"IFSM 461: Systems Analysis and Design Precision Electronic Parts, Inc. Case StudyIntroduction This case study will be used for a series of staged assignments.It should be thoroughly read andunderstood prior to working on any of the assignments. SettingPrecision Electronic Parts (PEP), Inc., is a small private business that has retained you to assist in thedevelopment of a new billing and payment system and associated processes. Background PEP is a small, private specialized electronics company in Kansas. For the past 20 years, it hasmanufactured a wide range of precision electronic components and replacement parts for medicalequipment used in hospitals, doctor’s offices, and pharmacies. Last year, the company began buildingand delivering custom low voltage motors that reduced electricity costs and made older medicalequipment more environmentally friendly.More recently, PEP has added a new line of more efficientlow voltage motors that can be used in precision equipment outside the healthcare industry. As a result, PEP is experiencing significant increases in orders for the motors. The manufacturing facilityhas been expanded, and the sales and marketing teams have been enlarged.All of this is straining theOrdering & Shipping Department and the Inventory Management Department, which have received noincrease in personnel.They are meeting the challenge, but the Executive Leadership Team (the CEO,COO, CFO, and CIO) know that they are only treading water.The Finance Department, however, isgetting further and further behind in their invoice, billing and payment processes.The BusinessAdministration Department has stepped up to the task, but is at the breaking point.IT Steering Committee The IT Steering Committee (ITSC) at PEP is comprised of the Executive Leadership Team, the Senior VicePresident and Vice President. • Carolyn West is the Chief Executive Officer (CEO). She has been at the company for 11 years. Carolynhas a background working for and managing electronics companies. Like most CEOs, Carolyn is focusedon the strategic and long-term business health of PEP. She chairs the IT Steering Committee. Carolynand the committee members jointly make decisions about IT systems and major organizational businessprocess changes. • Tim Uduak, Jr. is the Chief Operating Officer (COO) and the son of founding partner Tim Uduak, Sr. Timhas been around the company since its inception in one capacity or another, except for four years ofcollege and a 3-year break to startup his own company. When his startup failed, Tim came back to PEPas the SVP, Engineering & Manufacturing Operations. Last year, he was promoted to COO. While Tim hasPEP Case Study1 a strategic focus and is not technology averse, he prefers to solve business challenges with processesrather than information technology. • Karl Manley is the Chief Financial Officer (CFO). He has been with the company for 9 years. Karl has abackground in accounting and finance, and is a certified public accountant (CPA). He tends to focus onthe company’s financial health to the exclusion of all other business concerns. While Karl is technologyfluent, he resists new IT purchases unless there is a clear and direct connection made between thetechnology investment and improving the company’s financial profile. The Director, Accounts Receivable(Mary Winston) and the Director, Accounts Payable (Amy Dole) report to the CFO, and together areresponsible for the financial operations of the business. • Mark Temple is the Chief Information Officer (CIO) and head of the IT Department.He provides all ITservices to PEP.Prior to being hired as the CIO, Mark was an IT manager at a large multi-nationalcorporation responsible for providing IT services to their offices from the headquarters in Lincoln,Nebraska.While in that position, Mark participated in very structured IT processes, and developed anappreciation for working with the operational and management divisions to ensure success of ITprojects.When he arrived at PEP, he advised the CEO, COO and CFO that an IT Steering Committeecould help ensure they pursued the most beneficial IT projects.He is your primary point of contact fordealing with PEP in analyzing their processes and systems. • Susan Black is the Senior Vice President (SVP), Engineering & Manufacturing Operations and is Tim’sreplacement. Susan has worked for the company for 13 years. She started as a Senior Engineer, andaftersix years was promoted to Director, Engineering, where she spearheaded the successful research anddevelopment of the low voltage motors. Susan is a champion of information technology as long as it isclearly focused on the core business. • Jason Udo is the Vice President (VP), Business Administration. He oversees all departments, exceptEngineering& Manufacturing, Finance, and IT. His responsibilities include key support functions such asSales, Marketing, Ordering & Shipping, Inventory, and Human Resources. The ITSC has adopted the IT governance processes recommended by the CIO.They review proposals forIT investments and determine where to invest their limited funds.Each of the members has particularareas of interest, but all of them are focused on reducing the overall cost of running the business,increasing sales, and managing the cost of IT for the company.The ITSC has established a series ofcheckpoints at which they make go/no-go decisions on IT projects.At these decision points thefollowing documents are reviewed by the ITSC:? Preliminary Investigation Report – describes the problem/opportunity, identifies benefits ofa new system, and reports on various aspects of feasibility of the proposed project.? Requirements Specification – documents the requirements to be fulfilled by the proposedsystem.? Systems Design Specification – translates the requirements into a logical design for theproposed system. ? Final System Report – compiles previous documents and lays out the way ahead if theproject is approved and funded.PEP Case Study2 As each report is approved, work on the following step begins.This controls the amount of time andeffort put into a request for a system.For example, if the Preliminary Investigation Report is notaccepted by the ITSC, no further work is performed on the system proposal.Your TaskYou are an independent Business and IT Systems Analyst, specializing in developing IT solutions for smallbusiness needs. You have been contracted by the CIO to prepare the documentation required for theITSC as they consider replacing the information systems associated with operations, businessadministration, and finance.Due to the backlog in the billing and payment processes, the ITSC wants tostart by replacing the current customer billing and payment system and processes.However, the ITSCrequires assurance that a new billing and payment system and processes can be interfaced with othernew IT systems and updated business processes as needed. While there is currently no money in thebudget allocated to replacing or upgrading these systems, the executives are committed to moving thecompany forward and improving PEP’s ability to manage its growing business efficiently and effectively. Your ActivitiesAfter interviewing each member of the ITSC, you have collected the following information regarding theinvoice, billing and payment processes and needs: • Customer billing is handled by the Invoicing Department, which reports to the VP, Business Administration. • Customer payments are handled by the Accounts Receivable Department, which reports tothe CFO. • Customer billing and payments are managed and recorded in an in-house developed Microsoft Access based solution. The solution was developed by the IT Department and is housed on aserver controlled and managed by the IT Department. The solution is updated on request fromthe Invoicing and Accounts Receivable Departments. • The Sales Department works with Invoicing to establish new customer accounts and updateand close existing accounts as needed. • The Ordering & Shipping Department sends a monthly report to Invoicing where the productsordered and shipped and their codes are entered into the invoicing module. Pricing is computedbased on the product codes and quantities entered. • Invoicing is responsible for adding, updating, and maintaining the product codes and pricingused by the invoicing database on the 15th of each calendar month. The monthly reportcontaining the updates is provided by the Marketing Department. • Invoicing generates and mails customer bills on the last business day of each calendar month. • Customer payments (lump sum) are due by the 10th of each calendar. Customers send thepayments to Accounts Receivable. Accounts Receivable is responsible for updating customeraccount records when the payments are received. • Invoicing is responsible for identifying accounts that are 30 days, 60 days or more overdue.These reports are sent to Accounts Receivable and Sales. Accounts Receivable handles allcollections. • There is a 2% fee added to all invoices that are 30 days or more overdue. PEP Case Study3 • Accounts Receivable notifies the Sales Department to assist with customers who are 60 daysor more delinquent. Ordering & Shipping is also notified so that no further shipments are madeuntil the outstanding invoice is paid in full. These situations are rare. • Installation services are offered as a fixed price fee for small businesses (doctor’s offices,individually owned pharmacies, etc.). Larger installations (hospitals, chain pharmacies,pharmaceutical manufacturers, etc.) are billed on a pre-defined hourly rate. • Volume discounts are not currently offered, but Marketing is planning to offer this discountwithin the next six (6) months because the low voltage motors are increasingly being ordered inquantities of five (5) or more. The following volume discounts will be offered: o 5 or more: 2% o 10 or more: 5% o 25 or more: 10% • Electronic invoicing via email is not currently offered, but Marketing and Invoicing plan to offerthis feature within the next six (6) months. • Electronic payment to a lockbox account is not currently offered, but Marketing and AccountsReceiving plan to offer this feature within the next six (6) months. • The customer account data elements currently include: o Customer Organization Name o Customer Street Address o Customer City o Customer State o Customer Zip Code + 4 o Primary Contact First Name o Primary Contact Last Name o Primary Contact Phone Number o Primary Contact Email Address o Secondary Contact First Name o Secondary Contact Last Name o Secondary Contact Phone Number o Secondary Contact Email Address o Products Ordered o Product Ordered Date o Products Shipped o Product Ship Date o Quantity o Product Pricing o Calculated Price (Calculated Field) o Amount Due (Calculated Field) o Amount Paid o Date Paid o Amount 30 Days Overdue (Calculated Field) o Amount 60 Days Overdue (Calculated Field) o Amount Greater Than 60 Days Overdue (Calculated Field) o 2% Overdue Amount (Calculated Field) • The customer account data elements required for near-term plans include: PEP Case Study4 o Quantity Discount (Calculated Field) o Electronic Invoicing (Check Box) o Electronic Payment (Check Box) • Paper invoices currently contain the following data elements: o Unique Serialized Invoice Number (System Generated?) o Customer Organization Name o Customer Street Address o Customer City o Customer State o Customer Zip Code + 4 o Products Ordered o Product Ordered Date o Products Shipped o Product Ship Date o Quantity o Product Pricing o Calculated Price (Calculated Field) o Amount Due (Calculated Field) o Amount 30 Days Overdue (Calculated Field) o Amount 60 Days Overdue (Calculated Field) o Amount Greater Than 60 Days Overdue (Calculated Field) o 2% Overdue Amount (Calculated Field) • Paper invoice data points required for near-term plans include: o Volume Discount (Calculated Field) o Electronic Invoicing (Yes or No) o Electronic Payment (Yes or No) • When electronic invoices are offered, the same current and near-term data elements asshown above will be included. You have also documented the following additional considerations:• All customer, invoicing, and payment data must be secured, but accessible to thosedepartments and personnel who have a need to know. • PEP requires the ability to generate a receipt automatically at the time payments arerecorded. The receipt will be sent electronically to the organization’s primary contact emailaddress. The receipt must contain: o Unique Serialized Invoice Number o Customer Organization Name o Customer Street Address o Customer City o Customer State o Customer Zip Code + 4 o Amount Paid o Date Paid PEP Case Study5 "