CHAPTER 4 SYSTEM EVALUATION AND CHOICES

1. INTRODUCTION

1.1. To assess the system to see if it does what it was supposed to do, that it is working well, and that everyone is happy with it.

1.2. All decisions arise from a process of evaluation, either explicit or implied. The process of valuing an option by balancing its benefits against its costs. Furthermore decisions arise throughout the development life cycle as and when options are identified.

2. FIXED OR VARIABLE COSTS AND BENEFITS

2.1. Some costs and benefits remain constant, regardless of how a system is used. Fixed costs are considered as sunk costs. Once encountered, they will not recur.

2.2. Variable costs are incurred on a regular basis. They are generally proportional to world volume and continue as long as the system is in operation.

2.3. Fixed benefits also remain constant by using a new system, if 20 percent of staff member are reduced, we can call it a fixed benefit. The benefit of personnel saving may occur month. Variable benefits, on the other hand, are realized on a regular basis.

3. DIRECT OR INDIRECT COSTS AND BENEFITS

3.1. Direct costs are those which are directly associated with a system. They are- applied directly to the operator. Direct benefits also can be specifically attributable to a given project.

3.2. Indirect costs are not directly associated with a specific activity in the system. They are often referred to as overhead expenses. Indirect benefits are realized as a by-product of another system.

4. PURPOSE OF SYSTEM EVALUATION

4.1. Evaluation is the process by which we decide whether or not to purchase or commit ourselves to something. Evaluation activities are by definition decisive periods in the life of any high tech project.

4.2. Formally the SDLC describes evaluation as a separate phase and activity, practically however evaluation takes place continuously, albeit with a shift in frequency, formality or emphasis.

4.3. This is a plethora of tools available to make optimal financial decisions based on the premise that significant aspects of the system can be monetized.

5. COST-BENEFIT ANALYSIS IN AIS DEVELOPMENT

5.1. Costs vary by type and consist of various distinct elements. Benefits are also of different type and can be grouped on the basis of advantages they provide to the management.

5.2. Cost-savings benefits lead to reduction in administrative and operational costs. A reduction in the size of the clerical staff used in the support of an administrative activity.

5.3. Cost-avoidance benefits are those, which eliminate future administrating and operational costs. No need to hire additional staff in future to handle an administrative activity.

5.4. Improved-service-level benefits are those where the performance of a system is improved by a new computer-based method.

5.5. Improved-information-benefit is where computer based methods lead to better information for decision-making.

6. EVALUATION CRITERIA AND EVALUATION METHODS

6.1. Efficiency

6.1.1. - measure speed of operation - measure total output over a given time - monitor staffing levels to see if fewer staff were needed

6.2. Effectiveness

6.2.1. - survey customer opinion of output - make subjective ("qualitative") judgements of product quality - monitor complaints from customers - monitor customer helpline enquiries about poor or good performance

6.3. Cost

6.3.1. - add up costs, income benefits - compare current year's system costs to date with previous year

6.4. Accuracy

6.4.1. - monitor customer complaints - monitor customer email related to errors or failures