System Analysis and Design
System Analysis
- Mr. Ahmad Al-Ghoul
learning Objectives
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Explain cost-benefit analysis and
financial analysis tools
Explain the differences between a
request for proposal (RFP) and a
request for quotation (RFQ)
Describe the contents of the
system requirements document
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Analyzing Cost and Benefits
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Financial Analysis Tools
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At the end of systems analysis phase, you must apply
financial analysis tools and technique to evaluate
development strategies and decide which alternative is
better
Three popular tools, these tools can be used to determine
total cost of ownership (TCO)
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Payback Analysis: determines how long it takes an information
system to pay for itself through reduce costs and increased
benefits
Return on investment (ROI): is a percentage rate that
compares the total net benefits received from a project to the
total cost of the project
Net present value (NPV): is the total value of the benefits
minus the total value of the cost, with both costs and benefits
adjusted to reflect the point in time at which they occur
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Analyzing Cost and Benefits
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Cost-Benefit Analysis Checklist
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The best way to apply the financial analysis tools is to
develop a cost-benefit checklist with the following steps:
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List each development strategy being considered
Identify all costs and benefits for each alternative. Be sure to
indicate when costs will be incurred and benefits realized
Consider future growth and the need for scalability
Include support costs for hardware and software
Analyze various software licensing options, including fixed fees
and formulas based on the number of users or transactions
Analyze various hardware options including Purchasing,
Leasing, or Renting
Apply the financial analysis tools to each alternative
Study the results and prepare a report to management
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The Software Acquisition Process
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As an analyst, part of the expertise you
are developing is to make sound
judgments regarding developing software,
or purchase, or customize a software
Although each situation is different.
There are some issues and tasks involved
in software acquisition
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The Software Acquisition Process
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Step 1: Evaluate the Information System Requirements
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Identify key features: by using the data gathered during factfinding. This information will be included in the system requirement
document, which is the end product of the systems analysis phase
Consider network and web-related issues: you must decide whether
the system will run on a network, the internet, or a company
intranet, and build these requirements into the design, also you
must determine the compatibility with other vendor or customers
systems
Estimate volume and future growth: you need to know the current
volume of transactions and forecast future growth. If you are
considering in-house development, you must make sure that your
software and hardware can handle future transaction volumes and
data storage requirements. If you are considering outsourcing,
analyze ASP fee structures and develop cost estimates
Specify hardware, software, or personnel constraints: you must
determine whether existing hardware, software, or personal issues
will affect the decision
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The Software Acquisition Process
Step 1: Evaluate the Information System
Requirements
To obtain the information you need to make a
decision, you should prepare a request for
proposal or a request for quotation
 Prepare a request for proposal or quotation
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Request for proposal (RFP)
Request for quotation (RFQ)
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The Software Acquisition Process
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is a document that describes your company, lists
the IT services or products you need, and specifies the features you
require, and spells out the service and support levels you require
Based on the RFP, vendors can indicate if they have a product that will
meet your needs
RFPs vary in size and complexity, just like the system they describe
Request for proposal (RFP):
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The Software Acquisition Process
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Request for quotation (RFQ)
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(RFQ) is a more specific than an RFP
When you use an RFQ, you already know the
specific product or service you want and you
need to obtain price quotations or bids
RFQ can involve outright purchase or a verity
of leasing or renting options and can include
maintenance or technical support terms
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The Software Acquisition Process
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Step 2: Identify Potential Vendors or Outsourcing
Options
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The Internet is a primary marketplace for IT products and
services
to locate vertical applications for specific industries, you can
research industry trade journals or Web sites to find reviews for
industry specific software
Another approach is to work with a consulting firm, the
advantage of using a consultant is that you can tap into broad
experience on IT products and services
Another resource is the Internet bulletin board systems that
contains thousands of forums, called newsgroups.
Newsgroups are excellent sources of information and good
places to exchange ideas with other analysts and IT
professionals
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The Software Acquisition Process
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Step 3: Evaluate the Alternatives
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You should obtain information about the options from
as many sources as possible including:
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Existing users: ASPs and vendors typically supply user
references, and try to find references users by your own.
User references are important to know whether the product
or service has worked well
Application testing: if a software package is one of the
options, find out if it is possible for users in your organization
to try the product
Benchmarking: is a test to determine whether a package can
handle a certain transaction volume efficiently
Match each package against the RFP features and rank the
choices
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The Software Acquisition Process
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Step 4: Perform Cost-Benefit Analysis
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Identify and calculate TCO for each option you are
considering
When you purchase software, what you are buying is
a software license be sure that the license is suitable
for now and future growth of your organization
Consider user support issues
If you purchase a software package, consider a
supplemental maintenance agreement, which offers
additional support and assistance from the vendor
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The Software Acquisition Process
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Step 5: Prepare a Recommendation
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You should prepare a recommendation that
evaluates and describes the alternatives,
together with the costs, benefits, advantages,
and disadvantages of each option
At this point, you may be required to submit a
formal system requirements document and
deliver a presentation
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The Software Acquisition Process
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Step 6: Implement the Solution
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Implementation tasks will depend on the
solution selected
Before the new software becomes
operational, you must complete all
implementation steps, including loading,
configuring, and testing the software; training
users; and converting data files to the new
system’s format
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Completion of Systems Analysis
Tasks
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To complete the systems analysis phase,
you must prepare the system
requirements document and your
presentation to management
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Completion of Systems Analysis
Tasks
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System Requirements Document
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The system requirements document, contains the
requirements for the new system, describes the
alternatives that were considered, and makes a
specific recommendation to management
This document is like a contract that identifies what
the system developers must deliver to the user
Format and organize it so it is easy to read and use
The system requirements document should include a
cover page and a detailed table of contents
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Completion of Systems Analysis
Tasks
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Presentation to Management
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After presentation, managers make key decisions that
affect the future development of the system
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Begin your presentation with a brief overview of the purpose
and primary objectives of the system project, the objectives
of this presentation, and what decisions need to made
Summarize the primary viable alternatives. For each
alternative, describe the costs, advantages, and
disadvantages
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Completion of Systems Analysis
Tasks
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Presentation to Management
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Explain why the evaluation and selection team
chose the recommended alternative
Allow time for discussion and for questions
and answers
Obtain a final decision from management or
agree on a timetable for the next step in the
process
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Completion of Systems Analysis
Tasks
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Presentation to Management
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Based on their decision, your next task will be one of
the following
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Implement an outsourcing alternative
Develop an in-house system
Purchase or customize a software package
Perform additional systems analysis work: management
might want you to investigate certain alternatives further,
explore alternatives not examined, develop a prototype,
reduce the project scope because of cost constraints, or
expand the project scope based on new development
Stop all further work: the decision might be based on your
recommendation, a shift in priorities or costs, or for other
reasons
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Sequence Summary
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Financial analysis tools include payback analysis, which
determines how long it takes for a system to pay for itself
through reduced costs and increased benefits
Return on investment (ROI), which compares project’s total
return to its total costs
Net present value (NPV), which analyzes the value of a
project by adjusting costs and benefits to reflect the time
that they occur
The process of acquiring software involves a series of
steps: evaluate the system requirements, identify potential
vendors or outsourcing options, evaluate the alternatives,
perform cost-benefit analysis, prepare a recommendation,
and implement the solution
The system requirements document is the deliverable, of
the system analysis phase
The document details all system requirements and
constraints, recommends the best solution, and provides
cost and time estimates for future development work
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Sequence Summary
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In this Sequence we have
 Described financial analysis tools include payback analysis,
which determines how long it takes for a system to pay for
itself through reduced costs and increased benefits, return
on investment (ROI), which compares project’s total return
to its total costs, and net present value (NPV), which
analyzes the value of a project by adjusting costs and
benefits to reflect the time that they occur
 Described the process of acquiring software which involves
a series of steps: evaluate the system requirements,
identify potential vendors or outsourcing options, evaluate
the alternatives, perform cost-benefit analysis, prepare a
recommendation, and implement the solution
 Explained the differences between a request for proposal
(RFP) and a request for quotation (RFQ)
 Described the contents of the system requirements
document
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Reference
[1] System Analysis and Design, Sixth Edition
Authors: Gary B. Shelly, Thomas J. Cashman
and Harry J. Rosenblatt ,
Publisher: SHELLY CASHMAN SEWIES.
[2] system analysis and design, sixth edition
Authors: Kenneth E. Kendall and Julie E.
Kendall
Publisher: Prentice Hall
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