Saturday, December 1, 2012

Overview of Feasibility Analysis

Since I have mentioned previously about planning in Difficulty of Wise Planning and its Importance, I think it is reasonable to write about what I have learned about feasibility analysis through the reading of System Analysis and Design with UML in this post since both the process of planning and feasibility analysis are sequential and closely related.

What is Feasibility Analysis?

According to the built-in dictionary of Mac OS X, the word feasibility means

the state or degree of being easily or conveniently done: the feasibility of a manned flight to Mars.

This implies that 'Feasibility Analysis' could be something like the process of analyzing the feasibility of doing something. According to the book System Analysis and Design with UML, 4th Edition, it says,
The feasibility analysis is there to guide the organization in determining whether or not to proceed with a project.
So, assessing whether the project plan that the company or a group within the company created is possible to attain its goal or not is the main purpose of feasibility analysis. In order to determine the final decision of whether to proceed the project by injecting company's money into it, the feasibility analysis tries to analyze how feasible the project will be by evaluating 3 different types of feasibilities:
  • technical feasibility
  • economic feasibility
  • organizational feasibility

Technical Feasibility

Technical feasibility assesses wether there is any risks or concerns related to anything technical along the way to proceed the project. For example, as this book suggests, companies can assess technical feasibility by asking themselves "Can we build it?". The question certainly examines whether the company has sufficient skills, knowledge and a capacity of the technologies that are used for the project. In addition to that, companies can also consider is the technology appropriate for the project, reconfirm the necessity of the technologies that they are about to use, whether users or developers are already familiar with this technologies, and so on.

The book gives us some of the examples of how to apply technical feasibility analysis:

  • compare with other projects that have already done within the organization
  • ask for IT professionals whether the project is possible to successfully complete

Economic Feasibility

While technical feasibility focuses on technical risks, economic feasibility, also called as cost-benefit analysis, focuses on mainly financial risks. Companies assessing economical feasibility ask a question like "Should we build it?" while considering its financial factors such as costs and benefits that the project will produce. Assumedly companies would not want to proceed the project if they can assume that costs of it will exceed benefits they can obtain. The book specifically states the process of assessing economic feasibility as
"identifying costs and benefits associated wit the system, assigning values to them, and then calculating the cash flow and return on investment for the project."

The book also mentions with regard to economic feasibility; it suggests that the more the expensive the project will be, the more effort and carefulness that companies should put into their economic feasibility. This is because expensive project simply implies that the big risk that companies have to bear and be aware of.

Organizational Feasibility

The last one, organizational feasibility allows companies to check and see if the outcome of the project, most likely applications, serves, or tangible products, will be helpful to attract more users or customers. The difference between economic feasibility and organizational feasibility is the meaning of benefit -- more actually money, or more users or customers. Thus, the best question to assess organizational feasibility is "If we build it, will they come?"

Not only future users or customers, but organizational feasibility also concerns how existing users or customers will benefit from the project. This means that companies can make sure whether the outcome of the project will create better environment for the user to be more familiar with other products or services, and the company itself. I personally thought that requires somewhat of connections or the brand impression between the project outcome and existing services, products, and the company itself must be shared in common. So that the existing customers or users of the company's business will like the company and be more familiar with it and its business.

Feasibility Study

The overall analysis and the result of those three different kinds of feasibilities above will be combined together eventually and called Feasibility Study. (In fact, in the real world, there a lot more to concern not just what I have explained in here..) This overall conclusion of the analysis will be given to the approval committee at the end of project initiation, and the final decision of whether the company should proceed to the project or not will be made.

Personal Review From the Reading

Through the reading of the section feasibility analysis from System Analysis and Design with UML, I simply thought that there are a lot of things that companies need to consider and be careful about before trying to move forward by doing some new projects and so on. As I will be working as an employee after I graduate from the university, it helps me have an image of how I feel or have to be aware of when I start working there, as it is not just simple as I was just randomly guessing and imagining a lot of things about working in real life from the outside of companies, as a student. Responsibilities, profits, costs, end-users, customers, usabilities, and more... I felt it is just so much to think about and carefully consider before making an action, and I realized that that is the real life, and therefore creating innovations or anything that changes people's ways of living is just so amazing and very far away from just 'good' result.

1 comment:

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