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Early and Complete Insurance Investigation Techniques document sample
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Class 8 – Preliminary Investigation:
Steps 2 - 4, Risk, and ROI
Client Project tasks
Preliminary Investigation
Steps – overview (Fig. 4.6, p. 238)
Risk Evaluation (technique for PI, Ch 4)
ROI (technique for PI, Tech Module F)
Exercise 7:Risk Evaluation for Latinitas
Preliminary Investigation
1. Perform enterprise analysis
2. Determine system objectives,
constraints, goals, risk, requirements,
and scope.
P
3. Evaluate feasibility and obtain approval Preliminary
to proceed. investigation
4. Conduct JAD sessions to confirm
preliminary findings. Document with
prototype or screen shots. A Analysis
User Review
D Design
C Preliminary
construction
Final
construction
System test and
installation
Figure 4.6, p. 238
Cut Over: Put system in production
Risk Management Techniques
Sources of risk for IS projects
1. The organization
2. The proposed system
3. Developer expertise
4. User characteristics
Risk analysis
Risk reduction strategies
Another Question:
Do you like surprises?
Risk Analysis Steps
1. Identify tasks and deliveries
that are risky.
2. Determine risk reduction
strategies to lower the
likelihood of each risk.
Risk Assessment Factors (p.251-253)
1. Organization
A. Clear, stable objectives?
B. Has a strategic Plan for Info Resources (SPIR)?
C. System fits into objectives?
2. Information System
A. Clear requirements ?
B. Structured business process ?
C. Install at only one site? cross functional?
D. Completed in less than three months ?
E. Stable, proven technology ? Or technology too old?
F. Install at one site?
3. Developers
Experienced with chosen development methodology?
Skilled at determining functional requirements?
Familiar with information architecture ?
4. Users
Experienced with proposed application area processes ?
Familiar with systems development process ?
Users and management committed to success ?
Risk Evaluation form (examples p. 70 & 252)
Risk Evaluation form (examples, p. 70, 252)
1st Factor
(3 items)
Risk Evaluation form (examples, p. 70, 252)
2nd Factor
(6 items)
EMS Scheduling Project
This was a project to automate
scheduling of drivers and medical
staff for the City of Austin’s
Emergency Medical Services.
Objectives
Automate scheduling
Alert managers to scheduling conflicts
Staffing reports
Create an electronic scheduling form
Monthly
Schedule
Overtime
Daily Payroll
Trades
Schedule Procedure
Leave
Reports
No Problem.
We can do that.
Now the rest of the story . . .
Training
Monthly Mandatory
OT list Leave
Schedule Data Vacation Reassignments
Continuing
Education Payroll
Overtime Workload
Rule
Daily Payroll
Trades
Schedule Procedure
Leave
Leave
Accrual
Holdovers
City
State
Certification Certification
Reports Callbacks Sick
Leave
Time Cap
Unfilled
Positions
Overtime
Per Shift
OJI
Risk Evaluation form EMS
realized
they needed
a SPIR & hired
consultants.
Goal of DFDs
was to illustrate
problems with
lack of model
requirements or
routine, structured
procedure.
Risk Evaluation form
Items 2 c, d, e
focus on size
& complexity
ASTA example
(p.21)
Managers in 3
departments
received
reports.
The real story:
Comments on
p. 7 by Yolanda
were not made
at the 1st real
meeting. The
team figured out
the problems
later.
Item 2f is related to both 2c & 2e.
Users now likely to all use web browser entry.
Production servers may be at single site.
Item 2e: Will proposed
system use stable,
proven technology?
general adoption
standardization
consolidation
maturation
early adopters
obsolescence
invention-experimentation
time/barriers to entry
Source: Andersen Consulting, Spring 1997 (now Accenture)
general adoption
standardization
consolidation
maturation
early adopters
obsolescence
invention-experimentation
time/barriers to entry
Source: Andersen Consulting, Spring 1997 (now Accenture)
Visual Studio ?
general adoption SAP ?
Oracle db? PeopleSoft ?
standardization Oracle ERP?
consolidation
Siebel CRM ?
Microsoft CRM ?
maturation
early adopters
obsolescence
invention-experimentation
time/barriers to entry
Source of curve: Andersen Consulting, Spring 1997 (now Accenture)
Source of tools in red: comments for discussion
“Managing Business Risk of IT”
“I think we need to prepare
ourselves to be surprised, and
surprised again and again.”
--Tech Services manager,
manufacturing company
Risk Evaluation form (figure 1,page 58)
3rd risk factor
(3 items)
Questions about your client project team
Think about your client and your team
Q1: What is the answer to item 3a: Are [the
developers] experienced in chosen
methodology?
Q2: What is the answer to item 3b: Are they
skilled at determining functional requirements?
Risk item 3c. Are the developers familiar with technology and
information architecture [of proposed] system?
really any input device.
RFID
The Fashion Genie Solution Chip
An integrated system of standardized hardware and
proprietary software that emphasizes functionality and
usability.
2. Client create
message and t
electronically. XM
used for the messa
standardized a
<xml-message>
<gender>f</ge
<size>4</size
<sku>3cw32<
Scan Fitting Room Monitor Wireless handheld Sales staff brings
<rfid>234092<
customer device receives item item in </xml-message
• Displays
card and information appropriate size
complementary items
bar code
• Consumer selects
Message -Requ
items
5. If required, respo
sent back to client d
The Magic not have to be sam
initiated the
of the Fashion Genie
Improves Gathers Data on
Increases Sales
Customer Consumer
per Customer
Experience Buying Patterns
Fashion Genie
Conceptual Architecture
Scan Customer
Scan Item Select Item(s)
Presentation Card
Layer
viewProfile viewMatches displayStatus
Application
Layer getCustProfile findMatches checkInventory idTargets
External Runner
Application Application
Layer
Data Customer Product Inventory FG Data
Layer Profile DB DB DB Warehouse
Risk Evaluation form (figure 1,page 58)
Risk Evaluation form (figure 1,page 58)
Risk Analysis Steps
1. Identify tasks and deliveries that
are risky.
2. Determine risk reduction
strategies to lower the likelihood
of each risk.
Risk Evaluation for a Quoting Website and Sales
Database System for Torres Insurance (Fig. 4.13, p. 252)
Factors Affecting Project Risk Rating Comments
*
Characteristics of the internal user (Gail Torres)
4. a. Have business-area Gail understands her current
experience? process but has only vague ideas
0
about how to improve processes.
b. Have development -1 No experience working with any
experience? developer.
c. Is committed to the +1 Yes and has adequate time for
project? working with developer to provide
feedback.
5. Characteristics of 0 Gail has found that most of her clients
external users know little about insurance options.
a. Have business area
experience
b. Have relevant computer 0 Current clients are older and most are
experience not web users.
Risk Summary
All projects have risk
You may not meet the criteria expected –
cost/benefit, number of resources, time, etc
You may not achieve established goals –
functionality or scalability or commitment
Risk occurs in proportion to the scope
of the project
The key is to identify and manage the
risks.
5 Categories of Feasibility
1. Organizational and Cultural
2. Technological
3. Schedule
4. Resource
5. Economic
Cost/benefit analysis and ROI
Sources of funds (cash flow, long-term
capital)
p. 253 - 256
Organizational and Cultural Feasibility
Each company has own culture
New system must fit into culture
Evaluate related issues for potential risks
Low level of computer competency
Computer phobia
Perceived loss of control
Shift in power
Fear of job change or employment loss
Change of established work procedures
Technological Feasibility
Does system stretch state-of-the-art
technology?
Does in-house expertise presently exist for
development?
Does an outside vendor need to be involved?
Solutions include:
Training or hiring more experienced employees
Hiring consultants
Changing scope and project approach
Schedule Feasibility
Estimates needed without complete
information
Management deadlines may not be realistic
Project managers:
Drive to realistic assumptions and estimates
Recommend completion date flexibility
Assign interim milestones to periodically
reassess completion dates
Involve experienced personnel
Manage proper allocation of resources
Resource Feasibility
Team member availability
Conflict matrix—use Outlook, Google calendar,
Basecamp
Tool: http://www.doodle.ch/
Team skill levels
Computers, equipment, and supplies
Support staff time and availability
Physical facilities
Economic Feasibility
Cost/benefit analysis (CBA)
Estimate project development costs
Estimate operational costs after project
Estimate financial benefits based on
annual savings and increased revenues
Calculate CBA using complete list of costs
and benefits
CBA uses net present value (NPV),
payback period, return on investment
(ROI) techniques
Intangibles in Economic Feasibility
Intangible benefits are harder to quantify
in dollars
Increased levels of service
Customer satisfaction
Survival
Need to develop in-house expertise
Intangible costs are harder to measure
in dollars
Reduced employee morale
Lost productivity
Lost customers or sales
Mindscape Costs and Benefits
Development Costs Operational Costs
Development team salaries Software Upgrades
Consultant Fees Software licensing Fees
Development Training Hardware fees (hosting, utilities,
Hardware and Software etc)
Vendor Installation Hardware Repairs, Upgrades
Office Space and Equipment Operational Team Salaries
Data Conversion Costs User Training
Tangible Benefits Intangible Benefits
Increased Sales Increased Market Share
Reductions in Staff or avoidance of Improved Morale
hiring – Net 2 people Higher Quality Products
Reductions in Inventory – better Improved Customer Service
control Better Supplier Relations
Improved Mgmt Report
Better Collection efforts
Steps to Conduct Economic Feasibility
1. Identify Costs and Benefits
2. Assign Values to Costs and Benefits
3. Determine Cash Flow
4. Determine Net Present Value
5. Determine Return on Investment
Return on investment = (Benefit –
Cost)/Cost * 100%
1. Identify Costs and Benefits
Development Costs Operational Costs
Development team salaries Software Upgrades
Consultant Fees Software licensing Fees
Development Training Hardware fees (hosting, utilities,
Hardware and Software etc)
Vendor Installation Hardware Repairs, Upgrades
Office Space and Equipment Operational Team Salaries
Data Conversion Costs User Training
Tangible Benefits Intangible Benefits
Increased Sales Increased Market Share
Reductions in Staff or avoidance of Improved Morale
hiring – Net 2 people Higher Quality Products
Reductions in Inventory – better Improved Customer Service
control Better Supplier Relations
Improved Mgmt Report
Better Collection efforts
2. Assign Values to Costs and Benefits
Benefits
Increased sales 500,000
Improved customer service 70,000
Reduced inventory costs 68,000
Total Benefits
638,000
Development costs
2 servers @ $125,000 250,000
Printers 100,000
Software licenses 34,825
Server software 10,945
Development labor 1,236,525
Operation costs
Hardware 54,000
Software 20,000
Operational Labor 111,788
Total costs
1,818,083
3. Calculate those values over time
2003 2004 2005 2006 2007 Total
2 Servers @ 125,000 250,000
Printers 100,000
Software licenses 34,825
Server software 10,945
Development labor 1,236,525
Total Development costs 1,632,295
Hardware 54,000 81,261 81,261 81,261 81,261 not adjusted for inflation
Software 20,000 20,000 20,000 20,000 20,000
Operational labor 111,788 116,260 120,910 125,746 130,776
Total Operational costs 185,788 217,521 222,171 227,007 232,037
Total Costs 1,818,083 217,521 222,171 227,007 232,037
PV of costs 1,765,129 205,034 203,318 201,693 200,157 2,575,331
PV of all costs 1,765,129 1,970,164 2,173,481 2,375,174 2,575,331
Increased sales 500,000 530,000 561,800 595,508 631,238
Reduction in customer complaint calls 70,000 70,000 70,000 70,000 70,000
Reduced inventory costs 68,000 68,000 68,000 68,000 68,000
Total Benefits 638,000 668,000 699,800 733,508 769,238
PV of Benefits 619,417 629,654 640,416 651,712 663,551 3,204,751
PV of all benefits 619,417 1,249,071 1,889,487 2,541,199 3,204,751
Total Project Costs less Benefits -1,180,083 450,479 477,629 506,501 537,201
Yearly NPV -1,145,713 424,620 437,098 450,020 463,394 629,419
Cumulative NPV -1,145,712 -721,092 -283,994 166,026 629,420
Return on Investment 24.44% (629,4219/2,575,331)
Break-even 4.63 (break-even occurs in year 4, 450,019 - 166,026 / 450,019)=.63
Non-Profit ROI Example
Assumptions for Non-Profit Client
IT team (MIS 374) work donated per semester
Our team consists of 5 members working 1 hour per day over a period of 90 days (the
duration of our project according to our project plan)
5 team members * 90 days * 1 hour/day * $15/hour = $6750
Each team member could earn at least $15/hour at an undergraduate IT consulting
internship
One future team will also donate time in updating the CRM system in 2007
Donation amounts will increase by 30% yearly, while number of
donation transactions will increase by 50% yearly:
Year Number of donators Donation amount
2006 5 $500
2007 8 $650
2008 11 $845
2009 17 $1098.50
Cost Calculations
Website registration at $10 flat fee yearly
Additional server space required at $150 yearly
PayPal charges $0.30 + 2.9% fee per transaction
Costs Hourly Rate Hours Initial Costs Annual Costs
Software monthly fees
(KMailer) ($99.95)
Server space, domain name, & SQL
license (1and1) ($179.88)
Website template ($49.00)
Topaz ROI
Short-Circuit Consulting Front-end
system development
StudentBB $0.00 122.33 $0.00
StudentDD $0.00 117.75 $0.00
StudentLL $0.00 108.25 $0.00
StudentRR $0.00 114.5 $0.00
Operational Costs
Administrator Staff $20.00 8hrs/week ($800.00) ($8,000.00)
Technical Staff $20.00 8hrs/month ($1,920.00)
Total ($849.00) ($10,199.83)
1000
Revenue 50 Clients 500 Clients 2000 Clients
Clients
Average Revenue $20/client/month $12,000 $120,000 $240,000 $480,000
From our preliminary calculations, Topaz Software should realize a break-even point at 72 clients
averaging $10 per month contracts. This is excluding overhead costs and fees normally
associated with system development. The client decided to change email clients.
Additionally, Topaz’s pricing structure changed increasing revenue.
Preliminary Investigation
Techniques
1. Goal Analysis
2. Cost/Benefit Analysis--ROI
Goal: Evaluate feasibility and
obtain approval to proceed
Preliminary Investigation–Review & Final step
1.Perform enterprise analysis
2.Determine system objectives, project
constraints, scope and goals
3.Evaluate feasibility and obtain
approval to proceed
4.Conduct JAD session(s) to confirm
preliminary findings
Conduct JAD session(s) to Confirm Preliminary Findings
Joint Application Design (JAD) - Developers
and Users meet
Executive sponsor
End user and management
External users (sometimes)
Development team members & management
Joint Application Design Facilities
Conducted in special room
Limit interruptions
May be off-site
Resources
Overhead projector, white board, flip charts, work
material
Electronic support (Laptops)
CASE tools, meeting facilitation tools
A JAD Facility
Joint Application Design Participants
Session leader trained in group dynamics
and JAD group facilitation
Knowledgeable business and system users
Policy making managers
Technical staff representatives to handle:
Computer and network configurations
Operating environments
Security issues
Project team members
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