Behzod Ibrohimov

Cost/Benefit Analysis

Before moving into cost/benefit analysis it is worth looking into the intangible costs and benefits of the new system.

1. Intangible Costs

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     Work overload for some staffs as they will be taking part in system development.
     
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     Might cause server errors as development, testing and day to day work are carried out together.
     
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     Slowing down of customer services due to the fact that employees are involved in an internal project.
     
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     High server load after implementation.
     

2. Intangible Benefits

   • 
     Better communication among departments after system implementation.
     
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     Easy access to information whenever necessary.
     
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     High work efficiency leading to better performance.
     
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     Reduced workload.
     
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     Reduction of paperwork.
     
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     Increasing job satisfaction among employees due to elimination of tedious tasks.
     

3. System Development Cost

Costs Number Hours RF/Hour Subtotal Total

System Analyst	1	40	250	10000
Programmer	3	320	200	192000
Designer	1	32	150	4800
Documentation		120	50	6000
Training	1	2	100	200
Other	4000
Total	217000

4. Payback

The current system incurs lot of cost on managing work. Lot of paper is used and are wasted throughout each year. File storage areas are used and expenses are incurred on small stationary items throughout each year.
This project have been analyzed using the payback method. The new system’s calculations have been carried out for the next 5 year period. The amounts used are estimated figures.
Year 0 1 2 3 4 5

Manual System	-	100000	100000	100000	100000	100000
New System Cost	(217000)	(50000)	(30000)	(25000)	(25000)	(25000)
New System Benefits	-	50000	70000	75000	75000	75000
Outstanding Balance	(217000)	(167000)	(97000)	(22000)	53000	128000

Payback Period = Year of Final Debt + (debt / (debt + next year saving))

= 3 + (22000 / (22000+53000))

= 3 + (22000/75000)

= 3.29 years

Unlike the old system, new system cuts the costs by more than half which results in huge savings for upcoming years of business. The new system cost can be covered under 4 years or less based on the actual costs.

5. Risk Assessment

The new system is going to be used in the organization to automate its own process so there are no marketing risks that comes along with the use of it. Also, the technologies used with the system have been in the market and are being used, so there are no risks of technology that comes when using new products. But there are natural, organizational and technical risks involved in this system.
Risks involved in the project are tabulated with the likeliness of risk arise and how dire the affect or consequence is.

1. Risk Assessment Form

Risk Event Likelihood Impact


Detection Difficulty When

Changing code and not documenting Changes being made to code simultaneously Security Risks Lack of cooperation from Management Resistance to Change Natural Disaster	2	2	3	Coding
	2	4	3	Coding
	3	5	2	Throughout
	1	5	1	Analysis/Design
	2	4	1	Implementation
	1	5	5	Throughout

Low High
1 5

2. Risk Response Matrix

The following form provides how the previously highlighted risks will be dealt with, along with why they occur and what response is taken.
Risk Event Response Contingency Trigger Responsibility of

Changing code and not documenting	Avoid	Leave reminders	Lack of communication among technical staff	Technical Staff
Simultaneous code update	Avoid	Plan a schedule	Multiple coders working on same code	Programmer
Security risk	Retain	Working Offline	Development with outside recruits and working online	Technical Staff
Lack of cooperation from management Natural Disaster	Retain	Negotiate with the management	Management not ready to negotiate	Project Manager
	Share	Seek for resources	If no resources available such as space and equipment	Management
Resistance to change	Avoid	Spread awareness	Employees unwilling to accept new system	Project Manager, Technical Staff

6. Implementation Plan

   1. System testing

1. 
   Verification Testing
   

At early stages of the system development. As developers complete each module, it will be simulated with test data related to the field. For example the module for IT department will be tested with IT related data such as resources used and documents used in that department. As system is build further, the new modules will be tested separately in the aforementioned manner before testing to see if they work well with each other. The developers will continue to correct any errors at this stage for each module.

2. 
   Validation Testing
   

When a module is completed it will be implemented as a working prototype. Companies staff related to the specific departments will be used to test each modules with real information. Feedback from the staff will be collected and any necessary changes are brought to the tested module like additional features or simplifying an existing feature.
Moreover, before finalizing the system another test will be carried out in live environment which will involve all the employees of the company. This test will use a fully working prototype to assess how well the modules work together with each other and much load the system can take at a time. This will help to address system performance. At the end of this test, again, feedback will be collected and taken into consideration before making necessary changes.

3. 
   Audit testing
   

After the abovementioned tests, the system is finalized. Before it is placed into operation a final test is carried out. Which includes IT experts from within and outside the company. System will be pushed to its limits to check how well it performs.

2. Conversion plan

1. 
   Database Installation
   

Currently the Human Resource Department uses MYSQL for its database. The new system will be created within MYSQL. The current tables will be copied to a new database and necessary changes will be made and new tables will be created in this new database as necessary. This is to carry out the project without disturbing the system being used in the HR department. At final conversion staged the HR system will be connected to the new database.

2. 
   Conversion strategy
   

As this system is huge and as the project will take a long period of time, it would not make sense to wait for the project completion to install and use the system. Rather than taking out the current manual system entirely out of the organization, the new system will be implemented to departments separately using staged conversion strategy. As the modules related to the specific department is completed it will be implemented and used within that department. However, this may cause problems at full system implementation stage. These can be small errors that occur while integration which will be solved at that stage.

3. 
   System Acceptance
   

The organization will use the system for its day to day operations to decide whether to accept or reject the system. This system is bound to provide benefits such as improved efficiency and performance in work handling. And as the system will be developed using latest technologies with help of professionals, it is safe to say that the system will be a success.

3.