Risks in development of system
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Student Name : Umair Sultan
Student ID No:
23010325
Unit Name:
System Analysis and Design
Unit Code:
ISY 00243
Tutor’s name:
Matthew Mansour
Assignment No.:
Assessment 1 Part A
Assignment Title:
Grow Your Business
Due date:
10/08/2018
Date submitted:
09/08/2017
Declaration:
I have read and understand the Rules Relating to Awards ( Rule 3 Section 18 – Academic Misconduct Including Plagiarism ) as contained in the SCU Policy Library. I understand the penalties that apply for plagiarism and agree to be bound by these rules. The work I am submitting electronically is entirely my own work.
Table of contents
Assignment cover page 01-03
Table of contents 04
Background of Organization 05
Organization chart 05
Description of Organization 06
Current Problems in Organization 06-07
System capabilities 07-08
Benefits of system 08
Project Initial Tasks 09
Project duration table 09
Grantt chart 10
Work breakdown structure 10
Risks in Development of System 11
Impacts of Risks on System 12-13
Tangible and Intangible Benefits 14
Cost of system 14-15
Cost Benefit Analysis 15
· Payback analysis 15-16
· Return of Investment 16-17
· Present Value Analysis 17-18
Assumptions 18
Conclusion 19
Background of “Grow Your Business”
The organization “Grow Your Business” is an agricultural business started by John. His fathers and forefathers had cattle and chickens and they grew vegetables in their dairy farm. But there is a little difference between john and his ancestor’s likeness. John love to grow vegetables whereas his ancestors were more biased towards dairy products. Still john has some animals in order to have manure for his farming needs. John is famous among customers because of his purely organic farming which leads him to think he is a born farmer. The organization started from a grass root level, as john left his job as a mechanic and returned to his ancestral land, basically a pasture land; he hired helping hands for years and turned that pasture to more of an agricultural land. Now, his organization is having issues which lead him to have information system.
Organization Chart
Description of areas of organization
Owner of “Grow Your Business” organization is john. His wife Jane is co-owner of the organization. The work is split in two different departments, one is the plantation and harvesting of vegetables and other one includes dealing with customers, taking orders, managing accounts and bills, pickup or delivery of orders. So, Jane being professional in customer service relationship and finance and accounts department, will supervise the department of customers and orders management. John is skilled with farmer qualities so he will supervise and lead the production unit. John hired Noel, Noeletta, Nick and Netta to help him with agricultural tasks such as planting, watering, fertilizers etc. These four answer directly to john about the situation of work. Chris, Christina, Cathy and Charlie were hired by Jane to take orders from customers on phone and directly tell her, but their duties were not limited just to order taking, sometimes they had to assist with other workers in the production unit. Sam and Samantha were hired by Jane, they had to control all the accounts work and directly tell her about the situation and issues. To handle the pickup point and delivery services, Jane hired mark and Marshato. Further, dirk was appointed to help mark and Marshato with the heavy lifting. Likewise other, mark and Marshato had to answer the situation and problems to Jane. Tim is manager of vehicles and machinery and answer john about situation of them. Tim will also look after customers and delivery issues and answer Jane. Terry and Tina will work together as they are good operators of vehicles and machinery and will report Tim.
Current problems in the organization
As the business progressed for john, there were many problems that arise for him which is essential to be eradicated. Here are some of the problems listed below:
· Usually there is a problem with placing orders. Customers that come to john are happy with him but still they want to have a fast and reliable way to place order in an efficient way. Furthermore, there should be a faster way to alter the placed order.
· There are usually some regular customers who have placed fixed orders. These regulars should be saved and have information about the products desired and their availability.
· There are some products that are not wanted by the customers but john always show up and ask about that, which is not liked by customers.
· There is no proper record of the payments that either the payments have been fully given or partially or nothing has been paid by the customers. Furthermore, there is no record of the payments that are they done by the cash or some card.
· There is no record of the vegetables that are available or what is the minimum time required for the harvesting of the desired vegetables or what maybe the influence of weather on productivity of vegetables.
· There is no proper way of billing the orders. And it takes a lot time to bill the orders.
· Personal details of the customers are written on the pieces of paper but later on, it gets difficult to recognize the order box with the client’s personal details.
· There is usually no specific route for the delivery of the products. At a time, there is usually one product being delivered. While more than one order could be delivered, this may save the money as well as time.
· Some customers come for their order pickup at a same time and due to less land available for parking and waiting area, its gets a lot congested and a queue starts to form up.
Information System capabilities required
The following list describes the system capabilities that Information System must have to resolve the current issues:
· Fast and reliable way for customers to order.
· Easy way to make alteration in order.
· Safe record of payment made by customers.
· Record of regular customers, their personal details and specific order.
· Availability and quantity of products available in store.
· A sequential list displayed for the completion of orders along details of customers.
· A tracking way to know the order belongs to which customer.
· Efficient scheduling and record about order pickup.
· Best path or route to deliver as much deliveries as possible.
· Provide customers with regular updates about their orders.
· Having good and almost accurate details about weather and climate.
· Giving customer an ideal time, which shouldn’t be less than the time required to prepare the order.
· A friendly way to advertise the ‘never purchased’ products.
· Generates the updates and accurate electronic billing.
· A way, customer can give feedback and comments about products.
Benefits of Information System
The Information System after implementation will lead to some of the benefits listed below:
· Increasing customer’s satisfaction.
· Increasing loyalty of customers by providing great services at one click. They can order by just one click and can alter easily.
· Increasing the revenue generated.
· Attracting more customers to the business.
· Attracting customers to the new products and ‘never wanted’ products but with one click they could cut it out.
· A large database to save existing or new customer’s details.
· A refined way from orders to deliveries or pickups.
· Eliminating the issues about the payments.
· Easy and fast way of generating bills.
· Automatic way of placing discounts to customers.
· Providing regular updates to customers about time and quantity of order.
· Better pickup and delivery services.
· Get to know customer’s remarks or further needs.
· Record of expense and profit per order.
Project’s Initial Tasks
Here are some of the initial tasks required to complete the initial investigation
of the Information System being developed.
Sr.No
Initial Tasks
Predecessor
Time Required
1
Meet the farmers
2 days
2
Interview the farm staff
1
5 days
3
Review the farm records
2
2 days
4
Observe business operations
3
2 days
5
Interview the customers
4
1 days
6
Analyze the current accounting process
5
2 day
7
Study samples of orders and payments
6
2day
8
Complete field work about delivery process
7
2 day
9
Preparing final report for John and Jane
8
1 day
DURATION OF PROJECT:
We will estimate the time required for the completion of initial investigation of the information system.
GRANTT CHART:
Work breakdown structure:
Risks in development of system
There are risks in the development of the information system, which are:
· The system may result into the loss.
· It takes too much time for the project to turn into profit.
· The cost of the system increases than the predicted amount.
· Little knowledge about the requirements of customer.
· The system may not work according to the requirements of the customer.
· The system could be not built due to lack of resources.
· The system may need more time than predicted.
· The client rejects the system.
· The system may work but it may not become comprehensive enough.
· The system may crash under heavy traffic.
· The system may become complex for the workers to use it.
· The system is not flexible for further modifications (maybe built on hard coding).
Impacts of risks on System
The risks discussed earlier are listed below to figure out the impact of those risks. The
Grading is done from 0-10 scale.
Sr.No
RISKS
POTENTIAL IMPACT
LIKELIHOOD OF OCCURRENCE
DIFFICULTY OF TIMELY ANTICIP-ATION
OVERALL
THREAT
1.
System results into the loss
10
5
2
17
(medium)
2.
It takes too much time to result into profit
10
5
2
16
(medium)
3.
Cost of system increases than expected
5
3
2
10
(low)
4.
Little knowledge about the requirements
10
2
2
14
(medium)
5.
The system may not work according to requirements
10
2
2
14
(medium)
6.
The system couldn’t be build due to lack of resources
9
2
1
12
(medium)
7.
System takes more time than predicted
3
5
5
13
(medium)
8.
Client rejects the system
10
5
7
22
(high)
9.
The system takes more time to work
8
3
5
16
(medium)
10.
The system may crash under heavy traffic
10
5
7
22
(high)
11.
The system gets complex for operators
9
5
2
16
(medium)
12.
The system is not flexible for modifications
5
2
2
9
(low)
Tangible and In-Tangible benefits
· Tangible benefits:
· A better payment procedure may result to the good amount.
· Better and efficient delivery services.
· Customer’s and product’s record.
· Profit and loss analysis.
· Earning a good amount of money than before.
· In-Tangible benefits:
· The customer’s satisfaction.
· Attracting customers to business and new products.
· Easy and sequential way.
Costs of system
Predicted initial cost of the system
Expenses
Amount (Predictive)
Salary of developers
$ 80,000
Equipments
$ 10,000
Development cost
$ 100,000
Total
$ 190,000
Table: 1
Predicted Annual Operating Costs
Expenses
Amount
Training
$ 5,000
Updating
$ 5,000
Total
$ 10,000
Table: 2
Cost-benefit analysis techniques
There are three ways to perform the cost-benefit analysis, which are:
· Payback analysis
· Return of investment analysis
· Present value analysis
Payback analysis:
In payback analysis, you have to figure out the total amount of cost you have to spend on the whole project. To get the total cost on the project, you have to sum up the initial cost with the cost that is going to be needed to spend on the system annually for its maintenance or any other purposes. You have to take maximum 5 years after the installation year to check the profit analysis of project because IT industry is changing day by day and after 5 years this system also needs to be updates with the ongoing technology. This way to find the analysis between cost and benefits is quite easy. But this way, ignores the benefits received after the payback period.
The following table shows the cost-benefit analysis using the payback technique:
· It is calculated (table 1) $190,000 will be total cost for the system.
· It is said that the $80,000 will be the profit for the year when system installed.
· For the maintenance and other purposes, $10,000 will be paid annually (table 2).
· There is consideration that 50% will be the profit per year.
Year
Costs
Cumulative cost
benefits
Cumulative benefits
0
190,000
190,000
80,000
80,000
1
10,000
200,000
40,000
120,000
2
10,000
210,000
60,000
180,000
3
10,000
220,000
90,000
270,000
4
10,000
230,000
135,000
405,000
5
10,000
240,000
202,500
607,500
Cumulative cost = $240,000
Cumulative benefits = $607,500
Return of investment analysis:
Return of investment is second way of finding out the cost-benefit analysis. This technique uses the formula to know the ratio of profit of the system after its implementation. If the ration is in negative numbers, this means this system will end up in the loss else if it’s in positive figure, the system is in profit. The higher the number in positive figure, the better this will be.
ROI = cumulative benefits-cumulative cost
Cumulative cost
PROJECT A:
Total cost= $400,000
Total benefit= $80,000
ROI = cumulative benefits-cumulative cost
Cumulative cost
ROI= 80,000-400,000
400,000
ROI= -0.8%
As, the ROI is -0.8%, this shows that the project A is not beneficial. It will result into the loss of money.
PROJECT B:
Total cost= $80,000
Total benefit= $800,000
ROI = cumulative benefits-cumulative cost
Cumulative cost
ROI= 800,000-80,000
80,000
ROI= 9%
As, the ROI is 9%, this shows that the project B is beneficial. It will be profitable for the client.
Present Value Analysis:
Present value analysis is the best and most accurate method to determine the ratio and probability of profit and loss. It eliminates the flaws of payback method and ROI method. Furthermore, it also deals with the discount factor.
Discount factor is the ratio which predicts that the value of money will not remain the same as it is today. The discount factor will affect profit as well as the cost of the system. If the end result, will be positive after the total PV cost and PV benefits, this means that the system is beneficial even if the value of money decreases.
To find the result between PV cost and PV benefits, this formula is used.
TOTAL PV= PV benefits – PV cost
The following table uses the data of the Information System. It is also predicted that the discount factor will be 9%.
Cost-Benefit Analysis
Description
Years
Cost
0
1
2
3
4
5
Initial Cost($)
190,000
Annual Cost($)
10,000
10,000
10,000
10,000
10,000
Total Cost($)
190,000
200,000
210,000
220,000
230,000
240,000
Discount Factor (9%)
1.00
0.9174
0.8417
0.7721
0.7084
0.6499
PV Of Cost($)
190,000
9174
8417
7721
7084
6499
Total PV Of Cost($)
190,000
199,174
207,591
215,312
222,396
228,895
BENEFITS
Benefit From System($)
80,000
40,000
60,000
90,000
135,000
202,500
Total Benefit($)
80,000
120,000
180,000
270,000
405,000
607,500
Discount Factor (9%)
1.00
0.9174
0.8417
0.7721
0.7084
0.6499
PV of Benefit
80,000
36,696
50,502
69,489
95,634
131,605
Total PV of Benefit
80,000
116,696
167,198
236,687
332,321
463,926
Total PV of Benefit – Cost
-110,000
-82,478
-40,398
21,375
109,925
235,031
NPV = 235,031
This result shows the positive NPV. This positive NPV in this analysis indicates a high feasibility to proceed with this Information System Project.
ASSUMPTIONS
There are different assumptions made in this project which may differ in actual markets. Following are the assumptions made:
· The discount factor will be 9%.
· Equipments cost for the project is considered to be 10,000$. The cost for the equipments may differ in the actual market.
CONCLUSION
The proceedings, initial investigations and findings prove that this Information System will be beneficial for the organization “Grow Your Business”. This project will not just be beneficial in the form of money but it will also bring satisfaction to customers, ease to all the employees, fast and efficient way for the business. This Information System will bring more customers to the farm. It is highly recommended that “Grow Your Organisation” should proceed with this project.
