System Analysis

System AnalysisSystem Analysis

- Mr. Ahmad Al-Ghoul- Mr. Ahmad Al-Ghoul

System Analysis and System Analysis and DesignDesign

AvicennaAvicenna System Analysis and Design SysteSystem Analysis and Design System Analysism Analysis

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learning Objectiveslearning Objectives

Explain cost-benefit analysis and Explain cost-benefit analysis and financial analysis toolsfinancial analysis tools

Explain the differences between Explain the differences between a request for proposal (RFP) and a request for proposal (RFP) and a request for quotation (RFQ)a request for quotation (RFQ)

Describe the contents of the Describe the contents of the system requirements documentsystem requirements document


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Analyzing Cost and BenefitsAnalyzing Cost and Benefits Financial Analysis ToolsFinancial Analysis Tools

At the end of systems analysis phase, you must At the end of systems analysis phase, you must apply financial analysis tools and technique to apply financial analysis tools and technique to evaluate development strategies and decide which evaluate development strategies and decide which alternative is betteralternative is better

Three popular tools, these tools can be used to Three popular tools, these tools can be used to determine total cost of ownership (TCO) determine total cost of ownership (TCO)

Payback AnalysisPayback Analysis: determines how long it takes an : determines how long it takes an information system to pay for itself through reduce information system to pay for itself through reduce costs and increased benefitscosts and increased benefits

Return on investment (ROI)Return on investment (ROI): is a percentage rate that : is a percentage rate that compares the total net benefits received from a project compares the total net benefits received from a project to the total cost of the projectto the total cost of the project

Net present value (NPV): is the total value of the Net present value (NPV): is the total value of the benefits minus the total value of the cost, with both benefits minus the total value of the cost, with both costs and benefits adjusted to reflect the point in time costs and benefits adjusted to reflect the point in time at which they occurat which they occur


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Analyzing Cost and BenefitsAnalyzing Cost and Benefits Cost-Benefit Analysis ChecklistCost-Benefit Analysis Checklist

The best way to apply the financial analysis tools is The best way to apply the financial analysis tools is to develop a cost-benefit checklist with the following to develop a cost-benefit checklist with the following steps:steps:

List each development strategy being consideredList each development strategy being considered Identify all costs and benefits for each alternative. Be Identify all costs and benefits for each alternative. Be

sure to indicate when costs will be incurred and sure to indicate when costs will be incurred and benefits realizedbenefits realized

Consider future growth and the need for scalabilityConsider future growth and the need for scalability Include support costs for hardware and softwareInclude support costs for hardware and software Analyze various software licensing options, including Analyze various software licensing options, including

fixed fees and formulas based on the number of users fixed fees and formulas based on the number of users or transactionsor transactions

Analyze various hardware options including Purchasing, Analyze various hardware options including Purchasing, Leasing, or Renting Leasing, or Renting

Apply the financial analysis tools to each alternativeApply the financial analysis tools to each alternative Study the results and prepare a report to managementStudy the results and prepare a report to management


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The Software Acquisition The Software Acquisition ProcessProcess

As an analyst, part of the expertise As an analyst, part of the expertise you are developing is to make sound you are developing is to make sound judgments regarding developing judgments regarding developing software, or purchase, or customize a software, or purchase, or customize a softwaresoftware

Although each situation is different.Although each situation is different. There are some issues and tasks There are some issues and tasks

involved in software acquisitioninvolved in software acquisition


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Step 1: Evaluate the Information System Step 1: Evaluate the Information System RequirementsRequirements

Identify key featuresIdentify key features: by using the data gathered during fact-: by using the data gathered during fact-finding. This information will be included in the system finding. This information will be included in the system requirement document, which is the end product of the requirement document, which is the end product of the systems analysis phasesystems analysis phase

Consider network and web-related issuesConsider network and web-related issues: you must decide : you must decide whether the system will run on a network, the internet, or a whether the system will run on a network, the internet, or a company intranet, and build these requirements into the company intranet, and build these requirements into the design, also you must determine the compatibility with other design, also you must determine the compatibility with other vendor or customers systemsvendor or customers systems

Estimate volume and future growthEstimate volume and future growth: you need to know the : you need to know the current volume of transactions and forecast future growth. If current volume of transactions and forecast future growth. If you are considering in-house development, you must make you are considering in-house development, you must make sure that your software and hardware can handle future sure that your software and hardware can handle future transaction volumes and data storage requirements. If you transaction volumes and data storage requirements. If you are considering outsourcing, analyze ASP fee structures and are considering outsourcing, analyze ASP fee structures and develop cost estimates develop cost estimates

Specify hardware, software, or personnel constraints: Specify hardware, software, or personnel constraints: you you must determine whether existing hardware, software, or must determine whether existing hardware, software, or personal issues will affect the decisionpersonal issues will affect the decision


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Step 1: Evaluate the Information System Step 1: Evaluate the Information System RequirementsRequirements

To obtain the information you need to To obtain the information you need to make a decision, you should prepare a make a decision, you should prepare a request for proposal or a request for request for proposal or a request for quotationquotation

Prepare a request for proposal or Prepare a request for proposal or quotationquotation

Request for proposal (RFP)Request for proposal (RFP) Request for quotation (RFQ)Request for quotation (RFQ)


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Request for proposal (RFP): Request for proposal (RFP): is a document that describes your company, is a document that describes your company, lists the IT services or products you need, and specifies the lists the IT services or products you need, and specifies the features you require, and spells out the service and support levels features you require, and spells out the service and support levels you requireyou require

Based on the RFP, vendors can indicate if they have a product that Based on the RFP, vendors can indicate if they have a product that will meet your needswill meet your needs

RFPs vary in size and complexity, just like the system they RFPs vary in size and complexity, just like the system they describedescribe

[1]


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Request for quotation (RFQ)Request for quotation (RFQ) (RFQ) is a more specific than an RFP(RFQ) is a more specific than an RFP When you use an RFQ, you already know the When you use an RFQ, you already know the

specific product or service you want and you specific product or service you want and you need to obtain price quotations or bidsneed to obtain price quotations or bids

RFQ can involve outright purchase or a verity RFQ can involve outright purchase or a verity of leasing or renting options and can include of leasing or renting options and can include maintenance or technical support termsmaintenance or technical support terms


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Step 2: Identify Potential Vendors or Outsourcing Step 2: Identify Potential Vendors or Outsourcing OptionsOptions The Internet is a primary marketplace for IT products The Internet is a primary marketplace for IT products

and servicesand services to locate vertical applications for specific industries, you to locate vertical applications for specific industries, you

can research industry trade journals or Web sites to find can research industry trade journals or Web sites to find reviews for industry specific softwarereviews for industry specific software

Another approach is to work with a consulting firm, the Another approach is to work with a consulting firm, the advantage of using a consultant is that you can tap into advantage of using a consultant is that you can tap into broad experience on IT products and servicesbroad experience on IT products and services

Another resource is the Internet bulletin board systems Another resource is the Internet bulletin board systems that contains thousands of forums, called newsgroups.that contains thousands of forums, called newsgroups.

Newsgroups are excellent sources of information and Newsgroups are excellent sources of information and good places to exchange ideas with other analysts and good places to exchange ideas with other analysts and IT professionalsIT professionals


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Step 3: Evaluate the AlternativesStep 3: Evaluate the Alternatives You should obtain information about the options You should obtain information about the options

from as many sources as possible including:from as many sources as possible including: Existing usersExisting users: ASPs and vendors typically supply user : ASPs and vendors typically supply user

references, and try to find references users by your references, and try to find references users by your own. User references are important to know whether own. User references are important to know whether the product or service has worked wellthe product or service has worked well

Application testingApplication testing: if a software package is one of the : if a software package is one of the options, find out if it is possible for users in your options, find out if it is possible for users in your organization to try the productorganization to try the product

BenchmarkingBenchmarking: is a test to determine whether a : is a test to determine whether a package can handle a certain transaction volume package can handle a certain transaction volume efficiently efficiently

Match each package against the RFP features and Match each package against the RFP features and rank the choicesrank the choices


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Step 4: Perform Cost-Benefit AnalysisStep 4: Perform Cost-Benefit Analysis Identify and calculate TCO for each option you Identify and calculate TCO for each option you

are consideringare considering When you purchase software, what you are When you purchase software, what you are

buying is a software license be sure that the buying is a software license be sure that the license is suitable for now and future growth of license is suitable for now and future growth of your organizationyour organization

Consider user support issuesConsider user support issues If you purchase a software package, consider a If you purchase a software package, consider a

supplemental maintenance agreement, which supplemental maintenance agreement, which offers additional support and assistance from offers additional support and assistance from the vendorthe vendor


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Step 5: Prepare a RecommendationStep 5: Prepare a Recommendation You should prepare a recommendation You should prepare a recommendation

that evaluates and describes the that evaluates and describes the alternatives, together with the costs, alternatives, together with the costs, benefits, advantages, and benefits, advantages, and disadvantages of each optiondisadvantages of each option

At this point, you may be required to At this point, you may be required to submit a formal system requirements submit a formal system requirements document and deliver a presentationdocument and deliver a presentation


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Step 6: Implement the SolutionStep 6: Implement the Solution Implementation tasks will depend on the Implementation tasks will depend on the

solution selectedsolution selected Before the new software becomes Before the new software becomes

operational, you must complete all operational, you must complete all implementation steps, including loading, implementation steps, including loading, configuring, and testing the software; configuring, and testing the software; training users; and converting data files training users; and converting data files to the new system’s formatto the new system’s format


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Completion of Systems Completion of Systems Analysis TasksAnalysis Tasks

To complete the systems analysis To complete the systems analysis phase, you must prepare the system phase, you must prepare the system requirements document and your requirements document and your presentation to managementpresentation to management


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System Requirements DocumentSystem Requirements Document The system requirements document, contains the The system requirements document, contains the

requirements for the new system, describes the requirements for the new system, describes the alternatives that were considered, and makes a alternatives that were considered, and makes a specific recommendation to managementspecific recommendation to management

This document is like a contract that identifies what This document is like a contract that identifies what the system developers must deliver to the userthe system developers must deliver to the user

Format and organize it so it is easy to read and useFormat and organize it so it is easy to read and use The system requirements document should include a The system requirements document should include a

cover page and a detailed table of contentscover page and a detailed table of contents


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Presentation to ManagementPresentation to Management After presentation, managers make key After presentation, managers make key

decisions that affect the future development of decisions that affect the future development of the systemthe system

Begin your presentation with a brief overview of the Begin your presentation with a brief overview of the purpose and primary objectives of the system purpose and primary objectives of the system project, the objectives of this presentation, and what project, the objectives of this presentation, and what decisions need to madedecisions need to made

Summarize the primary viable alternatives. For each Summarize the primary viable alternatives. For each alternative, describe the costs, advantages, and alternative, describe the costs, advantages, and disadvantagesdisadvantages


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Presentation to ManagementPresentation to Management Explain why the evaluation and Explain why the evaluation and

selection team chose the recommended selection team chose the recommended alternativealternative

Allow time for discussion and for Allow time for discussion and for questions and answersquestions and answers

Obtain a final decision from Obtain a final decision from management or agree on a timetable for management or agree on a timetable for the next step in the processthe next step in the process


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Presentation to ManagementPresentation to Management Based on their decision, your next task will be Based on their decision, your next task will be

one of the followingone of the following1.1. Implement an outsourcing alternativeImplement an outsourcing alternative2.2. Develop an in-house systemDevelop an in-house system3.3. Purchase or customize a software packagePurchase or customize a software package4.4. Perform additional systems analysis work: Perform additional systems analysis work:

management might want you to investigate certain management might want you to investigate certain alternatives further, explore alternatives not examined, alternatives further, explore alternatives not examined, develop a prototype, reduce the project scope because develop a prototype, reduce the project scope because of cost constraints, or expand the project scope based of cost constraints, or expand the project scope based on new developmenton new development

5.5. Stop all further work: the decision might be based on Stop all further work: the decision might be based on your recommendation, a shift in priorities or costs, or your recommendation, a shift in priorities or costs, or for other reasonsfor other reasons


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Sequence SummarySequence Summary Financial analysis tools include payback analysis, which Financial analysis tools include payback analysis, which

determines how long it takes for a system to pay for determines how long it takes for a system to pay for itself through reduced costs and increased benefitsitself through reduced costs and increased benefits

Return on investment (ROI), which compares project’s Return on investment (ROI), which compares project’s total return to its total coststotal return to its total costs

Net present value (NPV), which analyzes the value of a Net present value (NPV), which analyzes the value of a project by adjusting costs and benefits to reflect the project by adjusting costs and benefits to reflect the time that they occurtime that they occur

The process of acquiring software involves a series of The process of acquiring software involves a series of steps: evaluate the system requirements, identify steps: evaluate the system requirements, identify potential vendors or outsourcing options, evaluate the potential vendors or outsourcing options, evaluate the alternatives, perform cost-benefit analysis, prepare a alternatives, perform cost-benefit analysis, prepare a recommendation, and implement the solutionrecommendation, and implement the solution

The system requirements document is the deliverable, The system requirements document is the deliverable, of the system analysis phaseof the system analysis phase

The document details all system requirements and The document details all system requirements and constraints, recommends the best solution, and provides constraints, recommends the best solution, and provides cost and time estimates for future development work cost and time estimates for future development work


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Sequence SummarySequence Summary In this Sequence we haveIn this Sequence we have

Described financial analysis tools include payback Described financial analysis tools include payback analysis, which determines how long it takes for a analysis, which determines how long it takes for a system to pay for itself through reduced costs and system to pay for itself through reduced costs and increased benefits, return on investment (ROI), which increased benefits, return on investment (ROI), which compares project’s total return to its total costs, and compares project’s total return to its total costs, and net present value (NPV), which analyzes the value of net present value (NPV), which analyzes the value of a project by adjusting costs and benefits to reflect a project by adjusting costs and benefits to reflect the time that they occurthe time that they occur

Described the process of acquiring software which Described the process of acquiring software which involves a series of steps: evaluate the system involves a series of steps: evaluate the system requirements, identify potential vendors or requirements, identify potential vendors or outsourcing options, evaluate the alternatives, outsourcing options, evaluate the alternatives, perform cost-benefit analysis, prepare a perform cost-benefit analysis, prepare a recommendation, and implement the solutionrecommendation, and implement the solution

Explained the differences between a request for Explained the differences between a request for proposal (RFP) and a request for quotation (RFQ)proposal (RFP) and a request for quotation (RFQ)

Described the contents of the system requirements Described the contents of the system requirements documentdocument


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ReferenceReference

[1] System Analysis and Design, Sixth Edition[1] System Analysis and Design, Sixth Edition Authors: Gary B. Shelly, Thomas J. Authors: Gary B. Shelly, Thomas J.

Cashman and Harry J. Rosenblatt , Cashman and Harry J. Rosenblatt , Publisher: SHELLY CASHMAN SEWIES.Publisher: SHELLY CASHMAN SEWIES.

[2] system analysis and design, sixth edition[2] system analysis and design, sixth edition Authors: Kenneth E. Kendall and Julie E. Authors: Kenneth E. Kendall and Julie E.

KendallKendall Publisher: Prentice HallPublisher: Prentice Hall

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