PRIOR CONSIDERATIONS TO EVALUATE THE CHOICE OF A TEAM
What should we evaluate to select a team?
First of all, the architecture of the team that we analyze, this involves evaluating which architecture is best suited for processing the applications that we plan to develop in our future team.
At this point, we must evaluate the philosophy with which the computer was built and the technical orientation of its components, in relation to the type of processing for which it was originally intended.
According to the philosophy of its construction, the processing can be: centralized, decentralized or distributed, and according to the size of some companies, a mixture of them.
Each of these philosophies aims to solve the different problems that a Company may face, in relation to data processing, and in turn, they contemplate the political guidelines with which each Company faces the resolution of its problems.
As we can see, computer equipment covers a wide spectrum in terms of business problems, and this is so, because in this way, equipment suppliers ensure greater market penetration.
Each philosophy establishes a design or construction architecture for each device of the “machine”, and it is based on these guidelines that the size, capacity, speed, etc., of each component of the system are determined.
For these reasons, it is essential to know the Company's “problem”, before starting the technical evaluation to define the philosophy, architecture and type of processing to be used.
For this reason, it will be necessary to know and understand the particularities of the "Business" of the Company, which will also avoid deviations in the characterization of its problems due to theoretical considerations outside its context.
On the other hand, the reasons why the Company decides to invest in computer equipment must be analyzed. These might be:
1) For being in expansion stage
2) For anticipating a future stage of expansion
3) Due to being in a recession stage (Critical need to reduce costs)
In the first two cases, the development of systems is linked to the development of the Company, for this reason, it invests in computing.
In the third case, the investment in computing is part of an "Austerity Plan" and then, only the immediate savings justifies it.
It can be seen that, in each case, the restrictions on the project act differently, and are a critical condition both for defining the configuration and for dimensioning the installation, although in all three cases we are facing a “Feasibility Study for incorporate a computer ”.
Generally, it is usually thought that the design of an installation configuration only depends on the volume of information to be processed, and that once this variable has been quantified, the person in charge of the project decides how many terminals, printers, etc., it needs.
Without a doubt, this is a serious error, since the volume of the information, as a parameter, affects the evaluation of the speeds of each device and the way of storing the data, but does not determine the design of the configuration., which will necessarily be conditioned by the policies that frame the project.
As we have seen, the configuration must contemplate the political aspects that condition it, the volumes, speeds and capacity of the devices, and finally the technical aspects related to hardware and software.
The complexity of evaluating an investment project, such as taking a computer, imposes the use of a methodology that establishes a work discipline that allows the planning and control of the project, facilitates the assignment of tasks and improves estimates, and in short, it allows us to reduce risk.
In the present work a methodology is formulated to carry out a Feasibility Study for the taking of a computer that contemplates the aforementioned aspects, although this is not the only investment project in computing that will require to be evaluated, the following can also be given cases:
- Replacement of the current computer Restructuring of the systems area Partial revision of the installation Processing of certain applications Specific applications (Robotics, Expert Systems, etc.)
In each case, the stages and phases of the methodology should be evaluated, but the common denominator will be that the Feasibility Study aims to transform a risky act of investment into a calculated risk decision.
The absence of a methodology is due more to the lack of appreciation of the risk involved, than to the difficulty of its formulation and subsequent execution.
ESTABLISH THE STRATEGY
THE BUSINESS STRATEGY
As we have seen, it is essential to know the problem of the Company, the peculiarities of its Business and the reasons that drive it to study the Feasibility of an investment project in informatics.
All these aspects and the estimates on the evolution of the Business are contemplated in the global strategy of the company and it is this that defines the policies that condition the project.
The fluctuations of the market, the competition, the volume of the demand, the analysis of the product or service that the Company provides, among others, determine essential factors to define a Business strategy, which considers, for example, the investments to be made for the medium and long term, its volume and specific items; factory re-equipment, use of state-of-the-art technology, development of new brands and products, broadening their market share, business diversification possibilities; improve the operational office, enter foreign markets, etc.
Based on the analysis of the current situation of the Company and the evolution of its operations, strategic Business alternatives will be formulated, which after being evaluated will allow establishing the Business objectives in the medium and long term, within the framework of a strategic plan.
The evaluation of a computer investment project, such as the taking of a computer, cannot be based exclusively on the current information needs of the Company, since an important part of the problem would be being avoided, therefore, the evaluation of the situation. The current situation of the Company as a restriction for the development of the project must be confronted with the vision that the organization has of its problems and the courses of action that it defines based on a strategic plan, which means analyzing the information needs based on the objectives. Business and strategy.
To this end, long-term plans should be reviewed and their possible data processing requirements evaluated.
To summarize this phase, we can say that it will be necessary:
- Evaluate the current situation of the Company as a restriction for the development of the project. Analyze information needs based on Business objectives and global strategy. Review the medium and long term plans. Establish the scope of the project.
DEVELOP SYSTEMS STRATEGY
With the same criteria with which a Business strategy is developed and a Strategic Plan is drawn up, it will be necessary to establish a systems strategy that covers both current and medium and long-term information needs.
There is no a priori recipe for developing the strategy of an organization, and although we can talk about general aspects, determining the weight of each variable is part of the study that is necessarily associated with the problems of each company.
Below, we detail some of the aspects to consider, although as we have mentioned, they lack universality and only serve as a reference.
HARDWARE STRATEGY
- Establish global requirements Establish the philosophy of processing Define architecture Guideline growth for the medium and long term Guideline scope of processing in the nodes, in case of distributed processing Define degree of technical sophistication
SOFTWARE STRATEGY
- Define choice: Internal development of systems vs. Acquisition of packages Establish criteria to set priorities in the development and installation of systems Guide internal development of systems Establish criteria for the acquisition of pre-planned systems Establish guidelines for the development of methodologies Guide development of basic software Establish guidelines to determine endowment affected development, systems installation and maintenance Establish basic system documentation requirements
DATA COMMUNICATION SYSTEMS
- Establish the scope of the system Define the use of the Teleprocessing architecture Specify the information systems affected Establish global requirements Establish guidelines for the design of the communications network Guide the scope of the processing in the network nodes
OFFICE AUTOMATION
Establish global requirements on:
- Text Processing Email Modeling Systems Personal Computers Notebooks Etc.
SUMMARY THE SYSTEMS STRATEGY
Finally, the systems strategy must be summarized, documenting the Business objectives, their implications for systems, as well as the results of the General Survey.
TECHNICAL FEASIBILITY
PRELIMINARY EVALUATION
In order to design the equipment configuration, it will be necessary, in advance, to size the installation, that is, to establish the number of devices, their capacity and speeds for each type of process, according to the requirements of the applications to be processed, as well as, define the type of peripheral devices to configure.
These elements must be evaluated within the framework established by the Systems Strategy regarding the philosophy of processing and architecture of the groups, development of base and application software, data communication systems and office automation.
In order to size the installation, it will be necessary to know the volumes by type of operation, file size, level of activity on them, number of characters by type of document to process, annual growth in the volume of operations and files, and type of processing for each application, in such a way that the capacity and form of data storage can be defined.
Having this information supposes the a priori knowledge of the information systems whose computerized functions will be processed in the new equipment, and although the Software strategy may define criteria for the allocation of priorities in the development of systems, and even the modalities of prosecution; it is difficult to elucidate the drawbacks of sizing the installation.
Therefore, it will be necessary to carry out a Survey that allows gathering the information indicated above.
To this end, the following Business activities and functions must be disclosed, among others:
Production
- Characteristics of the production line Planning (Production plans, supply, etc.) Production scheduling Inventory management and administration Inventory control Raw materials Production in process Spare parts and materials Industrial costs Consumption analysis Labor quality control Industrial engineering (Methods, times and efficiency control) Production management Plant maintenance (Maintenance plan, costing of work orders, etc.) Development of new products (Prototypes and specifications) Accounting requirements for production
Purchase Management
- Issuance of requisitions Purchasing Plan Activation Reception Control Purchasing-suppliers circuit
Commercialization
- Distribution channels Orders-billing Sales plan Market research Brands and new products Statistics and management reports Mailing
Administration
- General accounting Suppliers Debtors-billing Cash-banks Projection of payments and collections Financial planning Fixed assets (Fixed Assets) Credits and collections Costs Budgets Economic plans Management control Taxes and insurance
Staff Administration
- Personnel inventory Performance analysis Jobs Training Remuneration Accidents Salary settlement
Although the main activities to be considered in an industry have been detailed, the scope of the Survey in each case will depend on the type of Business of each Company and its main characteristics, depending on whether they are financial entities, service companies, etc., and these in turn are, state or private, national or foreign, etc.
The analysis of the information obtained in the Survey will establish the needs in terms of both operational, administrative and management information; as well as regarding decision making.
In each case, the following should be considered: volumes, confidentiality, frequency, complexity for obtaining it, integrity, redundancy, security, timeliness, internal control and the particular factors inherent to the Company.
Based on the results of the Survey and the systems strategy, you should:
- Carry out a review of the systems strategy in order to detect possible inconsistencies in the previous definitions, regarding the results of the Survey. Establish a hypothesis about the information systems whose processing flow must be absorbed by the new installation. Analyze the global processing modality, establishing percentages for each type of process. Establish special hardware and software requirements (special devices). Analyze requirements for special data processing techniques to be used for the short and medium term.
SIZE OF THE INSTALLATION
First, the capacity by device type will be calculated and the peripheral technical profile will be established based on the systems that will be processed by the future installation, such as:
Central processing unit
- Memory size and organization Transfer rate Control unit capacity Interrupt levels
Discs
- Average access time Capacity Fixed or removable CD's and CD players
Tapes
- Track Speed Density
Video Terminals
- Smart or Non-Smart Advanced Hardware Features Screen Size or Buffer Transfer Rate
Printers
- Inkjet or laser size speed
software
- Multiprogramming Dispatch of tasks Security in data handling Interactive edition Batch processing of application programs Means for handling formats General services
If the study includes the use of processing techniques such as teleprocessing, the nodes (Hardware components that can perform information processing and network control) should be evaluated on the one hand and the links (Means they use to transmit on the other) information between nodes).
In relation to the nodes, in addition to the devices indicated above, the following must be evaluated:
Communications Controller
- Programmable Requirements for line connection Serialization for asynchronous, serial or parallel transmission Possibility of storing and retransmitting Priority management Detection and correction of errors Time-out management Handling of responses or calls automatically Circuit switching
Modems
- Acoustic coupling facility Number of wires Automatic equalization Speed Status indicators Facilities for handling more than one transmission mode
In relation to the links, the type of link and the mode and transmission speed that it must support must be defined.
Regarding communications software, the use of a teleprocessing architecture and a line control discipline should be evaluated on the one hand, and a teleprocessing monitor with basic functions should be available on the other.
Office automation
- Word Processing Email Distribution of personal computers connected to the central facility Modeling software Application development
CONFIGURATION DESIGN
Once the parameters of capacity and technical profile of the components have been defined, they will be quantified; mainly from peripheral devices.
To define the number of video terminals, variables such as: peak hours, waiting queues, time for data re-entry due to typing errors, functional aspects such as physical adjacency of certain users, specialized terminals according to their use should be considered (For programming, systems with high usage times, etc.).
In order to calculate the number of terminals to install, a calculation formula can be applied that yields a value that is an approximation and that must be adjusted by the aforementioned variables:
Number of documents * Document characters
Number of terminals =
Working hours * Fingering speed per hour
The same procedure may be applied to calculate the printers.
Once the devices of the installation have been quantified, the flexibility for the future growth of the installation and the endowment required for its operation will be analyzed.
From this analysis the final adjustments will be established and the configuration will be designed.
EVALUATION OF THE EQUIPMENT OFFERED IN THE MARKET
Each company that supplies computer equipment tends to make its proposals based on its marketing guidelines and generally describe more fully the favorable aspects of its product in relation to the competition, and does not go into depth (and in some cases no mention is made) about items that are at a disadvantage compared to other providers. For this reason, difficulties usually arise when selecting proposals. To avoid these drawbacks, a report must be prepared for the supplier companies that contains the variables in order to standardize the proposals on which the selection will be made.
In said report the quotation of:
- Configuration to be quoted Opening cost per device Import charges Installation charges Contract modalities Payment terms Delivery times Surcharges or taxes Technical service (Features and cost) Advice and support Backup team Machine hours for development (Quantity, place and cost) Possibilities for expansion List of users with installed equipment similar to the one listed
Once the proposals have been received, the criteria for selecting them must be set in order to select a shortlist.
SUMMARY THE RESULT OF THE TECHNICAL FEASIBILITY STUDY
In this phase, the report will be prepared with the results of the technical feasibility study that will contain the technical foundations of the decisions taken and will summarize the results of the stage.
OPERATIONAL FEASIBILITY
EVALUATION OF THE IMPACT OF THE PROJECT ON THE ORGANIZATION
Depending on the characteristics of the project and the modality with which the Company faced it, the organizational aspects may have been evaluated when defining the systems strategy, in which case, the execution of this phase will not be required.
If not, the corresponding study must be carried out to evaluate the impact of the project on the organization.
To see more clearly the importance of the Operational Feasibility study we will use an example:
Take the case of a bank that currently manages all of its operations in a traditional way whose systems have a large percentage of manual processing and in some cases batch (in the parent company), which decides to use state-of-the-art technology, and automate the The bulk of its operations, incorporate ATMs, connect all its systems to a communications network, and distribute processing capacity to its 50 branches.
From a technical and economic point of view, the project is a priori, viable, since this type of installation is widely approved by other financial entities, the benefits resulting from an investment project of this nature are easy to verify, there is no more That consulting other companies and also equipment supplying companies have already acquired sufficient experience, with a large park installed and there is even the possibility of acquiring pre-planned systems with good performance and low cost.
In this case, the operational Feasibility study acquires its greatest significance, since the viability of the system is not in doubt, but what remains to be verified is whether this Bank is in a position to absorb it; Since the personnel do not have experience in the management of this type of systems, managers will see the procedures of their entire operation modified and they must also be at the forefront of the change. Fears of rationalization will also emerge, in addition to natural resistance to change at all levels; the operation of each branch will undergo profound modifications, it will require the training of personnel on a large scale; participation as a user (A new function) in the definition of future systems,Modifications may arise in the power structure of the organization that will be directly related to organic restructuring, etc. In addition to all this, daily activities must continue to be carried out so that the Business continues to function.
As we see, a change of this magnitude can generate an endless succession of conflicts that, if left to chance, the chances of success of the project will have a high degree of randomness.
As we can see, the operational study cannot be relativized and, in order to reduce risk margins, it should:
- Establish the scope of organizational changes Assess current organizational norms, methods and functions. Evaluate the organizational development achieved. Analyze current and future power relations and their effect on the project. Draw a hypothesis of potential conflicts. Carry out an analysis on the opportunity of the project.
DEFINITION OF THE ORGANIZATIONAL CHANGES TO BE MADE
In this phase you should:
- Make an estimate on the areas that must be restructured and the magnitude of the change in each case. Design the structure of the systems area in relation to the results of the technical feasibility study. Define roles and functions. Establish criteria to plan the training of affected personnel. Estimate operating costs and benefits (Tangible and intangible)
Finally, the results of Operational Feasibility must be summarized.
ECONOMIC-FINANCIAL FEASIBILITY
INVESTMENT QUANTIFICATION
In order to carry out the economic-financial feasibility study, it is essential to know all the expenses that the Company will incur to incorporate the new system, as well as the increase in costs for structural loads that its operation will demand after the start-up March.
Since the hardware and software costs are included in the technical study, it will be necessary to know the following additional costs:
Endowment
With the detail of the salaries plus social charges, for all positions and vacancies.
Furniture
With the detail of the elements and their unit cost. The office furniture (Desks, chairs, etc.), and the computer furniture (Libraries, files, terminal tables, etc.) should be specified.
Electrical installation
- Command board Voltage regulator Three-phase branch line Earthing (Copper javelins) Power supply for computer groups (Safely flameproof or others) Laying the loop Etc.
Supplies
- Forms Ink cartridges for printers (Color and Black) Toner for laser printers Diskettes CD's Backup tapes Etc.
Layout
- Plans Modification of light fixtures, partitions, etc.
Security system
- Fireproof box Fire fighting system (With smoke detectors) Microfilming services for documentation Etc.
Training courses
- Detail and cost
insurance
- Coverage and cost detail
Freight
- Detail and cost
To establish these costs, at least three suppliers should be consulted and in each case, the following should be known:
- Time of validity of the budgets Payment methods Estimated starting date of the works Time of execution of the tasks Delivery times Etc.
To these costs must be added those of the technical study:
- Hardware cost Software cost Import charges Installation charges Surcharges and taxes Technical Service Guarantee for the rental modality Installation backup charges
With all these data, the investment will be quantified and the most advantageous contracting modality will be evaluated.
ANALYSIS
First, the initial investment amount will be established, which includes one-time expenses, and then, the monthly charge of the new cost center.
In order to measure the incidence of the monthly charge, you must take an index that allows you to visualize the degree of participation in the company's total charge, such as sales or any other index that allows you to visualize the degree of participation in the total charge. of the company, such as sales or any other that the Company uses to carry out these measurements.
Finally you should:
- Conduct a review of the cost evaluation Analyze the investment against the Company's financial position Establish total benefits (Including intangibles) Analyze the return on investment (NPV - Net updated value, IRR - Internal Rate of Return) Measure in product terms the total investment
SUMMARY THE RESULTS OF THE ECONOMIC-FINANCIAL STUDY
A report must be prepared that summarizes the economic-financial feasibility study.
Finally, the final report will be prepared for senior management, with the summary of the Feasibility Study of the IT investment project.
It must contain:
- Introduction Background and needs Strategy Results of the technical study Results of the operational study Results of the economic-financial study Suggestion from the project team Annex with the received proposals and comparative tables
Based on this report, the decision may be made, but in the event that the Company decides to consider the study carried out, the documentation of each stage of the study and all the information used may be available.
CONSIDERATIONS ON THE CONTRACTING OF AN EXTERNAL COMPUTER SERVICE
The hiring of a computer service does not differ, in its formal aspects, from the hiring of any other type of service by a Company.
In our case, the technical evaluation of the type of service to be contracted for electronic data processing will correspond, and in particular the contracting of a computer service.
It is important to consider that this is an alternative to resolve the processing of the information of a Company, depending on the cost-benefit ratio and, once again, the policy that defines the Company for the resolution of its problems.
The variables to consider for contracting this type of services will not only be present in the evaluation of the suppliers, but also in the legal contract to be signed between the companies.
Below are the most relevant variables:
COSTS
Detailed by:
- Process cost Recordings recorded Basic volume to process and record Surpluses According to the frequency of each process Forms Special processes Listings on request
ASPECTS TO EVALUATE
- Modality for updating prices Payment condition Validity of the contract Risks of loss of documentation Modification of programs and files (Procedure and cost) Use of the service computer Programming language used Training charges Obligations for non-compliance of the parties Program testing Approval per system Folder per system (Documentation) Place of reception and delivery of information Duplication of files (That may be required at any time) Service security (Definition of backup for processing) Ownership of programs and files
It should be considered that all these variables are carefully explained in the legal contract that will regulate the operation of this service.
For legal purposes, the following must be added:
- Modalities to define the termination of the contract Payment of the seal (in charge of whom) Location and legal domicile (in case of eventual lawsuits)
Given that the service to be contracted may suffer distortions in time, both in terms of cost, as well as the efficiency of the service, the Company must have the necessary elements that allow it to make the most appropriate decisions in this regard, for which It will require avoiding a level of dependency on the service, which prevents you from solving the inconveniences raised in the most appropriate way for your interests.
The aforementioned problems or due to the growth in the volume of information processed may suggest alternatives such as: changing the service or incorporating a system.
In both cases it will be extremely valuable to have ownership of the programs and files, as well as having the documentation of each system.
The security of the service, the testing of programs, their maintenance, the definition regarding the approval of each implemented system, etc. They are variables that ensure an efficient service, and the explanation of them in a contract, represent the legal support that the Company has among the various inconveniences that could occur over time.
The evaluation of the aforementioned aspects will detect omissions that in the short or long term could seriously harm the Company.
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