Likewise benefits, there are tangible and intangible costs are involved in developing and maintaining the proposed system. The costs are listed as following:
9. Feasibility Assessment
9.1 Economic Analysis
There are numerous tangible and intangible benefits. Those benefits are list as following:
Tangible Benefits
o Increased speed of activity
o Sales opportunities can be quickly identified and the appropriate point of
contact can be notified in a timely manner
o Quick identification of sales on the verge of being lost
o Automation of the follow-up process
o Increased communication throughout the sales pipeline
o Improvement of management planning and control
a Management can identify unproductive branches or relationship managers
o Users can generate a wide array of reports
o More efficient planning for the sales and marketing functions
o Opening new markets and increasing sales opportunities
o Identifying potential sales leads/referrals earlier in the sales process in
order to increase the success rate of the sale
o Enhanced management of human resources
o Age sales leads and referrals, so as to prevent lost sales
Intangible Benefits
o Increase in competitiveness
o More timely information
o Better information
o Improved account management
o Improved resource management
o Increased leveraging ability
Likewise benefits, there are tangible and intangible costs are involved in developing and maintaining the proposed system. The costs are listed as following:
Tangible Costs
o Initial labor costs
o Development costs
o Implementation costs
o Software
o Hardware
o Technical training of employees
Intangible Costs
o Employee adaptation to new system
o Employee response to new technology
o Employee reaction to performance analysis
9.1.1 Financial Summary
Revenue Increases:
The company is estimated to lose approximately $2.5 million in sales each year due to the lack of mechanism to generate and handle sale leads/referrals. It is estimated with LTRS the company will have a decrease in lost revenue by 15% the first year, 35% the second year, 40% the third year and 50% in the forth and fifth year. There will not be any significant changes in the first year as the new system is still at its infant stage. It will take some time before the users get familiar with the new system. As they get comfortable, they could then reap the full benefits from the new system.
Non-recurring Costs:
Non-recurring costs include all costs associated with researching, designing, developing, and implementing LTRS. Below is a breakdown of the associated costs. All costs are lumped into categories and summed for the entire project.
HARDWARE
Workstations $10,500
Servers (Database/Web Servers)$47,000
Networking equipment $90,000
Communication eauit3ment $29,000
SOFTWARE
Development Software $25,000
Database software $10,000
LEGAL PROFESSIONAL/CONSULTING $60,000
USER TRAINING $36,700
GENERAL AND ADMINISTRATIVE $32,200
RESEARCH AND DEVELOPMENT $7,800
REQUIREMENT DOCUMENTATION $4,500
TOTAL NONRECURRING COSTS $352,700
Recurring Costs:
SYSTEM MAINTENANCE
APPLICATION SOFTWARE MAINTENANCE $60,000
DATABASE STORAGE EXPENSE $10,000
COMMUNICATIONS $9,300
CONTINUED TRAINING $16,000
GENERAL AND ADMINISTRATIVE $21,300
$75,000
TOTAL RECURRING COSTS $191,600
The above costs and benefits are combined into the cost-benefit analysis below.
The project is a worthwhile venture because it provides a Net Present Value return of $2.8 million over a five-year period.
| year O | year 1 | year 2 | year 3 | year 4 | year 5 | |
| Economic Benefits | $0.00 | $375,000 | $875,000 | $1,000,000 | $1,250,000 | $1,250,000 |
| Initial Cost | $352,700 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Recurring Cost | $191,600 | $191,600 | $191,600 | $191,600 | $191,600 | $191,600 |
| Total Cost | $544,300 | $191,600 | $191,600 | $191,600 | $191,600 | $191,600 |
Old vs. New Costs
| 0 | 1000 | 2000 | 3000 | 4000 | 5000 | |
| Old system | 0 | $200,000 | $400,000 | $700,000 | $1,000,000 | $1,200,000 |
| New system | $544,300 | $640,000 | $750,000 | $850,000 | $950,000 | $1,050,000 |
9.1.2 Break-Even Analysis
9.1.3 Payback Analysis
9.2. Technical Analysis
There are four primary areas to analyze when assessing technical risk: project size, project structure, the development group’s experience with the application and technology area, and the user group’s experience with development projects and application area.
LTRS is a relatively small sized project. It will be implemented into the corporate intranet for a select group of key personnel – corporate strategist, marketing strategist, regional operational managers, branch managers, and relationship managers. All functionality will be geared to the internal user, thus, limiting the size and scope of the project. The current XYZ IT staffs and the XYZ web development team are sufficient to cover the LTRS project. The only possible need for increased staffing would be in the programming department. We feel two additional programmers would be the most that would be required.
XYZ has given the LTRS project top priority. All key personnel will act as subject matter experts. They have been informed that they will be completely assessable, for their input is of the utmost importance in developing the LTRS project. We feel this is sufficient to define the project structure.
The technology to be used for LTRS is fairly standard. MS Access will be used as a DBMS and Visual Basic will be used for application language. As already mentioned, it will be incorporated into the existing corporate intranet. Thus, the same equipment currently being used for other XYZ web-based systems, will also be used for the LTRS system, i.e., networks, web servers, file servers, application software, etc… We expect very low risk as far as technology goes.
9.3. Operational Analysis
The problem XYZ hopes to solve with LTRS is the loss of sales because of inattentiveness towards leads and referrals. The system is designed to identify the weak points in the sales process so key personnel can take measures to strengthen these weaknesses. It will take time to learn how to properly use the system to identify these weaknesses. However, LTRS is fairly straightforward because the system uses GUI and button oriented navigation method; we perceive no inordinate amount of operational risk. Below are some examples of how the system will be used to do this.
Branch managers and relationship managers will be notified of any leads or referrals that have spent an inordinate amount of time at any point of the system. This aids branch managers in decreasing lost sales due to lack of contact. In essence, the follow up process is being automated.
Regional managers will have the ability to generate reports that provide insight into the performance of branches and relationship managers. Regional managers can then identify weaknesses and act accordingly.
Executives in the planning and marketing functions can use LTRS in the planning and/or marketing functions. For instance, reports can be generated to show the success rate of new leads by region, branch, etc… Another example of functionality includes the ability to identify bottlenecks in the sales process.
With the moderate office culture and politics, the possible new changes as a result of the new system will not affect the company significantly. Moreover, users have a similar perception of the problems, making adoption and implementation virtually easier. Also, employees are clear of their responsibility and therefore they will be ready for the new change.
Users will definitely be incorporated into the development process. As mentioned above, all key personnel will be relied upon as subject matter experts.
We do this in hope of designing the system to the specifications of the users. To alleviate any unforeseen risks, mandatory training will be provided to push users to use the system.
Since LTRS is an efficient tool to track lost sales, lost contacts, and identify prospects, all XYZ personnel still work on their daily tasks. It doesn’t replace anyone’s responsibilities so no reduction in workforce is expected. LTRS will be implemented on a partial basis – in the Southwest region (Texas and Oklahoma).
All testing, quality assurance, and training programs will be implemented on the same partial basis. We have chosen a partial implementation in order to get a feel for how the system should be presented to the rest of XYZ Financial. The system will be available over the corporate intranet, but we will limit access based on the implementation schedule. The system will be tested for a minimum of one month before implementing the rest of LTRS.
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