Feasibility Analysis and the System Proposal

Objectives

Identify feasibility checkpoints in the systems life

cycle.
Identify alternative system solutions.
Define and describe six types of feasibility and
their respective criteria.
Perform various cost-benefit analyses using
time-adjusted costs and benefits.
Write suitable system proposal reports for
different audiences.
Plan for a formal presentation to system owners
and users.
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Feasibility Analysis
Feasibility the measure of how beneficial or
practical an information system will be to an
organization.
Feasibility analysis the process by which
feasibility is measured.
Creeping Commitment an approach to
feasibility that proposes that feasibility should be
measured throughout the life cycle.
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Feasibility
Checkpoints
During
Systems
Analysis

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Six Tests For Feasibility

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Operational feasibility a measure of how well a

solution meets the system requirements.
Cultural (or political) feasibility - a measure of how
well a solution will be accepted in an organizational
climate.
Technical feasibility a measure of the practicality of a
technical solution and the availability of technical
resources and expertise.
Schedule feasibility a measure of how reasonable the
project timetable is.
Economic feasibility - a measure of the costeffectiveness of a project or solution.
Legal feasibility - a measure of how well a solution can
be implemented within existing legal/contractual
obligations.

Operational Feasibility
How well proposed system solves the
problems and takes advantage of
opportunities identified during the scope
definition and problem analysis phases
How well proposed system satisfies
system requirements identified in the
requirements analysis phase
Is the problem still worth solving?
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Cultural (or political) feasibility

Does management support the system?
How do end users feel about their role in
the system?
What end users may resist or not use the
system? How can this be overcome?
How will the working environment
change? Can users and management
adapt to the change?
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Technical feasibility
Is the proposed technology or solution
practical?
Do we currently possess the necessary
technology?
Do we possess the necessary technical
expertise?

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Schedule feasibility
Are specified deadlines mandatory or
desirable?
Are mandatory deadlines realistic for
proposed solution?

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Economic feasibility
During Scope Definition
Do the problems or opportunities warrant the
cost of a detailed study and analysis of the
current system?

During Problem Analysis

After a detailed study of the current system
Better estimates of development costs and
benefits

During Decision Analysis

Requirements now defined
Development costs can be better estimated
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Legal feasibility

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Copyrights
Union contracts
Legal requirements for financial reporting
Antitrust laws
National data and work laws

Information System Costs

Development costs - one time costs that will
not recur after the project has been completed.

Personnel
Computer usage
Training
Supply, duplication, and equipment
Computer equipment and software

Operating costs - costs that recur throughout

the lifetime of the system.

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Fixed costs occur at regular intervals but at

relatively fixed rates.
Variable costs occur in proportion to usage.

Information System Benefits

Tangible benefits are those that can be easily
quantified.
Intangible benefits are those benefits believed
to be difficult or impossible to quantify.
Fewer processing errors
Increased throughput
Decreased response time
Elimination of job steps
Increased sales
Reduced credit losses
Reduced expenses
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Costs for
a
Proposed
Solution

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Three Popular Techniques to

Assess Economic Feasibility
Payback Analysis
Return On Investment
Net Present Value

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Time Value of Money

Used with all three cost-effectiveness
techniques.
Concept that recognizes that a dollar today is
worth more than a dollar one year from now.
Invest $100 at 2% for one year yields $102.
So $100 today and $102 one year from today
represent the same value.
Given $20,000 benefit from information system two
years from now and 10% return from other
investments, means that benefit is worth $16,528
today.
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Payback Analysis
Payback analysis a technique for
determining if and when an investment will
pay for itself.
Payback period the period of time that
will lapse before accrued benefits overtake
accrued and continuing costs.

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Present Value Formula

Present value the current value of a
dollar at any time in the future.
PVn = 1/(1 + i)n
Where n is the number of years and i is discount rate

Discount rate a percentage similar to interest

rates that you earn on your savings.

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In most cases the discount rate for a business is the

opportunity cost of being able to invest money in
other projects or investments

Payback Analysis for a Project

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Return-on-Investment Analysis (ROI)

Return-on-Investment (ROA) analysis a
technique that compares the lifetime profitability
of alternative solutions.
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.

Lifetime ROI =
(estimated lifetime benefits estimated lifetime costs) /
estimated lifetime costs
Annual ROI = lifetime ROI / lifetime of the system
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Net Present Value (NPV) Analysis

Net present value analysis technique that compares
annual discounted costs and benefits of alternative solutions.

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Candidate Systems Matrix

Candidate 1 Name

Candidate 2 Name

Candidate 3 Name

Stakeholders
Knowledge
Processes

Communications

Candidate Systems Matrix a tool used to document

similarities and differences between candidate systems.

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Stakeholders - how system will interact with people and other

systems.
Knowledge - how data will be implemented, how inputs will be
captured, how outputs will be generated.
Processes - how processes will be built and implemented.
Communications - how processes and data will be
distributed.

Sample Candidate Systems Matrix

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.

Candidate 1

emulators, operating systems,

languages, etc.). Not generally
applicable if applications
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software
packages are to be
purchased.

Candidate 3

COTS package Platinum Plus

from Entertainment Software
Solutions would be purchased
and customized to satisfy
Member Services required
functionality.

Member Services and

warehouse operations in
relation to order fulfillment.

Same as candidate 2.

This solution can be

implemented quickly because
its a purchased solution.

Fully supports user required

business processes for
SoundStage Inc. Plus more
efficient interaction with
member accounts.

Same as candidate 2.

Technically architecture
dictates Pentium III, MS
Windows 2000 class servers
and workstations (clients).

Same as candidate 1.

Same as candidate 1.

MS Visual Basic 5.0

System Architect 2001
Internet Explorer

MS Visual Basic 5.0

System Architect 2001
Internet Explorer

MS Visual C++ and MS

Software tools needed to design Access for customization of
and build the candidate (e.g.,
package to provide report
database management system, writing and integration.
Software Tools Needed

Candidate 2

Sample Candidate Systems Matrix (cont.)

Characteristics

Application Software

Candidate 1

Candidate 2

Candidate 3

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.

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 constratints)
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Web pages must be designed to

VGA resolution. All internal screens
will be designed for SVGA
resolution.

Sample Candidate Systems Matrix (cont.)

Characteristics
Input devices and
Implications

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.
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Candidate 3

Keyboard & mouse.

Apple Quick Take digital camera

and software
(15) PSC Quickscan laser bar-code
scanners
(1) HP Scanjet 4C Flatbed Scanner
Keyboard and mouse

Same as candidate 2.

MS SQL Server DBMS

with 1000GB arrayed
capability.

Same as candidate 1.

Same as candidate 1.

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 2

Feasibility Analysis Matrix

Feasibility Analysis Matrix a tool
used to rank candidate systems.
Weighting

Description
Operational Feasibility
Cultural Feasibility

Technical Feasibility
Schedule Feasibility
Economic Feasibility
Legal Feasibility
Ranking
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Candidate 1

Candidate 2

Candidate 3

Sample Feasibility Analysis Matrix

Wt
Description

Operational
feasibility

15%

Candidate 1

Candidate 2

Candidate 3

Purchase commercial offthe-shelf package for

member services.

Write new application inhouse using new company

standard VB.NET and SQL
Server database

Rewrite current in-house

application using
Powerbuilder.

Supports only Member

Services requirements.
Current business process
would have to be modified
to take advantage of
software functionality. Also
there is concern about
security in the system.

Fully supports user-required

functionality.

Fully supports user-required

functionality.

Score: 100

Score: 100

Score: 60
Cultural
Feasibility

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15%

Possible user resistance to

non-standard user interface
of proposed purchased
package.
Score: 70

No foreseeable problems.
Score: 100

No foreseeable problems.
Score: 100

Sample Feasibility Analysis Matrix (cont.)

Technical
feasibility

Wt

Candidate 1

Candidate 2

Candidate 3

20%

Current production release

of Platinum Plus package is
version 1.0 and has been
on the market for only 6
weeks. Maturity of product
is a risk, and company
charges and additional
monthly fee for technical
support.

Solution requires writing

application in VB .NET.
Although current technical
staff has only Powerbuilder
experience, it should be
relatively easy to find
programmers with VB .NET
experience.

Although current technical staff

is comfortable with
Powerbuilder, management is
concerned about acquisition of
Powerbuilder by Sybase Inc.
MS SQL Server is the current
company standard for
database, which competes with
Sybase DBMS. We have no
guarantee that future versions
of Powerbuilder will "play well"
with our current version of SQL
Server.

Score: 95
Required to hire or train
Java J2EE expertise to
perform modifications for
integration requirements.

Score: 60
Score: 50
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Sample Feasibility Analysis Matrix (cont.)

Wt
Economic
feasibility

Candidate 1

Candidate 2

Candidate 3

30%

Cost to develop:
Payback
(discounted):
Net present
value:

Approx. $350.000

Approx. $418.000

Approx. $400.000

Approx. 4.5 years

Approx. 3.5 years

Approx. 3.3 years

Approx. $210,000

Approx. $307,000

Approx. $325,000

See Attachment A

See Attachment A

See Attachment A

Detailed
calculations:

Score: 60

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Score: 85

Score: 90

Sample Feasibility Analysis Matrix (cont.)

Wt
Schedule
feasibility

10%

Candidate 1
Less than 3 months
Score: 95

Legal feasibility

Weighted score

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10%

100%

No foreseeable problems

Candidate 2
9-12 months
Score: 80
No foreseeable problems

Candidate 3
9 months
Score: 85
No foreseeable problems

Score: 100

Score: 100

Score: 100

67

92.5

87.5

The System Proposal

System proposal a report or
presentation of a recommended solution.
Usually formal written report or oral
presentation
Intended for system owners and users

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Length of the Written Report

To Executive-level managers - one or two
pages
To Middle-level managers - three to five
pages
To Supervisory-level managers - less than
10 pages
To clerk-level personnel - less than 50
pages.
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Formats for Written Reports

factual format - traditional and best suited to readers
interested in facts and details as well as conclusions.
administrative format - modern, result-oriented format
preferred by managers and executives.
Factual Format

Administrative Format

I. Introduction
II. Methods and procedures

I. Introduction
II. Conclusions and recommendations

III. Facts and details

III. Summary and discussion of facts

and details

IV. Discussion and analysis of

facts and details
V. Recommendations
VI. Conclusion

IV. Methods and procedures

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V. Final conclusion
VI. Appendixes with facts and details

Organization of the Written

Report
Primary elements present the actual
information that the report is intended to
convey.
Secondary elements package the report
so the reader can easily identify the report
and its primary elements.

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Secondary Elements for a

Written Report
Letter of transmittal
Title page
Table of contents
List of figures, illustrations, and tables
Abstract or executive summary
(The primary elements--the body of the report, in either the factual
or administrative format--are presented in this portion of the report.)
Appendices
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Writing the Report

Paragraphs should
convey a single idea.
Sentences should
not be too complex.
Write in active voice.
Eliminate jargon, big
words, and
deadwood.
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System Proposal formal

presentations
Formal presentation a special meeting
used to sell new ideas and gain approval for
new systems. They may also be used for any
of these purposes:

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Sell new system

Sell new ideas
Head off criticism
Address concerns
Verify conclusions
Clarify facts
Report progress

Typical Outline and Time Allocation

for an Oral Presentation
I. Introduction (one-sixth of total time available)
A. Problem statement
B. Work completed to date
II. Part of the presentation (two-thirds of total time available)
A. Summary of existing problems and limitations

B. Summary description of the proposed system

C. Feasibility analysis
D. Proposed schedule to complete project
III. Questions and concerns from the audience (time here is not to be included in the time
allotted for presentation and conclusion; it is determined by those asking the questions and
voicing their concerns)
IV. Conclusion (one-sixth of total time available)
A. Summary of proposal
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B. Call to action (request for whatever authority you require to continue systems
development)

Guidelines
for Visual
Aids

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Source: Copyright
Keith London

Conducting the Formal

Presentation
Dress professionally.
Avoid using the "I" word when making the
presentation.
Maintain eye contact with the group and
keep an air of confidence.
Be aware of your own mannerisms.

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When Answering Questions

Always answer a question seriously, even
if you think it is a silly question.
Answer both the individual who asked the
question and the entire audience.
Summarize your answers.
Limit the amount of time you spend
answering any one question.
Be honest.
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