SYSTEM EVALUATION AND SELECTION

Group 4: Percy Mae Estudillo Karen Bordomeo Mary June Pacarro Kurt Elvinia Cindy Lugatiman

The system evaluation and selection phase seeks to identify the best system from the set of alternative conceptual designs that will go to the detailed design phase. It involves two steps: (1) Perform a detailed feasibility study, and (2) Perform a cost-benefit analysis.

Perform a Detailed Feasibility Study This step considers five aspects: technical, economic, legal, operational, and schedule (TELOS) feasibility. The assessment of the proposed systems feasibility can evaluate its likelihood for success, before committing a large amount of financial and human resources. 1. Technical Feasibility whether the system can be developed under existing technology or if new technology is needed 2. Economic Feasibility whether funds are available to complete the project 3. Legal Feasibility whether there are any conflicts between the conceptual system and the companys ability to discharge its legal responsibilities 4. Operational Feasibility whether the firms existing procedures and personnel skills are compatible with the operational requirements of the new system 5. Schedule Feasibility whether the firm is capable of implementing the project within an acceptable time Perform a Cost-Benefit Analysis This step helps management determine whether (and by how much) the benefits from a proposed system will exceed its costs. There are three steps to follow under this analysis: 1. Identify Costs costs are divided into two categories: (1)one-time costs and (2)recurring costs. y One-time costs - include the initial investment to develop and implement the system. They include the following: y Hardware acquisition y Site preparation y Software acquisition y Systems design y Programming and testing

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Recurring costs include operating and maintenance costs that recur over the life of the system. These costs include: y y y y y Hardware maintenance Software maintenance Insurance Supplies Personnel costs

2. Identify Benefits can be classified into tangible and intangible benefits y Tangible benefits fall into two categories, those that increase revenue and those that decrease costs. y Intangible benefits - important if information system decisions, but cannot be easily measured and quantified. Examples are increased customer satisfaction, improved employee satisfaction, more current information, improved decision making, faster response to competitor actions, more efficient operations, better internal and external communications, improved planning, operational flexibility, and improved control environment. 3. Compare Costs and Benefits the two most common methods for comparing costs and benefits are the net present value and payback. y Net Present Value Method the present value of the costs is deducted from the present value of the benefits over the life of the system; projects with a positive net present value are economically feasible. When choosing between projects with positive net present values, the optimal choice is the one with the higher positive net present value. Payback Speed the shorter the payback period, the better

After following the two major steps, a Systems Selection Report is prepared, which contains a revised feasibility study, a cost-benefit analysis, and a list and explanation of intangible benefits for each alternative design. This is used by the steering committee in selecting a single system that will go to the next step of the SDLC detailed design.