Chapter 2

System Planning
 System
SDLC Request

System First phase in

Planning
SDLC

System
Analysis

System
Design

System
Development

System
Implementation

Operation and
Maintenance
Reasons for System
Projects
System Request
• Need for a System Request :
– Changes in an organisation's objectives
– Formulation of new objectives
– Recognition of problems or errors in a current
system or suggestions from users
• It is a formal request for the services of the
IS department.
• Results of Request :
– Development of a new system
– Enhancements to an existing system.
System
Request

Example of an online system request form

 Sources of System Request
1. Directives from Top Management. Improvements on
existing system
• Examples
– Need new or additional information
– New management (or style)
– Meet a new organisational objective eg. Increase sales
– New activity in the business
2. Existing System. Errors or inefficiencies within existing
systems.
3. Users’ Needs. Need for new features to support new roles.
• Examples
– New features for inward returns (inventory system).
– Unhappy with the existing system performance
– Growth of the organisation or new requirements.
 Sources of System Projects
4. External Sources. Outside forces may influence
the pressure for changes to existing systems.
• Examples
– New advances in technology put pressure to
develop new systems eg. RFID.
– New government tax regulation put pressure on
changes to payroll system
– New requirements by important customers eg. to
use EDI.
– New release of package put pressure on
organisation to keep up.
5. IS Department. IS department's own
recommendations for projects.
Types of Improvement Required
1. Improved Performance. The current system
might not perform as well as it must.
– Examples
• Reports might take too long to prepare.
• Response time might be too long

2. Better Service. Improving service to the

customers or the end-users.
– Examples
• Simplifying overtime claims process.
• Improving share registration process.
• Providing customers with up-to-date product
brochures.
Types of Improvement Required
3. Quality Information. Information produced might be
inadequate, incomplete, not timely or available.
– Examples
• Reports produced are not useful
• Reports produced are inaccurate
4. Effective Controls. Controls might be inadequate, allowing
erroneous data to enter the system.
– Examples
• a system requires input of redundant data.
• the control might be excessive.
• invalid stock number is input to an inventory system.
5. Lower Cost. Features in the current system might be more
costly than they need to be.
– Examples
• Existing system is too expensive to operate or maintain.
• Cumbersome purchasing process
Preliminary Investigation
• When : after a system project has been
approved
• Purpose : gather information to determine if
problems specified in the systems request
warrant conducting subsequent phases of the
SDLC.
• Areas Involved :
– Investigating of a systems requested.
– Determining the true nature and scope of the
problem
• Output : Preliminary Investigation Report to
management for recommendation
Steps in Preliminary Investigation
Feasibility Study:
Purposes and
Types
Definition of Feasibility Study
• A study carried out :
– To determine whether the new system is
viable or feasible.
– To determine whether the new system is
justifiable ie. benefits outweigh (exceed in
value) the cost of developing and
implementing the solution.
Main Purposes or Objectives of
Feasibility Study
• Identify objectives. To identify the key technical and
performance objectives that the system must achieve.
• Determine requirements. To determine the technology and
personnel requirements to achieve these targets.
• Determine scope of project. To determine the principal work
areas for improvement and studies in order to achieve the
aims stated.
• Estimate costs and benefits. To estimate the costs and
benefits involved in the project.
• Estimate time requirements. To determine or estimate the
time frames required to achieve these targets.
• Identify constraints. To identify any possible constraints (eg.
finance, money) in the project.
Constraints (Cont…)
• Is a requirement or condition that the
system must satisfy or an outcome that
the system must achieve
• Can involve hardware, software, time,
policy, law, and cost.
• For example, if the system must operate
with existing hardware, that is a constraint
that affect potential solutions
 Types of
Feasibility Study
 Technical Feasibility
• Concern with
– Specifying the hardware, software and performance
requirements of the application system under study.
– Evaluating whether the above requirements are technically
achievable (ie. feasible). (Evaluating existing hardware, software
and personnel to see whether they can support the new
system.)
• Issues to be addressed (issues to pay attention of)
– Number of users – the ability to support increased number of
users
– Data Inputs - the ability to accurately enter and process a large
number of inputs, such as examination marks
– Response times - the ability to provide a given response time
eg. respond to a request from a customer for an insurance
quotation no more than a two-second response time
– Outputs - the ability to produce certain outputs, such as
examination results, by a certain deadline. For example, to
produce 120,000 examination certificates in 2 weeks
Social and Operational Feasibility
• Concern with
– Assessing whether the project can fit into the existing social
and operational structure of the organization.
– Identifying any additional costs that may be incurred (eg
cost of staff re-training, redundancies) or new benefits.
• Issues to be addressed
– Employee skills - the new system may require new skills and
attitudes. (training cost)
– Employee motivation and resistance - likely job changes
caused by the system and how these might affect the
motivation of employees. (new ways to do a job)
– Structural changes - changes in management
responsibilities, relationships, status and chains of
command, or does not suit regional reporting structures.
– High costs - Assess direct (redundancies, retraining) and
indirect (eg. in terms of morale and motivation of remaining
staff) costs.
Economic Feasibility
Costs Benefits
• Concern with
– Identify and quantify (calculate) the various costs and
benefits of implementing proposed system.
– Evaluating the various project options using
techniques eg. ROI, NPV, PP
• Issues to be addressed
– Technique. Using the correct technique to compare
costs and benefits.
– Selection. Determine which of the technical options
under consideration the company should choose.
.(bear in mind that different techniques may lead to
different options being selected)
– Decision. Making decision whether to halt the project.
Categories of Cost – Statement 1
Cost Categories Examples
Hardware & Hardware and peripherals
Software costs Software (eg. OS, DBMS)
Development tools (eg. languages)
Installation costs New buildings (if necessary)
Preparation costs of the site (eg. computer room), wiring, furniture
and air-conditioning
Delivery charges & others
Development Feasibility study
costs System design and analysis
Programming and testing
Implementation (eg. file conversion, changeover)
Personnel costs Staff salaries, benefits and pensions
Redundancy payments
Staff training
Staff recruitment / relocation
Other overheads (eg. overtime)
Operating costs Consumable materials (tapes, disks, stationery etc)
Space costs (eg. rental)
Maintenance costs
Outside services
Utilities (eg. heating, power, telephone
Standby arrangements, in case the system breaks down
Cost Statement 2
• Capital Expenditure
– Computer Hardware (if purchased)
– Communications infrastructure
One-Off
– Software (written or purchased) Costs
– Office furniture and accessories
• Revenue/Recurring Expenditure
– Feasibility and analysis
– Program development & testing
– Support contracts
Recurring
– Supply of essential services (eg. electricity and
Costs
telecommunications
– Training courses
– Stationery and consumables
Cost Statement 2 (cont..)
• Revenue Expenditure
– Equipment
• Computer rental or lease payment (if not
purchased)
• Computer depreciation (if purchased)
• Maintenance of computer
• Maintenance and depreciation of data preparation
equipment, terminals and ancillary equipment. Recurring
• Depreciation of computer room fittings, eg. air costs
conditioning
• Power
– Salaries and Wages
• Managers, system analysts, programmers, data
preparation operators, computer operators, data
control staff
 Intangible Costs / Indirect Costs
• Learning curve costs. Staff need to learn how the
system operates. During the learning curve, staff
become slower and make more mistakes.
• Dysfunctional costs. Staff dissatisfaction and
dysfunctional behaviour eg. scolding customers,
come late.
• Incompatibility costs. Costs of incompatibility
between existing systems and the new system. For
example, replacing old system or build a special data
file conversion facility.
• Opportunity costs. Whenever money is invested in
one area, the opportunity to invest in another area is
foregone. (For example, investing in the new system
may require the company to invest RM300K which
could have been invested in opening two new
branches)
Exercise for Students (Costs)
• List the 5 main cost elements for a
procurement system.
• List potential benefits of using a
procurement system.
Solutions - Costs
Solution - Potential Benefits
Tangible benefits (example)
• Benefits that can be quantified (to
determine)
• E.g reducing staff by automating manual
function
Tangible or Quantifiable Benefits
• Reduced operating costs. Due to streamlining of
processes, reduced office space.
• Reduced staff costs. Reduced number of staff
required.
• Increased sale revenue. Through customer retention.
• Better business control. Through up-to-date
information eg reduce stock holding costs.
• Reduced mistakes. Less mistakes made means less
costs of rectifying them.
• Improve productivity. Reduced number of staff or
increased output per staff.
Intangible benefits (example)
• Benefits that are not easily quantified (to
determine)
• E.g increase level of service ( in way that
cannot be measured)
 Intangible or Non-Quantifiable Benefits
• Improved quality of customer service or satisfaction
• Improved company image
• Better information accessibility which leads to better decision
making.
• More accurate management information. (help management
make accurate or correct business decisions)
• More timely and up-to-date information for decision makers.
(up-to-date information holds the key to competitive
advantage over competitors)
• Improved staff morale, motivation and retention ((all tedious
jobs are carried out by computers)
• Greater reliability and security (less likely to break down)
• Faster response time (shorter queues at the check-out points)
Exercise for Students (Benefits)
• Implementing an Inventory Control system
– List 4 tangible benefits
– List 4 intangible benefits
Solutions (Benefits)
• Tangible Benefits

• Intangible Benefits
 Cost Benefit Summary
COST BENEFIT SUMMARY

DATA FOR PLAN A: In-House Development

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Costs:
Consultant time to develop system 14,440
Purchase necessary software platform 2,500 One-Off Recurring
Hardware 5,000 Costs Costs
Consultant training time 3,900
Office staff maintenance, backup, and update 884 1,768 1,768 1,768 1,768 1,768
Total Costs: 26,724 1,768 1,768 1,768 1,768 1,768
Benefits:
Eliminate overtime 995 1,989 1,989 1,989 1,989 1,989
Eliminate additional position 8,840 17,680 17,680 17,680 17,680 17,680
Eliminate daily errors 1,105 2,210 2,210 2,210 2,210 2,210
Total Benefits: 10,940 21,879 21,879 21,879 21,879 21,879

DATA FOR PLAN B: Purchase Vertical Software Package

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Costs:
Purchase price for vendor package 3,000 3,000 3,000
Tech support contract 500 500 500 500 500
Consultant time to install, configure, and test 4,800
 Benefits:
Eliminate overtime 995 1,989 1,989 1,989 1,989 1,989
Eliminate additional position 8,840 17,680 17,680 17,680 17,680 17,680

Cost Benefit Summary

Eliminate daily errors
Total Benefits:
1,105
10,940
2,210
21,879
2,210
21,879
2,210
21,879
2,210
21,879
2,210
21,879

DATA FOR PLAN B: Purchase Vertical Software Package

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Costs:
Purchase price for vendor package 3,000 3,000 3,000
Tech support contract 500 500 500 500 500
Consultant time to install, configure, and test 4,800
Hardware 5,000
Consultant training time 3,900
Office staff maintenance, backup, and update 884 1,768 1,768 1,768 1,768 1,768
Total Costs: 17,584 5,268 5,268 2,268 2,268 2,268
Benefits:
Eliminate overtime 995 1,989 1,989 1,989 1,989 1,989
Eliminate additional position 8,840 17,680 17,680 17,680 17,680 17,680
Eliminate daily errors 1,105 2,210 2,210 2,210 2,210 2,210
Total Benefits: 10,940 21,879 21,879 21,879 21,879 21,879
Feasibility 1. Aim and Objectives
• should be clearly stated
Report • agreed upon by the managers
• areas involved are defined.
2. Costs and Benefits Comparison
Alternative solutions should be outlined indicating for each its
respective cost/benefits comparisons using eg. payback.
3. Description of Proposed System
Describe the hardware, software and business processes. Eg.
DFD.
4. Description of Current System
Describe how the current system operate in the organisation.
Eg DFD.
5. Development & Implementation Plan
Includes a time-table and methods of change-over.

6. Recommendations
Final recommendation of a particular solution or methods.