NOMAS
Systems Analysis and Design
by
Knight Associates, Inc.
Prepared By:
Kyle Davis
Ryan Hartsfield
Graham Myers
Ronda Russell
Werner Sauer
November 30, 2006
Knight Associates, Inc.
Memorandum
DATE:
TO:
FROM:
SUBJECT:
November 30, 2006
NOMAS
Knight Associates, Inc.
NOMAS Systems and Procedures Analysis
As you requested the Knight Associates, Inc. team was brought in to conduct an analysis
for the information systems used by North Miami Apparel Suppliers (NOMAS).
The following report contains the requested list of topics as follows:




Our Client Introduction
The Project Problems
The New System Proposal
Feasibility Analysis
The sources used and contained in this report have been researched by each team
member.
Given the time allotted to complete our team’s mission we have each done extensive
research and used all the resources available in completing this analysis. If there are any
questions or concerns regarding any of the information provided in the report please feel
free to contact Ronda Russell at ronda5255@yahoo.com.
2
TABLE OF CONTENTS
COVER PAGE ...................................................................................................... 1
MEMORANDUM ................................................................................................. 2
TABLE OF CONTENTS ..................................................................................... 3
COMPANY INTRODUCTION AND CURRENT SYSTEM ........................... 4
MARKET TRENDS AND INDUSTRY ANALYSIS.................................... 5
CURRENT SYSTEM IN USE ........................................................................ 8
CURRENT SYSTEM DFD ........................................................................... 10
REGIONAL STRUCTURE .......................................................................... 11
NOMAS JOB DESCRIPTIONS ................................................................... 12
MANAGEMENT STRUCTURE .................................................................. 14
PROBLEM STATEMENT ................................................................................ 15
PIECES ........................................................................................................... 16
PROPOSED SYSTEM ....................................................................................... 17
PROPOSED SYSTEM DFD ......................................................................... 19
PROPOSED SYSTEM ERD ......................................................................... 20
STEERING COMMITTEE .......................................................................... 21
FEASIBILITY REPORT ................................................................................... 22
APPENDIX ............................................................................................................. i
DISTRIBUTION OF REVENUE ................................................................... ii
NOMAS REGIONAL STORE DISTRIBUTION ........................................ iv
NOMAS ORDER FORM ................................................................................ v
CENTRALIZED vs. DECENTRALIZED WAREHOUSE ........................ vi
CENTRALIZED vs. DECENTRALIZED IT SYSTEM ............................ vii
PROPOSED E-COMMERCE USER INTERFACE ................................... ix
DATA DICTIONARY .................................................................................. xiv
E-COMMERCE SITE ................................................................................. xvi
COST/BENEFIT ANALYSIS ..................................................................... xvii
PROJECT SCHEDULE .............................................................................. xxii
3
COMPANY INTRODUCTION
North Miami Apparel Suppliers, Inc., to be referred to as NOMAS, is a senior citizen
clothing supplier located in Miami, Florida. NOMAS was developed in 1980 and is
jointly owned by Mr. and Mrs. Pedro Martinez. Jane King Mature Fashions Company of
New Mexico was contracted in 1982 to be the sole clothing manufacturer to NOMAS.
The current number of NOMAS retail stores is 21, with primary headquarters located in
North Miami. All retail stores are located in the state of Florida. NOMAS is divided by
region; the north region, central region, and south region. Each region has immediate
supervision from one of three regional managers. NOMAS is currently looking into the
possibility of updating their existing information system.
Mr. and Mrs. Martinez feel that the problems associated with the current information
system are not serious and can be easily corrected. Through our findings, we have
discovered that this is not the case. NOMAS’s problems stem from a lack of control
within the company. Combined with a poor database design, the problems experienced
by NOMAS are critical and could become detrimental if not quickly corrected. By using
a PIECES analysis, we were able to determine each problem and how it affects the
company. Control ranked highest, followed by efficiency and information. Poor
standardization and a poor line of communication have led to the problems with control.
This tells us that the major problems cannot be corrected by us as a systems analysis firm.
NOMAS will have to re-evaluate their personnel and procedures, since it is not our place
to make recommendations to their business process. Although it is not our place, we feel
that by correcting the problems causing a lack in efficiency and information, we will in
turn be helping NOMAS correct their control problems. We have found that the
NOMAS database is flawed. There is a problem with data redundancy and duplication.
Along with this problem, many employees do not have computers to access a database,
flawed or not.
After our first meeting with Pedro Martinez, it was discussed that our analysis had to be
performed before any rulings could be made. Since we have finished our analysis, the
design of a contract may commence. Once this contract has been created and signed by
both parties, work can be started on designing the new information system for NOMAS.
In order to better understand our client, we have also completed research on the current
clothing market that targets senior citizens. We have included our findings in the
following section. For a breakdown on NOMAS revenue information please refer to
Appendix ii and iii.
4
Market Analysis
Senior Citizen Clothing Market
The US Census states that the estimated number of people in Florida over the age of 65 is
around 16.8 percent of 17,789,864 resulting in 2,988,697 senior citizens. The Census
estimates that Floridian retail expenses per capita is $11,498 resulting in an estimated retail
market of $34,364,039,853 a year.
Senior Population Projections for the South Atlantic
35,000,000
30,000,000
Population 65+
25,000,000
.Delaware
.Maryland
.District of Columbia
.Virginia
.West Virginia
.North Carolina
.South Carolina
.Georgia
.Florida
20,000,000
15,000,000
10,000,000
5,000,000
0
2000
2005
2010
2015
Years
5
2020
2025
2030
Retail Market Projections
Apparel generated $181.2 billion at retail in the US in 2005. This was up 4% from 2004.
According to NPD Fashionworld consumer estimated data, sales of Women’s apparel
accounted for 56% of sales, men’s at 29% and children at 15%. Right now about 20
companies control 30% of the sales in the US. And the remaining 70% is sold from private
brands. The projection of the retail market is expected to grow about the same rate as GDP
and Population growth.
Table 4: US Clothing Retailing Market Distribution: % by Value, 1998
DISTRIBUTION CHANNELS
JC Penney
Wal-Mart
Kmart
Sears
Target
Mervyns
Toys ‘R Us
May
GapKids
Others
TOTAL
6
% SHARE
14.0%
12.0%
8.5%
6.0%
5.0%
4.0%
3.3%
2.9%
2.7%
41.6%
100.0%
7
Current System In Use
The current system used by NOMAS is a pair of stand-alone IBM-PC computers set up to handle
all mail orders and keep track of suppliers and products. They also have two Dot Matrix
printers, of which, only one is currently in use.
Any more details of software or PC usage will have to require more interviews with someone
from NOMAS.
NOMAS Current System
Hardware
Description
IBM-PC Computer
Handles all incoming NOMAS mail orders.
IBM-PC Computer
Dot-Matrix Printer
Handles all tracking of products and payment to suppliers
Handles all NOMAS print jobs
Dot-Matrix Printer
Handles all NOMAS print jobs. This hardware is not currently being used
by NOMAS
The current system is required to process all orders and keep track of order shipping. Below is
our understanding of the current procedure based on our investigation.
Order Processing
An order comes in by mail. The order is immediately checked for errors by a mail order
processor. Problem orders containing any type of errors (inaccurate information, missing
information, addition errors, etc.) are sent to the problem-orders file. At the end of the day when
all incoming orders have been processed, one processing clerk calls or sends letters to customers
notifying them of problems with their orders. If they can be dealt with by phone the order is
corrected and placed into the orders received folder.
Orders placed by phone are immediately placed in the telephone orders folder. Throughout the
day, one clerk goes through the orders and picks out any with glaring errors. If they cannot be
corrected on the spot, they are placed into the problem orders folder and follow the same
procedure as listed above. If they are correct, they go to the orders received folder.
The orders received folder is all orders that have passed the first inspections. They are then
categorized by method of payment: credit card, money orders, cashier’s checks, and personal
checks. NOMAS assumes that money orders and cashier’s checks are guaranteed forms of
payments so it places these orders directly into the accepted orders folder. This assumption is
not always true and NOMAS often writes off these losses.
8
Personal checks are taken to the bank and credit card companies are called to confirm payment.
If payment is confirmed they are placed into the accepted orders folder.
Accepted orders are entered into the computer by Blake Robey. The computer runs a program to
detect any errors such as mismatches between items, colors, sizes, and costs, addition errors, and
non-existing zip codes that were not immediately obvious in the first error checks. If problems
are listed with the order, the original order is retrieved along with the problem noted and placed
into the problem orders file. Orders that pass inspection are placed into the shipping folder.
Order Shipping
After the order is confirmed the merchandise is then located. The North Miami warehouse uses
its own inventory supply for direct order sales. This warehouse is able to supply roughly 70% of
all orders from its inventory. If the item cannot be located a call is made to the Southern Region
warehouse to see if they had it in stock. If the item could be tracked down a car would be sent
over to pick up the item, otherwise calls would be made to retail stores starting with the ones
closest to the consumer who would then send the merchandise to the customer in the mail. If the
item could not be found at any of these locations the manufacturer would be contacted. If the
manufacturer has the merchandise they will either send it directly to the customer or to NOMAS,
and NOMAS submits payment for the merchandise and shipping to the manufacturer.
9
Customer
1.0
1.1
Mail orders are
received.
Places order by phone.
Operator receives all
necessary info and
performs calculations.
2.0
2.1
Orders are inspected for
errors. Problem orders
are sent to problemorders file, the rest to
orders received folder.
Customer is
contacted if error
can’t be fixed by
clerk.
Problem orders
folder
Order Received
folder
3.1
3.2
3.2
Money Orders and
Cashiers checks
Orders are sent to
accepted orders
folder.
Credit card orders
are sorted by card
issuer. Company is
then called for
confirmation. Orders
with problems are
sent to problem
folder, otherwise
accepted orders
folder.
Personal checks are
taken to bank and
deposited in
NOMAS account.
Checks that bounce
are sent to problem
orders folder,
otherwise accepted
3.0
Orders are sorted by
type of payment.
Accepted orders
folder
4.0
Shipping folder
Orders are entered into the
computer. Program runs to
check for undetected errors.
If errors exist they are sent to
problem orders folder,
otherwise shipping folder
10
REGIONAL STRUCTURE
NOMAS is broken into three regions, South, Central, and Northern. The current system does not
currently support the separate districts as they have their own procedures in place and are using
whatever type of system they could put together. Below is our understanding of the regional
procedures based on our investigation. Please refer to Appendix iv for a map detailing all
current stores and their regions.
The South Region
The south district is managed by Margi who establish a central warehouse. The entire region is
adequately serviced by one truck. In terms of store operations, most of the stores have hand-held
scanners that are connected to the cash register. Most of the items are already shipped to the
stores with the codes (prices) already on them. Items without codes can be coded by the store
manager in the store. At the end of the day, the manager or clerk records the information from
the register summaries into the general ledger and then sends the summary off to Margi. The
cash and checks are deposited each evening. Charge receipts are sent-off to the charge card
issuers the following morning. Physical inventory counts are scheduled every Wednesday and
Saturday, and orders placed with the central Warehouse as needed. Each day Margi receives
copies in the mail of each of the store summaries. If anything looks strange, she will call up the
store manager for clarification. If everything looks okay, or can be explained, she mails the daily
summary to NOMAS. She also visits each of the stores at least once a week. At the end of each
month, Margi prepares a monthly summary.
The Central Region
The central district is managed by Cynthia. Each store keeps track of its own inventory and
maintains about a 2 to 3 week supply of each item. The store managers are responsible for
keeping physical inventory counts. The central region has an older line of registers which
requires the clerk to enter in the item code. When a sale is made, the sales clerk removes the
bottom half of the tag, enters the code into the register. At the end of the day, the register prints
out a summary of sales and sales taxes. The sales summary consists of a list of item codes and
the number of times each sales code was entered. The store manager must physically check off
each of the sales tag (from the box) against the sales register summary. Cynthia visits each store
at least three times a week because the store managers are not required to mail store summaries.
At the end of each month, Cynthia prepares a monthly summary for NOMAS.
The Northern Region
The Northern Region Manager is Gordon Mason. The store managers are encouraged to set their
own policies, while minimally conforming to NOMAS' reporting standards. Sales are rung up on
whatever equipment is available. One of the stores has a set-up corresponding to what was
described for the Central Region. The other stores have old cash registers which record the
amount of the sale and tax. Each store sets its own inventory levels and orders all their own
merchandise from whomever they wish. The inventory is recorded by the item sold using the
sales-tag approach; some just take an inventory each night. Gordo has his store managers
prepare the sales reports, send one copy to him, and the other directly to NOMAS.
11
NOMAS JOB DESCRIPTIONS
The following is a list of the organizational roles of the NOMAS staff.
Pedro Gustavo Wilfred Martinez  NOMAS President and Chairman of the Board.
 Pedro works setting goals, objectives, and developing strategic plans for
NOMAS.
 At the operations level, he is responsible for the direct-order end of business and
also decides on which product lines to carry.
Enid Martinez  NOMAS Senior Vice President and Vice Chairman of the Board.
 Enid takes care of the retail operations and all of the administrative details.
M. Lynne Tsai  Vice President of Direct Sales.
 Lynne reports directly to Pedro.
 Lynne is helpful at detailing the NOMAS problem, offering suggestions, and
recognizing the outstanding mail order issues.
A. Milton Srinivasan  Vice President of Finance, and former chief accountant.
 Milton reports directly to Enid.
 Milton keeps the operation running and assists with the research for a new
information system.
Benn Ginsberg  Vice President of Retail Operations for NOMAS.
 Benn reports directly to Enid while the Regional Managers (Margrethe Sprague,
Cynthia Elam, and Gordon Mason) report directly to him.
Gordon Mason  North Regional Manager under Retail Operations and longtime
business associate of Pedro and Enid’s.
 Gordo is in charge of managing the following stores: Ft. Walton Beach, Panama
City, Tallahassee, and Jacksonville.
Sirkka Kendall Store manager that is employed in the North Region.
 Sirkka assists with monthly summary reports and is learning the business routine
from her Uncle Gordo.
Norm Munro  Store manager that is employed in the North Region.
Cynthia Elam  Central Regional Manager under Retail Operations.
 Elam is in charged of managing the following stores locations: Gainesville, St.
Augustine, Ocala, Daytona Beach, Leesburg, and Orlando.
Margrethe Sprague  South Regional Manager under Retail Operations.
 Margrethe is in charged of the following stores location: Petersburg, Winter
Haven, Coral Gables, Miami, Palm Beach , Ft. Lauderdale.
12
Burt Senn  Works in the South Region, under Margi’s management.
 Determine inventory needs and purchasing.
Courtney DeSanctis  Direct Sales Personnel.
 Director of Telephone Sales.
Ephraim Franz  Director of Sales Personnel.
 Director of Mail Orders.
Hugh Bostrom  Director of Sales Personnel.
 Manager of Customer Order Processing.
Izak Wetherbe  Director of Sales Personnel.
 Izak manages six Shipping Clerks.
Iris Zmud  Director of Sales Personnel.
 Handles Customer Complaints and Returns.
Maryam Kaiser  Accounting handling Personnel
 Payroll, and the company’s credit union.
 Maryam is also knowledgeable about payments that NOMAS receives and the
difficulties associated with returned payments due to the current system’s
inadequacies.
Warren Remus  Accounting
 Revenues and expenses.
Blake Robey  NOMAS data processing.
 Helps maintains customer records for Accounting.
 Knowledgeable about information systems.
 Blake is educated on issues regarding customer service turnover, telephone
customer service and managing order backlogs.
 New development projects are not part of Blake’s role at this time due to time
constraints arising from the current system maintenance.
13
Management Structure
Pedro Martinez
President
Enid Martinez
Vice President
M. Lynne Tsai
Vice President of
Direct Sales
Courtney
DeSaretis
Director of
Telephone Sales
Ephraim Franz
Director of Mail
Orders
Telephone
Salesperson
Mail Order
Processor
Hugh Bostrom
Manager of
Customer Order
Processing
Izak Wethabe
Shipping Clerk
Supervisor
Iris Zmud
Customer
Complaints
Shipping Clerk (6)
Benn Ginzberg
Vice President of
Retail
Margretha
Sprague
Southern Regional
Manager
Cynthia Ebam
Central Regional
Manager
Gordon Mason
North Region
Manager
Store Managers
Store Managers
Store Managers
Retail Employees
Retail Employees
Retail Employees
A. Milton Srinivisan
Vice President of Finance
Mariam Kaiser
Personell and
Payroll
Warren Remus
Revenues and
Expenses
14
Blake Robey
Data Processing
NOMAS Problem Statement
During our investigation of NOMAS Company many issues were found. Some of the
major problems NOMAS currently faces are poor inventory control, lack of standard
procedures by the entire organization, poor catalog procedures, and a poor marketing
strategy. In order to address these tribulations, Knight Associates, Inc. proposes a new
information system for NOMAS. However, before discussing the new system it is
necessary to further understand these existing problems.
The lack of inventory control is creating serious issues. The most obvious problems are
the stores are getting products from many different places and products are being shipped
to the individual stores from many places. For example, products are being received
from warehouses, the suppliers, the manufacturers, and even other stores. This makes it
impossible to keep track of what items are currently owned by NOMAS in addition to
theft, damages, and defective items.
The lack of standards in management procedures is really hurting this organization.
Managers are using different procedures for similar activities. This makes it very hard to
evaluate and compare store/regions performances. It is critical to have consistent
procedures for an organization as big as NOMAS. Having standards in procedures
enforced by managers makes it much easier to identify problems the organization may
face. Another advantage is the fact that accountability of both positive and negative
consequences can be tracked to the right person.
A large portion of the errors that NOMAS is currently experiencing is caused by their
requirements for catalog order completion. Customers are responsible for taking their
own measurements. By following catalog instructions, customers are expected to
measure their own bodies then they will find their correct size based on the measurements
they have taken. The human error factor in taking one’s own measurements is enormous.
Therefore, this process is more confusing, inaccurate, and unsatisfactory. In addition, the
customer is also required to do numerous confusing mathematical calculations to
determine the correct payment amount. This compounds the errors they have already
created by sending incorrect size information. Many catalog orders are received totally
incorrect due to these complicated procedures. An example of the current order form
used by NOMAS is located in Appendix v.
NOMAS also does not have a web site which is an inexpensive and reliable way of
marketing. With the surge in Internet usage and purchasing, NOMAS is losing a great
number of potential customers, and more importantly, money.
After analyzing the PIECES framework, it becomes clear that it is necessary to develop a
new information system that will fix these major issues. The problems stated above are
severely affecting the whole organization and must be addressed immediately. There are
many smaller issues that were not mentioned, but by fixing the main matters, they will
also be corrected. It is time for change and the Knight Associates, Inc. will help NOMAS
to get to the cutting edge of it industry’s technology.
15
PIECES Framework
Symptom
Poor communication from top-level to mid-level employees
Poor inventory management and control
Trust issues with Enid Martinez
Poor standardization
Cannot keep track of problem orders
Problem orders take a great amount of time to correct
Employees doing other employees' jobs
Poor database design
Not having enough data clerks
Only one region has a centralized database and does not extend well into
other region's operations
Performance Information Economic Control Efficiency Service
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Redundacy in Sale-price
x
Conflicts with Cynthia over centralized regional warehouse
x
Margi is the only one with a computer
Central & Northern stores pay for shipping merchandise out of their own
pockets
Accuracy of inventories is not what it should be
Frequent changing of views on the system by employees
Payroll is kept by hand
Many employees start quitting
Clients are telling NOMAS that their sevices are no longer needed
Accepted orders need to be received quicker
Ben spends close to 95% of his time trying to keep system running
Ben is forced to work on the system during the weekends
Need to identify differenct types of orders
x
x
x
x
x
x
x
x
x
x
x
x
TOTALS
6
16
9
1
10
5
2
Proposed System
Our research of all NOMAS systems and procedures has shown the need for a new
information system and updated procedures to support any future organizational growth.
Knight Associates, Inc. proposes a centralized IT system and a centralized warehouse to
improve all organizational operations.
The new system will be a centralized database which will support the corporate office,
the centralized warehouse, and all retail stores. For the information used to determine
that a centralized database would be the most beneficial choice, please refer to Appendix
vi. Our analysis of the current system and procedures has enabled us to design a
centralized database which will host all of the functions necessary to the successful
management of NOMAS. Every retail store, phone order operator, and mail order
processor will be connected to a point of sale system to record all transactions. Each
retail store will have their own server and the corporate office where the phone order
operators and the mail order processors are located will have their own server. Each of
these servers will be connected to a central server which will host the centralized
database. This connection and the transfer of transaction data will be real-time to ensure
the centralized database has accurate information at all times.
Implementation of this new system will reduce data redundancy, data would be
standardized, inventory control would be provided, and will make all reporting easier as
all information will be stored on one database in real-time. In addition, with real-time
data, reports can be pulled at any time for any segment of the company to allow
management to view the current status and also compare previous time periods. This
gives management the ability to see the health of their organization at any given point.
We believe a centralized warehouse will be essential to managing the control struggle
NOMAS currently has. For the information used to determine that a centralized
warehouse would be the most beneficial choice, please refer to Appendix vii. All orders
will be shipped from the centralized warehouse rather than from individual retail stores or
manufacturers. A more standardized process is a more efficient process and will
ultimately get the product to the customer much quicker.
To help standardize the data, all products will need to have a standardized product tag.
Each product SKU will be unique to the type of product including size and color. This
will ensure that accurate inventory levels are known at all times and allow the centralized
warehouse to replenish stock in the stores as needed and place orders to manufacturers
for replenishment of warehouse stock as needed.
Catalog order forms will be simplified for ease of customer completion which will reduce
the number of errors. Implementation of flat fees for shipping based on type of shipping
will also be implemented reducing errors even more.
17
All of the suggested changes will put control back where it belongs: in the hands of top
management. There will be no further guessing at how each region is operated as it will
be standardized. This benefits the customer as they will be treated the same no matter
what store they shop at and will have a better chance of the product they are looking for
being in stock. This benefits NOMAS because a happy customer is a returning
customer providing a win-win situation.
On the following pages we have provided a copy of the Data Flow Diagram showing how
data will flow through the new system. In addition, we are providing a copy of the Entity
Relationship Diagram which will give a snapshot of the new database if implemented. In
order to aid the customer completion of the order form and process data into this
proposed system we have designed an interface for a new order system to be
implemented through e-commerce. Our proposed order forms for the new system begin
at Appendix ix.
18
DFD for Proposed System
Customer
1.0
1.01
Customer goes to
NOMAS website
online and places
order into Order
Processing Program
Places order by phone.
Operator receives all
necessary info and enters it
into Order Processing
program.
2.0
Program runs and
checks order for any
initial errors such as
blank fields, or
insufficient funds. If
error occurs customer or
operator is alerted and
instructed to fix it.
Otherwise order is sent
to Orders, OrderDetails
table in NOMAS
database.
NOMAS database
3.0
3.01
Orders are filled out by
shipping clerks and sent out
to customers. If items can’t
be located in any of NOMAS
warehouses, the
manufacturer is called to
ship the product(s). If the
item(s) still can’t be located
the customer is called and
issued a refund or rain check
Customer is
contacted if their
product is not in
stock, then issued a
refund or rain check.
19
ERD for Proposed System
For detailed information regarding the entities and attributes above please see our data dictionary at Appendix xiv.
20
Recommendations for Steering Committee Participants
Pedro Martinez – CEO - Pedro is the CEO of the company and is the one that decided to have
us come out and evaluate his company. He will insist on being on the steering committee.
Enid Martinez – VP - Pedro’s wife, she shares most of his work equally and will insist on being
on the committee. She is very knowledgeable of business operations at NOMAS.
Blake Robey – Data Processing – The person that the new Information System will affect the
most. He also has extensive knowledge of the current system in and how the system is
incorporated into daily business operations.
Milt Srinivasen – VP of finance – His entire department will rely heavily on the new IS. His
advice will be needed for major decisions on what NOMAS will need.
Lynne Tsai – VP of Direct Sales – Lynne will ensure that the necessary tools for mail and
phone orders are included in the new systems.
Hugh Bostrom – Manager of Customer Order Processing – Will assist in the daily tasks of
direct sales and order processing in the new system.
Ben Ginzberg – VP of retail – Ben will make sure that the new system will comply with his
needs as a regional manager of all retail operations.
Pedro Martinez
CEO
Enid Martinez
Blake Robey
Milt Srinivasen
21
Lynne Tsai
Hugh Bostrom
Ben Ginzberg
FEASIBILITY REPORT
The purpose of this report is to illustrate the need for new information systems to replace
NOMAS’s current systems, determine what benefits or risks may result from the new
system, and estimate the total costs and time needed to implement these systems. This
report will start by listing some of the problems identified by NOMAS staff, follow up
with an evaluation of the current system, and propose a summary of the new information
system.
The second half of our report will list the equipment and personnel necessary to set up the
new proposed system, establish the system’s feasibility, and forecast a project development
schedule. Our conclusion will include a list of policy level decisions that must be
determined by management.
NOMAS’s current information systems are quite simply put, either outdated or
nonexistent. Daily reports and monthly summaries from store managers are delivered by
mail or by hand, and are not standardized throughout the stores. Inventory is not tracked
efficiently throughout the NOMAS warehouses and stores resulting in costly shortages and
surpluses of merchandise. Customer mail orders from the NOMAS catalogue are typically
error-prone due to confusing order forms and insufficient forms of payment, resulting in
loss of sales and unnecessary waste of employee time devoted to fixing errors.
With our investigation of NOMAS complete, it is time to examine the problems and
possible solutions that the company is experiencing. One major problem that our team
uncovered centers on a poorly designed and managed database. Data redundancy is the
main problem experienced by NOMAS. We believe the most efficient way to correct this
problem will be to completely redesign the database using new software and programming.
Along with programming new applications for the database, we will be redesigning a new
online ordering system. A prototype of an E-commerce site can be found at Appendix xvi.
NOMAS is currently using outdated methods in sending and receiving order forms, ordercorrection forms, accounting forms, etc. The goal is that the new system will be more
user-friendly, which in turn will improve efficiency and increase profits. The new order
process will affect both employees and customers. A new Point of Sale (P.O.S.) system
will be implemented in each of the retail stores. This system will include touch-screen
monitors for simplified operations and the conservation of space in and around the
registers. NOMAS executives have expressed interest in moving their headquarters from
Coral Gables, Florida to facilities located in the North Miami area. Once there, a new
centralized warehouse will be formed. A centralized warehouse will help allocate proper
resources and merchandise more effectively and efficiently. It will also make organizing
inventory easier for employees and give management an opportunity to take advantage of
bulk discounts. The need has arisen to move merchandise to a larger warehouse. NOMAS
does not have the space required to house the merchandise for direct orders and retail
operations. Finally, and most obvious, is the fact that NOMAS can make a profit by
selling in Coral Gables and purchasing in North Miami. Along with these
recommendations, there are some recommendations that only NOMAS can resolve.
22
Our investigation uncovered several large problems associated with control. Many smaller
problems were directly linked to the larger problems. There is a lack of standardization
throughout the organization with regard to policies and procedures. Each retail store has a
system that each manager has implemented. This has caused many problems in
transferring merchandise, accounting, payroll, and customer service, just to name a few. It
would be in NOMAS’s best interest to standardize their policies and procedures to allow
for a consistent flow of information throughout the entire company. With regard to the
new system, we feel it is necessary for NOMAS to hire new technical assistants to help
Mr. Blake Robey control the database and the information being entered and retrieved
from within. Finally, new training procedures should be implemented to properly
familiarize current and future employees with the new system. We feel that training
should be made as simple as possible so that employees can receive a thorough
understanding of the system while not getting inundated with technical aspects that are not
vital to their role in the business. We feel that if NOMAS corrects these points, that many
of their underlying problems will be corrected as a result.
In order to implement our system new equipment will need to be purchased. NOMAS’s
old server will be replaced with an HP ProLiant ML310 G4 Server. Included inside will be
a Dual-Core Intel Xeon processor 3050. We will implement 25 HP rp5000 Point of Sale
Systems to be used at the 21 retail locations. The four remaining workstations will be
used for sales order processing and customer service. Each workstation will consist of
Intel Pentium 4 processor at 2.4 GHz/533MHz. Each station will operate on Windows XP
Professional with Microsoft Retail Point Of Sale Application Software. To compliment
these HP workstations, 25 15 inch HP L5006tm Smart Buy Touchscreen Flat Panel
Display monitors will be installed for use with the Point of Sale system. Each monitor will
include an integrated magnetic strip reader. Finally, we will provide five HP Compaq
Business notebook computers for use by administrators and technical advisors. Each
laptop will operate on Windows XP Professional. Each system will also have 512 MB
DDR2 SDRAM memory, 40 GB hard drive, and 14.1 inch XGA Panel. There is a three
year business standard pass support in place for the users. For each store, there will be a
cable modem provided for internet and network access. SQL Server will be provided to
create the new database for NOMAS. Each store will receive two handheld LED scanners
to be used to categorize and organize inventory quickly and efficiently for a total of 50
scanners. NOMAS has two current printers that will alleviate the need to purchase new
ones. Training will be included to make sure NOMAS employees and staff are competent
in using their new equipment.
Now that we have a list of the equipment, we will need a plan for what purpose we want
our information system to serve and we will have to test our system for feasibility. There
are five factors for us to test in our report – technical, operational, human, legal, and
economical.
Technical
For our feasibility analysis we will have to determine whether the equipment listed above
is readily available and if NOMAS staff has the technological skill set and technical
23
expertise to handle the new equipment. We will also have to determine some alternatives
to our proposed solution. All of the equipment we will need for the initial implementation
is available from HP’s website and ready to ship out on demand. We have used HP
equipment for other systems projects and are confident in its ability to perform all the tasks
proposed for NOMAS’s new system. Bundled with the equipment are the tools and
software needed to install the equipment, which is a necessity given that the NOMAS
organization as a whole does not possess the greatest technical skill set. This bundle also
includes helpful instruction manuals which should guide even novice computer users
through the installation process on smaller tasks.
Alternative options to purchasing all the equipment from HP would have been to shop for
the best prices from other websites or brick-and-mortar stores. The negatives to this option
are that many of the different components of the system may be incompatible with each
other, and attaining all of the necessary equipment on time at critical moments in the
implementation may be a problem and result in costly delays. NOMAS may also opt to
develop their own custom software to run on their system rather than going with the
commercial off-the-shelf (COTS) software. We strongly advise against this since it would
be unnecessary and costly as the software provided would be more than capable of
handling the large majority of NOMAS’s business tasks.
Operational
Operational feasibility asks the question “What will the new system do to make us better?”
We will answer this question by applying the PIECES framework. Performance will be
enhanced by a new online order processing system that will reduce errors and POS
registers that will track inventory levels. Information will be constantly updated by a new
database that tracks all store sales, online orders, and all other NOMAS transactions.
NOMAS’s centralized warehouse will prove to be economically beneficial by allowing the
retail chain to take advantage of bulk discounts, and the new online ordering system will
be very user friendly and attract new customers and increase sales. Control will be
maintained by assigning access to critical areas of the system to high-ranking NOMAS
personnel such as store managers and technical support employees like Blake Robey.
Efficiency will be improved by a centralized warehouse that allocates
resources/merchandise to the stores that need them, and by the new online ordering system
that speeds up online transactions and reduces simple errors. Finally services will be
improved when store policies and equipment are standardized throughout all NOMAS
retail stores which will result in customers receiving consistent service no matter which
store they decide to shop at. The benefits that were just described are just the tip of the
iceberg that NOMAS can expect from our new information system.
Human Factors
In order for our system to be successful we will have to determine what kind of impact it
will make on our users. Will the new system make our employee’s jobs easier? Who will
benefit from the changes? Questions like these must be answered before deciding whether
or not to proceed with the new information system. It is impossible to predict with
24
complete accuracy how well the users will adapt to the new systems, but we will use
NOMAS’s competitor stores like Sears and Wal-Mart for comparisons. The POS registers
that will be installed in the stores will be very similar to those used by Sears. Training on
this equipment is very simple, usually taking one to two weeks. Each register will have a
handheld scanner that will allow the cashier to simply scan the merchandise and eliminate
the need for the user to manually enter in the UPC code. POS registers also have the
ability to track inventory efficiently, and this in turn will make the manager’s job easier
when he or she needs to order stock for their store.
The task of data management for the new database will land squarely on the shoulders of
Blake Robey. This is a very big task for one person but we have been informed that Mr.
Martinez is leaning toward hiring additional technical assistants to help Blake manage the
database and the new computer equipment that will be installed throughout the NOMAS
organization. This aspect of the system has the biggest question mark of how will affect
the users since we don’t know what kind of personnel NOMAS will hire and the extent of
the technical knowledge they will possess. Overall we feel that the NOMAS organization
is more than capable of adapting to the new system, and in the end will make their users
more efficient.
Legal
Not all users may be willing to switch to the new system. With this statement I will
address the legal/political feasibility of our new system. With the implementation of most
new systems there is often a shift of power between employees. Some positions will be
assigned greater roles in the new system, while others will be relieved of some of their
responsibilities. It would be foolish not to expect an employee who feels scorned by the
power shift to not retaliate against the new system by trying to sabotage it. It is important
to focus on management when trying to determine which employees would undermine the
new system because it affects them in a negative way. Saboteurs can be thwarted by
discussing what impact the new system will have on their jobs and compromising on ways
to restore the balance and appease the employee in order to avoid any potentially negative
outcomes. According to our research, all products and operations lie within legal and
ethical boundaries.
Economic
Attached to this report are two additional reports. The first is a cost benefit analysis that
will provide NOMAS with an estimation of some of the tangible and intangible benefits
and costs that will come with the new system. This detailed analysis can be found at
Appendix xvii. The second report is a project schedule for the initial implementation of
the system and its subsequent training of the end users. This timeline is by no means
concrete and is subject to unexpected changes. That said this schedule will serve as a
useful “measuring stick” to determine where NOMAS should be at certain phases in the
developmental cycle. The project schedule is located at Appendix xxii. The figures we
came up with for both of these reports were based off of similar projects carried out by
some of NOMAS rival corporations.
25
The success of the new system will ultimately be in the hands of the NOMAS users. It is
completely reasonable to expect some deviations from our proposed schedule and analysis,
but nothing that we won’t be able to overcome during the implementation stage. We are
confident that the new system will be a great benefit to their organization for many years if
it is used to its full potential. Policies and procedures on how to use it will be up to upper
management to decide and will determine the level of success that NOMAS experiences in
the future.
26
Estimated Distribution of Revenues
These Numbers are pulled from the financial reports from NOMAS provided to the
team. These are estimated daily revenues taken in by each store based on past sales.
*Note: The records for the Northern region were not kept, and there is no way of
estimating what each store brings in on a daily basis.
Northern Regional Estimated Sales per Day
Pensacola
Ft. Walton Beach
Panama City
Tallahassee
Jacksonville
Total:
1,000
1,000
1,000
1,000
1,000
$5,000
Southern Regional Sales per Day
St. Petersburg
Winter haven
Coral Gables
North Miami
Ft. Pierce
Sebring
Sarasota
Ft. Myers
Palm Beach
Ft. Lauderdale
Total:
6,424.03
836.85
840.95
907.17
893.11
351.62
1,554.14
879.04
625.88
3,241.90
$16,554.69
Central Region Sales per Day
Gainesville
St. Augustine
Ocala
Daytona Beach
Leesburg
Orlando
Total:
956.40
291.84
1,054.85
1,603.37
439.52
2,267.93
$6,613.91
ii
NOMAS Daily Earnings Summary
Southern Region
Central Region
Northern Region
iii
Store Distribution in Florida
1. Pensacola
2. Ft. Walton Beach
3. Panama City
4. Tallahassee
5. Jacksonville
6. Gainesville
7. St. Augustine
8. Ocala
9. Daytona Beach
10. Orlando
11. Leesburg
12. St. Petersburg
13. Winter Haven
14. Ft. Pierce
15. Sebring
16. Sarasota
17. Ft. Myers
18. Palm Beach
19. Ft. Lauderdale
20. North Miami
21. Coral Gables
iv
NOMAS
Order Form
Name:
(1)
(2)
(3)
Address:
(4)
Zip Code:
Telephone:
Item Code
(
To find Order Cost, Multiply the unit cost by the
quantity
To find Order Weight, multiply item weight by quantity
Florida residents add 6% sales tax
To find shipping cost, refer to the enclosed UPS
Ground
Service Chart to find your zone. Then use the
Residential Ground Rates Chart to find Total Shipping
Cost based on Total Order Weight.
)
Item
Description
Color
Size
Quantity
Unit Cost
SubTotal:
Tax (3):
Shipping
(4):
Total:
v
Item Order Cost
(1)
Unit Ship.
Weight
Total Weight:
Item Order Weight
(2)
Centralized vs. Decentralized Warehouse
Centralized Management of Inventories
Advantages
Stronger, more professional inventory managers may be employed who are removed
from day-to-day events that cause reactionary actions. These individuals can be
thoroughly trained in both the general principles of inventory management and the
particular system being used to drive the ordering process. Finally, special buying
opportunities can be more effectively explored since all the information resides in one
location and the individual is taking a total company view.
Disadvantages
Problems can develop unless some mechanism is created to make the central planners
aware of local events. Finally, local management can feel disenfranchised by not having
control of their inventories.
Decentralized Management of Inventories
Advantages
The key advantage to having inventory decisions take place locally is that personnel are
aware of local factors and upcoming events. They are in a position to anticipate special
promotions that may be strictly local in nature. Additionally, they may be aware of
unique input regarding the plans of major customers. Finally, allowing the local
management to control and manage their inventory fosters a sense of ownership and
control that can be desirable.
Disadvantages
The biggest disadvantage to local control is that local personnel may lack inventory
management skills and operate on a highly subjective basis, even when fairly
sophisticated tools are available. There is a tendency to over react to events which are
transient in nature. Finally, local management has a strong bias for high inventories
being visually present. That is, they fail to take advantage of the inventory that is in the
pipeline or which exists in the central warehouse.
vi
Centralized vs. Decentralized IT Systems
Centralized IT Organizations
In the centralized model, all IT functions (strategy and planning, application development and
maintenance, and operations) report directly to a senior executive such as the chief information
officer (CIO), chief technical officer (CTO), or sometimes to the chief financial officer (CFO) or an
administrative officer. All of the assets like hardware, software, personnel and the budget are
controlled by this organization.
On the surface, this appears to be the most attractive way to manage because there are several
obvious benefits. Procurement of hardware and software is possible on the broadest scale within the
company, and centralized operations produce substantial economies of scale. For example,
centralizing data centers typically results in a 10 to 15 percent cost savings. A centralized staff
eliminates redundant functions, such as multiple help desk support groups. A unified approach to
architecture and standards reduces integration difficulties and costs for new applications. Clarity of
purpose and alignment with overall company strategies improve due to the simpler organizational
communications required.
However, there also are potential problems with a centralized structure. As a cost center, IT's large
budgets are a constant point of contention, putting it on the defensive within the company. A fully
centralized structure also requires a very effective decision and resource allocation process within
the company, since each business unit can have different or conflicting needs for the IT workforce
and operations capacity. Also, if the operation of equipment and application support is not excellent,
outages in one business unit can cripple the entire company.
The key to a centralized organization's success is its responsiveness. If the big centralized operation
can be responsive to the needs of the business, then that approach can make sense.
Decentralized IT Organizations
Many companies successfully decentralized IT operations to their business units as they adopted
client/server architectures. Many other companies adopted decentralized IT structures during
mergers because it was frequently the quickest way to solve the problem of integrating disparate
hardware and software infrastructures. The benefits of the decentralized approach in these situations
are tangible. Each business unit has complete knowledge and choice over the allocation of IT
resources to support business priorities. Costs are fully allocated to business unit initiatives and
there is the perception of faster, more flexible responses to necessary changes. IT architects and
engineers typically have better access to business information, allowing them to closely tailor their
proposed solutions to specific business problems. In decentralized organizational models, the IT
organization is typically perceived as a partner in the business unit, and defensive tensions, which
can occur in highly centralized models, are reduced.
However, there are challenges to the decentralized model. The company as a whole will have higher
total procurement and operations costs
due to duplicate data centers and
vii
multiple independent procurement and vendor partnerships. New technology can be very difficult
and expensive to introduce. Even relatively inexpensive desktop tools, such as e-mail, messaging
and calendar applications, can proliferate widely, producing unnecessary integration expenses and
introducing hurdles to the flow of company information.
An escalating risk is the potential impact on customers and business partners who need products and
services from more than one business unit. With opportunities from new technologies, such as the
Internet, increasing the interaction between external partners and internal business processes, the
need to have a unified presence for a company increases. This unified presence is nearly impossible
to achieve in a completely decentralized organizational model.
Then there is the issue of accountability. Who is responsible for failure especially of a crossorganizational system? What about accountability for security and its new complexities? There is
usually a huge amount of finger pointing that goes on when something goes wrong in IT, and many
CEOs don't appreciate it. They prefer a single point of accountability, which is difficult in a
decentralized model
http://www.darwinmag.com/read/100103/question54.html
viii
PROPOSED E-COMMERCE USER INTERFACE
The user’s first action is to enter their CustomerID. Once they Log-in they can enter the items that
they want to order from the catalog. If they don’t have a CustomerID yet they can click the second
button to register.
ix
If the user makes a mistake and forgets to fill out one of the fields they will be prompted by a
message box to correct it. In this example the user did not enter their name.
Otherwise, if they have filled out everything correctly they will be prompted by a message box
confirming that they are now registered in the NOMAS database.
x
Now that they are registered customers they can start ordering products from the NOMAS catalog.
When they fill out the item number field with an item number from the catalog a picture of the item
along with its description appears on the order form. The user can then select their desired color
and size from the drop down boxes.
Now that the customer has chosen their color, size, and quantity of their item they can add the
item(s) to their shopping cart.
xi
A list of the items the customer has ordered appears on the list and the program calculates the total
cost of all items along with the shipping charges and tax if applicable. The user can then choose to
keep shopping or to make a payment.
xii
xiii
DATA DICTIONARY
Table
Attribute
Data
Null? Unique? Pkey? Fkey? Type
NOMASOrderDetails
NOMASOrderID
ProductID
Quantity
NOMASOrderID
ManufacturerID
OrderDate
DateReceived
OrderComplete
PaymentID
OrderID
Amount
PaymentType
OrderID
CustomerID
EmployeeID
OrderDate
ShippedDate
Freight
RegionID
RegionDescription
ProductID
ProductName
ManufacturerID
ProductColor
ProductSize
ProductWeight
UnitRetailPrice
UnitWholesalePrice
UnitsInStock
UnitsOnOrder
ReorderLevel
ManufacturerID
CompanyName
ContactLastName
ContactFirstName
ContactTitle
Address
City
State
PostalCode
Country
N
N
N
N
N
N
Y
Y
N
N
N
N
N
N
Y
N
Y
Y
N
N
N
N
N
Y
Y
Y
N
N
Y
Y
Y
N
N
Y
Y
Y
N
N
N
N
N
NOMASOrders
Payments
Orders
Regions
Products
Manufacturers
N
N
N
N
N
N
Y
Y
Y
N
Y
Y
N
N
N
N
Y
Y
N
Y
N
Y
N
Y
Y
Y
Y
Y
Y
Y
Y
N
Y
Y
Y
Y
N
N
N
N
N
xiv
Y
Y
N
Y
N
N
N
N
Y
N
N
N
Y
N
N
N
N
N
Y
N
Y
N
N
N
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
N
N
N
N
F
N
N
N
Y
Y
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
Int
Int
SmallInt
Int
Int
DateTime
DateTime
Bit
Int
Int
Money
NVarChar
Int
Int
Int
DateTime
DateTime
Money
Int
NVarChar
Int
NVarChar
Int
NVarChar
NVarChar
NVarChar
Money
Money
SmallInt
SmallInt
SmallInt
Int
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
Size
4
4
2
4
4
8
8
1
4
4
8
15
4
4
4
8
8
8
4
30
4
40
4
15
15
20
8
8
2
2
2
4
40
20
15
30
60
30
20
10
15
Customer
Employees
OrderDetails
Stores
Phone
Fax
CustomerID
LastName
FirstName
Address
City
State
PostalCode
Country
Phone
EmployeeID
LastName
FirstName
Title
DateOfBirth
DateOfHire
Address
City
State
RegionID
PostalCode
HomePhone
WorkPhone
ReportsTo
OrderID
ProductID
Quantity
PaymentID
TaxRate
OrderStatus
StoreID
StoreAddress
StoreCity
StoreState
StorePostalCode
RegionID
Phone
ProductID
UnitsInStock
N
Y
N
N
N
N
N
N
N
N
Y
N
N
N
Y
Y
Y
N
N
N
N
N
Y
Y
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
Y
Y
N
N
N
N
N
Y
Y
Y
N
N
N
N
Y
Y
Y
Y
Y
Y
Y
N
N
N
N
xv
N
N
Y
N
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
Y
N
N
N
N
Y
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
Y
N
N
N
N
N
N
N
Y
N
Y
N
NVarChar
NVarChar
Int
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
NVarChar
Int
NVarChar
NVarChar
NVarChar
DateTime
DateTime
NVarChar
NVarChar
NVarChar
Int
NVarChar
NVarChar
NVarChar
Int
Int
Int
SmallInt
Int
Real
NVarChar
Int
NVarChar
NVarChar
NVarChar
NVarChar
Int
NVarChar
Int
SmallInt
24
24
4
20
15
60
30
20
10
15
24
4
20
15
30
8
8
60
30
20
4
10
24
24
4
4
4
2
4
4
15
4
60
30
20
10
4
24
4
2
Prototype of E-commerce Site
xvi
COST/BENEFIT ANALYSIS
A. Tangible Costs.
1. Developmental Costs
a. Company Personnel. Most of the costs of personnel for the new system will be the
occupation of their time during training. The main exception to this is their current
computer manager, who will need to be involved fully in the implementation of the new
system.
b. Developmental System. – There are no developmental systems needed if the system is
implemented on schedule.
c. Computer Processing. – All of the computer processing will be controlled at the main
headquarters by a main server. Each local location will have computing power for their
individual needs, but then will report their operations to the main database.
d. Supplies. - $500
e. Overhead. – Office space is already accounted for in each location, Also each store is
already paying for utilities. The new utilities for each location will consist of $79/month
for Business class DSL.
f. Start-up Costs. Training costs will be $100 per location. During training the system will be
tested to make sure the interaction with the main server is running correctly and
accurately.
2. Operating Costs
a. Hardware/Software. Hardware costs will be for 1 main server, 25 Point of Sale bundles,
one for each location and 4 extra for the main location for online, mail, and phone orders.
There will also be a cost of 5 notebook computers for the technicians and managers of
NOMAS.
HP ProLiant ML310 G4 2.13GHz SAS/SATA Server with RPS
HP ProLiant ML310 G4 Server
Dual-Core Intel® Xeon® Processor 3050 (2.13GHz/1066MHz 1x2MB L2 cache)
HP 512MB UB PC2-5300 1x512MB Memory
HP Embedded 4 Port SATA Controller
Embedded NC320i PCI Express 10/100/1000T Gigabit network adapter
48x IDE (ATAPI) CD-ROM Drive
HP 430W redundant power supplies
Integrated Lights Out 2 (iLO 2) Standard Management
1-year limited warranty, parts only.
Unit Cost - $1,449.00
xvii
HP rp5000 Point of Sale System - $2699 Bundle Offer
Windows® XP Professional
Microsoft® Retail Point Of Sale Application Software
Intel® Pentium® 4 2.4GHz/533MHz FSB
Intel® 845GV
512MB DDR PC2700 Non ECC (DDR333)
80GB ATA/100 7200RPM HD 1st
48X/32X Combo Drive - XP Pro only
Integrated Intel® Extreme graphics
Restore CD kit - XP Pro
Integrated Intel® PRO/100 VM network connection
Soft modem Hi-Speed 56K FH PCI
PS/2 ball scroll mouse HP branded carbonite
Norton Anti-Virus 2005 - Available only with XP Pro
rp5000 documentation
HP L5006tm Smart Buy Touchscreen Flat Panel Display
HP USB Thermal Receipt Printer
HP USB Barcode Scanner x 2
HP Cash Drawer
HP USB POS Keyboard
HP USB Mini Magnetic Strip Reader
Warranty - 3 years - parts, labor, onsite - next business day
Unit Cost - $2,697.00
25 Units Total - $67,425.00
HP Compaq Business Notebook nc6220HP Compaq Business Notebook nc6220
Windows® XP Professional
Intel® Pentium® M 750 processor (1.86GHz, 2MB L2 cache, 533MHz FSB) (Intel®
xviii
Centrino™ Mobile Technology)
512MB 400MHz Shared DDR2 SDRAM (1 DIM)
40GB hard drive (5400 rpm)
14.1-inch XGA panel
MultiBay II 24X DVD/CDRW Combo drive
56K modem
Integrated 10/100/1000 NIC
Integrated Intel® PRO/Wireless 2200BG (802.11b/g), Bluetooth
HP TPM Embedded Security Chip, Integrated Smart Card Reader
6-Cell Li-ion battery
Keyboard with dual pointing devices
3 Year worldwide limited warranty
Unit Cost - $1,499.00
5 Unit Cost - $7,495.00
Verizon Business Class DSL – Free installation and activation $79.95/month after that per
Internet connection for a total of $1,680
b. Overhead. After the implementation of the system, most of the administration overhead
will be limited if not eliminated.
c. Personnel. The amount of personnel changes will be minimal. The new system will
mainly help the existing company function much better.
d. Supplies. The new system will cut down on most supplies, with the exception of receipt
tape. This will be around $1000 a month.
e. Communications. The new system will be hosted from our main server through the DSL
line. This will cost $79.95/month. There will be email exchanged and each site will have
their own internet connection for communication with the main office. All mail orders
will be sent to the main location.
B. Intangible Costs.
1. Developmental Costs. Since there is no current technical information system in use, and it is
all mainly done by hand, the implementation and turn over to the new system will not really
cause any interruption of business. The biggest concern with the new system would be
employee apprehension due to ignorance of the new system. But with proper training this
should also be eliminated.
2. Operating Costs. There may be errors with the new software. This may cause a slower
implementation of the new system. The new system will probably enhance employee morale
mainly because the employees no longer have to complete every sale by hand.
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C. Tangible Benefits.
1. Developmental Benefits. The remaining market value of the current equipment and the costs
of retaining current employees will be completely tax deductible.
2. Operating Benefits. These can be broken into three categories:
a. Reduced Operating Expenses. Fewer processing errors, a drastic reduction of paperwork,
improved throughput/turnaround/response times, streamlining of business processes
(reduce job steps, improve controls), and reduced staff responsibilities. The inventory
control now included in the new system ensures that stolen or “lost” inventory will no
longer be written off as expenses and can be traced to a location or even an employee.
b. Improved Cash Flows. The system should help in terms of accounts receivable. NOMAS
will be able to reduce bad debts, keep better control over inventory, take advantage of
discounts, improve credit ratings, and so forth. They will be able to keep accurate records
of all sales.
c. Increased Revenues. There will be an increase in sales due to the new E-Commerce
system. Also the control on inventory will ensure the increase in revenue and find trouble
spots.
INTANGIBLE BENEFITS
A lot of the intangible benefits of a new Information system for a company will be a boost in
employee morale. The cashiers and managers of each location will have a much easier time selling
and keeping track of inventory. The elimination of the hand operated sales process will allow
employees to help customers, clean the stores, and improve overall store operations. The creation of
the new system will ease most of the employees’ overall daily labor.
Customer goodwill is a major benefit of the new system. Ordering online will become available,
phone orders will be processed much faster, and mail orders can be taken and completed very
quickly. Customers will be able to purchase clothing at the retail locations much more quickly and
easily as well.
With accurate tracking of sales and trends, the new system will eventually allow for analysis of
marketing and advertising techniques. This wasn’t very possible with the old system, where some
regions and individual stores never kept sales records. NOMAS will also be able to keep track of
each customer, notify them of specials and sales, and also keep track of purchasing trends.
ANALYSIS SUMMARY
Initial Outlay
Laptop
$ 7,495.00
Monthly Internet Fee
$ 1,680.00
Workstations
$67,425.00
Server
$ 1,449.00
$78,049.00
Total
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1. Payback Analysis: Due to the low value of the current system that NOMAS has in place, most
of the payback will occur over time from the benefits of the new system. We can only estimate
tangible monetary gains in sales and profits from the new system. Yearly it would be fair to
estimate an increase of sales to be around $15,000 and the cost savings of around $5,000 a year.
With these estimates we can estimate a payback period of only 3.8 years.
2. Return on Investment: The expected life of the new system is estimated to be around 5 years. In
5 years the return on investment is 115%. This is calculated using a required rate of return of US
Treasury bonds of 4.55%, savings of $20,000 a year, and the initial outlay of $76,448.95.
3. Net Present Value: When calculating the Net Present Value we use the current US Treasury
bond rate of 4.55% and annual cash flows of $20,000 with an initial outflow of $76,448.95 over
5 years, which is the estimated life of the current system. This gives the project a $10,739.73 net
present value.
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