Chapter 2

Analyzing the Business Case

 Explain the concept of a business case and
how a business case affects an IT project
 Describe the strategic planning process and
why it is important to the IT team
 Explain the purpose of a mission statement
 Conduct a SWOT analysis and describe the
four factors involved
 Explain how the SDLC serves as a
framework for systems development

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 List reasons for systems projects and factors
that affect such projects
 Describe systems requests and the role of the
systems review committee
 Define operational, technical, economic, and
schedule feasibility
 Describe the steps and the end product of a
preliminary investigation

3
• Analysts must consider company’s mission,
objectives, and IT needs
• Process starts with a systems request
• Preliminary investigation follows to evaluate:
• Feasibility study
• Fact finding techniques
• Reporting to management

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 Strategic Planning Overview
◦ Starts with a mission statement
◦ Continues with goals and objectives
◦ Long and short-term goals identified
 What Is SWOT Analysis
◦ An enterprise SWOT analysis usually begins with these
questions:
 What are our strengths, and how can we use them to achieve our
business goals?
 What are our weaknesses, and how can we reduce or eliminate
them?
 What are our opportunities, and how do we plan to take advantage
of them?
 What are our threats, and how can we assess, manage, and respond
to the possible risks?

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FIGURE 2-3 Strategic planning is a dynamic process that starts with a FIGURE 2-4 A SWOT analysis might
mission statement, which is shaped by the firm’s purpose, vision, and produce similar results to those
values. The mission generates goals and objectives that produce shown here
business results.

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FIGURE 2-5 This SWOT analysis example focuses on a specific asset,
such as a company patent.

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Strategic Planning for IT Projects
 Careful planning can help assure that:
◦ The project supports overall business strategy and
operational needs
◦ The project scope is well-defined and clearly stated
◦ The project goals are realistic, achievable, and tied
to specific statements, assumptions, constraints,
factors, and other inputs

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 Planning Tools
◦ Some analysts use traditional text-based methods
like Microsoft Word
◦ Some analysts prefer a spreadsheet method like
Microsoft Excel
◦ The most effective approach is to use a CASE tool
such as Visible Analyst

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FIGURE 2-6 The Visible Analyst
CASE tool supports strategic
planning and allows a user to
enter many kinds of planning
statements. Notice the four
SWOT categories highlighted in
the list.

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 A New Role for the IT Department
– Management and IT are linked closely, and
remarkable changes have occurred in both areas
– Today, systems development is much more team-
oriented
– Although team-oriented development is the norm,
some companies see the role of the IT department
being screening and evaluating systems requests
– Larger firms are more likely to use an evaluation
team or systems review committee

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 A business case refers to the reasons, or
justification, for a proposal
◦ Should be comprehensive, yet easy to understand
◦ Should describe the project clearly, provide the
justification to proceed, and estimate the project’s
financial impact

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 A business case should answer the following
questions:
◦ Why are we doing this project?
◦ What is the project about?
◦ How does this solution address key business
issues?
◦ How much will it cost?
◦ How long will it take?
◦ Will we suffer a productivity loss during the
transition?

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 A business case should answer the following
questions (Cont.):
◦ What is the return on investment and payback
period?
◦ What are the risks of doing the project?
◦ What are the risks of not doing the project?
◦ How will we measure success?
◦ What alternatives exist?

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Main Reasons for Systems Requests:
◦ Improved Service
 Improving service to customers or users within the
company
◦ Support for New Products and Services
 New products and services often require new types or
levels of IT support
◦ Better Performance
 Current system might not meet performance
requirements

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 Factors That Affect Systems Projects
◦ Internal Factors
 Strategic Plan
 Top Managers
 User Requests
 Information Technology Department
 Existing Systems and Data
◦ External factors
 Technology
 Suppliers
 Customers
 Competitors
 The Economy
 Government

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Factors That Affect Systems Projects

FIGURE 2-10 Internal and external factors

that affect IT projects.
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 Systems Request Forms
◦ Streamlines the request process
◦ Ensures consistency
◦ Easy to understand
◦ Includes clear instructions
◦ Indicates what supporting documents are needed
◦ Submitted electronically

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FIGURE 2-13 Example of an online systems
request form. 19
 Systems Review Committee
◦ With a broader viewpoint, a committee can establish
priorities more effectively than an individual
◦ One person’s bias is less likely to affect the decisions
◦ Disadvantages:
 Action on requests must wait until the committee
meets
 Members might favor projects requested by their
own departments
 Internal political differences could delay important
decisions

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 Is the proposal desirable in an operational sense?
◦ Is it a practical approach that will solve a problem or take
advantage of an opportunity to achieve company goals?
 Is the proposal technically feasible?
◦ Are the necessary technical resources and people available
for the project?
 Is the proposal economically desirable?
◦ What are the projected savings and costs?
 Are other intangible factors involved, such as
customer satisfaction or company image?
◦ Is the problem worth solving, and will the request result in
a sound business investment?
 Can the proposal be accomplished within an
acceptable time frame?

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FIGURE 2-14 A feasibility study examines
operational, technical, economic,
and schedule factors.

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 Operational Feasibility
◦ Does management support the project?
 Do users support the project?
 Is the current system well liked and effectively used?
 Do users see the need for change?
◦ Will the new system result in a workforce reduction?
 If so, what will happen to affected employees?
◦ Will the new system require training for users?
 If so, is the company prepared to provide the necessary
resources for training current employees?
◦ Will users be involved in planning the new system
right from the start?

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 Operational Feasibility (Cont.)
◦ Will the new system place any new demands on users or
require any operating changes?
 For example:
 Will any information be less accessible or produced less
frequently?
 Will performance decline in any way? If so, will an
overall gain to the organization outweigh individual
losses?
◦ Will customers experience adverse effects in any way, either
temporarily or permanently?
◦ Will any risk to the company’s image or goodwill result?
◦ Does the development schedule conflict with other
company priorities?
◦ Do legal or ethical issues need to be considered?

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 Technical Feasibility
◦ Does the company have the necessary hardware,
software, and network resources?
 If not, can those resources be acquired without
difficulty?
◦ Does the company have the needed technical
expertise?
 If not, can it be acquired?
◦ Does the proposed platform have sufficient
capacity for future needs?
 If not, can it be expanded?

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 Technical Feasibility (Cont.)
◦ Will a prototype be required?
◦ Will the hardware and software environment be reliable?
◦ Will it integrate with other company information
systems, both now and in the future?
◦ Will it interface properly with external systems operated
by customers and suppliers?
◦ Will the combination of hardware and software supply
adequate performance?
◦ Do clear expectations and performance specifications
exist?
◦ Will the system be able to handle future transaction
volume and company growth?

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 Economic Feasibility
◦ Costs for people, including IT staff and users
◦ Costs for hardware and equipment
◦ Cost of software, including in-house
development as well as purchases from vendors
◦ Cost for formal and informal training, including
peer-to-peer support
◦ Cost of licenses and fees
◦ Cost of consulting expenses
◦ Facility costs
◦ The estimated cost of not developing the system
or postponing the project

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 Tangible Benefits  Intangible Benefits
◦ A new scheduling system ◦ A user-friendly system
that reduces overtime that improves employee
◦ An online package job satisfaction
tracking system that ◦ A sales tracking system
improves service and that supplies better
decreases the need for information for marketing
clerical staff decisions
◦ A sophisticated inventory ◦ A new Web site that
control system that cuts enhances the company’s
excess inventory and image
eliminates production
delays

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 Schedule Feasibility
◦ Can the company or the IT team control the
factors that affect schedule feasibility?
◦ Has management established a firm timetable for
the project?
◦ What conditions must be satisfied during the
development of the system?
◦ Will an accelerated schedule pose any risks?
 If so, are the risks acceptable?
◦ Will project management techniques be available
to coordinate and control the project?
◦ Will a project manager be appointed?

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 Identify and weed out systems requests that
are not feasible
 Even if the request is feasible, it might not
be necessary
 Requests that are not currently feasible can
be resubmitted as new hardware, software,
or expertise becomes available

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 Factors That Affect Priority
◦ Will the proposed system reduce costs?
 Where? When? How? How much?
◦ Will the system increase revenue for the company?
 Where? When? How? How much?
◦ Will the systems project result in more information or
produce better results?
 How? Are the results measurable?
◦ Will the system serve customers better?
◦ Will the system serve the organization better?
◦ Can the project be implemented in a reasonable time
period?
 How long will the results last?
◦ Are the necessary financial, human, and technical
resources available?

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 Discretionary Projects  Nondiscretionary Projects
◦ Projects where ◦ Projects where management
management has a choice has must implement them
in implementing them  Adding a report required by
 Creating a new report for federal law
a user  Most of these projects are
predictable
 Annual updates to payroll
 Tax percentages
 Quarterly changes

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 Interaction with Managers and Users
◦ Meet with key managers, users, and IT staff to
describe the project, explain responsibilities,
answer questions, and invite comments
◦ Focus on improvements and enhancements, not
problems

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FIGURE 2-15 Model of a preliminary
investigation. Notice the importance of
fact-finding in each of the four areas.

FIGURE 2-16 Six main steps in a

typical preliminary investigation.
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 Step 1: Understand the Problem or Opportunity
◦ Develop a business profile that describes business
processes and functions
◦ Understand how modifications will affect business
operations and other information systems
◦ Determine which departments, users, and business
processes are involved
◦ Systems request may not reveal an underlying
problem
◦ Consider using a fishbone diagram

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FIGURE 2-17 A fishbone diagram displays the
causes of a problem. Typically, you must dig deeper
to identify actual causes rather than just symptoms. 36
 Step 2: Define the Project Scope and
Constraints
◦ Define the specific boundaries, or extent, of the
project
◦ Define project scope by creating a list with sections
called Must Do, Should Do, Could Do, and Won’t Do
◦ Define project scope as clearly as possible to avoid
project creep
◦ Identify Constraints
 A constraint is a requirement or condition that the
system must satisfy or an outcome that the system
must achieve

37
FIGURE 2-18 Examples of various types of
constraints.
38
 Step 3: Perform Fact-Finding
◦ Gather data about Conduct Interviews
project usability, 1. Determine the people to
costs, benefits, and interview
schedules 2. Establish objectives for
the interview
◦ Analyze organization
3. Develop interview
charts questions
 Understand the 4. Prepare for the interview
functions and 5. Conduct the interview
identify people you 6. Document the interview
want to interview 7. Evaluate the interview

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 Step 3: Perform Fact-Finding (Cont.)

◦ Review Documentation
 Investigate the current system documentation
 Check with users to confirm that you are receiving
accurate and complete
information
◦ Observe Operations
 See how workers carry out
typical tasks
 Sample inputs and outputs
of the system

FIGURE 2-20 Sometimes, an analyst can get

a better understanding of a system by
watching actual operations. 40
 Step 3: Perform Fact-Finding (Cont.)

◦ Conduct a User Survey

 A survey is not as flexible as a series of interviews,
but it is less expensive, generally takes less time, and
can involve a broad cross-section of people
◦ Analyze the Data
 Systems analyst might use a Pareto chart
 Analysts may use an XY chart to identify if there is a
correlation of variables

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FIGURE 2-21 A Pareto chart displays the causes of a
problem, in priority order, so an analyst can tackle the most
important causes first. In this example, the part number issue
would be the obvious starting point.

FIGURE 2-22 An XY chart shows correlation between variables, which

is very important in problem solving. Conversely, a lack of correlation
suggests that the variables are independent, and that you should look
elsewhere for the cause. 42
 Step 4: Analyze Project Usability, Cost, Benefit,
and Schedule Data
◦ What information must you obtain, and how will you
gather and analyze the information?
◦ Will you conduct interviews? How many people will you
interview, and how much time will you need to meet
with the people and summarize their responses?
◦ Will you conduct a survey? Who will be involved? How
much time will it take people to complete it? How much
time will it take to tabulate the results?
◦ How much will it cost to analyze the information and
prepare a report with findings and recommendations?

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 Step 5: Evaluate Feasibility
◦ OPERATIONAL FEASIBILITY
 Review of user needs, requirements, and expectations
 Look for areas that might present problems for system
users and how they might be resolved
◦ TECHNICAL FEASIBILITY
 Identify the hardware, software, and network resources
needed to develop, install, and operate the system
 Develop a checklist that will highlight technical costs and
concerns
◦ ECONOMIC FEASIBILITY
 Apply the financial analysis tools
 The cost-benefit data will be important
◦ SCHEDULE FEASIBILITY
 Include stakeholder expectations regarding acceptable
timing and completion dates

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 Step 6: Present Results and Recommendations
to Management
◦ Typical Report Includes:
 Introduction
 Systems Request Summary
 Findings
 Case for Action
 Project Roles
 Time and Costs Estimates
 Expected Benefits
 Appendix

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• Systems planning is the first phase of the
systems development life cycle
 A business case should describe the project
clearly, provide the justification to proceed, and
estimate the project’s financial impact
 Various internal and external factors affect
systems projects, such as user requests, top
management directives, existing systems, the IT
department, software and hardware vendors,
technology, customers, competitors, the
economy, and government

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 Analysts evaluate the systems request and
determine whether the project is feasible from an
operational, technical, economic, and schedule
standpoint
 Steps in the preliminary investigation are:
◦ Understand the problem or opportunity
◦ Define the project scope and constraints
◦ Perform fact-finding
◦ Analyze project usability, cost, benefit, and schedule
data
◦ Evaluate feasibility
◦ Present results and recommendations to management

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