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Systems Analysis and Design with UML Version 2

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1 Systems Analysis and Design with UML Version 2
Systems Analysis and Design with UML Version 2.0 An Object-Oriented Approach, Second Edition Chapter 3: Project Initiation Alan Dennis, Barbara Wixom, and David Tegarden John Wiley & Sons, Inc.

2 Copyright © 2005 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for redistribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

This chapter was not done in order since our project has already been decided to be done. Chapter 3 and chapter 4 are business and management processes that must be done in an organization to make sure people do not try to implement BRIGHT IDEAS that are not feasible, economically sound or technically impossible. The chapters also present the project management of a project.

4 Key Ideas Projects being when someone sees an opportunity to create business value from using information technology. Feasibility analysis is used to aid in the decision of whether or not to proceed with the IS project. Projects are usually initiated because someone has a BRIGHT IDEA of how to improve the business and technology is involved. The people who have the ideas are not software developers and do not have much of an idea of how much things cost and how much time they may take. So there are certainly issues when these ideas come up. So there is a phase in the SDLC for project initiation to assure that these BRIGHT IDEAS as indeed BRIGHT. One of the debates is on the definition of project. For this course a project is defined above. Once a project is defined project initiation begins. Project initiation is a process step clearly defined by the Project Management Body of Knowledge (PMBOK). It requires that all projects have a project sponsor(s). A proposal is developed that very briefly defines what is needed and request to make an initial investigation to determine the technical, economic and organizational pros and cons for doing this project. This initial investigation, often called initial analysis, should not take more than 1 week. It is not a requirements document. Guesstimates are made on how much the software will cost and what the benefits will be. The SRS will clarify more of this. During this time a feasibility analysis is used to aid in the decision of whether or not to proceed.

5 Key Ideas The project sponsor is a key person proposing development or adoption of the new information technology . The approval committee reviews proposals from various groups and units in the organization and decides which to commit to developing. The project sponsor (there may be more than one but ONE AND ONLY ONE must be in charge is the champion of this project. Usually some committee in the organization, often called the steering committee, makes the decision by weighing the pros and cons as well as prioritizing their needs..


7 Business Value Business value is determined by weighing the cost against the benefits – both tangible and intangible. Tangible benefits are quantifiable and measurable. --save 500,000 dollars in services, etc. Intangible benefits are improvements that are suspected to be able to give tangible benefits but are not as measurable. -- improve customer service. There are various techniques for determining business value….These are typically not taught in an undergraduate course but rather in a graduate course.

8 System Request Lists key elements of the project Project name
Project sponsor Business need Functionality Expected value Special issues or constraints The system request made to the committee to decide whether a project should be done or not contains the elements listed. The project sponsor is the person who initiates the request and serves as the primary point of contact from the business side… he/she is the champion of this project. The business need is expressed precisely and briefly telling what the actual need is in the organization. This wording is done usually by the sponsor or their delegates. The Functionality or Business Requirements are the high level functions the system will perform. Depending on the size of the project this list may be large or small. The expected value (business value) is a brief description of the tangible and intangible benefits. Any special issues are documented here. These might include things like a polity change must take place before we can do the project or an organizational change might need to occur that reassigns personnel. Any constraints must be documented such as the new software will have to be run at non-peak times or the system can not run over 80,000 dollars, etc.


10 Feasibility Analysis Detailing Expected Costs and Benefits
Technical feasibility Economic feasibility Organizational feasibility The feasibility analysis guides the organization in whether to continue with the project or not. Three items are typically evaluated in these analysis processes.

11 Technical Feasibility: Can We Build It?
Familiarity with application Knowledge of business domain Familiarity with technology Extension of existing firm technologies Project size Number of people, time, and features The first items is the technical feasibility of the proposal. CAN WE BUILD IT. This is not can it be built but can our organization build it or hire someone to build it. Here you are measuring the RISK of the proposal. If everything is new to the world – new hardware, new software, new language, new operating system, new type of system, then it is VERY risky. The more familiarity your team has with the hardware, software language, domain the less risky.

12 Economic Feasibility Should We Build It?
Development costs Annual operational costs Annual benefits Intangible costs and benefit The next item is the economic feasibility. Everything has a price, we can build it but should we. There are many costs NOT just the development costs. There is hardware/additional software, time to run this application in the windows you have available in your current hardware….more and more costs. But there is also benefits that must be weighed against these costs.

13 Economic Feasibility Process
1. Identify Costs and Benefits 2. Assign Values 3. Determine Cash Flow 4. Determine New Present Value 5. Determine Return on Investment 6. Calculate Break-Even Point 7. Graph Break-Even Point The next item is the economic feasibility. Everything has a price, we can build it but should we. There are many costs NOT just the development costs. There is hardware/additional software, time to run this application in the windows you have available in your current hardware….more and more costs. But there is also benefits that must be weighed against these costs.

14 Cost–Benefit Analysis
Way of determining whether a possible course of action would be profitable Compare estimated future benefits against projected future costs Fundamental technique in deciding whether a client should computerize his/her business and in what way Cost-benefit analysis 2nd analytical tool used by software engineers Another fundamental theoretical software engineering technique used throughout the software life cycle 3) And in what way Cost and benefits of various alternative strategies are compared Can implement something in a number of different ways; look at the cost and benefits of each way to determine the optimal strategy

15 Cost–Benefit Analysis
Compare estimated future benefits against costs Estimate costs Estimate benefits State all assumptions explicitly Cost-benefit analysis How much does it cost us to do “it” manually (current salaries, current profit, etc.) vs. how much to switch to computerized version Must decide if the costs of switching and the benefits to be obtained OUT WEIGH the current costs of operation 1) Costs – see following slides 2) Benefits Always determined relative to the existing mode of operation Tangible benefits are easy to measure Less manual work; therefore, fewer employees; therefore, lower salary costs Bills faster to customers so payments received more often or more quickly Intangible benefits can be hard to quantify directly SO we make ASSUMPTIONS 3) Assumptions Always must be stated in conjunction with the resulting estimates of the benefits

16 Cost–Benefit Analysis
Possible costs Procurement costs Consulting costs Actual equipment purchase or lease costs Equipment installation costs Costs for modifying equipment site (air conditioning, security, etc,) Cost of management and staff dealing with procurement Cost-benefit analysis

17 Cost–Benefit Analysis
Possible costs Start-up costs Cost of operating system software Cost of personnel searches and hiring activities Cost of disruption to the rest of the organization Cost of management required to direct start-up activity Cost-benefit analysis

18 Cost–Benefit Analysis
Possible costs Project-related costs Cost of applications software purchased Cost of software modifications to fit local systems Cost of personnel from in-house application development Cost of training user personnel in application use Cost of data collection and installing data collection procedures Cost of preparing documentation Cost of development management Cost-benefit analysis

19 Cost–Benefit Analysis
Possible costs Ongoing costs System maintenance costs (hardware, software, and facilities) Depreciation costs on hardware Cost of staff involved in ITS management, operation, and planning activities Cost-benefit analysis

20 1. Identify Costs and Benefits 2. Assign Values
Tangible Intangible * Using this table, we can itemize the costs and benefits Costs include hardware, software, developmental, operational (maintenance) costs, any support staff costs, materials needed, etc. Benefits are defined and estimated on their value to the organization.

21 3. Determine Cash Flow Cash Flow Method for Cost Benefit Analysis
Usually a cost and benefits summary contains those figures over a period of years (usually 5 years) Using this technique you can estimate the costs and benefits to show how over a period of time the benefits may outweigh the costs. It may take more than 5 years….This allows you to budget how much cash flow you will need to cover the cost of this project

22 4. Determine New Present Value Return on Investment Calculation
RETURN ON INVESTMENT EQUALS Total (benefits - costs) Divided by Adding the figures across the 5 year table can give you a ROI. This is a very simple calculation… ROI and NPV both have far more complex ways of calculation but these are subjects for the MIS program. This will do for us just to let us realize that BRIGHT IDEAS may not always be funded and that there is some process that makes that determination. We must be very aware of these items as software engineers. We are often ask to fill in the blanks for estimates on how much a project will cost. Our honesty helps the organization although they may not want to always here our high estimates. Total costs

23 Net Present Value Calculation
(1 + interest rate)n Some amount of money NET PRESENT VALUE EQUALS Divided by Where “n” equals the number of periods The difference between the ROI and NPV is the cost of the money you are using. This adds that cost into the formula.

24 Organizational Feasibility If we build it, will they come?
Stakeholder analysis considers Project champion(s) Organizational management System users The next item, organizational feasibility, determines how easily this new process/system will be accepted within the organization. Many system fail because there is no BUY IN from the users that this indeed was a BRIGHT IDEA. It may cause more work for them… It may be more difficult, it may change their job description, it may require they have more skills that previously. Often large projects have what is called a separate contractor called an integration contractor. These people are responsible to assure that the organizational changes are implemented as the new system is installed. There is an area of MIS called “Change Control” and today with large systems that have huge organizational impacts as much money as is spent on the software may be spent on user organizational changes and training for new skills. It is am important step in software development to assure this is accomplished.

25 Summary Project initiation involves creating and assessing goals and expectations for a new system Identifying the business value of the new project is a key to success The system request describes an overview of the proposed system. The feasibility study is concerned with insuring that technical, economic, and organizational benefits outweigh costs and risks

26 Expanding the Domain For an excellent source of information on IT management see:

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