Feasibility analysis is a technique used in project management and portfolio management for selecting viable projects. A natural outgrowth of the problem definition and planning phase, feasibility analysis is a set of processes that
consider the required resources, skill sets, experience, and facilities against an organization’s availability of these. When a project has high feasibility but the organization is lacking in one or more of these required elements, outsourcing becomes a reasonable avenue to pursue. Therefore, in any organization there are triple constraints on any project: Scope, Time, and Cost. Once the MIS project has been defined in terms of what the concept of operations is, who the stakeholders are, and where the funding comes from, there are steps in making the decision to do the project: is it feasible? Five specific criteria are used for project selection:
• Backed by management
• Timed appropriately for commitment of resources
• It moves the business toward attainment of its goals
• Practicable and reasonable in its technical approach
• Important enough to be considered over other projects
A feasibility study assesses the merits of the proposed project. There are three types of feasibility analysis that factor into the decision: Technical, Economic, and Operational feasibility. Technical feasibility assesses whether the current technical resources have the skills, tools and knowledge sufficient for the project. Outsourcing becomes a reasonable alternative in the decision model if the organization does not consider this a core process. If the resources are not available, can they be acquired, or training provided? Another technical question is to determine if the organization has the right tools to do the project; or can the MIS be upgraded to provide the level of technology necessary for the new system? When upgrading MIS or entering a new realm of experience, another concern is the maturity of the technology. It is important to note if the technology exists in the marketplace and whether it has already been proven. When crafting a new innovation, it helps to have an outsourcing partner that has done similar MIS projects before, or who has direct and deep experience in that business area. If it is to be “sourced” in house, it will be vital to address if the organization has the experience to do the job, as well as ensure that the right team members are, in fact, available so that resource contention does not become the wedge that makes the project fail.
In some cases, after performing the technical feasibility study we discover that the costs are prohibitive, or that to do the MIS project successfully from the technical standpoint, we have under-estimated the financial commitment. Per-haps the ABC analysis proved that existing processes can’t really be improved without major investments of capital. In such cases, the project must also undergo an economic feasibility analysis to determine whether the time and money are available to develop the system. The project proposal must be
carefully examined to be sure that management has the right understanding of all costs, both real and “implied costs,” for example staff time away from other assignments, time to train staff in the new processes, consultants that may be needed to help transition the MIS project. These are all economic cost factors that cannot be forgotten in the cost model.
Other costs include the purchase of new equipment, hardware, software, and maintenance. The economic analysis also weighs the costs against the perceived benefits to ensure that the expected results are compelling. Lastly, economic feasibility must address the availability of sufficient funding and whether that funding is actually appropriated or only “earmarked.” Many firms have em-barked on risky outsourcing arrangements hoping to pay for the services or the infrastructure from the expected savings, only to find that the “undocumented costs” of knowledge transfer, or the outsourcer’s lack of experience in legacy applications made the costs of supporting the outsourcer higher than expected, and resulted in the arrangement being less advantageous than envisioned.
The last aspect of feasibility analysis concerns the cultural or operational feasibility of a project. Operational feasibility determines if the human re-sources are available to operate the system once it has been installed. Another aspect is that the project must have executive sponsorship and management support for the time it will take from their other duties to implement or transition the project. In outsourcing it is generally the case made that the time savings of outsourcing will pay for the services wrought. User acceptance of a project that was done elsewhere can be an issue, such as in the case of a software development SLA. If users do not want a new system they may prevent it from becoming operationally feasible. When the MIS is to be paid for by departments having to forego some part of their budgets, due to fewer operations required because of the new MIS, the organization may suddenly find all support for the new project disappeared. Operational feasibility also requires evaluation of related issues for potential risks:
• Computer competency of user community
• Computing comfort level of potential clients and customers
• Perceived loss of decision control by employees
• Shift in power away from traditional business processes
• Fear of job changes
• Fear of employment loss
• Reversal of longstanding procedures
Finally, not all costs and benefits can always be measured. Some intangible benefits might include increased levels of service, improved customer satisfac-tion, the necessity of the MIS for competitive survival, or simply a need to source
the project with organic resources to develop in-house expertise. On the flip side of the model, intangible costs might include reduced employee moral, lost productivity, or even poor customer perception resulting in lost customers or sales.