Information Technology Reference
In-Depth Information
Figure 12.13
T
echnical
Technical, Economic, Legal,
Operational, and Schedule
Feasibility
E
conomic
L
egal
O
perational
S
chedule
Economic feasibility
determines whether the project makes financial sense and whether
predicted benefits offset the cost and time needed to obtain them. A securities company, for
example, investigated the economic feasibility of sending research reports electronically in-
stead of through the mail. Economic analysis revealed that the new approach could save the
company up to $500,000 per year. Economic feasibility can involve cash flow analysis such
as that done in net present value or internal rate of return (IRR) calculations.
Net present value
is an often-used approach for ranking competing projects and for
determining economic feasibility. The net present value represents the net amount by which
project savings exceed project expenses, after allowing for the cost of capital and the passage
of time. The cost of capital is the average cost of funds used to finance the operations of the
business. Net present value takes into account that a dollar returned at a later date is not
worth as much as one received today, because the dollar in hand can be invested to earn
profits or interest in the interim. Spreadsheet programs, such as Lotus and Microsoft Excel,
have built-in functions to compute the net present value and internal rate of return.
Legal feasibility
determines whether laws or regulations can prevent or limit a systems
development project. For example, a Web site that allowed users to share music without
paying musicians or music producers was sued. Legal feasibility should have identified this
vulnerability during the Web site development project. Legal feasibility involves an analysis
of existing and future laws to determine the likelihood of legal action against the systems
development project and the possible consequences.
Operational feasibility
is a measure of whether the project can be put into action or
operation. It can include logistical and motivational (acceptance of change) considerations.
Motivational considerations are important because new systems affect people and data flows
and can have unintended consequences. As a result, power and politics might come into play,
and some people might resist the new system. On the other hand, recall that a new system
can help avoid major problems. For example, because of deadly hospital errors, a healthcare
consortium looked into the operational feasibility of developing a new computerized physi-
cian order-entry system to require that all prescriptions and every order a doctor gives to staff
be entered into the computer. The computer then checks for drug allergies and interactions
between drugs. If operationally feasible, the new system could save lives and help avoid
lawsuits.
Schedule feasibility
determines whether the project can be completed in a reasonable
amount of time—a process that involves balancing the time and resource requirements of
the project with other projects.
economic feasibility
The determination of whether the
project makes financial sense and
whether predicted benefits offset
the cost and time needed to obtain
them.
net present value
The net amount by which project
savings exceed project expenses
after allowing for the cost of capital
and the passage of time.
legal feasibility
The determination of whether laws
or regulations may prevent or limit
a systems development project.
operational feasibility
The measure of whether the project
can be put into action or operation.
schedule feasibility
The determination of whether the
project can be completed in a
reasonable amount of time.
Object-Oriented Systems Investigation
The object-oriented approach can be used during all phases of systems development, from
investigation to maintenance and review. Consider a kayak rental business in Maui, Hawaii,
where the owner wants to computerize its operations, including renting kayaks to customers
and adding new kayaks into the rental program (see Figure 12.14). As you can see, the kayak
rental clerk rents kayaks to customers and adds new kayaks to the current inventory available
