This is a test of the system’s user interfaces and is measured in
how easy they are to learn, to use and support the desired
productivity levels of the users.
• The goal is to identify the areas of the system where the users are
prone to make mistakes, processes which may be confusing or too
complicated, and also observe the reactions of the user and assess
their productivity.
19
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Operational Feasibility

Usability Analysis:
 How do you determines if a system’s user interface is usable?
 There are certain goals or criteria which experts agree help
measure the usability of an interface and they are as follows:
• Ease of Learning - How long does it take to train someone to
perform at a desired level.
• Ease Of Use - You are able to perform your activity quickly and
accurately. If you are a first time user or infrequent user, the
interface is easy and understandable. If you are a frequent user,
your level of productivity and efficiency is increased.
• Satisfaction - You the user are favorably pleased with the interface
and prefer it over types you are familiar with.
20
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Technical Feasibility


Technical feasibility can only be evaluated after those phases
during which technical issues are resolved — namely, after the
evaluation and design phases of our life cycle have been
completed.
Technical feasibility addresses three major issues:
 Is the proposed technology or solution practical?
 Do we currently possess the necessary technology?
 Do we possess the necessary technical expertise, and is the
schedule reasonable?
21
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Technical Feasibility

Is the Proposed Technology or Solution Practical?
 The technology for any defined solution is normally available.
• The question is whether that technology is mature enough to be
easily applied to our problems.
Some firms like to use state-of-the-art technology, but most
firms prefer to use mature and proven technology.
 A mature technology has a larger customer base for obtaining
advice concerning problems and improvements.

22
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Technical Feasibility

Do we Currently Possess the Necessary Technology?
 Assuming the solution's required technology is practical:
• ``Is the technology available in the information systems shop?''
– If the technology is available, does it have the capacity to
handle the solution.

If the technology is not available:
• ``Can the technology be acquired?''
23
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Technical Feasibility

Do we Possess the Necessary Technical Expertise, and is the
Schedule Reasonable?
 We may have the technology, but that doesn't mean we have the
skills required to properly apply that technology.
• True, all information systems professionals can learn new
technologies.
– However, that learning curve will impact the technical
feasibility of the project; specifically, it will impact the
schedule.
24
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Schedule Feasibility

Given our technical expertise, are the project deadlines reasonable?
 Some projects are initiated with specific deadlines.
• You need to determine whether the deadlines are mandatory or
desirable.
• If the deadlines are desirable rather than mandatory, the analyst
can propose alternative schedules.

It is preferable (unless the deadline is absolutely mandatory) to
deliver a properly functioning information system two months late
than to deliver an error-prone, useless information system on time!
 Missed schedules are bad.
 Inadequate systems are worse!
25
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

Economic Feasibility

The bottom line in many projects is economic feasibility.
 During the early phases of the project, economic feasibility
analysis amounts to little more than judging whether the
possible benefits of solving the problem are worthwhile.
 As soon as specific requirements and solutions have been
identified, the analyst can weigh the costs and benefits of each
alternative.
• This is called a cost-benefit analysis.
26
Feasibility and Cost-Benefit Analysis
Four Tests for Feasibility

The Bottom Line


You have learned that any alternative solution can be evaluated
according to four criteria: operational, technical, schedule, and
economic feasibility.
How do you pick the best solution? It's not always easy.
 Operational and economic issues often conflict.
 The final decision can only be made by sitting down with endusers, reviewing the data, and choosing the best overall
alternative.
27
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

How Much Will the System Cost?

Costs fall into two categories.
1 There are costs associated with developing the system.
• Can be estimated from the outset of a project and should be refined
at the end of each phase of the project.
2
There are costs associated with operating a system.
• Can only be estimated once specific computer-based solutions
have been defined (during the selection phase or later).
28
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

How Much Will the System Cost?

Systems development costs:
 Are usually one-time costs that will not recur after the project
has been completed.
 Sample systems development costs:
•
•
•
•
•
Personnel costs
Computer usage
Training
Supply, duplication, and equipment costs.
Cost of any new computer equipment and software.
29
Feasibility and Cost-Benefit Analysis
Estimated Costs for Client-Server System Alternative
DEVELOPMENT COSTS:
Personnel:
2
System Analysts (400 hours/ea $35.00/hr)
4
Programmer/Analysts (250 hours/ea $25.00/hr)
1
GUI Designer (200 hours/ea $35.00/hr)
1
Telecommunications Specialist (50 hours/ea $45.00/hr)
1
System Architect (100 hours/ea $45.00/hr)
1
Database Specialist (15 hours/ea $40.00/hr)
1
System Librarian (250 hours/ea $10.00/hr)
$28,000
$25,000
$7,000
$2,250
$4,500
$600
$2,500
Expenses:
4
Smalltalk training registration ($3500.00/student)
$14,000
New Hardware & Software:
1
Development Server (Pentium Pro class)
1
Server Software (operating system, misc.)
1
DBMS server software
7
DBMS Client software ($950.00 per client)
$18,700
$1,500
$7,500
$6,650
Total Development Costs:
$118,200
PROJECTED ANNUAL OPERATING COSTS
Personnel:
2
Programmer/Analysts (125 hours/ea $25.00/hr)
1
System Librarian (20 hours/ea $10.00/hr)
$6,250
$200
Expenses:
1
Maintenance Agreement for Pentium Pro Server
1
Maintenance Agreement for Server DBMS software
Preprinted forms (15,000/year @ .22/form)
$995
$525
$3,300
Total Projected Annual Costs:
$11,270
30
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

How Much Will the System Cost?


The lifetime system benefits must recover both the developmental
and operating costs.
Systems operating costs:
 Recur throughout the lifetime of the system.
 The costs of operating a system over its useful lifetime can be
classified as fixed and variable.
• Fixed costs occur at regular intervals but at relatively fixed rates.
Examples of fixed operating costs include:
– Lease payments and software license payments.
– Prorated salaries of information systems operators and support
personnel (although salaries tend to rise, the rise is gradual and
tends not to change dramatically from month to month).
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Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

How Much Will the System Cost?

Systems operating costs:
• Variable costs occur in proportion to some usage factor. Examples
include:
– Costs of computer usage (e.g., CPU time used, terminal
connect time used, storage used) which vary with the work
load.
– Supplies (e.g., preprinted forms, printer paper used, punched
cards, floppy disks, magnetic tapes, and other expendables),
which vary with the work load.
– Prorated overhead costs (e.g., utilities, maintenance, and
telephone service).

After determining the costs and benefits for a possible solution,
you can perform the cost-benefit analysis.
32
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

What Benefits Will the System Provide?



Benefits normally increase profits or decrease costs, both highly
desirable characteristics of a new information system.
To as great a degree as possible, benefits should be quantified in
dollars and cents.
Benefits are classified as tangible or intangible.
 Tangible benefits are those that can be easily quantified.
• Tangible benefits are usually measured in terms of monthly or
annual savings or of profit to the firm.
• Examples include: fewer processing errors, reduced expenses, and
increased sales.
33
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

What Benefits Will the System Provide?

Benefits are classified as tangible or intangible. (continued)
 Intangible benefits are those benefits believed to be difficult or
impossible to quantify.
• Examples include: improved customer goodwill and improved
employee moral.
• Unfortunately, if a benefit cannot be quantified, it is difficult to
accept the validity of an associated cost-benefit analysis that is
based on incomplete data.
34
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?


There are three popular techniques to assess economic feasibility,
also called cost-effectiveness.
 Payback analysis.
 Return on investment.
 Net present value.
One concept that should be applied to each technique is the
adjustment of cost and benefits to reflect the time value of money.
35
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

The Time Value of Money:
 A concept shared by all three techniques is the time value of
money — a dollar today is worth more than a dollar one year
from now.
 Some of the costs of a system will be accrued after
implementation.
 All benefits of the new system will be accrued in the future.
 Before cost-benefit analysis, these costs should be brought back
to current dollars.
• Why go to all this trouble?
• Because projects are often compared against other projects that
have different lifetimes.
36
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

Payback Analysis:
 The payback analysis technique is a simple and popular
method for determining if and when an investment will pay for
itself.
• Because systems development costs are incurred long before
benefits begin to accrue, it will take some period of time for the
benefits to overtake the costs.
• After implementation, you will incur additional operating expenses
that must be recovered.
• Payback analysis determines how much time will lapse before
accrued benefits overtake accrued and continuing costs.
– This period of time is called the payback period.
37
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

Payback Analysis:
 How do you determine the payback period?
• Adjust the costs and benefits for the time value of money (that is,
adjust them to current dollar values).
– The present value of a dollar in year n depends on something
typically called a discount rate.
– The discount rate is a percentage similar to interest rates that
you earn on your savings account.
– The discount rate for a business is the opportunity cost of
being able to invest money in other projects.
38
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

Payback Analysis:
 How do you determine the payback period? (continued)
– The current value, actually called the present value, of a dollar
at any time in the future can be calculated using the following
formula:
PVn = 1(1 + i)n
– where PVn is the present value of $1.00 n years from now and
i is the discount rate.
• Determine time period when lifetime benefits will overtake the
lifetime costs.
– This is the break-even point.
39
Feasibility and Cost-Benefit Analysis
40
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

Return-on-Investment Analysis:
 The return-on-investment (ROI) analysis technique compares
the lifetime profitability of alternative solutions or projects.
 The ROI for a solution or project is a percentage rate that
measures the relationship between the amount the business gets
back from an investment and the amount invested.
 The ROI for a potential solution or project is calculated as
follows:
• ROI = (Estimated lifetime benefits - Estimated lifetime costs) /
Estimated lifetime costs

The solution offering the highest ROI is the best alternative.
41
Feasibility and Cost-Benefit Analysis
Cost-Benefit Analysis Techniques

Is the Proposed System Cost-Effective?

Net Present Value:
 The net present value of an investment alternative is
considered the preferred cost-benefit technique by many
managers.
 Costs are represented by negative cash flows while benefits are
represented by positive cash flows.
 After discounting all costs and benefits, subtract the sum of the
discounted costs from the sum of the discounted benefits to
determine the net present value.
• If it is positive, the investment is good.
• If negative, the investment is bad.

When comparing multiple solutions or projects, the one with
the highest positive net present value is the best investment.
42
Feasibility and Cost-Benefit Analysis
43
Feasibility and Cost-Benefit Analysis
Feasibility Analysis of Candidate Systems

Candidate Systems Matrix



The candidate systems matrix documents similarities and
differences between candidate systems; however, it offers no
analysis.
The columns of the matrix represent candidate solutions.
The rows of the matrix represent characteristics that serve to
differentiate the candidates. The breakdown is as follows:
 TECHNOLOGY
 INTERFACES
 DATA
 PROCESSES
 GEOGRAPHY
44
Feasibility and Cost-Benefit Analysis
Candidate 1 Name Candidate 2 Name Candidate 3 Name
Technology
Interfaces
Data
Processes
Geography
45
Feasibility and Cost-Benefit Analysis
Characteristics
Portion of System Computerized
Brief description of that portion of the
system that would be computerized in
this candidate.
Benefits
Brief description of the business benefits
that would be realized for this
candidate.
Servers and Workstations
A description of the servers and
workstations needed to support this
candidate.
Software Tools Needed
Software tools needed to design and
build the candidate (e. g., database
management system, emulators,
operating systems, languages, etc.). Not
generally applicable if applications
software packages are to be purchased.
Application Software
A description of the software to be
purchased, built, accessed, or some
combination of these techniques.
Method of Data Processing
Generally some combination of: on-line,
batch, deferred batch, remote batch, and
real-time.
Output Devices and Implications
A description of output devices that
would be used, special output
requirements, (e.g. network, preprinted
forms, etc.), and output considerations
(e.g., timing constraints).
Input Devices and Implications
A description of Input methods to be
used, input devices (e.g., keyboard,
mouse, etc.), special input requirements,
(e.g. new or revised forms from which
data would be input), and input
considerations (e.g., timing of actual
inputs).
Storage Devices and Implications
Candidate 1
COTS package Platinum
Plus from Entertainment
Software Solutions would be
purchased and customized to
satisfy Member Services
required functionality.
This solution can be
implemented quickly
because its a purchased
solution.
Candidate 2
Member Services and
warehouse operations in
relation to order fulfillment.
Candidate 3
Same as candidate 2.
Fully supports user required
business processes for
Soundstage Inc. Plus more
efficient interaction with
member accounts.
Same as candidate 1.
Same as candidate 2.
MS Visual Basic 5.0
System Architect 3.1
Internet Explorer
MS Visual Basic 5.0
System Architect 3.1
Internet Explorer
Package Solution
Custom Solution
Same as candidate 2.
Client/Server
Same as candidate 1.
Same as candidate 1.
(2) HP4MV department
Laser printers
(2) HP5SI LAN laser
printers
(2) HP4MV department
Laser printers
(2) HP5SI LAN laser
printers
(1) PRINTRONIX bar-code
printer (includes software &
drivers)
Same as candidate 2.
Technically architecture
dictates Pentium pro, MS
Windows NT class servers
and Pentium, MS Windows
NT 4.0 workstations
(clients).
MS Visual C++ and MS
ACCESS for customization
of package to provide report
writing and integration.
Keyboard & mouse
MS SQL Server DBMS with
100GB arrayed capability.
Web pages must be designed
to VGA resolution. All
internal screens will be
designed for SVGA
resolution.
Apple “Quick Take” digital
camera and software
(15) PSC Quickscan laser
bar-code scanners
(1) - HP Scanjet 4C Flatbed
Scanner
Keyboard & mouse
Same as candidate 1.
Brief description of what data would be
stored, what data would be accessed
from existing stores, what storage media
would be used, how much storage
capacity would be needed, and how
data would be organized.
46
Same as candidate 1.
Same as candidate 2.
Same as candidate 1.
Candidate ...
Feasibility and Cost-Benefit Analysis
Feasibility Analysis of Candidate Systems

Feasibility Analysis Matrix

This matrix complements the candidate systems matrix with an
analysis and ranking of the candidate systems. It is called a
feasibility analysis matrix.
 The columns of the matrix correspond to the same candidate
solutions as shown in the candidate systems matrix.
 Some rows correspond to the feasibility criteria presented in
this chapter.
 Rows are added to describe the general solution and a ranking
of the candidates.
 The cells contain the feasibility assessment notes for each
candidate.
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Feasibility and Cost-Benefit Analysis
Feasibility Analysis of Candidate Systems

Feasibility Analysis Matrix
Each row can be assigned a rank or score for each criteria (e.g.,
for operational feasibility, candidates can be ranked 1, 2, 3,
etc.).
 After ranking or scoring all candidates on each criteria, a final
ranking or score is recorded in the last row.

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Feasibility and Cost-Benefit Analysis
Candidate 1 Name Candidate 2 Name Candidate 3 Name
Description
Operational
Feasibility
Technical
Feasibility
Schedule
Feasibility
Economic
Feasibility
Ranking
49
Feasibility and Cost-Benefit Analysis
Feasibility Criteria
Operational Feasibility
Wt.
30%
Functionality. A description of to what
degree the candidate would benefit the
organization and how well the system
would work.
Candidate 1
Only supports Member
Services requirements and
current business processes
would have to be modified to
take advantage of software
functionality
Candidate 2
Fully supports user required
functionality.
Candidate 3
Same as candidate 2.
Score: 60
Current production release of
Platinum Plus package is
version 1.0 and has only been
on the market for 6 weeks.
Maturity of product is a risk
and company charges an
additional monthly fee for
technical support.
Score: 100
Although current technical
staff has only Powerbuilder
experience, the senior
analysts who saw the MS
Visual Basic demonstration
and presentation, has agreed
the transition will be simple
and finding experienced VB
programmers will be easier
than finding Powerbuilder
programmers and at a much
cheaper cost.
Score: 100
Although current technical
staff is comfortable with
Powerbuilder, management is
concerned with recent
acquisition of Powerbuilder
by Sybase Inc.
MS SQL Server is a current
company standard and
competes with SYBASE in
the Client/Server DBMS
market. Because of this we
have no guarantee future
versions of Powerbuilder
will “play well” with our
current version SQL Server.
Political. A description of how well
received this solution would be from
both user management, user, and
organization perspective.
Technical Feasibility
30%
Technology. An assessment of the
maturity, availability (or ability to
acquire), and desirability of the
computer technology needed to support
this candidate.
Expertise. An assessment to the
technical expertise needed to develop,
operate, and maintain the candidate
system.
Required to hire or train C++
expertise to perform
modifications for integration
requirements.
MS Visual Basic 5.0 is a
mature technology based on
version number.
Score: 50
Economic Feasibility
Score: 95
Score: 60
30%
Cost to develop:
Approximately $350,000.
Approximately $418,040.
Approximately $400,000.
Payback period (discounted):
Approximately 4.5 years.
Approximately 3.5 years.
Approximately 3.3 years.
Net present value:
Approximately $210,000.
Approximately $306,748.
Approximately $325,500.
Detailed calculations:
See Attachment A.
See Attachment A.
See Attachment A.
10%
Score: 60
Less than 3 months.
Score: 85
9-12 months
9 months
100%
Score: 95
60.5
Score: 80
92
Schedule Feasibility
Score: 90
An assessment of how long the solution
will take to design and implement.
Ranking
50
Score: 85
83.5
Candidate ..
Feasibility and Cost-Benefit Analysis
Summary





Introduction
Feasibility Analysis - A Creeping Commitment
Approach
Four Tests for Feasibility
Cost-Benefit Analysis Techniques
Feasibility Analysis of Candidate Systems
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