JOURNAL OF INFORMATION SYSTEMS

Vol. 20, No. 2

Fall 2006
pp. 81–91

Omni Furniture Company: A Systems

Development Life Cycle Case
David H. Sinason
Northern Illinois University
Carol J. Normand
University of Wisconsin–Whitewater
ABSTRACT: The Omni Furniture Company Case was created to help students enrolled
in an accounting information systems (AIS) course further their understanding of the
systems development life cycle (SDLC) by thinking through all stages of the develop-
ment process. Omni is a privately held company that has found a market niche by
assembling several models of simple yet durable desks, tables, and chairs for use in
offices. After several years in business, Omni has recently experienced tremendous
growth that has resulted in cash flow and production scheduling problems. Susan and
Barry Omni, the owners of the company, realize that the information system they have
been using is outdated and needs to be improved. No one in the company has the
time or ability to develop such a system and so a business consulting firm has been
hired to develop the new system. Each business consulting team is required to (1)
design a system that will solve Omni’s cash flow and production scheduling information
needs and (2) use an appropriate software package to actually implement the system.
Teams do not design a system that processes transactions; data should be manually
entered into an appropriate software package such as Access or Excel. All tables must
be linked so that one change in the data affects all of the information presented in all
of the reports.

PART I—OVERVIEW

O
rganizations constantly adapt their information systems to reflect changes in the
type of information needed because of changes in technology, the organization’s
business processes, the organization’s structure, or the external environment. A
process called the systems development life cycle (SDLC) has been developed to ensure
that these changes are orderly and productive. Because of the importance of this process,
all accounting information systems (AIS) textbooks present the SDLC as either a four- or
five-stage cycle of activities. Thus, most students are introduced to the SDLC in the ac-
counting systems course but few students have the chance to actually experience the proc-
ess. The Omni Furniture Company Case helps students enrolled in an AIS course further
their understanding of the SDLC by thinking through all stages of the process and designing
a system that meets the users’ information and internal control needs.
In addition to increasing the students’ understanding of systems development issues,
this case helps students further develop the communication and teamwork skills necessary
for accountants to succeed in today’s profession. Reports and position statements published
in the last 15 years contain varying configurations of these necessary skills and abilities
(AAA 1986; Arthur Anderson & Co. et al. 1989; AECC 1990; IMA/FEI 1994; AICPA

81
82 Sinason and Normand

1999; Albrecht and Sack 2000); however, all focus on the need for accounting students to
develop communication and interpersonal skills1. This case offers instructors a way in which
to introduce some of these skills into their courses if they so choose.

LEARNING OBJECTIVES
At the conclusion of this case, students should be able to demonstrate an understanding
of how the systems development life cycle can be used to develop an effective and efficient
computerized managerial information system. Additionally, because of the group work,
students should gain an understanding of the importance of working with others in order
to successfully develop an AIS appropriate for a given situation within a specific timeframe.
Depending upon the way in which an instructor implements the case, additional learning
objectives can be achieved. For example, if an instructor assigns points to the formatting
of the written materials and/or requires a formal presentation of the team solutions, the
students will be provided with a structured opportunity to communicate in a professional
style both in writing and/or orally. If an instructor requires students to consider two or
more software packages before selecting one, students will have an opportunity to learn
the ways in which specific programs can be used to convert data into information that is
helpful to decision makers.

PART II—CASE
Company Background
Located in Chesterton, Wisconsin, Omni Furniture Company is a small but growing
family-owned office furniture assembler. Barry and Susan Omni, a brother and sister team,
started the company in 1996. The current organization chart for the company is presented
in Exhibit 1. As seen in Exhibit 1, Barry Omni functions as the company’s CEO while
Susan Omni functions as CFO. Before the Omnis started the company, Barry earned a
management degree at a Wisconsin university and spent five years as the assistant manager
of a major office furniture retail store. Prior to 1996, Susan earned an accounting degree
at an Illinois university and worked in Chicago for a regional CPA firm as a staff auditor
for two years. After two years in the big city, Susan was glad when her brother suggested
they start their own business in one of their parents’ unused barns.
The Omnis have found a good market niche by assembling several models of simple
yet durable desks, tables, and chairs for use in offices. The furniture is assembled from a
variety of components that are bought directly from the five manufacturers presented in
Exhibit 2. The company uses a custom assembly process—the finished goods are assembled
only when an order is received. Only one type of unit (table, desk, or chair) can be assem-
bled at one time due to the structure of the production lines. Orders are shipped directly
to the customer with terms of net 30. Invoices are generated the day an order is shipped
so the date of an invoice is the same as the shipping date.
Orders are generated through a network of independent sales agents located at various
office furniture chains. Eric Grigsby, Omni’s marketing manager and a first cousin of Barry

1
Examples of these reports include the 1986 Bedford Report (AAA Committee on the Future Structure, Content
and Scope of Accounting Education 1986); the white paper written by representatives of the big eight public
accounting firms in existence at that time (Perspectives on Education 1989); the Accounting Education Change
Commission’s 1990 Position Statement No. One; a 1994 IMA / FEI position statement entitled What Corporate
America Wants in Entry-Level Accountants; the AICPA Core Competency Framework for Entry Into the Ac-
counting Profession (AICPA 1999); as well as Albrecht and Sack’s 2000 publication, Accounting Education,
Charting a Course through a Perilous Future.

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Omni Furniture Company: A Systems Development Life Cycle Case 83

EXHIBIT 1
Organization Chart for Omni Furniture Company

Chief Executive Officer

Barry Omni

Marketing Manager Chief Financial Officer Production Manager

(Salespeople Relations) Susan Omni Justin Martin
Eric Grigsby

A/R and A/P Manager H/R and Payroll Purchasing Manager

Lindsey Plautz Manager Becky Newman
Kimberly Odell

and Susan Omni, oversees this network of sales agents. Each of the independent sales agents
represents a number of office furniture lines. Omni provides the furniture to the sales agents
at the price listed in Exhibit 4. The sales agents sell the furniture to their customers at a
markup. By allowing the local sales agents to determine the markup, sales prices can be
competitive in various markets. Because Omni does not have its own sales force, it avoids
having to pay overhead costs associated with employees such as payroll taxes and employee
benefits.
In addition to contracting with the sales agents, Eric monitors sales and periodically
discusses market conditions and pricing with each representative. Orders are sent directly
to Eric who, upon receipt of the orders, enters them into Omni’s system.

A Period of Expansion
From its start in 1996, the company has grown steadily as Eric Grigsby added more
independent sales agents to the company’s list of approved agents. Through Grigsby’s
efforts, the company’s marketing efforts were expanded from south and central Wisconsin
to include northern Illinois including Rockford and the north suburban Chicago area. Eric
developed several Excel spreadsheets to help him keep track of the independent salespeople,
the number of orders and total dollar amount each person generates, and the total amount
of sales. However, his spreadsheets do not capture the individual items included on each
order.
In 2000, in order to accommodate the growing number of orders being generated, the
Omnis constructed a 28,000 square-foot metal building in a local industrial park and the
company moved out of the barn in which it had started. When planning the new building,
Barry, Susan, and Justin Martin, the production manager and an Omni cousin, had spent a
great deal of time on the physical layout of the building. As a result of this effort, the
current assembly process is based on an efficient and effective workflow.
When the Omnis’ decided to upgrade their physical plant, they also decided to upgrade
the company’s information technology infrastructure. Each of the seven individuals iden-
tified in the organization chart received a computer and a printer. Microsoft Office was

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84
EXHIBIT 2
Vendor Information

Vendor Zip
Number Vendor Name Contact Street Address City State Code Telephone Terms
147 WeGotLegs Pat Harper 100 Beard Boulevard Nashville TN 44321 999–555–4321 2 / 10, n / 20
230 We’reTheTops Bob Oldies 230 Memory Lane Sarasota FL 32222 777–555–8796 2 / 15, n / 30
256 Best Hardware Bill Wilson 543 Penn Ave Washington DC 08965 888–555–5432 n / 14
332 Purple Stain Jay Sherman 90 Purple Place San Francisco CA 99999 123–456–7890 2 / 10, n / 30
654 Metal Fabricators Chris Mills 5 Jane Street Brentwood CA 99887 123–987–6543 n / 30

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Omni Furniture Company: A Systems Development Life Cycle Case 85

installed on all of the machines. No upgrades or patches have been installed since the
computer products were originally purchased. The technology included in the seven work-
stations is now obsolete.
Barry, Eric, and Susan are the only employees who received Internet access so they
are the only individuals who can send and receive emails outside the company. All seven
computers are networked, so that emails can be sent internally by anyone to anyone. When
the router was installed for the Internet access, the original settings from the original equip-
ment manufacturer were not changed. Additionally, the four computers in the accounting
function were networked so that those four employees have access to Quick Books. Susan’s
computer was used as the server for the LAN. When Quick Books was installed, the four
members of the accounting function decided as a group the password for the software. The
password was given to Barry who wrote it on a post-it note and attached it to the side of
his file cabinet so he would not forget it. A tape drive back up system was attached to
Susan’s computer so that a backup of the accounting data could be made whenever enough
changes to the data had been made. The tape-drive was placed on a shelf in the bookcase
behind Susan’s desk. None of the other employees have any back-up capabilities but be-
cause a power outage has never occurred in the industrial park, Barry and Susan did not
consider that to be an issue.
When the company moved into the new building, Justin and his crews were able to
assemble the requested furniture pieces and ship completed orders in a timely fashion from
the remainder of 2000 to the end of June 2006. During this period, through his contacts in
the community, Justin was able to hire enough workers to keep his crews full. Justin also
developed a database using Access to track orders as they progressed through the assembly
process. In order to meet the increasing sales levels, Barry and Justin increased and main-
tained Omni’s parts inventory based on their experience and judgment.
When the new building was constructed in 2000, a specific area for an expanded ac-
counting function was also included in the design. Before the building was built, Susan
Omni had been overseeing all accounting functions with the help of two 15-hour-a-week
employees and a single-user version of Peachtree. As the company grew, however, Susan
realized she needed more help. Barry and Susan decided that three 40-hour-a-week em-
ployees should be hired—an account receivable (A/R) and an accounts payable (A/P)
manager, a human resources (H/R) and payroll manager, and a purchasing manager. The
Omnis decided to cease using Peachtree and bought a site license for Quick Books that
allowed for ten users. They decided to install the A/R, A/P, inventory, and payroll modules.
Kimberly Odell, the new payroll manager, and Lindsey Plautz, the new A/R and A/P
manager, are unrelated to the Omnis and had worked with Susan as 15-hour-a-week em-
ployees. They, therefore, were familiar with Omni’s processes when they accepted their
respective positions. Additionally, they both had been full-charge bookkeepers for other
firms and were not intimidated by having to learn a new general ledger software package.
They both helped Susan to migrate the company’s data from Peachtree to Quick Books.
Becky Newman, an unrelated neighbor, was hired as the new purchasing manager
because she had been in charge of purchasing necessary materials for the farm she and her
husband ran before they sold their dairy herd and retired from farming. When she started
her new job, Becky found Quick Books intimidating and confusing because she had never
taken a formal accounting course. She had learned accounting from the CPA she and her
husband hired to complete the tax returns and other required documents for their farm.
Becky did know how to use Excel and Eric Grigsby helped her to develop several spread-
sheets designed to track purchases and the cost of each component used in the various

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86 Sinason and Normand

desks, chairs, and tables marketed by Omni. She was told to reorder inventory based on
guidelines established by Barry and Justin.

The Current Situation

At 8:00 on a Monday morning in July 2006, Barry Omni had just sat down at his desk
after returning from a two-month trip to Canada and Alaska when he received an irate
phone call from Matt Kotwitz, one of Omni’s top sales agents. Mr. Kotwitz informed Barry
that an order he had placed for 51 desks and 51 chairs was six weeks past the shipping
date promised to the customer. As a result of this lag time, the customer, Whitewater
Fabricators, had been forced to rent furniture for the new facility it had built and threatened
to send the rental bill to Omni.
When the telephone call ended, Barry went directly to the production floor and finally
cornered a harried looking Justin Martin. Barry told Justin about the phone call he had just
received and wanted to know why the Whitewater Fabricators order was so late. Justin told
Barry that the day after he had left on his Alaska trip Eric Grigsby had signed contracts
with 20 sales agents in the Minneapolis/St. Paul region. These sales agents apparently were
an energetic lot and the company’s sales had increased by 40 percent in two weeks. Justin
also told Barry that he was unprepared for the increase in sales and did not have the work
force to assemble and ship the increase in orders in a timely fashion. When he had asked
Susan for permission to expand the work force, Susan had told him no. She had said that
she was aware of the problem because she had received several irate phone calls from sales
agents over missed shipping dates but that he could not hire more people because the
company was having cash flow problems.
Justin also told Barry that, in addition to not having the required work force, the
components he needed to assemble the ordered furniture pieces were not always in stock.
At the same time, the quantity of a number of components he did not need seemed to be
increasing and taking up increasingly sparse warehouse space and cash. Justin said that he
had talked with Becky Newman about the situation but she said she was purchasing com-
ponents based on the guidelines he and Barry had established. Becky maintained that it
was not her fault the configuration of finished goods items being sold was changing. She
had also said that she was not a mind reader and could not know in advance what finished
goods items would be ordered, and, therefore, what parts would be needed for the orders
when they were received.
As soon as the conversation with Justin ended, Barry went to Susan’s office. When he
arrived, she was sitting behind her desk staring at her computer screen that was filled with
columns of numbers. As he related his experiences of that morning, Susan looked up but
sat extremely still and stared at him. When he finished, she coldly told him that he was the
one who had decided to leave his cell phone at home for two months because he needed
to reconnect with nature.
Susan went on to tell Barry that she was well aware of the problems he had described
and that there was an additional problem. Because Omni Furniture offered their customers
payment terms of net 30, most customers took the entire 30 days to pay their invoices and
some were taking around 40 days. Fortunately, the amount of bad debt was still negligible.
However, Omni did have payment terms with four of their major suppliers of less than 30
days that created a cash flow problem. The cash flow problem was being increased because
of the mismatch between the finished goods components that were being stocked and the
finished goods being ordered as well as the extended lag time for shipment of completed
orders.

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Omni Furniture Company: A Systems Development Life Cycle Case 87

Susan said that she had established a line of credit at the local bank to cover the
shortages but, if the shortages kept growing at the current rate, the line of credit would
soon be exhausted. Finally, Susan said that she had tried to create a spreadsheet that would
predict when cash shortages would occur and to what extent but had been unable to create
one that she felt would work reliably.
As Susan talked, Barry deflated like an old balloon and sunk into the chair in front of
Susan’s desk. After she finished explaining the cash flow situation, he stared at the floor
for a minute and then asked sarcastically if there were any more bits of news he should
hear. Susan said that she had asked Eric Grigsby to provide a monthly sales forecast for
the next 12 months. The forecast that Susan gave to Barry is presented in Exhibit 3.
Susan went on to tell Barry that she had also asked Justin and Becky for current
production and purchasing related costs. Those costs are presented in Exhibit 4.
Eric, Justin, and Becky had all indicated that the sales prices and costs included in
their respective reports are likely to change. For example,
(1) Eric is considering a 7 percent reduction in the price of Omni’s chair. This price
reduction is expected to increase the number of chairs sold by 15 percent.
(2) Justin believes that there will be an increase in factory labor cost of between $.30
and $.65 per hour in order to attract sufficient good workers.
(3) Becky believes that the cost of certain parts may increase by 5 percent.
Susan continued that under the current production system she had no idea how any of these
issues would affect Omni. All three managers agree that selling and administrative fixed
expenses will remain at $24,000 per month. Eric indicated that sales commissions will not
change and will continue to be reported as part of variable overhead.
After reviewing all of the information provided, Susan said that she had come to
the conclusion that Omni Furniture needs to improve its managerial information system.
If the company could get reasonable estimates of the sales, they could produce an estimate
of the material requirements and sales forecast could provide a prediction of income and
cash flow. This prediction would allow Omni to utilize its line of credit to meet short-term
cash needs and would allow Omni to analyze the impact of proposals and pricing changes
that may occur.
Susan also said that she does not have the time or ability to develop such a system nor
does anyone else currently working for the company. Therefore, she had been looking into
hiring a business consulting firm with the capabilities to create a complete information
system that would, at a minimum, tell Becky what to purchase each month. The new system
must also be able to generate pro forma monthly and yearly income statements. Since these
pro forma numbers are subject to change, the system must be able to handle any changes
with a minimum of input. Susan believed that the effect of taxes could be ignored.
Susan also said that she had some experience using the Systems Development Life
Cycle (SDLC) when she had participated on some consulting assignments during her em-
ployment with the regional CPA firm in Chicago. She believes that any consulting firm they
hire should use that framework to develop their new system and, thus, proceed through the
following stages:
● Identify user needs;
● Analyze current system;
● Provide a new system conceptual and physical design;
● Plan for the implementation of and conversion to the new system; and
● Perform a post-implementation review.

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88
EXHIBIT 3
Sales Forecast Data (in units)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Table 100 100 110 120 120 110 130 100 105 100 120 120
Desk 75 80 80 80 85 85 90 90 85 90 100 100
Chair 500 525 550 600 600 580 580 600 625 600 650 650

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Omni Furniture Company: A Systems Development Life Cycle Case 89

EXHIBIT 4
Finished Goods Direct and Indirect Costs

Cost Scrap Lead

per Unit Rate Time Vendor
Part Table Desk Chair ($) (Percent) (months) Number
Top 1 1 0 42.00 2.2 1 230
Long Leg 4 0 4 6.80 3.1 1 147
Short Leg 0 4 0 3.60 4.0 1 147
Long Side 0 1 0 8.40 1.2 1 147
Short Side 0 4 0 3.50 1.6 1 147
Bottom 0 0 1 12.50 2.1 2 230
Board 1 5 0 4.00 5.3 0 654
Drawer Front 0 3 0 9.12 0.8 3 230
Back 0 0 1 12.88 1.7 2 654
Screws 8 12 8 0.07 1.0 0 256
Stain (ounces) 0.6 1 0.2 2.50 0 332
Selling Price ($) 180 450 120
Labor (hours) 3 14 5
The average labor rate per hour in $8.37.
Overhead is charged at $1.60 per direct labor hour.
There are 3600 labor hours available each month given the present labor force.

Susan has budgeted $40,000 for any new hardware that they may need and $20,000 for
any software and training.

CASE REQUIREMENTS
For many small firms, a good production and scheduling system must assist the orga-
nization in planning its future activities and be able to help management identify problems.
Therefore, to complete this case, each business consulting team is required to use the SDLC
approach to (1) design a system that will solve Omni’s cash flow and production scheduling
information needs and (2) use an appropriate software package to actually implement the
system. Teams should not design a system that processes transactions; data should be man-
ually entered into an appropriate software package such as Access or Excel. All tables must
be linked so that one change in the data affects all of the information presented in all of
the reports. At a minimum, this system should provide management with the following
reports:
● Finished product sales forecast by month for the next year (in units);
● Purchases forecast by month for the next year (in units);
● Raw materials required in units and in dollars by month for the next year;
● Purchases forecast by vendor with and without discounts taken by month for the
next year;
● Labor requirements forecast in hours and in dollars by month for the next year;
● Total raw materials expenses with and without discounts by month for the next year;
● Forecasted income from sales by month for the next year;
● Accounts receivable from forecasted sales by month for the next year; and
● Pro forma income statement by quarters and annually.

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90 Sinason and Normand

Each team must provide the following SDLC documentation:

a. Identify user needs. Documentation should include:
(1) A statement of Omni’s needs as identified in the case narrative;
(2) Suggested employee surveys that could be used to obtain information about
Omni’s needs; and
(3) A discussion of the necessary feasibility studies.
b. Analysis of the current system. Documentation should include:
(1) A statement identifying Omni’s current system as described in the case
narrative;
(2) A list of existing internal control weaknesses; and
(3) Identification of deficiencies in the kind and amount of information provided
by the existing system.
c. New system conceptual and physical design. Documentation should include:
(1) A narrative and a flowchart of the system;
(2) Detailed specifications and costs for system infrastructure including a LAN
configuration if necessary;
(3) System input requirements including copies of any required source documents;
(4) System output requirements including copies of any required reports; and
(5) Preventive and detective general and application controls for the new system.
d. Implementation of and conversion to the new system. Documentation should
include:
(1) A computer file of the system saved on a transferable media (such as a CD)
that is compatible with the university network/system;
(2) Complete documentation of how the system works and where (i.e., which files
or tables) information is located (user guides); and
(3) A timeline for system implementation.
e. Post-implementation review. Documentation should include the survey to be used
for the review.

TEACHING NOTES
Teaching Notes are available only to full-member subscribers to the Journal of Infor-
mation Systems through the American Accounting Association’s electronic publications
system at www.atypon-link.com/action/showPublisherJournals?code⫽AAA. Full-member
subscribers should use their personalized usernames and passwords for entry into the system
where the Teaching Notes can be reviewed and printed.
If you are a full member of AAA with a subscription to the Journal of Information
Systems and have any trouble accessing this material please contact the AAA headquarters
office at office@aaahq.org or (941) 921–7747.

REFERENCES
Accounting Education Change Commission (AECC). 1990. Objectives of education for accountants:
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Albrecht, W. S., and Sack, R. J. 2000. Accounting Education: Charting the Course through a Perilous
Future. Sarasota, FL: American Accounting Association.
American Accounting Association (AAA), Committee on the Future, Structure, Content, and Scope
of Accounting Education (The Bedford Committee). 1986. Future accounting education: Pre-
paring for the expanding profession. Issues in Accounting Education 1 (1): 160–195.

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Omni Furniture Company: A Systems Development Life Cycle Case 91

American Institute of Certified Public Accountants (AICPA). 1999. The AICPA Core Competency
Framework for Entry into the Accounting Profession. New York, NY: AICPA.
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Journal of Information Systems, Fall 2006