Case Study Requirements

Trusty Carpets

Capstone Course

Executive Summary

I. Background and Environmental Analysis

A. Background

Trusty Carpets is a successful family-owned business that has been operating

from a single location for the past 20 years. Currently, total carpet sales is in the

ballpark of $1.2 million annually, with a net profit of $100,000. The business is

poised for major growth through the recent acquisition of Metro Carpets, a

business located on the other side of town that sees $3 million in sales annually

with a profit of $360,000. Additionally, Trusty Carpets will be combining

operations with their previously contracted carpet installer.

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The original location has basic existing IT infrastructure to aid with sales and

ordering, the new location does not. A technology solution is required to manage

two separate locations and the installation operation as a single business. The

targeted solution will also enable increased sales through an online presence that

connects Trusty Carpets with home builders, and directly with consumers via in-

home sales. The primary business objective is increased profit margins, while

ensuring that Trusty Carpets is operating in an environmentally friendly manner.

B. Environmental Analysis

There is a rising number of residential and commercial construction activities in

numerous countries globally indicating a boost in growth in the global rugs and

carpet industry. This coupled with an increasing focus in aesthetically pleasing

interior decor and a shift toward environmentally friendly carpets, is further

driving market revenue growth. Currently, the global carpets and rugs market is

projected to hit $164 billion by 2028. Other stats indicative of this growth include

nylon material accounting for the largest revenue share of 32.5% in 2020, with

North America owning major revenue share followed by the Asia Pacific market

(Global Carpets and Rugs Market Size, 2020). COVID-19 has also been a stressor

in this industry, stunting the construction of housing and building projects and in

turn limiting the purchasing of carpet tile flooring and a subset of services. With

re-openings, increased renovation and remodeling activities in the real estate

realm, high consumer interest in interior decor, and revamping of commercial

buildings (Carpet Tiles Market, 2021), there is an increased post-COVID need for

the carpet tile services, which expose great business opportunities for Trusty

Carpets.

Opportunity or Change to Business Vision, Strategy or Objectives

Expansion is a single driving factor for increase in profit margins, Trusty Carpet’s

primary business goal. Acquiring Metro Carpets and merging with Mike’s

installation company is an exponential step towards that objective. This new

business direction presents several opportunities. First, obtaining Metro Carpets

presents 50% non-utilized space which can be leveraged to store recyclable

carpets before they are picked up, and installation equipment that are otherwise

stored in trucks. Having space to store recyclable carpets also means scouting for

individuals who would like to dispose of old carpets and offering to facilitate the

process, all the while offering Trusty Carpets as replacements. In light of finding

customers, the enterprise can leverage the digital space for marketing and e-

commerce efforts. Otherwise, in-person outreach can include attending niched

events including but not limited to real estate conventions and establishing

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partnerships with interior design showcases like those at IKEA, or local home

improvement vendors to aid in promoting/selling Trusty carpets.

Expanding also indicates recruiting more employees and obtaining an adept

information system that will handle data/information generated from billing,

accounting, HR, business partnerships, supply chain logistics, e-commerce

management, and marketing efforts. This system must ensure privacy and security

of data, while maintaining downtimes, and offering mobility, speed, and

efficiency. These will help optimize current business processes and technology.

Inefficient Business Processes or Technology

Currently, Trusty Carpets utilizes the local paper for its advertising and marketing

efforts, which proves inefficient especially as the pandemic accelerated digital

transformation by 3 to 7 years in just months (Boulton, 2021). Trusty Carpet’s

accountant handles all paperwork as well as processes relating to finances, bill

payments, invoice distribution, payment collection, and payroll. This can be

overwhelming and lead to errors. Transferring the workload to the new

information billing system will help, and the accountant can own managerial tasks

like overseeing processes and performing quality control. Order forms will also

need to be managed by the system, as well as all customer records and

handwritten ledges generated by Metro Carpets. Carol handles the bookkeeping

which is organized but paper-based; these records should be stored in the cloud

for backup, additional security, and ease of access. Mike currently runs his

installation business from home and stores equipment in trucks. Leveraging the

additional space acquired, installation services can be moved onsite.

New Technology Trends

Carpets still continue to be trendy despite the rise in popularity for hardwood

floors; and technology is being used to improve their beauty and durability.

Manufacturing remains constant with the standard principle of fiber being woven

or tufted into a roll of modular-backed finished product (Morris, 2021). Aesthetic

ability in regard to color, texture and pattern are controlled to match a disposable

mentality among consumers to keep the margin between carpet and hardwood

floors thin. Design-capable tufting machines have allowed for more decorative

and comfortable/”soft” modular carpets. Multiple-dye technologies help to

achieve better blended coloration. Antimicrobial technologies help eliminate

damaging microbial growth without compromising aesthetics and functionality

(Ryan, 2020). Eco-friendly carpets are being manufactured by materials like

recycling plastic bottles all to protect occupants and the environment (Morris,

2021).

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Commercial or Operational Trends

Operational efficiency is an important aspect of ensuring commercial and

industrial activities result in value and profitability. Operational efficiency and

best business practices are essential in the carpet industry. Companies are

absorbing and implementing operational efficiency as well as best practices which

in turn provide them with a competitive advantage in the industry. Trusty Carpets

should design its operations so that they are efficient, environmentally friendly,

customer oriented, technologically advanced, and profitable.

New or Better Products & Technologies

There are other competitors in the carpeting industry, and Trusty Carpets is not a

unique firm. Jerry will be required to maintain a competitive advantage, which

will be accomplished through an investigation of the enterprise's information

technology infrastructure. A large number of small firms have made the transition

away from paper bookkeeping, payments, billing, invoicing, and inventory

management practices (Silva, Filho, & Fontoura, 2020). These companies have

discovered that deploying an information technology system that automates these

operations is considerably more effective, accurate, and saves money and

resources. Additionally, businesses have discovered that advertising online,

whether through a website or social media, reaches a greater number of potential

customers than any other form of marketing.

The latest technological advances, such as social media, have made advertising

considerably easier, cheaper, and more effective in terms of reaching a wider

audience in a shorter amount of time. Many competitors are using social media,

allowing them to easily reach a larger audience of young people who are looking

to purchase the latest trends in carpet manufacturing. Trusty Carpets can leverage

social media – Facebook, Twitter, Instagram, and other platforms – to quickly

reach this technologically savvy segment of the population.

Changes to Statutory Legislative or Other Environmental Requirements

The environmental rules and policies may need to be revised. As a result, the

government may alter policies in order to better safeguard the environment. These

rules frequently lead to new regulations governing company activities. Existing

laws and policies may also be revised or updated by the government.

Ignorance of the law is not an acceptable justification for breaking the law. It is

Trusty Carpet’s obligation to keep up to date on environmental laws, rules, and

regulations that apply to its particular industry and firm. Trusty Carpets should

create a Compliance Management System (CMS) to ensure that they are in

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compliance. (Dittmers, 2018). A CMS is used to manage the risk associated with

new legislation and changes in the marketplace. Incorporating requirements into

business processes, conducting operations reviews to guarantee adherence to

requirements, developing corrective action plans, and updating materials are all

made possible through the use of a CMS.

II. Problem Analysis

A. Business Problem

Trusty Carpets’ has an immediate need to select and implement an IT

infrastructure solution or system that enables the management of two separate

brick-and-mortar locations and the installation operation as a single business. The

existing IT solution only services one location and the new location on the other

side of town operates with non-digitized legacy business processes. The recent

acquisition of Metro Carpets and expansion of the business exacerbates a problem

that already existed: Inefficient processes lead to poor profit margins, this being

the chief business problem that a new solution will address, in addition to

facilitating online sales, establishing home builder contacts, in-home sales and

environmentally responsible carpet disposal. The business is currently negatively

affected financially, which will be compounded operationally with the expansion

and operation of two disparate locations that are not connected by and managed

within a single system that must unify the ledger of both entities. DynaTech

recommends an aggressive timeline of 4 months for system selection and

implementation.

III. Proposed Solution

Trusty Carpets has several separate programs that handle finance, inventory, sales,

marketing, payroll, and customer relations; fragmented data should be streamlined to

ensure enterprise decision-making is data driven. A good ERP option is Oracle’s

NetSuite. It is cost effective, easy to use, customizable, secure and offers support

services.

Oracle’s NetSuite is a cloud-based business management platform that gives companies

tools needed to nurture growth and efficiently run their businesses. Enterprise Resource

Planning (ERP) tools offered include applications for finance, supply chain management,

customer relationship management (CRM), human resources, ecommerce, inventory,

order, procurement, payroll and more; all of which are needed in the merging of Trusty

Carpets and Metro Carpets. With a centralized data source, information inputted across

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the system updates in real-time allowing authorized users to access the most accurate

information on demand. NetSuite uses the SaaS model where a subscription fee is paid to

access the platform, but system maintenance and management of the platform is owned

by the vendor, Oracle. With an established LAN for Trusty carpets and a WAN to

support the connectivity of the additional site at Metro Carpets, the enterprise is set to

support the implementation of NetSuite. This acquisition will provide a unified view of

the business bringing together disparate systems, bookkeeping tasks will be automated,

the complexity of managing invoicing, billing and subscriptions will be simplified,

inventory will be centralized, and Salesforce automation will help to manage

leads(McCue, 2021). Capabilities with NetSuite are endless as required by Trusty

Carpets.

IV. Expected Improvements

The modern economic landscape indicates a business need for Management Information

Systems and solutions. These can be presented in the forms of infrastructure, platform, or

software that can be built-in or outsourced to enable small businesses to operate like

enterprise-scale businesses (Gratch, 2015). Since Trusty Carpets is a small start-up with

an in-house IT infrastructure and an expansion underway, it would benefit greatly from

an Enterprise Resource Planning (ERP) system which would be outsourced and hosted on

the cloud. Therefore, it is important when acquiring ERP that only features needed by the

carpet retailer like CRM, web hosting, ecommerce platform, etc. are obtained.

The proposed solution, NetSuite, can address ineffective business processes in finance

management, operations, and customer relationship optimization all of which will lead to

increases in profit. The software’s financial management solution will help manage

bookkeeping tasks by automatically updating ledgers. Accounts receivable, payable, and

invoices will be tracked efficiently - previous methods used that were manual and at risk

of human error will be replaced. The solution will provide a single view of inventory,

streamlining data relating to carpets and equipment’ stock. Order processing will be

automated and fulfilled across channels, helping to manage the ordering lifecycle. With a

360-view of customers, the lead-to-cash process will be sped up as critical customer data

like sales history and active support cases are consolidated. Forecasting tools provided by

the solution will be used to predict future sales, and the customer experience will be

personalized. These are in line with the strategy of the business since its main aim is to go

digital and generate greater revenue. Lastly, value gained by the organization will aid

with the cost of production of the carpets which will in-turn decrease, hence more profit.

V. Alternatives Analysis

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The following alternative analysis information exposes four options that Trusty Carpets

may adopt moving forward regarding IT infrastructure and related business processes.

The status quo, proposed solution, different solution and process change are further

detailed by description, benefits, cost elements, feasibility, risks and defining issues.

These attributes are compared in a matrix and finally a justification is provided regarding

which system is selected.

A. Status Quo

● Description: Do nothing, continue existing basic IT workflow with google

docs at the original store, and non-IT processes at the new store while

advertising in the local paper.

● Benefits: No new capital investment or monthly fees, however no

problems from section II are addressed.

● Cost Elements: No additional cost.

● Feasibility: Not feasible while attempting to manage the entire business

with one solution in addition to seeking increased profit margins.

● Risks: Discontinuity between store finances, inventory, lost sales and the

same (or worse) decreased profit margins.

● Defining Issues: Does not allow for the management of separate locations

and the installation business. Does not establish an online presence for

marketing and business communications. Does not address carpet

recycling requirements.

B. The Proposed Solution (NetSuite ERP)

● Description: Oracle’s NetSuite is a cloud-based ERP offering applications

for finance, supply chain management, CRM, human resources,

ecommerce, inventory, order, procurement, payroll and more.

● Benefits: Centralized finances, inventory and asset management. A low

cost, scalable solution that enables the creation of new efficient business

processes in addition to online marketing.

● Cost Elements:

a) $99 Monthly ERP subscription

b) $100 Monthly ISP subscription at the new location

c) 5x Tablets for Metro Carpet Sales & Warehouse staff: $2,000

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d) Personnel training and system familiarity: $5,000

● Feasibility: Extremely feasible, ERP adoption for small business is

streamlined for ease. Costs are negligible, as an increase in just 1% profit

margin represents tens of thousands of dollars in revenue gains for the

newly combined business operation.

● Risks: Internet access - required for cloud access, this can be mitigated

with a redundant system like cellular hotspot use. Information Security -

company data is protected to the highest level of Confidentiality and

Integrity by Oracle's industry leading security practices - however, there is

always risk that data can be compromised in the cloud. Personnel

adaptability - Metro Carpets employees are coming from a no-IT business

process environment, are they up to the challenge in adopting a new

solution?

● Defining Issues: Centralizes data for management of the business as a

whole, ubiquitous access, scales to meet the needs of Trusty Carpets, cost

effective, introduces process efficiencies, vendor managed (no in-house

development or maintenance).

C. A Different Solution (Metro Carpets IT Update)

● Description: Connecting the new Metro Carpets location to the internet via

ISP, establish a WiFi with a router and leverage existing google docs

● Benefits: Improves upon existing legacy, manual processes being

conducted at the Metro Carpets location, enables faster invoicing for sales

and inventory purchase. Likely to have a small impact on the profit

margins at the Metro Carpets location.

● Cost Elements

a) $100 Monthly ISP subscription at the new location

b) 5x Tablets for Metro Carpet Sales & Warehouse staff: $2,000

c) Scanner/Fax/Printer (all-in-one) $1,500

● Feasibility: Highly feasible, the existing infrastructure and processes at the

main store were implemented by an existing employee, it’s essentially a

replication of the footprint.

● Risks: Organizational - Metro Carpets personnel unfamiliarity with

technology, IT - Internet access is required for cloud access, this can be

mitigated with a redundant system like cellular hotspot use. Financial -

missed profits.

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● Defining Issues: This solution does not address management of the

enterprise, will likely not increase profit margins and will not address poor

marketing strategy.

D. A Process Change (Reconciliation)

● Description: Reconciliation of sales, ordering and inventory at the close of

each business day.

● Benefits: Provides a consolidated picture of the enterprise ledger, albeit

not in real time. May also contribute to better situational awareness of

what inventory is on hand.

● Cost Elements: None

● Feasibility: Feasible, the only delineating factor is employee time spent

delivering and consolidating records.

● Risks: Time - human error is likely when combining records, resulting in

lost time. Organizational - time spent on this process will encumber

existing personnel. Financial - missed opportunities to increase profit

margin.

● Defining Issues: This solution does not address management of the

enterprise, will likely not increase profit margins and will not address poor

marketing strategy.

E. Comparison of Alternatives

The comparative analysis matrix plainly states the positive and negative aspects

of each possible solution:

Trusty Carpets Alternatives Analysis Matrix

Name of

Alternative

Positive Aspects Negative Aspects

Status Quo No added cost No Organizational, Financial or IT

improvement.

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NetSuite ERP Organizational, Financial and IT

improvement.

User hesitation, added cost, data

security.

Metro Carpets IT

Update

IT improvement No Financial or Organizational

improvement, added cost

Reconciliation Organizational improvement No IT or Financial Improvement.

F. Justification

Selection of the NetSuite ERP is justified through the following primary reasons:

It enables a holistic view of the business through integrated finance & asset

management, a by-product of which is the ability to track carpet skews in

warehouses, allocating space for recycled carpet. It is also the only solution that

modernizes Trusty Carpet’s IT infrastructure, instantiating the online presence

required to boost sales and customer relationships to realize enhanced profit

margins. While this solution comes with some risk, the investment in equipment,

an ERP subscription and training for personnel strategically align IT and business

strategic objectives.

VI. Feasibility Analysis

Understanding organizational readiness to address the root causes of problems means

understanding how to solve complex problems (Sebastian-Coleman, 2013). Trusty Carpet should

therefore have processes and people in place to coordinate the efforts and communicate changes

(Greeff & Ghoshal, 2004). Trusty Carpets is a small business looking to expand their IT

infrastructure and streamline their current business processes. The proposed solution is to

implement an ERP solution using Oracle’s NetSuite by benefiting its feasibility based on time,

cost and staffing. As we’ve identified pain points in our previous sections, Trusty Carpet now

has the ability to implement this solution and understand the benefits. Integrating an ERP system

into the current business process will help address and support their growing business. A

feasibility analysis will be conducted to evaluate Trusty Carpet's potential for success and will be

examined in the following areas: economic/financial, organizational/operational, and technical

feasibility (Simplilearn, 2021).

A. Economical/Financial Feasibility

With the current business model, Trusty Carpets sells about 250,000 square feet of carpet

a year (70% of it is mid-grade carpet and padding) for sales of about $1.2 million. With

the recent changes and expansion, Metro Carpets generates about $3 million in annual

sales at a 12% profit. The proposed agile business solution provides positive economic

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benefits to Trusty Carpets. The estimated project income and expenses to implement

NetSuite’s ERP system is cost-effective, scales rapidly and prepares Trusty Carpets for

long term growth (NetSuite.com, 2021).

Oracle’s NetSuite ERP solution provides flexibility with startup implementation costs.

They offer subscription services where users can subscribe for an annual license fee

(Netsuite.com, 2021). NetSuite quotes, “Your license is made up of three main

components: core platform, optional modules and the number of users and there is also a

one time implementation fee for initial setup.” NetSuite’s ERP system is cloud based and

modular so that you can purchase additional licenses and modules as Trusty Carpets

grows their business. Lastly, by implementing NetSuite best practices, Trusty Carpets has

the financial capability to accommodate growth and strategize to increase sales. With

reduced operating expenses, assessed resource allocation and increased projected

revenue, Trusty Carpets should start recovering costs of the implementation within 6-24

months.

B. Organizational/Operational Feasibility

NetSuite is an industry leader in cloud ERP and is trusted by start-ups and household-

name enterprises across various industries. Its primary role is consolidating disparate data

across functional areas in a business. Therefore, core functions in the finance, inventory,

procurement, and accounting departments at Trusty and Metro carpets will be merged

and managed using a common database. Centralizing the data sources will allow for real-

time information updates. Access will be authorized to cross-functional teams including

Ann in Sales, Mike in Installations, Ben in IT, and Carol in accounting. Using NetSuite,

processes that support the expansion along with increased internet sales and

environmental responsibility will be automated resulting in increased efficiency.

Trusty Carpets has a standard IT infrastructure in place consisting of LAN and internet

access, enough to support the integration of NetSuite into current business processes. The

solution can easily be accessed from a browser using any device with connectivity -

salesmen using tablets to check carpet inventory can continue to do so; stored and shared

Google order forms can continue to be utilized as needed. The significant shift in

processes would be through transferring such data to the ERP portal so they are readily

available in real time by authorized users.

Staff expansion would be necessary to maintain the merger with Metro Carpets, oversee

system processes, analyze data reports and leverage reports to fuel business intelligence.

The sales team will benefit from additional staff with monitoring inventory and

coordinating installations. Unless this is outsourced, a team of marketers will be needed

to own marketing efforts especially as it will transition digitally. The merger will indicate

more paperwork for accounting and increased necessary man-power. And managing a

WAN will mean employing and training more tech support specialists. NetSuite supports

a single sign-on portal and offers drag-and-drop tools, all of which underpin usability and

reduces friction with employee training.

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C. Technical Feasibility

System capabilities are at the forefront of technical feasibility. Exploring whether the

software is equipped with features needed to enable the business prior to procurement is

critical. NetSuite’s cloud platform is dynamic in that it allows clients to tailor the system

capabilities exactly to their needs and customers have the flexibility now and in the future

as business challenges shift. The solution offers the following application and developer

tools: Customization with drag and drop options plus the ability to create custom fields,

records, and roles. Process automation allows the enterprise to automate approvals for

purchase orders and sales discounts among others. Integration is enabled so that data

flows smoothly from Netsuite to outside software applications. With internalization, an

environment is created where teams can easily leverage the system despite language,

local tax and accounting rules. With health dashboards, there is visibility into system

performance so that business continuity is ensured and users are kept productive.

Because of the lack of servers to set up and devices to configure, implementing NetSuite

is quick and straightforward through its SuiteSuccess Implementation methodology. This

is an approach that tailors implementation to the business based on its industry (and the

solution serves various industries including but not limited to retail, manufacturing, and

software.) Through the program, there is faster deployment of less than 100 days and

rapid time-to-value which fuels increased employee adoption and success for businesses.

There is also a team of readily available consultants to guide Trusty Carpets as it

maneuvers through change management.

VII. Requirements Checklist

VIII. Context Diagram

IX. Project Management

X. Acquisition Strategy

XI. Risk Management

XII. Security

XIII. Additional Implementation Issues

XIV. Performance Measures

XV. Conclusion

References

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Appendices