CHAPTER 2
ANALYZING THE
BUSINESS CASE
Learning outcomes
2
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
Conduct a SWOT analysis and describe
the four factors involved
Learning outcomes
3
Explain the purpose of a mission
statement
Describe the SDLC, and explain how it
serves as a framework for systems
development and business modeling
List the reasons for information systems
projects and the factors that affect such
projects
Learning outcomes
4
Explain the initial review of systems
requests and the role of the systems
review committee
Define operational feasibility, technical
feasibility, economic feasibility, and
schedule feasibility
Describe the steps in a preliminary
investigation and the end product of an
investigation
Introduction
5
The term business case refers to the
reasons, or justification, for a proposal
A strong business case suggests that the
company should pursue the alternative,
above other options, because it would be in
the firm’s best interest to do so
Systems development typically starts with a
systems request, followed by a preliminary
investigation, which includes a feasibility
study
Strategic Planning – A
Framework for IT Systems
6
Development
Strategic planning is the process of
identifying long-term organizational
goals, strategies, and resources
Strategic Planning Overview
SWOT analysis
Strategic Planning – A
Framework for IT Systems
7
Development
From Strategic
Plans to
Business
Results
Mission
statement
Stakeholders
Goals
Objectives
Strategic Planning – A
Framework for IT Systems
8
Development
Mission statement (defines) company’s
overall purpose, products, services and values
Stakeholders (are) anyone affected by the
company’s operations (customers,
employees, suppliers and stakeholders)
Goals (are) set of targets to be accomplished
Objectives (are) sort of short-term plan to
achieve determined goals (e.g. tactical plans)
Strategic Planning – A
Framework for IT Systems
9
Development
A CASE Tool Example
You are a systems analyst
You research the Visible Analyst CASE tool
Planning statements can include
assumptions, goals, objectives, and critical
success factors, and many other types of
statements
Strategic Planning – A
Framework for IT Systems
10
Development
The Role of the IT Department in
Project Evaluation
Management leadership and information
technology 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 as a gatekeeper
Strategic Planning – A
Framework for IT Systems
11
Development
The Future
If you could look into the future, here is
what you might see: new industries,
products, and services emerging from
amazing advances in information
technology, customers who expect world-
class IT support, a surge in Internet-based
commerce, and a global business
environment that is dynamic and incredibly
challenging
What Is a Business Case?
12
Should be comprehensive, yet easy to
understand
Should describe the project clearly,
provide the justification to proceed,
and estimate the project’s financial
impact
ProSci’s BPR Online Learning Center
offers a Business Case Tutorial Series
Information Systems
13
Projects
Main Reasons for Systems Projects
Systems request
Improved service
Support for new products and services
Better performance
More information
Stronger controls
Encryption and biometric devices
Reduced cost
Information Systems
14
Projects
Factors that Affect Systems Projects
Internal and external factors affect
every business decision that a company
makes, and IT systems projects are no
exception
Information Systems
15
Projects
Internal Factors
Strategic plan – company’s planning
determine how IT provide benefits to company
Top managers – directives from top managers
determine success/failure of IT/IS projects
User requests
Information technology department
Existing systems – insufficient/incomplete
info and unable to support company’s
operation
Information Systems
16
Projects
External Factors
Technology
changing
technology, rapid growth of
communication
Suppliers
Relationship/communication with suppliers
Just-in-time (JIT)
Information Systems
17
Projects
External Factors
Customers
Customer Relationship Management (CRM)
Electronic proof of delivery (EPOD)
Competitors
The economy
Government
federal, state and gov. affect the design
corporate IS.
e.g: income tax, regulations
Information Systems
18
Projects
Project Management
If the project is approved, it can be
planned, scheduled, monitored and
controlled, and reported upon
Individual analysts or IT staff members
often handle small projects, but
companies usually designate a project
manager to coordinate the overall effort
for complex projects
Evaluation of Systems
19
Requests
Systems review committee or a
computer resources committee
evaluate systems requests
Systems Requests Forms
A properly designed form streamlines the
request process and ensures consistency
Occasionally a situation will arise that
requires an immediate response
Evaluation of Systems
20
Requests
Systems Review Committees
Most large companies use a systems review
committee to evaluate systems requests
Many smaller companies rely on one person
to evaluate system requests instead of a
committee
The goal is to evaluate the requests and set
priorities
Overview of Feasibility
21
A systems request must pass several
tests, called a feasibility study, to see
whether it is worthwhile to proceed
further
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Overview of Feasibility
22
Operational Feasibility
Operational feasibility means that a
proposed system will be used effectively
after it has been developed
Depends on several vital issues
Technical Feasibility
Technical feasibility refers to technical
resources needed to develop, purchase,
install, or operate the system
Overview of Feasibility
23
Economic Feasibility
Total cost of ownership (TCO)
assessing costs, which includes ongoing
support and maintenance costs, as well as
acquisition costs
Tangible benefits
E.g.
decrease in expenses, an increase in
revenues
Intangible benefits
E.g. Web site that improves a company's image
Overview of Feasibility
24
Schedule Feasibility
A requirement or constraint is a condition
that the system must satisfy or an outcome
that the system must achieve
project can be implemented in an
acceptable time frame
Evaluating Feasibility
25
The first step in evaluating feasibility is
to identify and weed out systems
requests that are not feasible
Even if the request is feasible, it might
not be necessary
Feasibility analysis is an ongoing task
that must be performed throughout the
systems development process
Setting Priorities
26
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?
Setting Priorities
27
Factors that Affect Priority
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?
Setting Priorities
28
Factors that Affect Priority
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?
Whenever possible, the analyst should
evaluate a proposed project based on
tangible costs and benefits that
represent actual (or approximate) dollar
values
Setting Priorities
29
Discretionary and Nondiscretionary
Projects
Projects where management has a choice in
implementing them are called
discretionary projects
creating new report
Projects where no choice exists are called
nondiscretionary projects
addinga report required by a new federal law,
annual update to payroll, tax percentages
Preliminary Investigation
30
Overview
Preliminary investigation
An initial investigation to clearly identify
the nature and scope of the business
opportunity or problem
Interaction with Managers and Users
Let people know about the investigation and
explain your role
Employee attitudes and reactions are
important and must be considered
Be careful in your use of the word problem
Question users about additional capability
they would like to have
Preliminary Investigation
31
Overview
Planning the Preliminary Investigation
During a preliminary investigation, a
systems analyst typically follows a series of
steps
The exact procedure depends on the nature
of the request, the size of the project, and
the degree of urgency
Preliminary Investigation
32
Overview
Step 1: Understand the Problem or
Opportunity
A popular technique for investigating
causes and effects is called a fishbone
diagram, or Ishikawa diagram
Pareto chart
Preliminary Investigation
33
Overview
Step 2: Define the Project Scope and
Constraints
Project scope
specific determination of a project's boundaries or
extent
Project creep
project
with very general scope, without specific
authorization
Constraint
Condition/requirementthat the system must satisfy
or an outcome that the system must achieve
Preliminary Investigation
34
Overview
Step 2: Define the Project Scope
and Constraints
Present versus future
Internal versus external
Mandatory versus desirable
Regardless of the type, all constraints
should be identified as early as possible to
avoid future problems and surprises
Preliminary Investigation
35
Overview
Step 3: Perform Fact-Finding
Fact-finding involves various techniques
Depending on what information is needed
to investigate the systems request, fact-
finding might consume several hours, days,
or weeks
Analyze Organization Charts
Obtain organization charts to understand how
the department functions and identify
individuals you might want to interview
Preliminary Investigation
36
Overview
Step 3: Perform Fact-Finding
Conduct interviews
1. Determine the people to interview
2. Establish objectives for the interview
3. Develop interview questions
4. Prepare for the interview
5. Conduct the interview
6. Document the interview
7. Evaluate the interview
Preliminary Investigation
37
Overview
Step 3: Perform Fact-Finding
Review documentation
Observe operations
Conduct a user survey
Preliminary Investigation
38
Overview
Step 4: Analyze Project Usability,
Cost, Benefit and Schedule Data
Before you can evaluate feasibility, you
must analyze this data carefully
What information must you obtain, and how
will you gather and analyze the
information?
What sources of information will you use,
and what difficulties will you encounter in
obtaining information?
Preliminary Investigation
39
Overview
Step 4: Analyze Project Usability,
Cost, Benefit and Schedule Data
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 prepare it and tabulate the
results?
Preliminary Investigation
40
Overview
Step 4: Analyze Project Usability,
Cost, Benefit and Schedule Data
How much will it cost to analyze the
information gathered and to prepare a
report with findings and recommendations?
Preliminary Investigation
41
Overview
Step 5: Evaluate Feasibility
Start by reviewing the answers to the
questions you asked
Operational feasibility
Technical feasibility
Economic feasibility
Schedule feasibility
Preliminary Investigation
42
Overview
Step 6: Present Results and
Recommendations to Management
The final task in the preliminary
investigation is to prepare a report to
management
The format of the preliminary investigation
report varies from one company to another
Preliminary Investigation
43
Overview
Step 6: Present Results and
Recommendations to Management
Introduction
Systems request summary
Findings
Case for action
Project Roles
Time & cost estimates
Expected benefits
Appendix
Chapter Summary
44
Systems planning is the first phase of
the systems development life cycle
Effective information systems help an
organization support its business
process, carry out its mission, and serve
its stakeholders
Chapter Summary
45
Strategic planning allows a company to
examine its purpose, vision, and values
and develops a mission statement,
which leads to goals, objectives, day-to-
day operations, and business results that
affect company stakeholders
Systems projects are initiated to improve
performance, provide more information,
reduce costs, strengthen controls, or
provide better service
Chapter Summary
46
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
During the preliminary investigation, the
analyst evaluates the systems request
and determines whether the project is
feasible from an operation, technical,
economic, and schedule standpoint
Chapter Summary
47
Analysts evaluate systems requests on
the basis of their expected costs and
benefits, both tangible and intangible
The steps in the preliminary
investigation are to understand the
problem or opportunity; define the
project scope and constraints; perform
fact-finding; analyze project usability,
cost, benefit, and schedule data;
evaluate feasibility; and present results
and recommendations to management
Chapter Summary
48
The last task in a preliminary
investigation is to prepare a report to
management
The report must include an estimate of
time, staffing requirements, costs,
benefits, and expected results for the
next phase of the SDLC