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Preparing the Systems Proposal CIS458. Last Class Project outline –Documents and reports Database Application Lifecycle –Database planning, system definition,

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Presentation on theme: "Preparing the Systems Proposal CIS458. Last Class Project outline –Documents and reports Database Application Lifecycle –Database planning, system definition,"— Presentation transcript:

1 Preparing the Systems Proposal CIS458

2 Last Class Project outline –Documents and reports Database Application Lifecycle –Database planning, system definition, requirements collection and analysis, database design, application design, implementation, data conversion and loading, testing, and operational maintenance. Database planning –Mission statement, mission objectives Database Design –Conceptual level design, logical database design, and physical database design.

3 Today Identifying and Forecasting Costs and Benefits Analysis –Feasibility analysis –How to prepare the charts (break even, payback) Tips for the report #1. –Recommendation

4 Database Application Lifecycle Database planning System definition Requirements collection and analysis Database design (conceptual, logical and physical) DBMS selection (optional)

5 Database Application Lifecycle Application design Prototyping (optional) Implementation Data conversion and loading Testing Operational maintenance.

6 Database System Customer DB Developer Fact Finding Design Implementation

7 Fact Finding Interview –Interview structure Questionnaire Observation Research Data format, procedures, etc.

8 Feasibility Analysis Technical feasibility. –Do we have adequate technology for the project? –DBMS, SDLC, and problem difficulty level Operational feasibility –Will users accept the new system? –How difficult to learn the new system? Economic feasibility –Is the new project cost effective? –Can the user afford it?

9 Business forecast Estimation of costs and benefits

10 Identifying and Forecasting Costs and Benefits Costs and benefits –Interrelated and interdependent Forecasting costs and benefits –Predict certain key variables What-if analysis (credible, meaningful, valuable) –Forecasting models: require historic data Estimates from the sales force Surveys to estimate customer demand Scenarios or historical analogies

11 Forecasting with Historical Data Conditional forecast –There is an association between variables Correlation, Regression, Leading indicators Econometrics, Input output models Unconditional forecast –There is no need to identify any causal relationship Graphical judgment, moving averages, time series

12 Estimation of Trends Graphical judgment –Simple –Depend on individual judgment The method of least squares The moving average method

13 Graphical Judgment

14 The Method of Least Square Find the best fitting trend line –Minimizing the sum of the deviations from a line Data points –(X 1, Y 1 ), (X 2, Y 2 ), … (X n, Y n ) Line –Y = m * X + b –(Y – Y’) = ((  (X – X’)(Y – Y’))/(  (X – X’)2) *(X –X’)


16 Moving Averages Seasonal, cyclical, or random patterns may be smoothed, leaving the trend patterns. The data at the very beginning and end are lost. Affected by extreme values


18 Identifying Benefits and Costs Tangible Benefits –Advantages measurable in dollars, resources, time saved. –Increase in the speed of processing –Access to otherwise inaccessible information –Access to information on a more timely basis –Computing power

19 Identifying Benefits and Costs Intangible Benefits –Difficult to measure but are important nonetheless. –Improve decision making process –Enhance accuracy –Become more comparative in the market –Customer service –Good business image

20 Identifying Benefits and Costs Tangible Costs –Cost of equipment –Cost of resources –The cost of systems analyst’s time (other employee's time and salary) Intangible costs –Losing a competitive edge –Losing the reputation for being first –Ineffective decision making

21 Comparing Costs and Benefits Break-Even Analysis (required) –The total costs of the current system and of the proposed system Operational cost + Development cost –Benefits are assumed to remain the same (Disadvantage) –Comparison of old systems cost vs. new system’s cost


23 Payback-Time Analysis (Required) A simple way to assess whether a business should invest in a proposed information system. The number of years of operation that the information system needs to pay back the cost of investing in it. Method: increasing revenues or increasing savings Short-term approach It does not consider the importance of how repayments are timed Total return


25 Return on Investment (ROI) % rate that measure profitability by comparing net benefits (the return) received from a project to the total costs (the investment) of the project. RROI = (total benefits – total costs)/ total costs

26 Present Value Analysis Consideration of Time value of money Interest rate vs. discount rate

27 Cash-flow Analysis This analysis examines the direction, size and pattern of cash flow.


29 Present Value

30 Guidelines for Analysis Use break-even analysis if the project needs to be justified in terms of cost, not benefits. Use payback when the improved tangible benefits form a convincing argument for the proposed system. Use cash-flow analysis when the project is expensive relative tot eh size of the company. Use present value when the payback period is long or when the cost of borrowing money is high

31 Logic for the Project Report Recommendation Benefits must exceed costs. –How much is enough? Payback time should be less than 3 years (based on your project size) Use the projection method –Yearly total sales –Increase rate –Historic data Your conclusion must be backed by your technical, operational, and economic analysis.

32 Project Requirement A coverage with team members and title Table of contents Executive summary Signature from the target business manager Business profile Business process description Problem statement

33 Project Requirement Analysis (cost/benefit) –Technical, operational, and economical analysis –Break-even and payback-time diagrams are required Recommendation Project organization –Team members –Group leader Project plan –Gantt Chart (required) –Task List

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