3Systems Analysis – ITEC 3155Feasibility Analysis

3

Systems Analysis and Design in a Changing World, 4th Edition 2

What is Feasibility Analysis?

Feasibility A measure of how beneficial or practical the development of

an information systems will be to an organization.

Feasibility Analysis The process by which feasibility is measured.

The goal of feasibility analysis: To enable the organization to determine whether or no to

proceed with a project To identify any important risks associated with the project

3

Systems Analysis and Design in a Changing World, 4th Edition 3

Confirming Project Feasibility

Risk management Economic feasibility

Cost/benefit analysis Sources of funds (cash flow, long-term capital)

Organizational and cultural feasibility Technological feasibility Schedule feasibility Resource feasibility

3

Systems Analysis and Design in a Changing World, 4th Edition 4

Risk Management

3

Systems Analysis and Design in a Changing World, 4th Edition 5

Economic Feasibility

An economic feasibility analysis (or cost-benefit analysis) should be performed to identify the financial risk associated with the project Estimate project development costs Estimate operational costs after project Estimate financial benefits based on annual

savings and increased revenues Calculate using table of costs and benefits

Uses net present value (NPV), payback period, return on investment (ROI) techniques

3

Systems Analysis and Design in a Changing World, 4th Edition 6

Supporting Detail for Salaries and Wages for RMO (Figure 3-16)

3

Systems Analysis and Design in a Changing World, 4th Edition 7

Summary of Development Costs for RMO (Figure 3-17)

3

Systems Analysis and Design in a Changing World, 4th Edition 8

Summary of Annual Operating Costsfor RMO (Figure 3-18)

3

Systems Analysis and Design in a Changing World, 4th Edition 9

Sample Benefits for RMO (Figure 3-19)

3

Systems Analysis and Design in a Changing World, 4th Edition 10

RMO Cost Benefit Analysis (Figure 3-20)

3

Systems Analysis and Design in a Changing World, 4th Edition 11

Intangibles in Economic Feasibility

Intangible benefits cannot be measured in dollars Increased levels of service Customer satisfaction Survival Need to develop in-house expertise

Intangible costs cannot be measured in dollars Reduced employee morale Lost productivity Lost customers or sales

3

Systems Analysis and Design in a Changing World, 4th Edition 12

Organizational and Cultural Feasibility

Each company has own culture New system must fit into culture

Evaluate related issues for potential risks Low level of computer competency Computer phobia Perceived loss of control Shift in power Fear of job change or employment loss Reversal of established work procedures

3

Systems Analysis and Design in a Changing World, 4th Edition 13

Technological Feasibility

The goal to assess the extent to which the system can be

successfully designed, developed and installed

Does system stretch state-of-the-art technology? Does in-house expertise presently exist for development? Does an outside vendor need to be involved? Solutions include

Training or hiring more experienced employees Hiring consultants Changing scope and project approach

3

Systems Analysis and Design in a Changing World, 4th Edition 14

Schedule Feasibility

Estimates needed without complete information Management deadlines may not be realistic Project managers

Drive realistic assumptions and estimates Recommend completion date flexibility Assign interim milestones to periodically reassess

completion dates Involve experienced personnel Manage proper allocation of resources

3

Systems Analysis and Design in a Changing World, 4th Edition 15

Resource Feasibility

Team member availability

Team skill levels

Computers, equipment, and supplies

Support staff time and availability

Physical facilities

3

Systems Analysis and Design in a Changing World, 4th Edition 16

Summary

Feasibility analysis aims to determine whether an organization should

proceed with a project; identify important risks.

Feasibility has many facets technical, economic, organizational/cultural,

schedule, resource.