information Managment
...ed. With any recommendation, you must weigh the benefits versus the increased costs. With the IT Plan we assembled for Company XYZ, we are using on hand employees, and are simply re assigning tasks. Looking long-term, the company should potentially be able to trim their employee levels, as the employees learn the system and how to work the soft-ware. The increase in revenue through sales, as well as, inventory turnover, will more than justify the possible increase in employee wages due to training. Equipment The current equipment levels, or lack there of, will be the company’s biggest investment and area of improvement. The carbon copy system of tracking inventory is completely antiquated, and inadequate. Investment in a new network will greatly increase the com-pany’s ability to monitor and track in real time, what the current inventory levels are. This new equipment will also allow them to more effectively receive electronic orders and track those orders all the way through accounts payable. Receiving inventory will also be facilitated with this new system, allowing employees to scan purchase orders into the system, where they can be reconclilled and accounted for. The one time expense of this system will be substantial, but the return on investment will more than justify the purchase. Time Frame A crucial part of any IT plan is a set time frame for the proposed changes. For our rec-ommendations, we are proposing a 5 year life cycle and a monthly review of the plan and its progress. Five years from the implementation of the new system and process, the company management will assess the effectiveness of the IT plan over the last few years. They will also design a new plan taking into consideration future company needs, as well as, those that might not have been considered under the past IT plan. ROI An essential part of any proposed plan is calculating the financial return on the invest-ment involved with the cost associated with the new plan’s recommendations. An ROI analysis should be done before the company makes a decision to proceed. This analysis is important to the company to know if the new system will pay for itself, in the form of increased sales revenue. A Return on Investment analysis was performed by the Learn-ing Team and will be submitted to management as part of our IT Plan. Software/Security With the substantial investment in this new system, we took into consideration in our IT Plan the software needed to run it properly, as well as the security needed to maintain a secure network and online business. Both of these components add cost to the IT Plan that we are proposing to management, but both are essential to ensure that the employees can use this system and that it will meet the company’s needs. It would be pointless for a company to invest substantially in a new system that ultimately does not work for its em-ployees. As a Learning Team, we feel that the software and security will ensure that the system will work and be used by the employees of Company XYZ. The additional cost will be included in our ROI and we still feel certain that the new system will pay for itself in an acceptable time frame. Analyze In analyzing a new system, the team prepared a Strength, Weakness, Opportunity, and Threat (SWOT) Analysis and a cost benefit analysis to determine if it is in the best interest of Company XYZ to change its current practice of doing business. SWOT Analysis Figure 1 shows the factors affecting the market opportunities for company XYZ. Stated briefly, the SWOT analysis describes the possible factors that may occur during Figure 1. SWOT Analysis STRENGTHS WEAKNESSES Management is entrepreneurial Roles and responsibilities are not clearly defined. Potential conflict in future as company grows and IT plan is implemented Low budget-priced software is available for implementa-tion, product works on various windows platforms Cost of the initial investment may not be available at this time Privately owned business. Skilled software programs can be implemented improving inventory, accounting, quality con-trol Cost to train employees and management may not be in the budget Implementing this IT plan would not cause a lot of debt. Business is very liquid and profitable. Excellent growth in sales revenues by integrating IT Plan Business plan may not contain a budget for the long-term maintenances of the IT plan Business produces, packages, and ships in-house. Products will be quickly processed and delivered to vendors better than before Possible downtime to switch to the new program Not a lot of capital investment required compare to the benefits over the long term implementation. OPPORTUNITIES THREATS Continuous opportunities in the U.S. Significant opportuni-ties in selling product in foreign countries with wholesalers and retailers due to a highly efficient IT program Computer software is constantly changing and could easily be outdated before this company could afford to upgrade Company could be highly competitive and possible rise to the top of its field Employees and management may not integrate the new IT plan well causing productivity, service, and quality to decrease Possibly franchise or expand throughout the US Management may not be willing to invest Export restrictions to foreign markets. inception of this plan. By reviewing this analysis, management of the company XYZ may be able to understand and know what to expect through the implementation of the IT Plan and its possible future to company XYZ in a competitive market. The company has little debt and a possibility for a strong future. One strength of implementing this plan is the availability to purchase low budgeted software that can be networked together and is fairly user-friendly. For a business of this size, having an af-fordable plan is more likely to be implemented and approved through management. Other strength is that the cost of the plan would be repaid within the first year of the initial im-plementation, if the plan is approached and maintained right. The long–term benefits of this plan will greatly out way to the cost in training, software, and maintenance. The most important strength of the IT plan is it ability to provide a more quality product and deliver at a higher efficiency rate. Company XYZ’s opportunities includes growth potential and ability to continue developing merchandise that would raise the standards, and position them at the top of their field. This could form a monopoly for company XYZ which could insure its future success and allow them to develop and branch out to form other centers across the coun-try. Currently, their product has only been distributed throughout the U.S. By implement-ing this IT plan, company XYZ could gain a larger product demand, and widen their mar-ketability in other fields and to other consumers. Significant opportunities also exist by selling products in foreign countries with wholesalers and retailers due to a highly effi-cient IT program. A weakness of company XYZ is simply the failure to implement the IT plan. This could occur from management, employees, and customers. Detailing the mainte-nance and training of the IT plan is imperative to its success. Company XYZ also finds a weakness in the cost of training the employees and management as well as the initial in-vestment cost might not be in the company’s budget. Another main weakness is the chance of downtime during the implementation process. There really is not an easy way to transition the plan, but it could be avoided with the proper precautions. Threat could occur if company XYZ does not budget for upgrades in the future. With computer software constantly changing, it could be easily outdated before the com-pany could afford to upgrade. The result of the threats is a loss in Sales Revenue and future business. Because the product lifecycle is short for most software, research de-velopment cost will continue to rise. Cost Benefit Analysis Based on network design in Figure 3, the team put together a cost estimate for the equipment plus software, installation, and training. The material listing in Figure 2 Figure 2. Point of Sale Material Listing Item Model Cost/Unit Quantity Total Unit Cost Computers (Keyboard, CPU, Flat Screen, CD RW Burner, 3.5" Floppy, Mouse) Gateway 505GR $1,149.97 3 $3,449.91 Plus View Tower Server 300439 $100.00 1 $100.00 D-Link Router 709520 $483.95 1 $483.95 Samsung Color Laser Printer 442432 $549.43 1 $549.43 Fax 571078 $159.00 1 $159.00 ScanJet 5550C Scanner 302018 $299.99 1 $299.99 TAPE Drive 704816 $513.95 1 $513.95 MS Office 2003 Professional $500.00 1 $500.00 Inventory Scanner Telxon 960X $650.00 2 $1,300.00 POS System (Hard-ware/Software Bundle, Credit Card Reader, Bar Code Scan-ner, Cash Drawer, Receipt Printer, QuickBook POS Soft-ware for Retailers 827668 $1,499.99 2 $2,999.98 Labor - Installation $200.00 Training $800.00 Total Cost $11,356.21 consists of equipment the team considered adequate to the meet the small business needs of Company XYZ. The quotes for the hardware plus software are actual vendor prices taken from various websites. It is estimated to take about 25 hours to assemble the net-work. The estimated hours is based on the team’s experience in assembling a basic com-puter network. The $8.00 labor rate used to calculate cost was based on student price range for providing similar services. As a small business, it may not be in the best interest finan-cially to hire a professional to assemble and train employees on a simple network design. Training hours are an estimated based on what the team judges to be adequate to show an employee how to use the system. The employee labor rate is based on a wrap rate of $7.075 per hour. The wrap rate includes the different labor categories of employees that will be trained on the new network system. Company XYZ spends about $11,800 a year in handling inventory based on two people working 60 days at a labor rate of $6.15. These figures are based on actuals pro-vided by one member of the team who has worked for the company for a period of about six years. By implementing the new network, the system will pay for itself after a period of one year. Based on a five year life expectancy of the current system, the return on in-vestment (ROI) is estimated to be about 619%. This is calculated by multiplying $11,800 for a five year period and adding in the initial investment of $11,356 and then dividing by the initial investment of $11,356. The Figure 3 network design is feasible. All the equipment and software are commercial-off-the-shelf (COTS) items are readily available by various vendors. Based on a substantial return on investment, the team believes the new network is in the best interest of Company XYZ, and therefore, recommends the purchase of equipment, labor to install, and training for employees. Design Company XYZ has a simple approach of doing business. The inventory received from the vendor is recorded by physical count by store employees. At the end of the year, two employees will spend up to 60 days counting every item in inventory and com-pare with the stores paper logs. Merchandise that leaves the store is recorded in a cash register, which functions include the manual calculation of product price and generation of purchase receipts. Em-ployees have responsibility to keep the store shelves stocked. When a product runs out, a vendor is called to supply more products. In the mean time, the store will lose potential profit while it waits for the shipment to arrive. At the end of the day, the cash register drawer is balanced using receipts and a calculator. The money then is then deposited in the bank in next business day. The cur-rent operation is more labor intensive as a result of having to track and count inventory manually. In order to improve the efficiency of Company XYZ, the team has designed a simple Point-of-Sale (POS) that will save the company approximately $11,800 in ex-penses yearly. Figure 3 delineates the system that would be installed at Company XYZ. Figure 3. Point-of-Sale Network Diagram To better understand the Figure 3 Network Diagram, each network component will be discussed. The five main components of the system are the Internet, Server, Warehouse, Back Office, and Point-of-Sales (POS) Sales Floor. Internet The internet is the means in which Company XYZ can quickly communicate to its vendors when inventory is in short supply. The vendors through the same channel com-municate to Company XY...