11.1

• DEMONSTRATE HOW BUILDING DEMONSTRATE HOW BUILDING NEW SYSTEMS CAN PRODUCE NEW SYSTEMS CAN PRODUCE ORGANIZATIONAL CHANGEORGANIZATIONAL CHANGE

• COMPARE ROLE OF COMPUTER IN COMPARE ROLE OF COMPUTER IN TOTAL QUALITY MANAGEMENT, TOTAL QUALITY MANAGEMENT, BUSINESS PROCESS BUSINESS PROCESS REENGINEERINGREENGINEERING

**

LEARNING OBJECTIVESLEARNING OBJECTIVES

11.2

LEARNING OBJECTIVESLEARNING OBJECTIVES

• EXPLAIN HOW ORGANIZATION CAN EXPLAIN HOW ORGANIZATION CAN DEVELOP SUITABLE INFO SYSTEMSDEVELOP SUITABLE INFO SYSTEMS

• IDENTIFY CORE ACTIVITIES IN IDENTIFY CORE ACTIVITIES IN SYSTEMS DEVELOPMENT PROCESSSYSTEMS DEVELOPMENT PROCESS

• EVALUATE MODELS FOR EVALUATE MODELS FOR DETERMINING BUSINESSDETERMINING BUSINESS VALUE OF INFO SYSTEMSVALUE OF INFO SYSTEMS

**

11.3

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

• SYSTEMS AS PLANNED SYSTEMS AS PLANNED ORGANIZATIONAL CHANGESORGANIZATIONAL CHANGES

• SYSTEMS DEVELOPMENT & SYSTEMS DEVELOPMENT & ORGANIZATIONAL CHANGESORGANIZATIONAL CHANGES

• OVERVIEW OF SYSTEMS DEVELOPMENTOVERVIEW OF SYSTEMS DEVELOPMENT• UNDERSTANDING BUSINESS VALUE OF UNDERSTANDING BUSINESS VALUE OF

INFO SYSTEMSINFO SYSTEMS

**

11.4

CHALLENGES:CHALLENGES:• RISKS AND UNCERTAINTIES IN SYSTEMS RISKS AND UNCERTAINTIES IN SYSTEMS

DEVELOPMENTDEVELOPMENT• BENEFITS LARGELY INTANGIBLEBENEFITS LARGELY INTANGIBLE

**

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

11.5

DIRECTION OF SYSTEM DEVELOPMENT:DIRECTION OF SYSTEM DEVELOPMENT:• RATIONALERATIONALE• CURRENT SITUATIONCURRENT SITUATION• MANAGEMENT STRATEGYMANAGEMENT STRATEGY• IMPLEMENTATION PLANIMPLEMENTATION PLAN• BUDGETBUDGET

**

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

11.6

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

1. PURPOSE OF THE PLAN:1. PURPOSE OF THE PLAN:• OVERVIEW OF PLAN CONTENTSOVERVIEW OF PLAN CONTENTS• CHANGES IN CURRENT SITUATIONCHANGES IN CURRENT SITUATION• FIRM’S STRATEGIC PLANFIRM’S STRATEGIC PLAN• CURRENT ORGANIZATIONCURRENT ORGANIZATION• MANAGEMENT STRATEGYMANAGEMENT STRATEGY

**

11.7

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

2. STRATEGIC BUSINESS PLAN:2. STRATEGIC BUSINESS PLAN:• CURRENT SITUATIONCURRENT SITUATION• CURRENT ORGANIZATIONCURRENT ORGANIZATION• CHANGING ENVIRONMENTCHANGING ENVIRONMENT• MAJOR GOALS OF PLANMAJOR GOALS OF PLAN

**

11.8

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

3. CURRENT SYSTEMS:3. CURRENT SYSTEMS:• MAJOR SYSTEMS SUPPORTING BUSINESS MAJOR SYSTEMS SUPPORTING BUSINESS

FUNCTIONSFUNCTIONS• MAJOR CURRENT CAPABILITIESMAJOR CURRENT CAPABILITIES

– HARDWARE– SOFTWARE– DATABASE– TELECOMMUNICATIONS

• DIFFICULTIES MEETING REQUIREMENTSDIFFICULTIES MEETING REQUIREMENTS• ANTICIPATED FUTURE DEMANDSANTICIPATED FUTURE DEMANDS

**11.9

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

4. NEW DEVELOPMENTS:4. NEW DEVELOPMENTS:• NEW SYSTEM PROJECTSNEW SYSTEM PROJECTS

– PROJECT DESCRIPTIONS– BUSINESS RATIONALE

• NEW CAPABILITIES REQUIREDNEW CAPABILITIES REQUIRED– HARDWARE– SOFTWARE– DATABASE– TELECOMMUNICATIONS

**11.10

INFORMATION SYSTEMS PLANINFORMATION SYSTEMS PLAN

5. MANAGEMENT STRATEGY5. MANAGEMENT STRATEGY• ACQUISITION PLANSACQUISITION PLANS• MILESTONES & TIMINGMILESTONES & TIMING• ORGANIZATIONAL REALIGNMENTORGANIZATIONAL REALIGNMENT• INTERNAL REORGANIZATIONINTERNAL REORGANIZATION• MANAGEMENT CONTROLSMANAGEMENT CONTROLS• MAJOR TRAINING INITIATIVESMAJOR TRAINING INITIATIVES• PERSONNEL STRATEGYPERSONNEL STRATEGY

* *

11.11

ENTERPRISE ANALYSISENTERPRISE ANALYSIS(BUSINESS SYSTEMS PLANNING) (BUSINESS SYSTEMS PLANNING)

ORGANIZATION-WIDE INFORMATION NEEDS ORGANIZATION-WIDE INFORMATION NEEDS IN TERMS OF:IN TERMS OF:

• ORGANIZATIONAL UNITSORGANIZATIONAL UNITS• FUNCTIONSFUNCTIONS• PROCESSESPROCESSES

• DATA ELEMENTSDATA ELEMENTS

HELPS IDENTIFY KEY ENTITIES & HELPS IDENTIFY KEY ENTITIES & ATTRIBUTES IN ORGANIZATION’S DATAATTRIBUTES IN ORGANIZATION’S DATA

**11.12

CRITICAL SUCCESS FACTORS CRITICAL SUCCESS FACTORS (CSFs)(CSFs)

SMALL NUMBER, EASILY IDENTIFIABLE SMALL NUMBER, EASILY IDENTIFIABLE OPERATIONAL GOALSOPERATIONAL GOALS

SHAPED BY INDUSTRY, MANAGER, SHAPED BY INDUSTRY, MANAGER, ENVIRONMENTENVIRONMENT

BELIEVED TO ASSURE FIRM’S SUCCESS.BELIEVED TO ASSURE FIRM’S SUCCESS.

USED TO DETERMINE ORGANIZATION’S USED TO DETERMINE ORGANIZATION’S INFORMATION REQUIREMENTSINFORMATION REQUIREMENTS

**

11.13

CRITICAL SUCCESS FACTORSCRITICAL SUCCESS FACTORS & GOALS& GOALS

11.14

EXAMPLEEXAMPLE GOALSGOALS CSFCSF

PROFIT EARNINGS/SHARE AUTOMOTIVE INDUSTRY:

CONCERN RETURN ON INVESTMENT STYLING

MARKET SHARE QUALITY DEALER SYSTEM

NEW PRODUCT COST CONTROL

ENERGY STANDARDS

NONPROFIT EXCELLENT HEALTH CARE REGIONAL INTEGRATION WITH

OTHER HOSPITALS

MEETING GOVERNMENT REGULATIONS EFFICIENT USE OF RESOURCES

FUTURE HEALTH NEEDS IMPROVED MONITORING OF

REGULATIONS

USING CSFs TO DEVELOP SYSTEMSUSING CSFs TO DEVELOP SYSTEMS

• COLLECT MANAGERS’ CFCsCOLLECT MANAGERS’ CFCs• AGGREGATE, ANALYZE INDIVIDUALS’ CSFsAGGREGATE, ANALYZE INDIVIDUALS’ CSFs• DEVELOP AGREEMENT ON COMPANY CSFsDEVELOP AGREEMENT ON COMPANY CSFs• DEFINE COMPANY CSFsDEFINE COMPANY CSFs• USE CSFs TO DEVELOP INFORMATION USE CSFs TO DEVELOP INFORMATION

SYSTEM PRIORITIESSYSTEM PRIORITIES• DEFINE DSS & DATABASESDEFINE DSS & DATABASES

**

11.15

SPECTRUM OF SPECTRUM OF ORGANIZATIONAL CHANGEORGANIZATIONAL CHANGE

• AUTOMATION:AUTOMATION: Using technology to perform Using technology to perform tasks efficiently / effectivelytasks efficiently / effectively

• RATIONALIZATION OF PROCEDURES:RATIONALIZATION OF PROCEDURES: Streamline SOPs; eliminate bottlenecksStreamline SOPs; eliminate bottlenecks

• BUSINESS REENGINEERING:BUSINESS REENGINEERING: Radical redesign Radical redesign of processes to improve cost, quality, service; of processes to improve cost, quality, service; maximize benefits of technologymaximize benefits of technology

• PARADIGM SHIFTPARADIGM SHIFT

**

11.16

PARADIGM SHIFTPARADIGM SHIFT

• PARADIGMPARADIGM IS A COMPLETE MENTAL IS A COMPLETE MENTAL MODEL OF HOW A COMPLEX SYSTEM MODEL OF HOW A COMPLEX SYSTEM FUNCTIONSFUNCTIONS

• A PARADIGM SHIFT INVOLVES A PARADIGM SHIFT INVOLVES RETHINKING THE NATURE OF THE RETHINKING THE NATURE OF THE BUSINESS, THE ORGANIZATION; A BUSINESS, THE ORGANIZATION; A COMPLETE RECONCEPTION OF HOW COMPLETE RECONCEPTION OF HOW THE SYSTEM SHOULD FUNCTIONTHE SYSTEM SHOULD FUNCTION

**

11.17

RISKS & REWARDSRISKS & REWARDS

11.18

RISKRISK

RETURNRETURN

LowLow

LowLow HighHigh

HighHigh

IT CAPABILITIES & IT CAPABILITIES & IMPACTSIMPACTS

• ANALYTICAL:ANALYTICAL: Can bring complex Can bring complex analytical methods to bear on processanalytical methods to bear on process

• INFORMATIONAL:INFORMATIONAL: Makes vast amounts Makes vast amounts of detailed information availableof detailed information available

• SEQUENTIAL:SEQUENTIAL: Enables changes in Enables changes in sequence, parallel taskssequence, parallel tasks

**

11.19Source: Davenport & Short “The New Industrial Engineering”(1990)Source: Davenport & Short “The New Industrial Engineering”(1990)

IT CAPABILITIES & IT CAPABILITIES & IMPACTSIMPACTS

• KNOWLEDGE MANAGEMENT:KNOWLEDGE MANAGEMENT: Allows Allows capture, dissemination of knowledge, capture, dissemination of knowledge, expertiseexpertise

• TRACKING:TRACKING: Allows detailed tracking of Allows detailed tracking of task status, inputs, outputstask status, inputs, outputs

• DISINTERMEDIATION:DISINTERMEDIATION: Connects parties Connects parties who otherwise depend on an intermediarywho otherwise depend on an intermediary

**

11.20Source: Davenport & Short “The New Industrial Engineering”(1990)Source: Davenport & Short “The New Industrial Engineering”(1990)

BUSINESS PROCESS BUSINESS PROCESS REENGINEERING REENGINEERING (BPR)(BPR)

• WORK-FLOW MANAGEMENT:WORK-FLOW MANAGEMENT: Streamlining process to move Streamlining process to move documents easily, efficientlydocuments easily, efficiently

• REENGINEERINGREENGINEERING

**

11.21

1. Develop business vision, process 1. Develop business vision, process objectivesobjectives

2. Identify process to be redesigned2. Identify process to be redesigned

3. Understand, measure performance of 3. Understand, measure performance of existing processesexisting processes

4. Identify opportunities for applying 4. Identify opportunities for applying information technologyinformation technology

5. Build 5. Build PROTOTYPEPROTOTYPE of new process of new process

**

BUSINESS BUSINESS REENGINEERING STEPS:REENGINEERING STEPS:

11.22

TOTAL QUALITY TOTAL QUALITY MANAGEMENT MANAGEMENT (TQM)(TQM)

RESPONSIBILITY FOR QUALITY RESPONSIBILITY FOR QUALITY SHARED BY ALL PEOPLE IN SHARED BY ALL PEOPLE IN

ORGANIZATIONORGANIZATION

**

11.23

CONTRIBUTIONS OF TQMCONTRIBUTIONS OF TQM• SIMPLIFY PRODUCT OR PROCESSSIMPLIFY PRODUCT OR PROCESS• BENCHMARKING: Strict standards for BENCHMARKING: Strict standards for

measuring performancemeasuring performance• LISTEN TO CUSTOMER DEMANDSLISTEN TO CUSTOMER DEMANDS• REDUCE CYCLE TIMEREDUCE CYCLE TIME• IMPROVE DESIGNIMPROVE DESIGN• INCREASE PRECISION OF PRODUCTIONINCREASE PRECISION OF PRODUCTION

**

11.24

• SYSTEMS ANALYSISSYSTEMS ANALYSIS

• SYSTEM DESIGNSYSTEM DESIGN

• PROGRAMMINGPROGRAMMING

• TESTINGTESTING

• CONVERSIONCONVERSION

• PRODUCTION & MAINTENANCEPRODUCTION & MAINTENANCE

**

SYSTEM DEVELOPMENT PROCESSSYSTEM DEVELOPMENT PROCESS

11.25

ANALYSIS OF PROBLEM TO BE ANALYSIS OF PROBLEM TO BE SOLVED WITH AN INFORMATION SOLVED WITH AN INFORMATION

SYSTEMSYSTEM

FEASIBILITY STUDY: CAN FEASIBILITY STUDY: CAN PROBLEM BE SOLVED WITHIN PROBLEM BE SOLVED WITHIN CONSTRAINTS?CONSTRAINTS?

**

SYSTEMS ANALYSISSYSTEMS ANALYSIS

11.26

FEASIBILITYFEASIBILITY• TECHNICAL:TECHNICAL: Assess hardware, software, Assess hardware, software,

technical resourcestechnical resources• ECONOMIC: Will benefits outweigh costsECONOMIC: Will benefits outweigh costs• OPERATIONAL:OPERATIONAL: Is solution desirable Is solution desirable

within existing conditions?within existing conditions?• INFORMATION REQUIREMENTS:INFORMATION REQUIREMENTS:

Detailed statement of new system needsDetailed statement of new system needs

**

11.27

SYSTEM DESIGNSYSTEM DESIGN

DETAILS HOW SYSTEM WILL MEET NEEDS:DETAILS HOW SYSTEM WILL MEET NEEDS:

• LOGICAL DESIGN:LOGICAL DESIGN: Components, Components, data as needed by applicationsdata as needed by applications

• PHYSICAL DESIGN:PHYSICAL DESIGN: PhysicalPhysical location of components and datalocation of components and data

**

11.28

DESIGN SPECIFICATIONSDESIGN SPECIFICATIONS• OUTPUTOUTPUT

– MEDIUM; CONTENT; TIMING• INPUTINPUT

– ORIGINS; FLOW; DATA ENTRY• USER INTERFACEUSER INTERFACE

– SIMPLICITY; EFFICIENCY; LOGIC– FEEDBACK; ERRORS

• DATABASE DESIGNDATABASE DESIGN– LOGICAL DATA RELATIONS– VOLUME, SPEED REQUIREMENTS– FILE ORGANIZATION & DESIGN– RECORD SPECIFICATIONS

**

11.29

• PROCESSINGPROCESSING– COMPUTATIONS– PROGRAM MODULES– REQUIRED REPORTS– TIMING OF OUTPUTS

• MANUAL PROCEDURESMANUAL PROCEDURES– WHAT ACTIVITIES– WHO PERFORMS THEM– HOW– WHERE

**

11.30

DESIGN SPECIFICATIONSDESIGN SPECIFICATIONS

• CONTROLSCONTROLS

– INPUT

– PROCESSING

– OUTPUT

– PROCEDURAL

• SECURITYSECURITY

– ACCESS CONTROLS

– CATASTROPHE PLANS

– AUDIT TRAILS

**

11.31

DESIGN SPECIFICATIONSDESIGN SPECIFICATIONS

• CONVERSIONCONVERSION

– TRANSFER FILES

– INITIATE NEW PROCEDURES

– SELECT TESTING MODULES

– CUT OVER TO NEW SYSTEM

• TRAININGTRAINING

– SELECT TRAINING TECHNIQUES

– DEVELOP TRAINING MODULES

– IDENTIFY TRAINING FACILITIES

• ORGANIZATIONAL CHANGESORGANIZATIONAL CHANGES

– TASK REDESIGN

– JOB DESIGN

– PROCESS DESIGN

– OFFICE / ORGANIZATION STRUCTURE DESIGN

– REPORTING RELATIONSHIPS

**

11.32

DESIGN SPECIFICATIONSDESIGN SPECIFICATIONS

ROLE OF END USERSROLE OF END USERS

• USERS DRIVE SYSTEMS EFFORTUSERS DRIVE SYSTEMS EFFORT

• MUST HAVE SUFFICIENT CONTROL MUST HAVE SUFFICIENT CONTROL TO ENSURE SYSTEM REFLECTS TO ENSURE SYSTEM REFLECTS BUSINESS PRIORITIES, NEEDSBUSINESS PRIORITIES, NEEDS

• FUNCTIONAL USERS DRIVE FUNCTIONAL USERS DRIVE SYSTEM NEEDSSYSTEM NEEDS

11.33

COMPLETING SYSTEM COMPLETING SYSTEM DEVELOPMENT PROCESSDEVELOPMENT PROCESS

• PROGRAMMING:PROGRAMMING: Translating Translating needs to program codeneeds to program code

• TESTING:TESTING: Does system produce Does system produce desired results?desired results?

**

11.34

TESTINGTESTING

• UNIT TESTING:UNIT TESTING: Tests each unit separatelyTests each unit separately• SYSTEM TESTING:SYSTEM TESTING: Do modules function Do modules function

as planned?as planned?• ACCEPTANCE TESTING:ACCEPTANCE TESTING: Final Final

certificationcertification• TEST PLAN:TEST PLAN: Preparations for Preparations for tests tests

to be performedto be performed

**

11.35

CONVERSIONCONVERSION• PARALLEL:PARALLEL: Old & new run same problems. Give same Old & new run same problems. Give same

results?results?• DIRECT CUTOVER:DIRECT CUTOVER: Risky conversion to new systemRisky conversion to new system• PILOT:PILOT: Introduce into one area. Does it work? Yes: Introduce into one area. Does it work? Yes:

introduce into other areaintroduce into other area• PHASED:PHASED: Introduce in stagesIntroduce in stages• CONVERSION PLAN:CONVERSION PLAN: Schedule for Schedule for

conversionconversion• DOCUMENTATION:DOCUMENTATION: Description of how Description of how

system workssystem works

**

11.36

PRODUCTION & MAINTENANCEPRODUCTION & MAINTENANCE

• PRODUCTION:PRODUCTION: Constant review by Constant review by users & operators. Does it meet users & operators. Does it meet goals?goals?

• MAINTENANCE:MAINTENANCE: Upkeep; Update; Upkeep; Update; Corrections over timeCorrections over time

**

11.37

SYSTEMS DEVELOPMENTSYSTEMS DEVELOPMENT

CORE ACTIVITYCORE ACTIVITY DESCRIPTIONDESCRIPTION

SYSTEMS ANALYSISSYSTEMS ANALYSIS IDENTIFY PROBLEM(S)SPECIFY SOLUTIONSESTABLISH INFORMATION REQUIREMENTS

SYSTEMS DESIGNSYSTEMS DESIGN CREATE LOGICAL DESIGN SPECSCREATE PHYSICAL DESIGN SPECSMANAGE TECHNICAL REALIZATION OF SYSTEM

PROGRAMMINGPROGRAMMING TRANSLATE DESIGN SPECS INTOPROGRAM CODE

11.38

SYSTEMS DEVELOPMENTSYSTEMS DEVELOPMENT

CORE ACTIVITYCORE ACTIVITY DESCRIPTIONDESCRIPTION

TESTINGTESTING UNIT TEST SYSTEMS TEST ACCEPTANCE TEST

CONVERSIONCONVERSION PLAN CONVERSION PREPARE DOCUMENTATION TRAIN USERS & TECHNICAL STAFF

PRODUCTION &PRODUCTION & OPERATE SYSTEMMAINTENANCEMAINTENANCE EVALUATE SYSTEM

MODIFY SYSTEM

11.39

• CAPITAL BUDGETING MODELSCAPITAL BUDGETING MODELS

LIMITATIONS: LIMITATIONS:

• Assume all relevant alternatives have Assume all relevant alternatives have been examined; cost & benefits can been examined; cost & benefits can be expressed as $$be expressed as $$

• Ignore intangible benefitsIgnore intangible benefits

**

UNDERSTANDING BUSINESS UNDERSTANDING BUSINESS VALUE OF INFO SYSTEMSVALUE OF INFO SYSTEMS

11.40

CAPITAL BUDGET:CAPITAL BUDGET:PROCESS OF ANALYZING, SELECTING PROCESS OF ANALYZING, SELECTING

CAPITAL EXPENDITURESCAPITAL EXPENDITURES• PAYBACK METHODPAYBACK METHOD• RETURN ON INVESTMENTRETURN ON INVESTMENT• COST-BENEFIT RATIOCOST-BENEFIT RATIO• NET PRESENT VALUENET PRESENT VALUE• PROFITABILITY INDEXPROFITABILITY INDEX• INTERNAL RATE OF RETURNINTERNAL RATE OF RETURN

**

11.41

COSTS:COSTS:

• HARDWAREHARDWARE

• SOFTWARESOFTWARE

• SERVICESSERVICES

• PERSONNELPERSONNEL

**

11.42

COSTS & BENEFITS:COSTS & BENEFITS:

TANGIBLE BENEFIT:TANGIBLE BENEFIT:

• INCREASED PRODUCTIVITYINCREASED PRODUCTIVITY

• LOW OPERATING COSTSLOW OPERATING COSTS

• REDUCED WORK FORCEREDUCED WORK FORCE

• LOWER COMPUTER EXPENSESLOWER COMPUTER EXPENSES

• LOWER VENDOR COSTSLOWER VENDOR COSTS

• LOWER CLERICAL/PROFESSIONAL COSTSLOWER CLERICAL/PROFESSIONAL COSTS

• REDUCED GROWTH OF EXPENSESREDUCED GROWTH OF EXPENSES

• REDUCED FACILITY COSTSREDUCED FACILITY COSTS

**

11.43

COSTS & BENEFITS:COSTS & BENEFITS:

INTANGIBLE BENEFIT:INTANGIBLE BENEFIT:• IMPROVED ASSET USE; RESOURCE CONTROL; PLANNINGIMPROVED ASSET USE; RESOURCE CONTROL; PLANNING• INCREASED FLEXIBILITYINCREASED FLEXIBILITY• MORE TIMELY INFORMATIONMORE TIMELY INFORMATION• INCREASED LEARNINGINCREASED LEARNING• ATTAIN LEGAL REQUIREMENTSATTAIN LEGAL REQUIREMENTS• ENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION, ENHANCED EMPLOYEE GOODWILL, JOB SATISFACTION,

DECISION MAKING, OPERATIONSDECISION MAKING, OPERATIONS• HIGHER CLIENT SATISFACTIONHIGHER CLIENT SATISFACTION• BETTER CORPORATE IMAGEBETTER CORPORATE IMAGE

**

COSTS & BENEFITS:COSTS & BENEFITS:

11.44

PORTFOLIO ANALYSIS:PORTFOLIO ANALYSIS:ANALYSIS OF POTENTIAL APPLICATIONS TO ANALYSIS OF POTENTIAL APPLICATIONS TO

DETERMINE RISKS & BENEFITS DETERMINE RISKS & BENEFITS • DETERMINE DESIRABLE FEATURES, DETERMINE DESIRABLE FEATURES,

ACCEPTABLE RISKS OF REQUIRED SYSTEMACCEPTABLE RISKS OF REQUIRED SYSTEM• GENERATE PORTFOLIO OF CHARACTERISTICS, GENERATE PORTFOLIO OF CHARACTERISTICS,

RISKS FOR EACH ALTERNATIVERISKS FOR EACH ALTERNATIVE• SCORING MODELSCORING MODEL

**

11.45

SCORING MODEL:SCORING MODEL:• IDENTIFY DESIRABLE FEATURESIDENTIFY DESIRABLE FEATURES• PROVIDE WEIGHTS FOR EACH (ADD TO 1.00)PROVIDE WEIGHTS FOR EACH (ADD TO 1.00)• LOOK AT EACH ALTERNATIVE:LOOK AT EACH ALTERNATIVE:–WHICH FEATURES ARE PRESENT?– TO WHAT EXTENT (as an amount)?– SCORE THE ALTERNATIVE

• RANK-ORDER THE ALTERNATIVESRANK-ORDER THE ALTERNATIVES• SELECT HIGHEST RANKED OPTIONSELECT HIGHEST RANKED OPTION

**

11.46

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11.47

11.48