PROJECT INITIATION
KEY IDEAS
An opportunity to create business value from
using information technology initiates a project.
Feasibility analysis helps determine whether or
not to proceed with the IS project.
Projects are selected based on business needs and
project risks.
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KEY IDEAS
The project sponsor is a key person who
identifies business value to be gained from using
information technology.
The approval committee reviews system requests
from groups throughout the organization and
selects projects for the benefit of the business.
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HOW DO PROJECTS
BEGIN?
Business needs should drive projects.
Project sponsor recognizes business need for new
system and desires to see it implemented.
Business needs determine the system’s
functionality (what it will do).
The project’s business value should be clear.
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SYSTEM REQUEST
A document describing business reasons for
project and system’s expected value.
Lists project’s key elements
Project sponsor
Business need
Business requirements
Business value
Special issues or constraints
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SYSTEM REQUEST
EXAMPLES
Project sponsor – VP of Marketing
Business need – Reach new customers and
improve service to existing customers
Business requirements – Provide web-based
shopping capability
Business value - $750,000 in new customer sales;
$1.8M in existing customer sales
Special issues or constraints – System must be
operational by holiday shopping season
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PRELIMINARY PROJECT
ACCEPTANCE
System request is reviewed by approval
committee
Based on information provided, project merits are
assessed.
Worthy projects are accepted and undergo
additional investigation – the feasibility analysis.
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YOUR TURN…
If you were building a web-based system for
course registration,
What is the business need?
What would be the business requirements?
What would be the business value (tangible and intangible)?
What special issues or constraints would you foresee?
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FEASIBILITY ANALYSIS
Detailed business case for the project
Technical feasibility
Economic feasibility
Organizational feasibility
Compiled into a feasibility study
Feasibility is reassessed throughout the project
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TECHNICAL FEASIBILITY:
CAN WE BUILD IT?
Users’ and analysts’ familiarity with the business
application area
Familiarity with technology
Have we used it before? How new is it?
Project size
Number of people, time, and features
Compatibility with existing systems
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ECONOMIC FEASIBILITY
SHOULD WE BUILD IT?
Identify costs and benefits
Assign values to costs and benefits
Determine cash flow
Assess financial viability
Net present value (NPV)
Return on investment (ROI)
Break even point (BEP)
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EXAMPLE COSTS AND
BENEFITS FOR ECONOMIC
FEASIBILITY
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TANGIBLE VS.
INTANGIBLE COSTS
Tangible Costs – Includes revenue that the
system enables the organization to collect, such
as increased sales.
Intangible Costs – Are base on intuition and
belief rather than “hard numbers.”
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ASSIGN COST AND
BENEFIT VALUES
Difficult, but essential to estimate
Work with people who are most familiar with the
area to develop estimates
Intangibles should also be quantified
If intangibles cannot be quantified, list and
include as part of supporting material
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DETERMINE CASH FLOW:
ASSIGN VALUES TO COSTS
AND BENEFITS – SIMPLE
CASH FLOW METHOD
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ORGANIZATIONAL
FEASIBILITY
IF WE BUILD IT, WILL
THEY COME?
Strategic alignment
How well do the project goals align with business objectives?
Stakeholder analysis
Project champion(s)
Organizational management
System users
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PROJECT SELECTION
ISSUES
Approval committee works from the system
request and the feasibility study
Project portfolio – how does the project fit within the entire
portfolio of projects?
Trade-offs must be made to select projects that will form a
balanced project portfolio
Viable projects may be rejected or deferred because of project
portfolio issues.
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