justifying information systems projects is 460 notes by thomas hilton
TRANSCRIPT
Justifying Information Justifying Information Systems ProjectsSystems Projects
IS 460 NotesIS 460 Notes
by Thomas Hiltonby Thomas Hilton
Why Develop Information Systems?Why Develop Information Systems?
Information is the intended output Data is the main input Is there a difference?
There had better be!
Data: Objective Measures of Traits of Real-World Objects
Objective• Not subjective• Replicable
Measures• Values• Quantitative• Qualitative
Traits• Characteristics• Attributes
Real-World Objects• Entities or Classes• Tangible• Intangible
Information: Data Aggregated and Placed in a Useful Context
Data• see prior
Aggregation• Groups• Calculations• Manipulations
Context• Titles• Labels• Rows• Columns
Usefulness• Decision-Making• Judged by User
Cost-JustificationCost-Justification
“Is the system worth its cost?” Compare “worth” with “cost” Various Methods
• ROI• Present Value• Cost-Benefit Analysis
Cost-Benefit AnalysisCost-Benefit Analysis
Conceptually Simple
Quantify all Costs Quantify all Benefits Divide Costs by Benefits If C/B Ratio < 1, then Proceed
Cost-Benefit AnalysisCost-Benefit Analysis
Complex in Practice
System Lifespan
Tangibles vs. Intangibles
Future Orientation
BenefitsBenefits
Cost Elimination• Worker• Process• Carrying Cost
Cost Reduction• Efficiency• Productivity• Maintenance
Cost Shifting• Inventory• Labor• Debt
Profit Generation• Product• Service
Cost-Benefit Analysis TableCost-Benefit Analysis Table
Costs BenefitsTangible Intangible Tangible Intangible
Name Quantity Name Quantity Name Quantity Name Quantity
Tangible Cost
Subtotal
Intangible Cost
Subtotal
Tangible Benefit
Subtotal
Intangible Benefit
Subtotal
Cost Subtotal Benefit Subtotal
Cost-Benefit Ratio:
Non-Cost Justifications
Cost-benefit analysis is not iron-cladCost-benefit analysis is not iron-clad Often, detractors can discredit itOften, detractors can discredit it Therefore, it Therefore, it must must be accompanied be accompanied
by non-cost justificationsby non-cost justifications• Organizational cultureOrganizational culture• Strategic directionStrategic direction• Potential competitive advantagePotential competitive advantage• Environmental ImperativesEnvironmental Imperatives• Top Management SupportTop Management Support