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Systems Analysis and Design

Chapter 1

The Systems Analyst and


Information Systems Development

Chapter 1 Outline

The systems analyst.

The Systems Development Life Cycle (SDLC).

Information system project identification and initiation.

Feasibility analysis.

System Development Life Cycle (SDLC)

SDLC is the process of

Determining how an IS can support business needs

Designing the system

Building it

Delivering it to users

Key person in SDLC is systems analyst who

Analyzes the business situation

Identifies opportunities for improvements


Designs an IS to implement improvements

The Systems Analyst

Systems analyst plays a key role in IS development projects

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

Objective:

NOT to create a wonderful/neat system

But to create value for the organization (lower costs; increase revenues)

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

Systems analysts may also serve as change agents who

identify the organization improvements needed,

design systems to implement those changes,

train/motivate others to use the systems

Systems Analyst Skills

Introduces change to the organization and people

Leads a successful organization change effort

Understanding what to change, knowing how to change it, convincing others of the need for change require
six categories of 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 solve problems

Interpersonal: Communicate effectively and give presentations

Management: Manage people and situations; manage pressure and risks

Ethical: Must be able to deal fairly, honestly, and ethically with other project members, managers, and
systems users

Project Team Specialization

Systems analyst

Business analyst

Requirements analyst

Infrastructure analyst

Software architect

Change management analyst

Project manager

Systems Analyst
Focuses on the IS issues surrounding the system

Have significant training and experience in analysis and design and in programming

Develops ideas and suggestions for ways IT can improve business process

Helps design new business processes

Designs the new information system

Ensures that all IS standards are maintained

Business Analyst

Focuses on the business issues surrounding the system

Have business training and experience, plus knowledge of analysis and design

Identifies the business value that the system will create

Develops ideas for improving the business processes

Helps design new business processes and policies

Requirements Analyst

Focuses on eliciting requirements from stakeholders associated with new IS

Infrastructure Analyst

Focuses on technical issues surrounding the ways the system will interact with the organizations technical
infrastructure

Have training and experience in networking, database admin, various HW/SW products
Ensures that the new information system conforms to organization standards

Identifies infrastructure changes

Over time, an experienced infrastructure analyst may become software architect, who takes a holistic view
of the organizations entire IT environment and guides application design decisions within that context

Change Management Analyst

Focuses on the people and management issues surrounding the system installation

Have training and experience in organizational behavior and expertise in change management

Ensures that adequate documentation and support are available to users

Provides user training

Develops strategies to overcome resistance to change

Project Manager

Ensures that the project is completed on time and within budget

Makes sure the system delivers the expected value to the organization

Is a seasoned systems analyst

Career Paths for System Developers

Systems Development Life Cycle (SDLC)

SDLC consists of four phases:

Planning
Analysis

Design

Implementation

Each phase includes a set of steps

Each step uses techniques to produce deliverables (specific documents and files)

Specific document and files provide understanding about the project

To Understand the SDLC:

Each phase consists of steps that lead to certain deliverables

SDLC is a process of gradual refinement

Each phase refines and elaborates on the work done by previous phase

Phase I: 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

The Planning phase will also determine how the project team will go about building the information system.

The Planning phase is composed of two steps

Two Steps in Planning


During project initiation, the systems business value to the organization is identified (How will it lower costs
or increase revenues?)

System request presents business need and explains how IS supporting those needs will create business
value

Feasibility analysis examines

Technical feasibility (can we build it?)

Economic feasibility (will it provide business value?)

Organizational feasibility (will it be used?)

Two Steps in Planning

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

Project plan describes how project team will go about developing the system

Phase II: Analysis

The analysis phase answers the questions of

Who will use the system,

What the system will do,

Where and when it will be used

During this phase the project team investigates any current system(s), identifies improvement opportunities,
and develops a concept for the new system
The Analysis phase has three steps

Three Steps in Analysis

Analysis strategy: This is developed to guide the projects teams efforts. This includes a study of the current
system and its problems, and envisioning ways to design a new system.

Requirements gathering (through interviews, questionnaires): 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.

The system proposal is the initial deliverable that describes what business requirements the new system
should meet.

The deliverable from this phase is both an analysis and a high-level initial design for the new system.

So some argue a better name for the analysis phase would be the analysis and initial design phase

Phase III: Design

This phase decides

How the system will operate in terms of 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

The Design phase has five steps

Five Design Steps


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.

Interface Design: This specifies how users will move through the system (e.g., menus) and forms
and reports that the system will use.

Database and File Specifications: These documents define what and where the data will be stored.

Program Design: This defines what programs need to be written and what they will do.

Phase IV: Implementation

During this phase, the system is either developed or purchased (in the case of packaged software) and
installed.

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

The Implementation phase has three steps

Three Implementation Steps

System Construction: The system is built and tested to make sure it performs as designed.

Installation: The process by which the old system is turned off and the new one is turned on.

Training plan teaches users how to use the new system and helps manage the changes caused by the new
system.

Support Plan: It usually includes a post-implementation review as well as a systematic way for identifying
changes needed for the system.

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.

Many organizations eye emerging technologies (e.g., RFID).

Business Process Management (BPM)

Nowadays many new IS projects grow out of BPM.

BPM is a methodology used by organizations to continuously improve end-to-end business processes.

BPM Process

1. Defining and mapping the steps in a business process

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

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

4. Creating and adjusting electronic workflows to match the improved process maps

Business process automation (BPA) technology components are used to complement or substitute manual
process (step 4 above).

Business process improvement (BPI) creating new, re-designed processes to improve the workflows,
and/or utilizing new technologies enabling new process structures (steps 2, 3, 4 above).

Business process reengineering (BPR) changing the fundamental way in which the organization operate.

Both IT people and business people should work together to find way for technology to support business
needs.

The project sponsor is a person (or group) who has an interest in the systems success.

Project Sponsor
The project sponsor will

work throughout the SDLC to make sure that the project is moving in the right direction from the
perspective of the business.

serve as the primary point of contact for the system.

Size and scope of the project is determined by the kind of sponsor that is involved.

Business need drives the high-level business requirements for the system.

Business requirements are what features and capabilities the information system will have to include.

e.g., ability to collect customer orders online

The project sponsor also should have an idea of the business value to be gained from the system, in both
tangible and intangible ways.

The tangible value can be quantified and measured easily (e.g., 2% reduction in operating costs).

An intangible value results from an intuitive belief that the system provides important, but hard-to-measure
benefits to the organization. (e.g., improved customer service).

System Request

The document that describes:

The business reasons for building a system;

The value that system is expected to provide


The project sponsor usually completes this form as part of a formal system selection process within the
organization.

Most system requests include five elements

The project sponsor

The business need presents reasons prompting the project

The business requirements of the project refer to the business capabilities that the system will need to have.

The business value describes the benefits that the organization should expect from the system.

Special issues are included on the document as a catch-all category for other information that should be
considered in assessing the project (e.g., deadline, constraints).

Elements of the

Systems Request: Tune Source Music Download System

Estimating Business Value:xh

Assign values as initial estimates

The completed system request is submitted to the approval committee for consideration.

The committee reviews the system request and makes an initial determination, based on the information
provided, of whether to investigate the proposed project or not.

If so, the next step is to conduct a feasibility analysis.


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 addressed if
the project is approved.

As with the system request, each organization has its own process and format for the feasibility analysis.

Most include techniques to assess three areas:

Technical feasibility

Economic feasibility

Organizational feasibility

The results of these three feasibilities are combined into a feasibility study deliverable that is given to the
approval committee at the end of the project initiation.

Technical Feasibility

Technical feasibility is the extent to which the system can be successfully designed, developed, and installed
by the IT group.

Technical feasibility is essentially a technical risk analysis that strives to answer the question: Can we build
it?

Risks can endanger the successful completion of a project. In analyzing risks, consider the following factors

Familiarity with the application: When analysts are unfamiliar with the business app area, they have a
greater chance of misunderstanding users or missing opportunities for improvement (e.g., Microsoft starting a new Web
dating service)
Familiarity with the technology: When a system will use technology that has not be used before, there is a
greater chance that problems will occur

Project size (i.e., size of development team, number of distinct features, development time): Larger projects
are more difficult to manage

Compatibility of the new system with the technology that already exists

Economic Feasibility

Economic feasibility analysis is also called a cost-benefit analysis, that identifies the financial risk associated
with the project.

This attempts to answer the question, Should we build the system?

Use cash flow analysis and measures to attempt to answer this question

Cash Flow Analysis and Measures

IT projects involve an initial investment that produces a steam of benefits over time, along with some on-
going support costs.

Cash flows, both inflows and outflows, are estimated over some future period.

Simple Cash Flow projection

Row 3: net benefits are computed by subtracting each years total costs from its total benefits

Row 4: cumulative total of net cash flows are computed

Example: Year 2s Cumulative Net Cash Flow = -65,000 + 38,000 =

-27,000

Common methods for evaluating a projects worth

Return on Investment (ROI)


Break-Even Point (BEP)

Discounted Cash Flow Technique

Net Present Value (NPV)

Return on Investment (ROI)

The return on investment (ROI) is a calculation that measures the average rate of return on the money
invested in the project.

ROI is a simple calculation that divides the projects net benefits (total benefits total costs) by the total
costs.

ROI=(Total Benefits Total Costs)/Total Costs

See Simple Cash Flow Method on slide #66

A high ROI suggests that the projects benefits far outweigh the projects cost.

Although ROI is commonly used in practice, it suffers from several important limitations and should not be
used as the only measure of a projects wealth.

Break-Even Point (BEP)

Break-even point is another common approach to measuring a projects worth.

Break-even point is sometimes referred to as the payback method.

The break-even point is defined as the number of years it takes a firm to recover its original investments in
the project from net cash flows.

See Simple Cash Flow Method on slide #66Year 4 is when cash flow becomes positive

Break-Even Point (BEP)


The break-even point is easy to calculate and understand and does give an indication of a projects liquidity
or the speed at which the project will generate cash returns.

The break-even point does ignore cash flows that occur after the break-even point has been reached and
therefore is biased against long-term projects.

Discounted cash flow technique

Discounted cash flows are used to compare the present value of all cash inflows and outflows for the project
in the todays dollar terms.

Net Present Value (NPV)

Net present value (NPV) is used to compare the PV of all cash inflows and outflows for the project in todays
dollar terms.

Net present value (NPV) is simply the difference between the total PV of the benefits and the total PV of the
costs.

As long as the NPV is greater than zero, the project is considered economically feasible.

See Net Present Value Method on slide #68

Steps to conduct an economic feasibility analysis

Cost-benefit analysis consists of six steps

Step 1: Identify Costs and Benefits

During this step, identify the kinds of costs and benefits the system will have and list them along the left-
hand column of a spreadsheet.

The costs and benefits are broken down into four categories:

Development costs

Operational costs
Tangible benefits

Intangibles

Development Costs

Development costs are those tangible expenses that are incurred during the creation of the system (i.e.,
non-recurring), such as:

Salaries

HW and SW expenses

Consultant fees

Training

Office space and equipment

Operational Costs

Operational costs are those tangible costs that are required to operate the system and are considered
ongoing cost (i.e., recurring), such as:

Salaries for operation staff

Software licensing fees

Equipment upgrades

Communications charges

Tangible Benefits

Tangible benefits include revenue that the system enables the organization to collect, such as

Increased sales
The system may enable the organization to avoid certain costs, which may lead to another type of tangible
benefit, such as

Reduction in staff

Reduction in inventory

Intangible Benefits

Intangible benefits and costs are more difficult to incorporate into the economic feasibility analysis as they
are based on intuition and belief rather than on hard numbers.

Increased brand recognition

Improved customer service

Better supplier relations

Step 2: Assign Values to Costs and Benefits

For tangible costs and benefits: Once the types of costs and benefits have been identified, you will need to
assign specific dollar values to them.

The most effective strategy for estimating costs and benefits is to rely on people who have the best
understanding of the them.

If predicting a specific value for a cost or benefit proves difficult, it may be useful to estimate a range of
values for the cost or benefit (V1, V2, V3,)and then assign a probability estimate (p1, p2, p3,) to each value, then
calculate an expected value EV:

EV=V1p1+V2p2+V3p3

p1+p2+p3=1

For intangible costs and benefits: Sometimes it is acceptable to list intangible benefits, such as improved
customer service, without assigning a dollar value.

Case: Tune Source Digital Music Download Project

Sales Projections for Individual Downloads category:

Expected sales from individual downloads =

(900,000 x 0.25)+(750,000 x 0.60)+(550,000 x 0.15)=757,500

Step 3: Determine Cash Flow

A formal cost-benefit analysis usually contains costs and benefits over a selected number or years to show
cash flow over time.

With this cash flow method,

the years are listed across the top of the spreadsheet to represent the period for analysis, and

numeric values are entered in the appropriate cells with the spreadsheets body for all years.

Often, amounts are augmented by some rate of growth to adjust for inflation or business improvements
(e.g., 6% added for sales numbers).

Finally, totals are added to determine what the overall benefits will be, and the higher the overall total, the
more feasible the solution becomes in terms of its economic feasibility.

Simple Cash Flow Method

Step 4: Assess Projects Economic Value

The three areas included in Assess Projects Economic Value are:

Determine Return on Investment (see slide #66)

Determine Break-Even Point (see slide #66)

Determine Net Present Value (see slide #68)

Net Present Value Method

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.

There are many organizational factors that can have an impact on the project, and seasoned developers
know that organizational feasibility can be the most difficult feasibility dimension to assess.

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

There are two ways to assess organizational feasibility

Strategic alignment is the fit between project and business strategy

How well goals of the project align with business objectives

Stakeholder analysis is the fit between project and interests of stakeholders


Stakeholder analysis

A stakeholder is a person, group, or organization that can affect, or be affected by, a new system

Different stakeholders:

Project champion: high-level executive and usually the project sponsor who created the system request

Organizational management: whose support conveys the belief that system is worthwhile

System users: who ultimately will use the system

Summary

The Systems Analyst is the key person in the development of information systems. This individual helps to
analyze the business situation, identify opportunities for the improvements, and design an information system that adds
value to the organization.

The Systems Development Lifecycle consists of four stages: Planning, Analysis, Design, and Implementation.

Project Identification and Initiation allows recognition of a business need that can be satisfied through the
use of information technology.

The business value for an information system is identified and then described in a System Request.

A Feasibility Analysis is used to provide more detail about the risks associated with the proposed system and
includes, technical, economic, and organizational feasibilities.j

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