Feasibility Study | Types of feasibility study | Technical, Economical and Organizational Feasibility

Feasibility analysis guides the organization in determining whether to proceed with the project. Feasibility analysis also identifies the important risks associated with the project that must be managed if the project is approved. As with the system request, each organization has its own process and format for the feasibility analysis, but most include techniques to assess three areas: technical feasibility, economic feasibility, and organizational feasibility.

A feasibility analysis is used to provide more detail about the risks associated with the proposed system, and it includes technical, economic, and organizational feasibilities. The technical feasibility focuses on whether the system can be built, by examining the risks associated with the users’ and analysts’ familiarity with the application, familiarity with the technology, project size, and compatibility with existing systems. The economic feasibility addresses whether the system should be built. It includes a cost–benefit analysis of development costs, operational costs, tangible benefits, and intangible costs and benefits. Finally, the organizational feasibility analysis assesses how well the system will be accepted by its users and incorporated into the ongoing operations of the organization. The strategic alignment of the project and a stakeholder analysis can be used to assess this feasibility dimension.

Some of the question which you have to asked in each of feasibility?

1. Technical Feasibility: Can We Build It?

• Familiarity with application: Less familiarity generates more risk.

• Familiarity with technology: Less familiarity generates more risk.
• Project size: Large projects have more risk.
• Compatibility: The harder it is to integrate the system with the company’s existing technology, the higher the risk will be.

2. Economic Feasibility: Should We Build It?

• Development costs
• Annual operating costs
• Annual benefits (cost savings and/or increased revenues)
• Intangible benefits and costs

3. Organizational Feasibility: If We Build It, Will They Come?

• Project champion(s)
• Senior management
• Users

• Other stakeholders

• Is the project strategically aligned with the business?

Technical Feasibility

the extent to which the system can be successfully designed, developed, and installed by the IT group. Technical feasibility analysis is, in essence, a technical risk analysis that strives to answer the question: “Can we build it?” Many risks can endanger the successful completion of the project. First and foremost is the users’ and analysts’ familiarity with the application.

Familiarity with the technology is another important source of technical risk. When a system will use technology that has not been used before within the organization, there is a greater chance that problems and delays will occur because of the need to learn how to use the technology. Risk increases dramatically when the technology itself is new.

Project size is an important consideration, whether measured as the number of people on the development team, the length of time it will take to complete the project, or the number of distinct features in the system. Project teams need to consider the compatibility of the new system with the technology that already exists in the organization.

Economical Feasibility

Economic feasibility is determined by identifying costs and benefits associated with the system, assigning values to them, calculating future cash flows, and measuring the financial worthiness of the project. As a result of this analysis, the financial opportunities and risks of the project can be understood.

Common assessment measures are:

Cash Flow Analysis and Measures, Return on Investment, Break-Even Point, Discounted Cash Flow Technique, Net Present Value (NPV).

Organizational Feasibility

how well the system ultimately will be accepted by its users and incorporated into the ongoing operations of the organization. There are many organizational factors that can have an impact on the project, and seasoned developers know that organizational feasibility can be the most difficult feasibility dimension to assess.Strategic alignment is the fit between the project and business strategy — the greater the alignment, the less risky the project will be, from an organizational feasibility perspective

A second way to assess organizational feasibility is to conduct a stakeholder analysis. A stakeholder is a person, group, or organization that can affect (or can be affected by) a new system.The champion is a high-level executive and is usually, but not always, the project sponsor who created the system request. The champion supports the project by providing time and resources.

The final feasibility study helps organizations make wiser investments regarding IS because it forces project teams to consider technical, economic, and organizational factors that can affect their projects.