The Systems AnalystInformation Systems DevelopmentProject Selection and Management

Phuc H. Duong, M.Sc.phuc@it.tdt.edu.vn

CS502052 / Chapter 02

Outline1. Systems analyst

2. Systems Development Life Cycle (SDLC)

3. Information system project identification and initiation

4. Feasibility analysis

5. Project selection

6. Creating project plan

7. Managing and controlling project

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Systems analyst

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Introduction• The systems development life cycle (SDLC) is the process of

determining how an information system (IS) can support business needs, designing the system, building it, and delivering it to users

• The key person in the SDLC is the systems analyst, who analyzes the business situation, identifies the opportunities for improvements, and designs an IS to implement the improvements

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Introduction

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Systems Analyst• The systems analyst plays a key role in IS development projects

• The systems analyst works closely with all project team members so that the team develops the right system in an effective way

• Systems analysts must understand how to apply technology in order to solve problems

• Systems analysts may serve as change agents who identify organizational improvement needed, design systems to implement those changes, and train and motivate others to use the systems

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Systems Analyst Skills• Technical – Must understand the technical environment, technical

foundation, and technical solution

• Business – Must understand how IT can be applied to business situations

• Analytical – Must be problem solvers

• Interpersonal – Need to communicate effectively

• Management – Need to manage people and to manage pressure and risks

• Ethical - Must deal fairly, honestly, and ethically with other project members, managers, and systems users

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Systems Analyst Roles• Business analyst - Focuses on the IS issues surrounding the

system

• Systems analyst - Focuses on the business issues surrounding the system

• Infrastructure analyst - Focuses on technical issues

• Change management analyst - Focuses on the people and management issues surrounding the system installation

• Project manager - Ensures that the project is completed on time and within budget, and that the system delivers the expected vale to the organization

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Systems Development Life Cycle (SDLC)

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SDLC

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SDLC• The SDLC is composed of four fundamental phases:

• Planning

• Analysis

• Design

• Implementation

• Each of the phases is composed of steps, which rely on techniques that produce deliverables

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Planning• This phase is the fundamental process of

• understanding why an information system should be built

• determining how the project team will go about building it

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Planning• During project initiation, the system's business value to the

organization is identified

• How will it lower costs or increase revenues?

• During project management, the project manager creates a work plan, staffs the project, and puts techniques in place to help the project team control and direct the project through the entire SDLC

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Analysis• The analysis phase answers the questions of who will use the

system, what the system will do, and where and when it will be used

• During this phase the project team investigates any current system, identifies improvement opportunities, and develops a concept for the new system

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Analysis• Analysis strategy

• This is developed to guide the projects team's efforts. This includes a study of the current system and its problems, and envisioning ways to design a new system.

• Requirements gathering

• The analysis of this information leads to the development of a concept for a new system. This concept is used to build a set of analysis models.

• System proposal

• The proposal is presented to the project sponsor and other key individuals who decide whether the project should continue to move forward.

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Design• The design phase decides how the system will operate

• The hardware, software, and network infrastructure

• The user interface, forms, and reports that will be used

• The specific programs, databases, and files that will be needed

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Design• Design Strategy

• This clarifies whether the system will be developed by the company or outside the company

• Architecture Design

• This describes the hardware, software, and network infrastructure that will be used

• Database and File Specifications

• These documents define what and where the data will be stored

• Program Design

• Defines what programs need to be written and what they will do

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Implementation• During the implementation phase, the system is either developed

or purchased and installed

• This phase is usually the longest and most expensive part of the process

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Implementation• System Construction

• The system is built and tested to make sure it performs as designed

• Installation

• The old system is turned off and the new one is turned on

• Support Plan

• Includes a post-implementation review as well as a systematic way for identifying changes needed for the system

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Project Identification and Initiation

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Project Identification and Initiation• A project is identified when someone in the organization identifies

a business need to build a system

• A need may surface when an organization identifies unique and competitive ways of using IT

• To leverage the capabilities of emerging technologies (AI, cloud computing, microservices, …)

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Business Process Management (BPM)• BPM is a methodology used by organizations to continuously

improve end-to-end business processes

• Defining and mapping the steps in a business process

• Creating ways to improve on the steps in the process that add value

• Finding ways to eliminate or consolidate steps in the process that do not add value

• Creating and adjusting electronic workflows to match the improved process maps

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Feasibility Analysis

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Feasibility Analysis• Feasibility analysis guides the organization in determining whether

to proceed with a project

• Feasibility analysis also identifies the important risks associated with the project that must be managed if the project is approved

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Feasibility Analysis• As with the system request, each organization has its own process

and format for the feasibility analysis

• But most include techniques to assess three areas:

• Technical feasibility

• Economic feasibility

• Organizational feasibility

• The results of evaluating these three feasibility factors are combined into a feasibility study deliverable that is submitted to the approval committee at the end of project initiation

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Technical Feasibility• Risks can endanger the successful completion of a project

• The following aspects should be considered:

• Users' and analysts' should be familiar with the application

• Familiarity with the technology

• Project size

• Compatibility of the new system with the technology that already exists

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Economic Feasibility• Economic feasibility analysis is also called a cost-benefit analysis

• In order to identify the costs and benefits associated with the system

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Tangible Benefit• A benefit derived from the creation of an information system that

can be measured in dollars and with certainty

• Kind of tangible benefit:

• Cost reduction and avoidance

• Error reduction

• Increased flexibility

• Increased speed of activity

• Improvement of management planning and control

• Opening new markets and increasing sales opportunities

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Intangible Benefit• A benefit derived from the creation of an information system that

cannot be easily measured in dollars or with certainty

• Example:

• Improvement of employee morale

• Broader societal implications

• Reduction of waste creation or resource consumption

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Intangible Benefit

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Project Costs• Tangible cost

• A cost associated with an information system that can be measured in dollars and with certainty

• Intangible cost

• A cost associated with an information system that cannot be easily measured in terms of dollars or with certainty

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Project Costs

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The Time Value of Money• Time value of money (TVM) reflects the notion that money

available today is worth more than the same amount tomorrow

• The rate at which money can be borrowed or invested is referred to as the cost of capital, and is called the discount rate for TVM calculations

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TVM - Example• Suppose you want to buy a used car from an acquaintance and

she asks that you make 3 payments of $1500 for three years, beginning next year, for a total of $4500

• If she would agree to a single lump-sum payment at the time of sale (and if you had the money!), what amount do you think she would agree to?

• Should the single payment be $4500? Should it be more or less?

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TVM - Example• Assumption:

• The seller could put the money received for the sale of the car in the bank and receive a 10% return on her investment

• To figure out the present value of the three $1500 payments, we use the formula follows:

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𝑃𝑉# = 𝑌×1

1 + 𝑖 #

where:- PVn is the present value of Y dollars- i is discount rate

TVM - Example• The present value of the three payments of $1500 can be

calculated as:

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𝑃𝑉* = 1500×1

1 + 0.1 * = 1500×0.9091 = 1363.65

𝑃𝑉1 = 1500×1

1 + 0.1 1 = 1500×0.8264 = 1239.60

𝑃𝑉5 = 1500×1

1 + 0.1 5 = 1500×0.7513 = 1126.95

TVM - Example• The net present value of the three payments of $1500 can be

calculated as:

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𝑁𝑃𝑉 =89:*

#

𝑃𝑉9 = 1363.65 + 1239.60 + 1126.95 = 3730.20

TVM - Example• The net present value of the three payments of $1500 can be

calculated as:

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𝑁𝑃𝑉 =89:*

#

𝑃𝑉9 = 1363.65 + 1239.60 + 1126.95 = 3730.20

• It means that the $4500 after 3-year payment is equivalent to $3730.20

• In other words, the seller could accept a lump-sum payment of $3730.20 instead of $4500

TVM - Exercise• Continue with the example above, but the discount rate is different

after each year

• First year: 11.25%

• Second year: 9.87%

• Third year: 10.43%

• Let's do the calculation again!

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Break-Even Point• BEP is the point at which total cost and total revenue are equal

• BEP is to determine the minimum output that must be exceeded for a business to profit

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Break-Even Point

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Break-Even Point

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Return on Investment (ROI)• ROI is a popular financial metric for evaluating the financial

consequences of investments and actions

• The calculated ROI is a ratio or percentage, comparing net gains to net costs

• ROI provides a direct and easy-to-understand measure of investment profitability

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Return on Investment (ROI)• ROI used to answer some questions:

• What do we receive for what we spend?

• Do expected returns outweigh the costs?

• Do the returns justify the costs?

• What is the profitability of the investment?

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Return on Investment (ROI)• ROI used to answer some questions:

• What do we receive for what we spend?

• Do expected returns outweigh the costs?

• Do the returns justify the costs?

• What is the profitability of the investment?

• ROI compares returns to costs by making a ratio of cash inflows to outflows that follow from the investment

• ROI ratio is by definition net investment gains over total investment costs

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Return on Investment (ROI)• A positive result such as ROI = 24.0% means that returns exceed

costs

• Analysts consider the investment a net gain

• The opposite kind of result, negative ROI = -12.7% means that costs outweigh returns

• Analyst view the investment as a net loss

• The investment with the higher ROI is the preferred choice

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Return on Investment (ROI)

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Use the ROI metric to compare the magnitude and timing of expected gains with the scale and timing of costs.

Return on Investment (ROI)• To find simple ROI, divide the net gains from the investment by the

investment costs, then report the result as a percentage

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ROI =Gains − Investment costs

Investment costs

Return on Investment (ROI)• What is the ROI for a marketing program that will cost $500,000

and deliver an additional $700,000 in profits over the next five years?

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Return on Investment (ROI)• What is the ROI for a marketing program that will cost $500,000

and deliver an additional $700,000 in profits over the next five years?

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ROI - Example• Consider two five-year investments competing for funding, Case

Alpha (A) and Case Beta (B)

• Which is the better choice in business terms?

• Analysts will probably look first at the expected net cash flow streams for these cases

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ROI - Example

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ROI - Example• Notice 2 features of these cash flow streams that are apparent at

once

• Case Alpha has the higher overall net cash flow over five years

• Cash flow timing in the two cases is entirely different

• Beta seems to be front-loaded, which means that more substantial returns come in the earlier years

• As a result, the analyst will want to know how the timing differences impact several different cash flow metrics

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ROI - Example• Note that the timing differences stand out clearly in a net cash flow

graph

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One investment has greater returns early, while the other has substantial returns later.

ROI - Example• Which is the better business decision?

• Which investment will you choose?

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ROI - Example• To produce simple ROI, the analyst must have cash inflow and

cash outflow data for each period, not just net cash flow values

• Thus, with inflows and outflows now in the first two columns, the tables suffice for producing proper ROIs

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ROI =Gains − Investment costs

Investment costs

ROI - Example• Case Alpha Cash Flow Data

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ROI - Example• Case Beta Cash Flow Data

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ROI - Example• For Beta data, ROI after three years stands at 35.9%

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ROIJK5 =Total inNlows to end Yr3 + Total outNlows to end Yr3

Total outNlows to end Yr3

ROIJK5 =0 + 100 + 90 + 75 − 100 + 30 + 30 + 35

100 + 30 + 30 + 35

=265 − 195

195 =70195 = 35.9%

ROI - Exercise• Compute the ROI of the following two proposals, then show your

choice

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Year Cash Inflow Cash Outflow Net CF Cumul CF ROI2018 0 -1352019 179 -1202020 211 -1102021 181 -452022 111 -302023 180 -352024 138 -20Total 1000 -495

Proposal A

ROI - Exercise• Compute the ROI of the following two proposals, then show your

choice

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Year Cash Inflow Cash Outflow Net CF Cumul CF ROI2018 0 -1252019 141 -902020 137 -752021 183 -852022 140 -1002023 158 -652024 134 -75Total 893 -615

Proposal B

Organizational Feasibility• Organizational feasibility of the system is how well the system

ultimately will be accepted by its users and incorporated into the ongoing operations of the organization

• In essence, an organizational feasibility analysis is to answer the question "If we build it, will they come?"

• Assess the organizational feasibility by understanding how well the goals of the project align with the business objectives and organizational strategies

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Operational Feasibility• The process of assessing the degree to which a proposed system

solves business problems or takes advantage of business opportunities

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Schedule Feasibility• The process of assessing the degree to which the potential time

frame and completion dates for all major activities within a project meet organizational deadlines and constraints for affecting change

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Legal and Contractual Feasibility• The process of assessing potential legal and contractual

ramifications due to the construction of a system

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Political Feasibility• The process of evaluating how key stakeholders within the

organization view the proposed system

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Project Selection

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Project Selection• CIOs (chief information officers) are challenged to select projects

that will provide highest return on the IT investments

• A critical success factor for project management is to start with a realistic assessment of the work and then manage the project according to the plan

• An approval committee must be selective about where to allocate resources as most organizations have limited funds

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Creating Project Plan

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Project Management• Project management phases consist of:

• initiation

• planning

• execution

• control

• enclosure

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Project Methodology• A methodology is a formalized approach to implementing the

SDLC

• Waterfall Development

• Parallel Development

• V-model (variation of the Waterfall Development)

• Rapid Application Development (RAD)

• Iterative Development

• System prototyping

• Agile Development

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Waterfall Development

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Parallel Development

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V-model

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Rapid Application Development• Iterative Development

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Rapid Application Development• System Prototyping

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Rapid Application Development• Throwaway Prototyping

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Agile Development

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Agile Development• Focus on streamlining the SDLC

• Includes face-to-face communication

• Extreme programming – emphasizes customer satisfaction and teamwork

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Extreme Programming

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Select Development Methodology

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Managing and Controlling Project

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Project Management• The science (or art) of project management is in making trade-offs

among three important concepts

• the size of the system

• the time to complete the project

• the cost of the project

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Managing Scope• Scope creep – the most common reason for schedule and cost

overruns occurs after the project is underway

• The project manager should allow only absolutely necessary requirements to be added after the project begins

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Timeboxing• Set a fixed deadline for a project

• Reduce functionality, if necessary

• Don't get hung up on the final "finishing touches"

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Managing Risk• Risk assessment

• Actions to reduce risk

• Revised assessment

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END OF CHAPTER