High Point Living, Inc.

Accounts Payable Department

New Systems and Processes

Feasibility Study

Prepared by: AP-5 Consulting Group

10/12/2014

TABLE OF CONTENTS SECTION PAGE SECTION 1

EXECUTIVE SUMMARY & INTRODUCTION 1

SECTION 2 SYSTEM REQUEST SUMMARY 1

SECTION 3

FEASIBILITY FINDINGS 3.1 OPERATIONAL 1 - 2 3.2 ECONOMIC 2 - 3 3.3 TECHNICAL 3 - 4 3.4 SCHEDULING 4 - 5 SECTION 4

RECOMMENDATIONS 5

APPENDIX A. INTERVIEW SUMMARY B. ISHIKAWA DIAGRAM C. SYSTEM SCOPE DOCUMENT

SECTION 1 EXECUTIVE SUMMARY & INTRODUCTION As one of the nation’s largest producers of fine wood and upholstered furniture in the United States, High Point Living, Inc. faces growing competition from overseas companies, which has slowly started to impact the financial bottom line. The current Accounts Payable systems and internal processes involve a mid-frame AS400 server, the use of Excel spreadsheets for critical decision making, internal document delivery via an in-house courier and mail delivery process, and routine telephone conversations regarding invoicing and other issues. This Feasibility Study evaluates the operational, economic, technical, and scheduling feasibility of implementing new systems and internal processes for the Accounts Payable department at High Point Living, Inc. This Feasibility Study is intended to be an informational resource to assist in determining the viability of the proposed new Accounts Payable systems and internal processes. SECTION 2 SYSTEM REQUEST SUMMARY Lost revenue due to an inefficient Accounts Payable system is the basis for the System Request from High Point Living, Inc. Contributing to this loss of revenue is the inefficient handling of internal paperwork and a decreased ability to track invoices, billing cycles, and issues. Reporting frequency is also a concern in that critical decisions are being made using outdated information. SECTION 3 FEASIBILITY FINDINGS

3.1 OPERATIONAL FEASIBILITY Top-tier management at High Point Living, Inc. has exhibited operational support for action regarding the Accounts Payable department’s loss of revenue, as evidenced by the request for outside consulting directed by the company president/CEO, William Sawmore.

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The new systems and processes will increase the Accounts Payable department’s efficiency, reduce outside vendor demands, and enhance High Point Living, Inc.’s corporate image. Increased efficiency should boost job satisfaction, with little risk to a reduction in workforce. There are other nominal operational risks associated with this project. Those identified include a minimal amount of downtime within the Accounts Payable department associated with the installation of the new systems, as well as employee training on the new systems and processes. These operational risks are reasonable and can be mitigated with successful project scheduling and adequate financial investment in employment training. The proposed new systems and processes are practical approaches that will result in a more efficiently operated Accounts Payable department. They will provide many operational benefits that will assist High Point Living, Inc. in achieving their desired company goals. FINDING: The proposed new Accounts Payable systems and internal processes are operationally feasible. 3.2 ECONOMIC FEASIBILITY For the Accounts Payable department, the proposed new systems and processes will include new servers, user computers, and other necessary peripherals that will support updated Windows environments, as well as updated software suitable for the responsibilities associated within the department. Employee training and six months of ongoing system support from the AP-5 Consulting Group is also included. The initial costs associated with the proposed new systems are estimated to be $170,000.00. Ongoing costs associated with yearly licensing fees and system supports are estimated at $1,000.00 per year, for the life of the system (approximately 10 years). Facility improvements are estimated at $20,000.00, resulting in a total cost of ownership to be an estimated $200,000.00. Another ongoing cost to consider is the need for High Point Living, Inc. to acquire suitable IT staff to maintain the new systems. With increased efficiency reducing the loss of revenue, as well as the impending retirement of the current IT staff member assigned to the Accounts Payable department, the costs associated with employing new IT staff is minimal.

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The financial risk of rising costs associated with yearly licensing fees and system support is nominal and to be expected. Financial risks associated with not implementing new Accounts Payable systems and processes are high. They include the continued loss of revenue due to vendor late payments and fees, decreased productivity within the department, and the increased probability of losing vendors. Tangible and intangible benefits associated with the proposed new systems and processes include improved efficiency, reduced vendor late payments and fees, decreased information lag time, a more user-friendly operating environment, and increased vendor satisfaction. These benefits outweigh the economic risks associated with implementing new Accounts Payable systems and processes. FINDING: The proposed new Accounts Payable systems and internal processes are sound business investments; however, the proposed financing of $120,000.00 for project completion is not economically feasible. 3.3 TECHNICAL FEASIBILITY High Point Living, Inc. does not currently have the necessary technical infrastructure, which includes hardware, software, network, and employee resources, available for successful implementation of the proposed new systems and processes. AP-5 Consulting Group will be tasked with the acquisition and installation of equipment, as well as the design and implementation of suitable internet based solutions associated with the new systems and processes. Risks associated with these functions include inability to procure necessary equipment, inability to improve existing infrastructure, and system design flaws. These risks will be assumed by AP-5 Consulting Group. High Point Living, Inc. should not be affected by the risks associated with acquiring the necessary technical infrastructure, which are low. High Point Living, Inc. will be tasked with procuring suitable IT staff to maintain and update the new systems, as needed. As the IT field continues to grow exponentially, there should be suitable candidates available within the local job market. The risks associated with procuring suitable IT staff are low.

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The inclusion of internet based portals through which the production department and associated vendors can interface directly with the new systems will increase departmental efficiency and vendor satisfaction. As the IT staff will receive sufficient training from the AP-5 Consulting Group, risks associated with maintaining the internet based portals are low. The proposed new systems and processes will provide sufficient capacity for substantial increases in data flow, transactional volume, and corporate growth. They should provide more than adequate performance and reliability. Risks associated with product performance and reliability is minimal and to be expected, and can be mitigated with proper maintenance and updating. Systems integration throughout High Point Living, Inc.’s corporate structure is not defined within the scope of this Systems Request. This Feasibility Study does not address feasibility and risks associated with full integration of all systems and internal processes within the company. FINDING: The proposed new Accounts Payable systems and internal processes are technically feasible. 3.4 SCHEDULING FEASIBILITY High Point Living, Inc. requires that the new systems and processes be designed, implemented and functioning efficiently prior to the April 2015 furniture market season. The acquisition of necessary equipment and the design of suitable internet solutions will be managed by AP-5 Consulting Group. High Point Living, Inc. should not suffer from risks associated with the scheduling of these duties, which is low. Departmental downtime during business hours while implementing new systems and processes is to be expected. AP-5 Consulting Group will mitigate this risk by scheduling the implementation phase during the Accounts Payable department’s “off hours” whenever possible. High Point Living, Inc.’s risk associated with departmental downtime is low. Scheduling for employee training will be managed by High Point Living, Inc. Risks associated with scheduling issues include inadequate departmental coverage during operational hours, as well as employee frustration that follows the introduction of new systems and processes. To help lessen these risks,

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AP-5 Consulting Group will provide an easy to understand User’s Guide, as well as group and one-on-one training sessions during the department’s “off hours”, as needed, for up to six months after project completion. The project schedule provides for minor delays associated with product availability and the design process. It provides sufficient time to accomplish the necessary tasks for successful project completion. Should this project require acceleration, the feasibility and system scope may require adjustments. As the furniture market season provides a firm end date, risks associated with project acceleration are minimal. FINDING: The proposed new Accounts Payable systems and internal processes schedule is feasible.

SECTION 4 RECOMMENDATION This Feasibility Study endeavors to thoroughly identify and examine the operational, economic, technical, and scheduling feasibility of providing new systems and internal processes to the Accounts Payable department of High Point Living, Inc. A myriad of tangible and intangible benefits exist, while the risks associated with this project are low. In order to successfully complete this project, as defined within the System Scope Document, AP-5 Consulting Group will require an increased budget of $200,000.00. It is our recommendation that High Point Living, Inc. should proceed with the new Accounts Payable systems and internal processes as defined within the System Scope Document (see Appendix) with an increased estimated budget.

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APPENDIX A. INTERVIEW SUMMARY

AP-5 Consulting Group interviewed the Director of the Accounts Payable department, Jim Payne. We discovered that the most pressing issue of concern is the loss of revenue, which results from late payments and fees to vendors. Contributing factors and other issues include:

Inefficient handling of internal/external paperwork (via interoffice and U.S. mail).

Inability to track invoice due dates, billing cycles, and issues.

Monthly reports generated with Excel, reliance on outdated information during the decision making process.

A flood of unnecessary vendor telephone calls.

Outdated equipment currently in use.

The project completion date is firm. It needs to be completed prior to the start of the April 2015 furniture market season.

The project budget is $120,000.00.

B. ISHIKAWA DIAGRAM

C. SYSTEM SCOPE DOCUMENT