Preparing the System Proposal

1. Preparing the System Proposal

2. Major Activities in Preparing the Systems Proposal • Acquiring Hardware and Software • Identifying and Forecasting Costs and Benefits • Cost/Benefits Analysis

3. Acquiring Hardware and Software Inventory Computer Hardware Estimate Workloads between Current and Proposed System Evaluate Hardware Evaluate Software Choose the Vendor Acquire the Computer Equipment

4. Identifying and Forecasting Costs and Benefits • Forecasting Costs and Benefits • Analysis of Time Series Data (when the historical data available); • Estimation of Trends: • Graphical judgment; • The methods of least squares; • Find the best fitting line from distribution. • Moving averages; • Find the average from a periodic of time lag.

5. Identifying Benefits and Costs • Tangible Benefits • Measurable Advantages, • Ex.: increasing the speed of processing, efficiency • Intangible Benefits • Difficult to measure. • Include improving the decision-making process, enhancing accuracy, becoming more competitive in customer services, etc;

6. Identifying Benefits and Costs • Tangible Costs • Ex.: Cost of equipment, cost of resources, costs of systems analysis’s time. • Intangible Costs • Ex.: Cost of losing competitive; losing of reputation;

7. Comparing Cost and Benefits • Break-even Analysis Cost Cost of Current System Break-even Point Cost of Proposed System Unit Sold

8. Comparing Cost and Benefits • Pay-back Cost Cumulative benefits from Proposed system Payback Period Cumulative Cost from current system Years

9. Comparing Cost and Benefits • Cash-flow Analysis

10. Comparing Cost and Benefits • Present Value • 1/(1+ i)n i = discount rate, n is period

11. Guidelines for Analysis • Use break-even analysis if the project needs to be justified in terms of cost, not benefits; or if benefits do not substantially improve with the proposed system • Use payback when the improved tangible benefits from a convincing argument for the proposed system. • Use cash-flow analysis when the project is expensive, relative to the size of the company; or when the business would be significantly affected by a large drain (even if temporary) on funds. • Use present value when the payback period is long, or when the cost of borrowing money is high.

12. Organizing the systems proposal • Cover Letter • Title page of proposal • Table of Contents • Executive summary (including recommendation) • Outline of system study with appropriate documentation • Detailed results of system study • System Alternative • System Analyst’s recommendation • Summary • Appendices