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The Importance of Feasibility Analysis

This survey analyses the value of Feasibility Examination to businesses when they are choosing the viability of any proposed business venture involving the execution or improvement of the information system. This survey is put into three parts the initial part defines a feasibility evaluation, the next part clarifies how an IT feasibility analysis should be conducted using the template of the IT Infrastructure Catalogue (ITIL) and the last section in this record examines a completed feasibility analysis by Powerco, a resources distribution Company in New Zealand.

What is a feasibility examination?

As what feasibility analysis suggests a feasibility analysis is completed to decide on the viability of an proposed venture; essentially it answers the fundamental question of is it a practical option and should the project be integrated. All stages of the examination are carried out to be able to answer this question.

When exploring it is clear that the majority of all large successful businesses perform a feasibility analysis to ensure they go on a viable project, for example Microsoft have a sizable research department located in many different locations throughout the world, this section collaborates with many companies producing many feasibility analyses a year. When examining successful businesses such as Microsoft, I uncovered they'll not commit to a new project without first carefully assessing every one of the variables and researching the likelihood of success by using a feasibility research.

The feasibility examination process

As a feasibility evaluation is often frustrating and expensive (many companies pay consultants to execute the research), an initial study is performed to determine if it might be worthwhile to proceed to the feasibility research, within this primary study the analysis of alternatives is made along with quick cost and advantage evaluation. A feasibility review is usually conducted following the project managers have discussed all task ideas and every possible situation, only if the results are positive the feasibility analysis begins.

The content of feasibility Analysis

Within a feasibility study it's important to discuss lots of areas including; information on the present system; what are the functions and targets, who are the Stakeholders and the reasons to improve or replace the existing system for example inconsistencies / inadequacies in features or performance, is there any possible solution alternatives and advantages and cons of the alternatives.

Feasibility analysis can be split into four types;

Operational factors; Operational feasibility is employed to determine how well the information systems will continue to work if carried out in the given environment.

  • Define the urgency of the project
  • If the job is implemented, might it be successful?
  • Does management support the job?
  • How do customers experience the new system?
  • People tend to resist change - can this problem be defeat?
  • Can management and customers adjust to the change?

Has the proposed opportunity conflicted with organisational or federal regulations?

Schedule factors;

  • It often does take time to make and put into action an information system solution; will the job be necessary on completion?
  • The technology may are present, but is there the skills available to not only complete the task but complete it on plan?
  • Is the project deadline affordable?
  • Is the deadline desired or mandatory? What exactly are the results of failing to meet the project deadline?

Technical; Technical feasibility is the measure of the practicality of specific technological information system alternatives and the option of specialized resources. Often new solutions are solutions buying problem to resolve:

Is the technology for the information system solution sensible?

  • Does the required technology exist?
  • Is the technology proven?
  • Is the technology functional and reliable?
  • Are the necessary skills available to design and execute the system?
  • Is there the infrastructure to cope with ongoing maintenance (problems, enhancements)

Economic; That is regularly the most important examination made, it asks important questions;

  • Is the job justified (i. e. will benefits outweigh costs)?
  • Can the task be achieved, within given cost constraints?
  • What is the minimal cost to achieve a certain system?
  • Which alternative supplies the best profits on return?
  • How much does it cost to keep up?

The 12 Phases of an ITIL Feasibility Analysis

ITIL is a global guidance document that provides world's guidelines for IT service management companies. ITIL recommendations are often found in feasibility studies and are broken down into twelve stages. These twelve phases are defined in this next section of course, if necessary a short example has been given;

Introduction

It is important an introduction to the feasibility examination is made; this launch includes this content, the objective, the supposed audience, the purpose, and organizational information on the feasibility research.

Management Summary

This level summarises, the actual other levels within the template will explain in greater detail; this section offers a quick summary of the feasibility research and would are the following, an Intro, Management Summary, Track record of the Project, Objectives, Situation, Benefits, Problems and Risks, Technical Requirements, Options, Cost/Advantage Examination, Financial/Budget Implications and Recommendations

Background to the Project

A task is suggested for a specific scenario which step describes the reason the proposal is out there. For example; current sales are in a low due to increased competition, the proposal is ideal for a fresh company website, where customers are able to buy immediately.

Objectives

The high level business purposes of the proposal, like the long-range management goals. For example, the proposed job is to increase sales by an estimated 15% per annum over the next ten years.

Situation

This step identifies today's condition, minus the service set up, including market conditions, it is necessary to highlight the necessity for the proposed system, and the results of the proposal not being authorized.

Benefits

In the benefits section, it's important to focus on the short-term advantages of the proposal; this differs to the target stage which targets the permanent gains and the cost-benefit step which centers mostly on the financial benefits. An example of this could be the increased client satisfaction of the proposed website.

Problems and Risks

It is important to recognize and examine possible problems and hazards of the suggested project associated with it within the development, design, and deployment stages. That is done by performing a risk examination on the proposed system; this will be utilized to recognize problems in numerous areas, including systems, lack of end user support, or resources.

Technical Requirements

Has the business the scientific infrastructure for the proposed system? These requirements include understanding of the hardware and software required, for example, will the business possess the database structures, network set ups, and hardware to support the website, will it be necessary to outsource?

Options

It is recommended in the ITIL framework that a feasibility examination includes any alternatives to the proposal, including benefits and drawbacks and costs. A good example of this may be advertising to increase sales and would show the estimated cost of the.

Cost/Benefit

In this step, the total cost of the task is calculated; this includes development, design, deployment, and maintenance of the new service. Costs include facilities, hardware, labor, and software. The project cost is set alongside the financial benefits provided by the proposed system.

What are benefits? They are types of benefits, more correct / timely information. Improved operation, increased versatility of operation, increased output, error reductions, cost reductions; benefits can be placed into three different categories;

  • Monetary; when money ideals can be computed,
  • Tangible; when benefits can be quantified, but economic values can't be calculated.
  • Intangible; when neither of others apply, this applies there's a profit, but it cannot be quantified.

There will vary types of costs;

Project related;

  • development,
  • purchasing,
  • Installation,
  • training costs,

Operational costs; these costs tend to be ongoing costs you need to include;

  • Maintenance on the hardware; maintenance, lease, materials
  • Software; maintenance fees and contracts
  • Personnel; operation, maintenance

There are a number of tools used, which helps in the economic portion of the feasibility analysis they are; Cost-benefit examination (CBA); which estimates and totals up the same money value of the benefits and costs of suggested projects to determine whether they are beneficial. Payback Examination; which is used to calculate the length of time it will require to pay the expenses of the project Return on Investment Research; which compares the life time profitability of substitute solutions, Net Present Value Examination: using current economic values, profitability is set of the proposed job, Return On Investment (ROI) compares the life time profitability of substitute solutions, (Life span benefits - Life-time costs) Lifetime costs and lastly you can compare alternatives with the feasibility analysis matrix.

Financial/Budget Implications

Once the entire costs have been founded, it is necessary to validate if the necessary funds are available, if just how? This may result in changes to the budget or priorities and reducing expenditure to support the costs.

Recommendations

In this last step recommendations regarding the proposal are created including arranging and budgeting

Summary

In synopsis these twelve steps that make up the ITIL is among the first activities a administrator will take on in planning for a proposal for a fresh IT service, though it is important to keep in mind these steps make a general guide and various information systems may require amendments.

Examples of feasibility analysis

Though the majority of businesses keep their own feasibility analysis private, research recognized an interesting feasibility analysis conducted by Powerco. In this section I am going to quickly review this feasibility research in a research study due to the word restrictions on this essay and the extensiveness of the ITIL construction.

Powerco comes with an believed 410, 000 consumers which makes it one of New Zealand's most significant utilities Companies. These customers expect a trusted service 24 hours a day, 7 days weekly.

Powerco applications are divided between two platforms; Oracle RAC and Microsoft SQL Server, which includes meant that the business enterprise had additional expenditures of licensing, assisting, operating, and maintaining two systems. Additionally it was awkward for personnel to alternate between the systems when working. As the Oracle system of Powerco's guarantee cycle was getting close expiration, and the financial system was slated an important update, it was clear to the business that it was time for you to reassess its options and whether it should consolidate to a single server system or replace existing hardware. Powerco acknowledged that to consolidate the database platforms would create a more simple IT environment and would decrease the total cost of the databases system significantly. "The truth for loan consolidation was simple - why maintain two systems if you don't need to?" clarifies Mr. Griffiths, Infrastructure Director, Powerco. Powerco undertook preliminary research of the alternatives and assessed the pros and cons of Oracle versus SQL Server. This research directed towards some significant advantages in choosing SQL Server over Oracle. These included reduced licensing and maintenance costs, ease of management and fewer requirements for a specialised expertise to control and service the system.

A feasibility review of migrating to SQL Server was then completed by consultants on Powerco's behalf including a cost/advantage evaluation, a risk evaluation, research of the alternatives and the four factors talked about earlier in this record, this confirmed

  • Powerco's applications could be backed on SQL Server, with the rest of the end of life applications being changed with SQL Server compatible ones, the feasibility analysis proved that unlike other options Microsoft SQL Server, serving could be done in-house.
  • Microsoft's SQL Server was the cheapest option to permit, maintain, and support, especially as a result of specialised nature of Oracle.
  • The business would become more streamline and reliable with just the solitary platform.
  • Increases security.
  • Further Tangible and Non-tangible benefits.

Due to the results of the feasibility study, Powerco improved from the two platforms to exclusively Microsoft SQL Server, the result of this loan consolidation has intended Powerco has been able to reduce costs significantly, also guaranteeing it was better to maintain and take care of in-house and reducing the necessity for external consultants. The migration to SQL Server has cut the overall cost of possession by $390, 000 per annum, also assisting to streamline Powerco's IT systems and have given a number of other Tangible and Non-tangible benefits.

Conclusion

In bottom line this article has explained just what a feasibility analysis is so when it ought to be used, I have then reviewed the many stages that are advised by the IT industry experts at the ITIL and have given an example of an effective feasibility study undertaken by Powerco.

I imagine to be objective this article must have explored types of a unsuccessful feasibility review, however this is not possible anticipated to my research not providing any appropriate cases, but nonetheless the findings of the report are obvious, it is recommended to do a feasibility analysis, as it is proven and almost all large and founded companies utilize this solution to check the viability of an proposed endeavor and are going for a substantial risk if a feasibility research is not carried out before embarking on new job.

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