Answer the following questions for both scenarios listed below.
1. What is your understanding of the situation and how would you evaluate the situation?
2. How would you evaluate the financial aspects of this decision? In other words, what is the numerical risk value for each scenario? Show your calculations in determining the financial value for both testing and not testing approaches.
3. What are the direct, tangible factors that influence your decision?
4. What are the intangible factors that would influence your decision?
5. How could you better determine the uncertainties involved? What else would you like to know?
6. Would you do the testing or release it to production as is? What would you do?
SCENARIO 1 Your company has determined that it is time to roll out a custom software application that you and your team have been developing for over a year. This application has enterprise-wide implications in that if it works well the entire organization will run more efficiently but if there are problems those problems can interfere with a large part of daily operation at varying possible levels of disruption. Your management wants to roll out the application with minimal testing because they are feeling pressure from the executive committee to show results for the ongoing development investment.
Members of your team feel that more testing is needed before the application is ready for production. Your team’s analysts have developed some estimates of how much a disruption could cost the company in profits, the likelihood of it happening and the amount of time it would take to correct the error. The have prepared these estimates for both with testing and without testing scenarios. These estimates and they are included in the table below.
Without Testing
Cost to Comp/Hr
Likelihood
Hrs to Fix
Frequency
Minor
$10,000
80%
3 to 7
>10
Major
$30,000
35%
6 to 15
4 or less
With Testing
Cost to Comp/Hr
Likelihood
Hrs to Fix
Minor
$10,000
30%
3 to 7
5 or less
Major
$40,000
10%
6 to 15
1 or less
SCENARIO 2 – Answer questions above using this scenario
You are renting a car at the airport and they ask you if you want to buy the supplemental insurance during your rental period. They will charge you $20 per day for the insurance and you are renting for 14 days. You talked to your insurance agent who told you that you have your normal car insurance coverage while driving a rental just as though it were your own car. Your policy carries a $500 deductible. What would you do? How would you analyze the financial aspects of this decision? What additional information would you like to have to help you make this decision? How would you evaluate the situation? What are the direct, tangible factors that influence your decision? What are the intangible ones? How would you determine the uncertainties involved? What would you do?
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