UNIT-3

 Cost-Benefit Analysis (CBA):

A CBA involves defining the project scope, identifying costs and benefits, assigning
monetary values, calculating the net present value (NPV), analyzing results, and
making informed decisions. It compares the total expected costs against the expected
benefits to determine the project's overall value and feasibility (often in the form of a
ratio).
Understanding cost-benefit analysis:
Cost-benefit analysis compares a project or decision's estimated or projected costs and
benefits. It’s a vital component of project management because it measures a project’s
financial feasibility and helps companies avoid losses. If the analysis shows that the
benefits outweigh the costs, you can assume that the project will be profitable for your
company and that it’s viable to proceed.
In contrast, if the costs exceed the expected benefits, the project is not viable and
should be rejected.
You can use cost-benefit analysis in the following scenarios:
1. System Implementation: Evaluating the costs of acquiring and implementing
new information systems versus the expected benefits, such as improved
efficiency or enhanced data accuracy.

2. Software Upgrades: Analyzing the costs of upgrading existing software versus

the benefits gained from increased functionality, security, and user satisfaction.
3. IT Infrastructure Investments: Assessing the costs and benefits of investing
in hardware and network upgrades to support business operations.
4. Cloud Migration: Weighing the costs of transitioning to cloud-based services
against benefits like scalability, reduced maintenance, and improved
accessibility.
5. Cybersecurity Measures: Evaluating the costs of implementing cybersecurity
protocols versus the potential financial impact of data breaches or security
incidents.
 6. Training Programs: Analyzing the costs associated with training staff on new
systems versus the benefits of improved user proficiency and productivity.
7. Data Management Solutions: Assessing the costs of implementing data
analytics or management systems against the potential for better decision-
making and insights.
8. Business Process Reengineering: Evaluating the costs of redesigning
workflows and processes supported by new information systems against the
benefits of efficiency gains.
9. Customer Relationship Management (CRM) Systems: Analyzing the costs
of implementing CRM systems against potential benefits like improved
customer retention and sales growth.
10. System Maintenance: Weighing the ongoing costs of maintaining current
information systems against the benefits of reliability and operational
continuity.
Using CBA in these scenarios helps organizations make informed decisions about
investments in information systems, aligning technology initiatives with overall
business goals.

 Quantitative and Qualitative Aspects of Cost Benefit

Quantitative data provides a clear picture of the financial costs and benefits of a
course of action. Quantitative data is numerical and can be expressed in graphs and
statistics.

 Cost Measurement: This involves identifying and quantifying all costs associated
with the MIS, including initial setup costs, operational costs, maintenance, and
training expenses. These can be expressed in monetary terms, allowing for
straightforward comparison.

 Benefit Measurement: Benefits can be quantified in terms of increased revenues,

cost savings, improved efficiency, or enhanced productivity. These benefits should be
measurable over a defined time period to provide a clear picture of the return on
investment (ROI).
 Return on Investment (ROI): This is a critical metric derived from comparing the
net benefits (total benefits minus total costs) to the costs. A positive ROI indicates that
the benefits of the MIS outweigh the costs.

 Payback Period: This calculates the time required for the benefits to repay the
initial investment. A shorter payback period is generally more favorable.

 Net Present Value (NPV): This method accounts for the time value of money by
discounting future benefits and costs back to their present value. A positive NPV
indicates that the project is expected to generate more value than it costs.

Qualitative data provides insights into intangible factors such as employee morale or
customer satisfaction. Qualitative data is descriptive and tends to be more subjective.

 User Satisfaction: While harder to quantify, user satisfaction is critical in

determining the success of an MIS. Systems that enhance user experience can lead to
higher adoption rates and better organizational outcomes.

 Strategic Alignment: Assessing how well the MIS aligns with the organization's
strategic goals is essential. A system that supports long-term objectives can provide
qualitative benefits that may not be immediately visible.

 Competitive Advantage: Implementing an effective MIS can provide qualitative

advantages, such as improved decision-making capabilities and enhanced
responsiveness to market changes, contributing to a stronger competitive position.

 Risk Mitigation: A qualitative analysis may include evaluating how the MIS helps
reduce risks associated with decision-making, compliance, and operational
efficiencies.

 Organizational Culture Impact: The introduction of new technology can

influence the organizational culture. A system that fosters collaboration and
innovation can have significant qualitative benefits.
 Assessing the information needs of an organization

Assessing the information needs of an organization is a critical step in ensuring that its
Management Information Systems (MIS) are aligned with its goals and objectives.
Here’s a structured approach to conducting this assessment:

1. Identify Stakeholders
 Engage Key Users: Involve various stakeholders, including management,
department heads, and end-users, to gather diverse perspectives on information
needs.
 Understand Roles: Clarify the roles of different stakeholders to identify
specific information requirements relevant to their functions.

2. Define Organizational Goals

 Align with Objectives: Understand the organization's strategic goals to ensure
that the information systems support these objectives.
 Prioritize Needs: Identify which information is most critical to achieving these
goals and prioritize accordingly.
3. Analyze Current Systems
 Evaluate Existing Information Systems: Assess the effectiveness of current
systems in meeting information needs. Identify gaps, redundancies, and areas
for improvement.
 User Feedback: Gather feedback from users on the strengths and weaknesses
of existing systems.
4. Conduct a Needs Assessment
 Surveys and Interviews: Use surveys and interviews to collect detailed
information from users about their specific information requirements,
frequency of use, and preferred formats.
 Workshops and Focus Groups: Organize workshops to facilitate discussions
among users to identify common needs and challenges.
5. Assess Data Sources
 Identify Data Requirements: Determine what types of data are needed (e.g.,
operational, financial, market) and the sources of this data (internal and
external).
 Data Quality and Availability: Evaluate the quality, accuracy, and
accessibility of the data required to meet information needs.
6. Determine Reporting Requirements
 Format and Frequency: Understand the preferred formats (reports,
dashboards, visualizations) and frequency (real-time, daily, weekly) of
information delivery.
 Decision-Making Needs: Assess how the information will be used for
decision-making and what insights are necessary for effective management.

7. Future-Proofing
 Anticipate Changes: Consider potential future needs based on organizational
growth, market changes, and technological advancements.
 Scalability and Flexibility: Ensure that the information systems can adapt to
changing requirements over time.

8. Documentation and Communication

 Create a Comprehensive Report: Document the findings, including identified
information needs, gaps, and recommendations for addressing them.
 Communicate Findings: Share the results with stakeholders to ensure
alignment and gather additional input.
9. Implementation and Review

 Develop an Action Plan: Based on the assessment, create a plan for improving
or implementing new systems to meet information needs.
 Regular Review: Establish a process for regularly reviewing and updating
information needs to adapt to changing organizational requirements.
 System Concept
 A system is an organized collection of highly integrated parts or subparts to
complete a specific purpose target.
 The system has several inputs which go under certain procedures to generate
particular outputs, all of which fulfill the specified objective of the system.
Three basic concepts of the system:
 The system was created or designed in a such way that to complete specific
predetermined objectives.
 Parts and subparts of the system must have interdependence and
interrelationships among them.
 The goals of the organization always have high priority rather than the goals of
the subsystem.
Characteristics for a System
There are five types of characteristics for a system. Such as,
1. Organization
2. Interaction
3. Interdependence
4. Integration
5. A central objective
ORGANIZATION:

 This implies structure and order.

 It can also be defined as the arrangement of components that help to achieve
objectives.
 For example, Hierarchical system in a company.

INTERACTION:

 This shows the manner in which each component functions with other
components of the system.
 It specifies there should be an interrelationship between every component of a
system.
 For example, the main memory holds the data that has to be operated by the
ALU.
INTERDEPENDENCE

 This means the components of a computer system depend on one another.

 Each component should depend on other components of the system.
 One component depends on the input of another component for proper
functioning.
 The output of one subsystem is the required input for another subsystem.
 For example, A decision to computerize an application is initiated by the user,
analyzed and designed by the analyst, programmed and tested by the computer
operator. None of the persons can perform properly without the required input
from others in the computer center subsystem.

INTEGRATION

 It is concerned with how a system is tied together.

 It is more than sharing physical components or locations.
 It means that components of the system work together within the system even
though each component performs a unique function.

CENTRAL OBJECTIVE

 Systems always have a central goal.

 These goals may be real or stated.
 The important point is that users must know the central objective of a computer
application early in the analysis for a successful design and conversion.

 Types of Systems
Here’s a detailed explanation of some key types: open systems, closed systems,
deterministic systems, and probabilistic systems.
Open Systems
Open systems are characterized by their ability to exchange both matter and energy
with their environment. This interaction allows them to adapt and respond to external
changes, resulting in dynamic and complex behaviors. For example, ecosystems are
open systems that rely on inputs like sunlight, nutrients, and water while releasing
waste and energy back into the environment. Businesses also function as open
systems, engaging with customers, suppliers, and competitors, which influences their
operations and strategies. The adaptability of open systems makes them inherently
more complex, as their behavior can be affected by numerous external factors.
Examples: Ecosystems, human bodies, businesses.

Closed Systems
Closed systems, in contrast, do not exchange matter with their surroundings but can
exchange energy. This means that while the amount of matter within the system
remains constant, the energy can flow in or out, leading to changes in temperature and
pressure. An example of a closed system is a sealed container of gas, where the gas
molecules cannot escape, but the container can still gain or lose heat from its
surroundings. Closed systems are often easier to analyze because they have well-
defined boundaries, but they can still exhibit complex behavior due to the energy
changes that occur within them. Examples: Sealed gas containers, Earth’s
atmosphere.

Deterministic Systems
Deterministic systems are those in which future states are entirely predictable based
on current conditions and the governing laws of the system. Given complete
information about the initial conditions, the outcomes can be calculated with
precision. For instance, the motion of a pendulum follows deterministic rules that
allow its future position to be precisely determined from its current state. However,
these systems can be sensitive to initial conditions; small variations can lead to vastly
different outcomes, a concept explored in chaos theory. This predictability makes
deterministic systems ideal for modeling phenomena in fields like physics and
engineering. Examples: Pendulum motion, projectile trajectory.

Probabilistic Systems
Probabilistic systems, on the other hand, embrace uncertainty and randomness in their
behavior. In these systems, the outcomes are not fixed and can only be described in
terms of probabilities. Factors influencing the system are often unpredictable, leading
to a range of possible outcomes. For example, weather forecasting is a probabilistic
system, where meteorologists use statistical models to predict various weather
scenarios based on numerous variables. Similarly, financial markets exhibit
probabilistic behavior, where the prices of stocks fluctuate due to a multitude of
influencing factors. Understanding these systems requires a different approach,
focusing on statistical analysis and the likelihood of different outcomes rather than
certainty. Examples: Weather forecasting, stock market trends, dice rolls.

 System Development Life Cycle

The System Development Life Cycle (SDLC) provides a well-structured

framework that gives an idea, of how to build a system. It consists of steps as
follows – Plan, Analyze, Design, Develop, Test, Implement and Maintain. Each
phase plays a vital role in ensuring the system is successfully developed, with
System Design being especially critical in shaping the final product.

Stage 1: Planning
The Planning phase sets the foundation for the entire SDLC. This stage involves
identifying the system’s objectives, defining the scope, setting timelines, and
allocating necessary resources. Effective planning ensures that the development
process aligns with the organization’s goals, guiding the project in a clear and
structured direction.
Stage 2: Analysis
In the Analysis phase, the focus is on understanding and documenting the
system’s requirements. This involves gathering input from stakeholders,
reviewing current processes, and identifying the system’s needs. The data
collected forms the basis for developing a system that addresses both user
expectations and organizational challenges.
Stage 3: Design
The Design phase translates the requirements gathered during Analysis into a
detailed technical blueprint. This includes designing the system’s architecture,
database models, user interfaces, and defining system components. The outcome
of this phase provides the technical structure needed to guide the upcoming
development and implementation activities.
Stage 4: Development
In this phase, the actual coding and development of the system take place.
Developers build the system according to the design specifications, implementing
features, creating databases, and writing code. This phase also includes initial
internal testing to ensure the system functions as expected and adheres to design
and functional requirements.
Stage 5: Testing
Testing is a crucial phase that ensures the system is free of errors and functions
correctly under various conditions. This phase includes multiple types of testing,
such as unit testing, integration testing, system testing, and user acceptance
testing. The goal is to identify and fix any issues before the system is deployed.
Stage 6: Implementation
The Implementation phase involves deploying the developed system into a live
environment. Key activities include system installation, migrating data, training
users, and configuring infrastructure. This phase requires thorough planning to
ensure a smooth transition from the existing system to the new one with minimal
disruptions.
Stage 7: Maintenance
Maintenance is an ongoing phase where the system is monitored, maintained, and
updated as needed. This includes bug fixes, performance enhancements, security
patches, and responding to user feedback. Proper maintenance ensures the system
remains efficient, secure, and adaptable to future business needs.

 Prototyping
Prototyping is all about bringing ideas to life. Whether it’s a new product, a piece of
software, or even a process, prototyping is the first step in turning concepts into reality. It’s
like making a rough draft before the final version.

Prototyping is an iterative process of quickly building a simplified version of a product

or system to test ideas, gather feedback, and refine the final solution. It ensures that the
product meets the needs of the user.
The Prototyping Model is one of the most popularly used Software Development Life Cycle
Models (SDLC models). This model is used when the customers do not know the exact
project requirements beforehand. In this model, a prototype of the end product is first
developed, tested, and refined as per customer feedback repeatedly till a final acceptable
prototype is achieved which forms the basis for developing the final product.

Steps of Prototyping Model

Step 1: Requirement Gathering and Analysis: This is the initial step in
designing a prototype model. In this phase, users are asked about what they
expect or what they want from the system.
Step 2: Quick Design: This is the second step in the Prototyping Model. This
model covers the basic design of the requirement through which a quick overview
can be easily described.
Step 3: Build a Prototype: This step helps in building an actual prototype from
the knowledge gained from prototype design.
Step 4: Initial User Evaluation: This step describes the preliminary testing
where the investigation of the performance model occurs, as the customer will
tell the strengths and weaknesses of the design, which was sent to the developer.
Step 5: Refining Prototype: If any feedback is given by the user, then improving
the client’s response to feedback and suggestions, the final system is approved.
Step 6: Implement Product and Maintain: This is the final step in the phase of
the Prototyping Model where the final system is tested and distributed to
production, here the program is run regularly to prevent failures.

-Prototyping Model

Advantages of Prototyping Model

 The customers get to see the partial product early in the life cycle. This
ensures a greater level of customer satisfaction and comfort.
 New requirements can be easily accommodated as there is scope for
refinement.
 Missing functionalities can be easily figured out.
 Errors can be detected much earlier thereby saving a lot of effort and cost,
besides enhancing the quality of the software.
 The developed prototype can be reused by the developer for more complicated
projects in the future.

 Flexibility in design.
 Early feedback from customers and stakeholders can help guide the
development process and ensure that the final product meets their needs and
expectations.
 Prototyping can facilitate communication and collaboration among team
members and stakeholders, improving overall project efficiency and
effectiveness.
Disadvantages of the Prototyping Model
 Costly concerning time as well as money.
 There may be too much variation in requirements each time the prototype is
evaluated by the customer.
 Poor Documentation due to continuously changing customer requirements.
 It is very difficult for developers to accommodate all the changes demanded
by the customer.
 After seeing an early prototype, the customers sometimes demand the actual
product to be delivered soon.
 The customer might lose interest in the product if he/she is not satisfied with
the initial prototype.
 The prototype may not be scalable to meet the future needs of the customer.
 The prototype may not accurately represent the final product due to limited
functionality or incomplete features.
 The prototype may be developed using different tools and technologies,
leading to additional training and maintenance costs.
 The prototype may not reflect the actual business requirements of the
customer, leading to dissatisfaction with the final product.
  End-User Development
End-user development (EUD) is a set of tools, techniques, and methods that allow
users to create, modify, or extend software systems. EUD is important in the software
development life cycle (SDLC) because it helps ensure that the system meets the
needs of the end users.

End-user involvement in the software development life cycle (SDLC) is essential in

order to define the requirements and specifications of the information system (IS)
based on the end-users' real needs and problems. Feedback and suggestions on the
design, functionality, usability, and user experience of the IS can also be provided.
Additionally, end-users can test and evaluate the IS before and after deployment,
report any issues or errors, and support its adoption and use.

Here are some ways that end users can contribute to the SDLC:
 Define requirements
End users can help define the requirements and specifications for the system based on
their needs and problems.
 Provide feedback
End users can provide feedback on the design, functionality, usability, and user
experience of the system.
 Test and evaluate
End users can test and evaluate the system before and after deployment, and report
any issues or errors.
 Support adoption
End users can help support the adoption and use of the system.
 SDLC - Waterfall Model
The Waterfall Model was the first Process Model to be introduced. It is also
referred to as a linear-sequential life cycle model. It is very simple to understand
and use. In a waterfall model, each phase must be completed before the next
phase can begin and there is no overlapping in the phases.

In "The Waterfall" approach, the whole process of software development is

divided into separate phases. In this Waterfall model, typically, the outcome of
one phase acts as the input for the next phase sequentially.
The following illustration is a representation of the different phases of the
Waterfall Model.

The sequential phases in Waterfall model are −

 Requirement Gathering and analysis − All possible requirements of the

system to be developed are captured in this phase and documented in a
requirement specification document.
 System Design − The requirement specifications from first phase are studied in
this phase and the system design is prepared. This system design helps in
specifying hardware and system requirements and helps in defining the overall
system architecture.
 Implementation − With inputs from the system design, the system is first
developed in small programs called units, which are integrated in the next
phase. Each unit is developed and tested for its functionality, which is referred
to as Unit Testing.
 Integration and Testing − All the units developed in the implementation
phase are integrated into a system after testing of each unit. Post integration the
entire system is tested for any faults and failures.
  Deployment of system − Once the functional and non-functional testing is
done; the product is deployed in the customer environment or released into the
market.
 Maintenance − There are some issues which come up in the client
environment. To fix those issues, patches are released. Also to enhance the
product some better versions are released. Maintenance is done to deliver these
changes in the customer environment.

 Spiral Method

The Spiral Model is one of the most important Software Development Life Cycle
models. The Spiral Model is a combination of the waterfall model and the iterative
model. It provides support for Risk Handling. The Spiral Model was first proposed
by Barry Boehm.

In its diagrammatic representation, looks like a spiral with many loops. The exact
number of loops of the spiral is unknown and can vary from project to project. Each
loop of the spiral is called a phase of the software development process.
The Spiral Model is a risk-driven model, meaning that the focus is on managing
risk through multiple iterations of the software development process. It consists
of the following phases:
1. Objectives Defined: In first phase of the spiral model we clarify what the
project aims to achieve, including functional and non-functional requirements.
2. Risk Analysis: In the risk analysis phase, the risks associated with the project
are identified and evaluated.
3. Engineering: In the engineering phase, the software is developed based on
the requirements gathered in the previous iteration.
4. Evaluation: In the evaluation phase, the software is evaluated to determine if
it meets the customer’s requirements and if it is of high quality.
5. Planning: The next iteration of the spiral begins with a new planning phase,
based on the results of the evaluation.

 System Analysis and Design

Systems development is systematic process which includes phases such as planning,
analysis, design, deployment, and maintenance. Here, in this tutorial, we will
primarily focus on −
 Systems analysis
 Systems design
Systems Analysis
It is a process of collecting and interpreting facts, identifying the problems, and
decomposition of a system into its components.
System analysis is conducted for the purpose of studying a system or its parts in order
to identify its objectives. It is a problem solving technique that improves the system
and ensures that all the components of the system work efficiently to accomplish their
purpose.
Analysis specifies what the system should do.
Some of the key aspects of system analysis are:
1. Problem Identification: It involves identifying the issues that the system is
aiming to address. Whether it is automating a business process, improving
 data management, or improving the user experience, understanding the
problem is the first and most important step.
2. Requirements Gathering: Once the problem is identified, the next step is to
gather and write down the requirements. This involves communicating with
the customer and developer to gather information about how the system is to
be designed.
3. Feasibility study: Before going into development, it is important to check the
feasibility of the project. This includes the evaluation of technical,
operational, and financial aspects to determine the feasibility of the proposed
solution.
4. Analysis and modeling: To get a deep insight into the system, analysts
develop various models, such as Data Flow Diagrams(DFD), Use Cases, and
Entity-Relationship(ER) diagrams. These models help the customer to
visualize the system and its interactions.
5. Scope Definition: Defining the scope of the system is important to prevent
adding excessive features to the system and ensure that the project stays
within its limits. It identifies what is part of the system and what is not.

 Systems Design
System design is where the project’s blueprint is created. It involves transforming
the requirements identified in the analysis phase into a visual solution. The main
components of system design are as follows:
1. Architecture design: This phase describes the high level structure of the
system. This includes deciding software and hardware components, their
connectivity with each other and the overall design of the system. Architects
make critical designs ensuring scalability, performance, and security.
2. Database configuration: The design phase includes defining the database
schema, data storage, and access methods. A database programmer ensures
that data is organized correctly, and that the system can retrieve and process
data efficiently.
3. Communication system: Communication controls are important components
of most systems. In this phase, designers create the system’s visual elements
and interactions.
4. Algorithm Design: Complex algorithms are designed in this phase.
Algorithms are the logic or program that makes systems work, and their
efficiency and accuracy are critical.
5. Security: Data security is a major concern in today’s digital world.
Developers must plan for security measures to protect the system and its data,
such as encryption, access control, and threat measures.
6. Test and Maintenance: System plans should also include plans for testing
and validation. The designer must specify how the system will be tested to
ensure that it meets specified requirements and performs as planned.
7. Documentation: Suitable documentation is necessary to maintain the system
and enable future use. During the design phase, documentation should be
created or updated to ensure that the development team and end users can
access the necessary information.

 Systems implementation

System implementation refers to the process of putting a new information system

into operation, ensuring that it functions as intended and meets the needs of the
users. It involves a series of well-defined steps to ensure a smooth transition from
the old system to the new one. Below is a detailed explanation of the system
implementation process:

1. Planning and Preparation: This initial phase involves setting goals, defining
project scope, and gathering requirements. The organization needs to plan
resources, including hardware, software, and personnel required for the
implementation process.

2. System Design and Development: During this phase, the system design is
finalized based on the requirements gathered earlier. The development of the
system involves programming, coding, and customization as per the
organization's specific needs. System testing is conducted to ensure it meets the
desired functionality and quality standards.

3. Training: Training is an essential part of the implementation process and

ensures that the end-users can effectively use the new system. Training programs
are conducted to familiarize employees with the system's features, functionalities,
and processes. Training sessions may include hands-on exercises, workshops, and
user documentation.

4. Data Migration: Data migration involves transferring data from the old
system to the new one. The organization needs to ensure data accuracy, integrity,
and security during the migration process. Data cleansing and validation are
performed to eliminate duplicate or erroneous data.

5. Deployment: In this phase, the new system is deployed into the production
environment. The implementation team installs the hardware, software, and
network infrastructure required for system operation. The deployment process is
carefully planned and executed to minimize disruptions to daily operations.

6. System Testing: After deployment, thorough testing of the system is

conducted to identify any bugs, errors, or performance issues. Different types of
testing, such as functional testing, integration testing, and user acceptance testing,
are performed to ensure system reliability and user satisfaction.

7. Evaluation and Maintenance: Once the system is operational, continuous

evaluation and maintenance activities are performed. Regular system monitoring,
bug fixing, and updates are carried out to keep the system running smoothly. User
feedback and suggestions are gathered to make improvements and enhancements
in the system.