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Project Initiation

Chapter 2
Identify projects with
business value
How do projects begin?
•Project sponsor: a key person to
recognizes business need for new system
& desires to see it implemented.
•Projects are selected based on business
needs and project risks.
•Business needs determine the system’s
functionality (what it will do).
•Project’s business value should be clear.
System Request
•A document describing business reasons for
project & system’s expected value.
•Must pass several tests before it can be

•project sponsor
•Lists project’s •business need
key elements •business requirements
•business value
•The approval committee
reviews system requests
throughout the
selects projects for
the benefit of the
System Request
Project sponsor VP of Marketing

Business need Reach new customers and

improve service to existing

Business requirements Provide web-based shopping


Business value $750,000 in new customer

sales; $1.8M in existing
customer sales

Special issues or System must be operational

constraints by holiday shopping season
Feasibility Analysis
•helps determine whether or not to proceed with
the IS project.
•worthy projects are accepted & undergo
additional investigation
•detailed business case for the project
-Technical feasibility
-Economic feasibility
-Organizational feasibility
•compiled into a feasibility study
•feasibility is reassessed throughout the project
Technical Feasibility
The proposed system have to be dropped if the answer to the questions are negative:

1.Can we build it using available hardware resources?

2.Can the hardware support future growth?
3.Does it require special technical expertise?

Project size
Number of people, time, and features
Compatibility with existing systems

Economic Feasibility
Should we build it?
•Proposed system must be economically viable
•Do the benefits outweigh the costs?
•The cost can be one-time or recurring costs

Analyst must estimate costs in areas:

•Staff costs (programmer, system analyst, etc)
•Staff training costs
•Hardware & equipment (server, printer, etc)
•Software (microsoft project, compiler, etc)
•Facility costs
•Consulting fees
•Fees and licenses
Economic Feasibility
The analyst must compare the cost of
developing the system with the benefits
(tangible/intangible) that system will bring
Economic feasibility
Tangible vs Intangible benefits

Tangible benefits - benefits that will increase sales and those that reduce costs, such as increased sales.
•Intangible benefits – benefits like customer service and care are more difficult to measure

The analyst must perform a cost-benefit analysis and determine if the system is economically feasible
Economic feasibility
Access Financial Viability

Break Even Point

•How long before the project’s returns match the amount invested
•The longer it takes to break even, the higher the project’s risk
Organizational feasibility
If we build it, will they come?

Strategic alignment
How well do the project goals align with business objectives?

Stakeholder analysis
Project champion
Organizational management
System users

Project Selection Issues
Approval committee works from the
system request & feasibility study

•Project portfolio – how does the project fit

within the entire portfolio of projects?
•Trade-offs must be made to select projects
that will form a balanced project portfolio
•Viable projects may be rejected because of
project portfolio issues.

Identifying project size

Creating and managing the workplan
Staffing the project
Coordinating project activities