UNDERTAKE A FEASIBILITY STUDY

A feasibility study involves undertaking a detailed assessment of a current business problem
or opportunity, identifying the various solution options available and determining the
likelihood of each alternative solution meeting a customer’s requirements.

The outcome of the exercise is the creation of a feasibility study document which provides:
• a full description of the business problem;
• a list of the requirements for a solution to fix the problem;
• a list of all available options for delivering a solution;
• an assessment of the feasibility of each option;
• a list of the risks and issues associated with each option;
• the preferred solution option for implementation.

The feasibility study document is presented by senior management in the business to the business sponsor or customer. Although a feasibility study may be conducted prior to the completion of a business case, it is usually undertaken as part of the overall business case process to add more rigour to the solution options presented. For this reason, the topics covered in the business case and feasibility study documents are similar.

Investigate the business problem
Research the business environment
Before you undertake a feasibility study, you should first have a full appreciation of the business problem to be addressed. To achieve this, first research the business environment within which the problem is contained.

External analysis
Identify the external environment within which the business operates by defining the market segment, competition and relevant products and services available. Also identify the market, technology and commercial trends, as well as any statutory or legislative changes.

Business vision
Identify the business vision, strategy and objectives for the short, medium and long term.

Business units
List each of the current business units (such as the finance department) relevant to this project. Show them in an organization chart, highlighting the internal reporting and communication lines.

Business locations
Identify the geographic location of each business unit identified. If necessary, show each business location on a geographical map to highlight the physical placement of business units in relation to one another.

Business information
Identify the major types of business information relevant to the project such as financial, human resources and asset-related information. List the repositories holding this information such as financial databases, human resources directories and asset systems. If appropriate, create a data flow diagram to show how information is used within the business to undertake relevant business processes.

Business technologies
List each of the technologies relevant to the project and describe their business functions. Where suitable, describe the make-up of each technology in a technology architecture diagram, highlighting the interfaces for each technology.

Business processes
List each of the current business processes relevant to the project and provide a detailed description for each. Show all business processes on a process flow diagram to describe the flow and interaction between each business process listed.

Research the business problem
Business problem
Identify the core business problem to be addressed. In particular, note the reasons the problem exists, the impact it is having on the business and the timeframe in which it must be resolved. Examples of typical business problems include those related to:

• Business process:
– efficiency, timeliness, ownership;
– clarity, accuracy, relevancy.
• Business unit:
– definition (eg lack of vision, scope, objectives);
– direction (eg lack of alignment with corporate vision);
– structure (eg inefficient/inappropriate structure);
– size (eg too small or large);
– makeup (eg lack of skills, experience);
– performance (eg inadequate product/service quality);
– data (eg poor data quality).
• Business location:
– security (eg security exposures or risks);
– relevancy (eg location does not fit with corporate image);
– finances (eg location is too expensive);
– physical appearance (eg deterioration).
• Business technology:
– reliability, scalability, and performance;
– relevancy (any misfit between technology and business objectives).

Business opportunity
List any business opportunities identified. In particular, note any supporting evidence to confirm that an opportunity currently exists, the time for which the opportunity will remain and the impact that realizing the opportunity will have on the business.

Examples of typical business opportunities include:
• new market demand identified;
• competitor company failure or change;
• new ideas for products or services;
• new business premises made available;
• new technologies available for usage;
• new skill-sets available in market;
• changes in legislation or regulatory requirements.

Identify the requirements
List the key business drivers
List the key business drivers for this project. Examples include:
• a particular business objective which must be achieved within a certain period;
• changes to legislation/regulation which come into effect on a certain date;
• a limited timeframe for competitive advantage;
• timing of other related changes in the business or external market place.

Define the business requirements
For each business problem or opportunity, list the requirements for a solution. For example, you may need:
• a new process to be implemented which improves business efficiency;
• to establish a new business unit to deliver a new product to market;
• to build new physical premises which provides more capacity.



Undertake a feasibility study
Now that you have identified the business environment, drivers, problem and requirements, you are ready to undertake the feasibility study. This section describes how to complete the feasibility study by identifying each of the potential solutions and determining the likelihood of each alternative solution meeting the requirements of the customer. It also describes the risks, issues and assumptions associated with each alternative solution.

Identify the potential solutions
Create a full list of potential solutions to the business problem or opportunity. For each potential solution, list its components and describe its purpose. Also consider how each particular component addresses the key business requirements identified above.

Undertake the assessment
Assess the actual feasibility of each alternative solution using a range of assessment methods. Examples of assessment methods include:

• Prototyping. A prototype is a subset of the full solution which is constructed to prove that at least part of the full solution is achievable. Prototypes are typically  developed to prove that the highest risk areas of the solution are feasible. For instance, if the solution was to involve the implementation of a new computer system, a prototype might be built to test that the system could be integrated with other systems used in the business.
• Staff surveys. Staff surveys are a great technique for identifying the feasibility of solutions that involve a change to business processes. For instance, they may be used to identify the likely adoption of a new performance management process by staff. 

• Market surveys. Market surveys may be undertaken to assess the feasibility of introducing new products or services to the market by determining the level of potential customer demand.

Measure the results
Measure the overall result of each assessment by scoring the actual versus expected
result and listing other non-tangible considerations that also need to be taken into
account in the final rankings.

Identify any risks
List the apparent risks associated with the implementation of each solution. Risks are defined as any event that may adversely affect the ability of the solution to produce therequired deliverables. Risks may be strategic, environmental, financial, operational, technical, competitor or customer-related. Document the risks by completing Table 2.8.

Prioritize the issues
Identify any issues associated with the adoption of each solution. Issues are defined as any event that currently adversely affects the ability of the solution to produce the required deliverables. Document the issues by completing Table 2.9.

List any assumptions
List any assumptions associated with the adoption of each solution. For example:
• There will be no legislative, business strategy or policy changes during this project.
• Prices of raw materials will not increase during the course of the project.
• Additional human resources will be available from the business to support the project.

Rank the feasibility results
Define the criteria
Specify the criteria used to rank each of the solution options and describe the scoring and weighting mechanism used to produce an overall result.

Assign ranking scores
Score each option against the identified criteria, using Table 2.10.

Note that a score is typically a number from 1 (low feasibility) to 10 (high feasibility), and a weight is a number from 0.5 (criterion is unimportant) to 1.5 (criterion is very important). The total is calculated as score multiplied by weight.

Identify the feasibility outcome

Based on the total score, identify the most feasible option to be recommended for implementation.

You are now ready to collate all of the materials listed in this section and create your feasibility study document for approval.