IS 341

Business Systems Analysis

Chapter 4 - Notes

Systems Planning and Selection

Two primary activities in Phase I: Project Identification and Selection, and Project Initiation and Planning

I. Identifying and Selecting Projects – organizations benefit from following a formal, organized process for identifying, selecting, initiating and planning projects (not ad hoc, sloppy, or “hey, let’s try something…”). IS Manger, Steering Committee, etc. assess needs and resources & select projects based on costs and projected benefits.

Requests come from 3 key sources:

1. Managers want to replace or extend existing system (gain needed info or provide new services)

2. Managers want to make system more efficient (lower costs) or move system to new operating environment

3. Formal planning groups want to want to improve existing systems to meet corporate objectives

A. The Process of Identifying and Selecting Information Systems Projects – 3 primary activities:

1. Identifying Potential Development Projects – done differently by different firms; can be done by top management, steering committee, department heads, or senior IS manager/development group

See Table 4-1 (IMPORTANT!):

Source	Cost	Duration	Complexity	System Size	Focus
Top Mgmt	Highest	Longest	Highest	Largest	Strategic
Steer. Com.	High	Long	High	Large	Cross-Functional
User Dept.	Low	Short	Low	Small	Departmental/ Tactical
Development Group	Low-High	Short-Long	Low-High	Small-Large	Integrate w/ Existing Systems

Top Mgmt. – strategic, reflects overall/broader firm’s needs (overall business objectives and constraints); top down;

Steering Committee - reflects diversity of members (cross functional) and overall/broader firm’s needs (overall business objectives and constraints, as above); top down;

Users Department – more narrow focus, tactical, individual needs; bottom up;

IS Manager/Development Group - narrow focus, tactical, individual needs; bottom up;

2. Classifying and Ranking IS Development Projects (see Table 4-2) – can be done by any of the four groups, criteria can vary based on the organization, and several criteria may be used rather than just one:

a. Value Chain Analysis – extent to which activities add value, vs. costs of development

b. Strategic Alignment – extent to which project helps the organization achieve strategic objectives and long-term goals

c. Potential Benefits – extent to which project will improve profits and other benefits, and duration of benefits

d. Resource Availability – amount and type of resources required and their availability

e. Project Size/Duration – length of time required

f. Technical Difficulty/Risks – level of technical difficulty and, therefore, can project be completed in time requirements

3. Selecting IS Development Projects – conditions (Environment) change over time and importance of specific projects may change over time; Factors to be considered:

a. Perceived needs of organization (is this really needed right now?)

b. Existing systems and ongoing projects (how busy are we right now?)

c. Resource availability

d. Evaluation Criteria (what criteria are we going to use?)

e. Current Business Conditions (Environment)

f. Perspectives of Decision Makers (Who is making decision, and what do they see as important; also POLITICS!)

B. Deliverables and Outcomes – Primary deliverable (end product) of ID/Selection is a schedule of specific IS projects

Incremental Commitment – strategy where the project is reviewed after each phase and project continuation is re-justified (or not!) at each review

II. Initiating and Planning Systems Development Projects – Proper initiation and planning, including determining Project Scope and identifying Project Activities, can reduce time needed to complete later phases – i.e., some things can be accomplished in later phases, but doing them now reduces time later on.

*Rule of Thumb – 10%-20% of project time should be spent on Initiation and Planning; i.e., considerable time should be spent here, so do not get I too much of a hurry to go to later phases, use time wisely at the beginning to avoid errors.

***Objective of Project Initiation and Planning: transform a vague system request document into a tangible project description. Effective communication between project team and users is crucial in creating a meaningful project plan.

A. The Process of Initiating and Planning Systems Development Projects

1. Initiation – activities that organize the project team

2. Planning – define clear, discrete tasks and the work needed to complete each task; objective of Planning:

a. Baseline Project Plan (BPP)

b. Project Scope Statement (PSS) – previously called the Statement of Work (SOW)

B. Deliverables and Outcomes of Initiation and Planning:

1. BPP - Baseline Project Plan –

a. internal document for the team, not for customers

b. foundational for the rest of the project

c. reflects best estimates of scope, benefits, costs, risks, and resource requirements

d. specifies detailed activities for the Analysis phase, but less for other phases (they are dependent on results of each phase and are specified as the project progresses, getting more specific at each step along the way)

2. Project Scope Statement (PSS) – (previously: SOW - Statement of Work) –

NOTE: for some reason, this information about the PSS has not been entered into this version of the textbook.

a. short document prepared for customer, a communication tool that assures that both customer and provider have a common understanding of the project

b. outlines the objectives and constraints for the customer

c. a high-level version of the BPP

d. may be formal (basis for a contract) or informal

III. Assessing Project Feasibility

Six Categories of feasibility: most important factors come under 6 categories

1. Economic – can you afford to do the project [alternatively, can you afford NOT to do the project?]

NOTE: some firms may spend up to 40% of their yearly budgets on their Information Systems!

2. Operational -

3. Technical – do you have the technical resources available?

4. Schedule – what time schedule is required?

5. Legal and Contractual – can the project be done legally/contractually?

6. Political – what are the political ramifications (internally/externally)?

A. Assessing Economic Feasibility – financial costs and benefits, determined by doing a Cost/Benefit Analysis; during Initiation/Planning it is IMPOSSIBLE to accurately determine all costs/benefits, but you have to start somewhere – start here!

1. Determining Project Benefits

a. Tangible Benefits – can be measured in dollars with certainty

1. Cost Reduction and Avoidance

2. Error Reduction

3. Increased Flexibility (measurable???)

4. Increased Speed of Activity

5. Improvement of Management and Control

6. Opening New Markets and Increasing Sales Opportunities

b. Intangible Benefits – not easily measured

1. Competitive Necessity

2. Increased Organizational Flexibility

3. Increased Employee Morale

4. Promotion of Organizational Learning and Understanding

5. More Timely Information

2. Determining Project Costs

a. Tangible and Intangible Costs

b. One-time Costs

1. System Development

2. New Hardware and Software Purchases

3. User Training (One-time, but continuing!!)

4. Site Preparation

5. Data or System Conversion

c. Recurring Costs

1. Application Software Maintenance

2. Incremental Data Storage Expense

3. Incremental Communications

4. New Hardware and Software Leases

5. Consumable Supplies, etc – paper, forms, ink

3. Time Value of Money (TVM)

PV_n= Y = 1/(1+i)ⁿ

where PV = Present Value of Y dollars, i = Discount Rate, and n = number of years from now.

Break-Even Ratio = (Yearly NPV Cash Flow) – (Overall NPV Cash Flow)/ (Yearly NPV Cash Flow)

B. Assessing Other Feasibility Concerns

1. Operational Feasibility – assessing the degree to which a proposed system solves business problems or takes advantage of business opportunities

2. Technical Feasibility - assessing the organization’s ability to construct the proposed system

3. Schedule Feasibility - assessing the degree to which the potential time frame and completion dates for all major activities within a project meet organizational deadlines and constraints for affecting changes

4. Legal and Contractual Feasibility - assessing potential legal and contractual ramifications due to the construction of a system

5. Political Feasibility – evaluating how key stakeholders within the organization view the proposed system

C. Building the Baseline Project Plan – all information collected during project initiation and planning is collected and organized into a document called the Baseline Project Plan; 4 major sections:

1. Introduction – brief overview of entire project

2. System Description – outline possible alternative solutions (very general, low level)

3. Feasibility Assessment – outline project costs, benefits, and technical difficulties

4. Management Issues – outline concerns that management has about the project

IV. Reviewing the Baseline Project Plan – before Phase 2 can begin, stakeholders (users, management, and the development group) must review and approve the BPP- the review process is call a Walkthrough (or Structured Walkthrough)

V. Pine Valley Furniture WebStore: Systems Planning and Selection – does the Internet fit into your business plan?

A. Internet Basics

1. Intranet - use of Internet technologies within an organization

2. Extranet – use of Internet technologies between firms, or in a value-added network

3. Electronic Data Interchange (EDI) – direct exchange of business data between organizations thru use of Standard Business Documents

B. Pine Valley Furniture WebStore

1. Initiating and Planning PVF’s E-Commerce System

2. WebStore Project Walkthrough