Feasibility Analysis and the System Proposal

Feasibility Analysis and the System Proposal10-1

Feasibility Analysis and the System Proposal

Answers

Discussion Questions for SoundStage

The focus is clearly a change from logical to physical (technical) concerns. Until now the focus has been on understanding problems and business requirements. Now Sandra and Bob have begun to try to solve the problem.
Terri is a system user. Most system owners and users feel uncomfortable addressing technical issues.
Absolutely! The last thing an analyst wants to do is ignore the ideas and opinions of the users. It is courteous to consider those ideas and opinions. Besides! Sometimes users come up with some excellent ideas for solutions.
Most system proposals are presented orally and in writing. The oral presentation allows attendees the opportunity to ask questions and address issues. The written report is especially valuable in that it can provide additional details and background information that people can read at their own discretion.

Review Questions

Feasibility is a measure of how beneficial the development of an informations system would be to an organization. Feasibility analysis is the process by which we measure feasibility. It is an ongoing evaluation of feasibility at various checkpoints in the life cycle.
The three tests for project feasibility are operational feasibility, technical feasibility, and economic feasibility. Operational feasibility is a measure of how well a specific alternative solution will work within the organization. It is measured by two aspects - is the problem worth solving or how well will the solution work (the PIECES framework is useful here) and how do the end-users and management feel about the problem? Technical feasibility looks at what is practical and reasonable. Is the proposed technology or solution practical? Do we possess the necessary technology? Do we have the necessary technical expertise and is the schedule reasonable? Economic feasibility is essentially a cost-benefit analysis. Do the projected benefits exceed the expected costs?
PIECES can be used as the basis for analyzing the urgency of a problem or the effectiveness of a solution. The following is a list of the questions that address these issues:

Performance – Does the system provide adequate throughput and response time?
Information – Does the system provide end-users and managers with timely, pertinent, accurate, and usefully formatted information?
Economy – No, we are not prematurely jumping into economic feasibility! The question here is, does the system offer adequate service level and capacity to reduce the costs of the business or increase the profits of the business?
Control – Does the system offer adequate controls to protect against fraud and embezzlement and to guarantee the accuracy and security of data and information?
Efficiency – Does the system make maximum use of available resources including people, time, flow of forms, minimum processing delays, and the like?
Services – Does the system provide desirable and reliable service to those who need it? Is the system flexible and expandable?

The three goals that help measure the usability of an interface include:

Ease of learning – How long it takes to train someone to perform at a desired level
Ease of use – You are able to perform your activity quickly and accurately. If you are a first-time user or infrequent user, the interface is easy and understandable. If you are a frequent user, your level of productivity and efficiency is increased.
Satisfaction – You, the user, are favorably pleased with the interface and prefer it over types you are familiar with.

Costs associated with developing the system and costs associated with operating the system.
Fixed costs occur at regular intervals but at relatively fixed rates. Examples include lease payments, prorated salaries, rent, etc. Variable costs occur in proportion to some usage factor. Examples include prorated overhead expenses, supplies, electricity, water, etc.
Tangible benefits are benefits that can be easily quantified like increased sales, reduced expenses, etc. Intangible benefits are benefits that are difficult or impossible to quantify like improved customer goodwill, better employee morale, etc. Individual student answers will vary. See Module C for a technique for estimating the actual dollar value of "intangible" benefits or costs.
Payback analysis, return-on-investment, and net present value
Net present value
The four types of business and technical reports include:

Systems Planning Reports
Systems Analysis Reports
Systems Design Reports

The guidelines for the length of the report based on the intended audience are:

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

The passive voice becomes wordy and boring when used consistently.
You should be honest: if you don’t know the answer admit it.

Problems and Exercises

The creeping commitment approach to feasibility uses several different checkpoints in the systems development life cycle to reassess feasibility. At any of these checkpoints, the project can be canceled, revised, or continued. This avoids the disastrous consequences of a onetime only feasibility assessment. The most common life cycle feasibility checkpoints are after the survey phase, the study phase, the selection phase, the acquisition phase, and the design phase.
The answers will vary. The basic point is that what is feasible for one business may not be feasible for another. Different companies of different sizes have different resources. The amount of money, equipment, technical expertise, office space, and many other factors may make an alternative that is feasible to one company infeasible to another operationally, technically, or economically.
Student answers will vary. Operational feasibility concerns how well an alternative solution will work in an organization and how the people feel about the system. The PIECES framework can be used to evaluate how well a given solution will work. A more difficult aspect may be how do people feel about the system? A good analyst always remembers that the system is for the end-user, and they will determine its success or failure. Some people, for whatever reason, are very against or afraid of computers. Others are overwhelmingly in favor of them, but have unrealistic expectations of what they can do. These and similar issues must be considered.
A few possible examples may include the following:

Improved customer goodwill
Improved employee morale
Better service to community
Better decision making

Payback analysis is simple and popular. However, it only indicates whether a project is good or not, it does not really distinguish how good one project is to another. A project with a payback period of 3.7 years may have a total value to the organization that is less than another project that has a payback period of 4.3 years. The return on investment (ROI) analysis compares the lifetime profitability of alternative projects. The project with the highest ROI is the best, but like payback analysis, it may still be below some organizational minimum standard. Both payback analysis and ROI can be performed without using the time-adjusted value of money that produces misleading results! The net present value analysis is the preferred method of evaluating projects because it requires a consideration of the time value of money and can be used to equally compare the value of projects with different useful lives.
A written report may be either factual or administrative in format. Both formats contain primary and secondary elements. The higher a person is in an organization, the shorter and more summarized report is appropriate. The lower the person is, the longer and more detailed the report can be.
Students may come up with an extensive list for this question. However, some of the things they should have included as important, prior knowledge of the audience are:

What are the responsibilities of this person?
How might the new system affect this person?
How is this person affected by the current system?
What is the attitude of this person toward the existing or proposed system?
What kind of information about the project does this person really need and want?
How busy is this person?
How much time and attention can I reasonably hope to get from this person?

Knowing as much as possible about the audience prior to the presentation will enable you to prepare an appropriate plan of presentation and effectively carry out the plan. Appropriate strategies can be formulated for dealing with the fears, hostilities, skepticisms, apathy, and other characteristics inherent in your audience. Most importantly, you have to capture and keep that specific audience's attention and interest.

Presentations offer the advantage of impact through immediacy and spontaneity, and permit the audience to respond to the presenter, who can use emphasis, timed pauses, and body language to convey messages not possible with the written word. However, since the material presented is easily forgotten, presentations are often followed or accompanied by a written report, either summary or detailed.
One possibility is to organize a larger report to include subreports for different managers. A suggested guideline for restricting the size of report subsections is:

To executive-level managers - one or two pages
To middle-level managers - three to five pages
To supervisory-level managers - less than 10pages
To clerk-level personnel - less than 50 pages

This answer may vary from student to student. Perhaps the best way to improve one's written communications skills is to practice. We recommend all our students get a copy of Elements of Style by William Strunk, Jr., and E. B. White. It is an indispensable "pocket" reference on grammar and style. Students are also encouraged to own a dictionary and thesaurus. Written communications skills can also be improved by gaining access to some current word processing software packages. Most schools have courses on writing. Identify those courses. Many businesses offer courses or seminars on writing. Many books, both general and computing-specific, are available to help the analyst become a more effective writer.

Projects and Research

Obviously, the responses to this question will vary greatly. However, it should be emphasized that all good systems development life cycles have multiple feasibility checkpoints. The students may find that there are other feasibility checkpoints that we have omitted or that some checkpoints in the book are not used by the industry. An explanation of this difference should make an interesting discussion.
The student answers will vary. It is likely that the various shops use similar criteria albeit they may call criteria by a different name or break down the feasibility criteria into a different number of classes.
The answer may vary from student to student. It is suggested that permission be obtained from the instructor and that observation results be kept confidential, between the student and that instructor.
This answer may vary from student to student. You may notice a trend inherent in the numerous report outlines collected by the students. The administrative format is gaining wide acceptance because of its orientation to the time management needs of the average manager.
Examples of secondary elements were introduced in the chapter. You might have the students do a checklist to see what common and unique components were uncovered.

Minicases

The following table reflects the answer:

COSTS / BENEFITS / DISCOUNT / ACCUMULATED
COSTS / ACCUMULATED
BENEFITS
125,000 / 0 / 1.000 / 125,000.00 / 0
3,500 / 26,000 / .893 / 128,125.50 / 23,218
4,700 / 34,000 / .797 / 131,871.40 / 50,316
5,500 / 41,000 / .712 / 135,787.40 / 79,508
6,300 / 55,000 / .636 / 139,794.20 / 114,488
7,000 / 66,000 / .567 / 143,763.20 / 151,910

Since the present value of accumulated benefits in the fifth year of operation ($151,910) exceeds the present value of the accumulated costs ($143,763.20), this project has a payback period of slightly less than five (5) years. It depends! Many companies have policies concerning minimum payback periods. If that limit was Five years or less, this would be a good investment. If that limit was three years, this project would not be a good investment.

As stated, the problem did not specify whether the student was to provide the lifetime or the annual ROI. Thus, here are the answers to both:

The Lifetime ROI is for the project is:

Lifetime ROI = estimated lifetime benefits - estimated lifetime costs

estimated lifetime costs

222,000 - 152,000

152,000 = 46%

The Annual ROI is for the project is:

Annual ROI = 46% / 5 years

= 9.2%

The net present value is:

Cost / Discount / Total
125,000 / 1.000 / 125,000
3,500 / .893 / 3,125.50
4,700 / .797 / 3,745.90
5,500 / .712 / 3,916.00
6,300 / .636 / 4,006.80
7,000 / .567 / 3,969.00

143,763.20 Total present value of cost

0 / 1.000 / 0
26,000 / .893 / 23,218
34,000 / .797 / 27,098
41,000 / .712 / 29,192
55,000 / .636 / 34,980
66,000 / .567 / 37,422

151,910 Total present value of benefits

151,910 - 143,763.20 = $8,146.80 Net present value

Based on the information provided, the student should not be able to make a decision amongst the three candidates. This question is intended to test their understanding of the need to establish a “weighting” system. Rarely will a single candidate ever prove to be the most feasible solution according to all criteria. Thus, it is necessary to establish the weight or importance level of each feasibility criteria. The chapter provides a candidate and feasibility matrix for establishing and recording weights. Refer the students to the examples. This method of assigning weights will help take the “opinion” factor out of the team’s decision-making process. Finally, it should be pointed out that management should be involved in determining the weight assignment for the various feasibility criteria.