DVD Direct: Systems Analysis and Design


DVD Direct is an entirely Web oriented movie rental business. Their customers order movies from DVD Direct's Web site and the movies are delivered on DVD disks by mail. While business has been good, some recent indications have pointed to possible trouble ahead. Specifically, an internal study discovered that many current and potential customers with high bandwidth Internet connections prefer to have movies delivered over the Internet rather than by mail. Further, the study reported that current customers who recently switched to high bandwidth connections were very likely to drop their DVD Direct membership. In response, top management has committed to expanding DVD Direct's business model to include online delivery of movies using streaming video technology. Once an order is placed, the Internet-delivered movies would be immediately downloaded onto the member's hard disk. The movie would remain there for a week, or until the movie was played, whichever occurs first.

Alice, a recently hired marketing analyst, has proposed the creation of a Frequent Renters Club that gives members points for each streaming movie they order. As a member's points accumulate, the points can be redeemed for gifts and for free rentals. Let's follow Alice as she meets with Bob, the vice president of marketing, to discuss the proposed Frequent Renters Club.


Bob: Good morning, Alice. Yesterday, I presented your Frequent Renters Club proposal to the Oversight Committee. This committee evaluates all new projects at DVD Direct. They liked your proposal and have given it tentative approval. This is a big project and an important one for the company. You've made a contribution. I want this project to be yours and I'm confident that you'll be able to successfully implement it. The key is to develop an information system that accurately and consistently records reward points. To assist you, I have arranged for a systems analyst to provide you ongoing support. Her name is Mia. I called her just before–oh, here she is now. Mia, I'd like you to meet Alice. Mia has been a systems analyst at DVD Direct for the past three years and has developed several large systems over that time. She knows the ropes better than anyone.

14-1.jpg “The key is to develop an information system that accurately and consistently records reward points.”

Mia: Hello, Alice! Bob has discussed the Frequent Renters Club with me. Your proposal looks like a great idea. I'm looking forward to working with you to develop an information system to support it.

Bob: I wish we could have Mia's undivided attention on this project; however, she is working on several other projects right now. She'll provide overall guidance on the project and provide you technical support. Alice, why don't you take Mia to your office and get started immediately?

Eager to get to work, Mia and Alice leave Bob's office.

Alice: Wow! I didn't expect this! I've been with the company for less than a month and now I have this big project. I've never done anything like this before. I have to admit I'm a little nervous. I've heard that these big projects can sometimes blow up.

Mia: Projects like this always seem overwhelming at first, and it's true that many projects are not successful for one reason or another. But we're going to do fine. To maximize the chances of success, we are going to follow a carefully developed procedure that includes periodic updates to the Oversight Committee. It is called systems analysis and design.

Alice: Systems analysis and design–tell me more.

Mia: Well, it's a problem-solving approach that has six sequential phases: preliminary investigation, analysis, design, development, implementation, and maintenance. These phases make up a system life cycle for a project. As we proceed on the project, I'll walk you through the phases and help out as much as I can.


Alice: Great, how do we get started?


Mia: Preliminary investigation is one of the most important phases and the one that often is overlooked. A common mistake is to rush into a project without a clear understanding of the problem to be addressed and clear support from management.

Alice: But I've already discussed the project with Bob and the project has been tentatively approved by the Oversight Committee.

Mia: Right, and that's a good beginning. But before proceeding we need to make sure that you, Bob, and the Oversight Committee are on the same page. If not, we could invest a lot of time only to learn later that Bob or the Oversight Committee were expecting something else. Taking a little time now can save us a great deal of time and money later.


Alice: I hear what you're saying. What do I do for this preliminary phase?

Mia: Start by writing a clear concise statement that describes the problem. In a way that's the hard part–being very brief and clear. It shouldn't be longer than four sentences. Then, identify some alternative systems or ways to address the problem. Again, be concise. You might run these by some of your coworkers to get their input. Let's meet Tuesday afternoon to review what you have by then.

Alice: Sounds good. I'll get on this right away!

On Tuesday, Alice and Mia meet again to discuss Alice's progress. Alice has put a good deal of time into exploring and describing the problem of installing the reward system.

Alice: Defining the problem was more challenging that I thought it would be. But some of my coworkers had some good suggestions. Here's the problem definition.

Frequent Renters Club Problem Definition:

Create a system to record the accumulation and the redemption of reward points for members participating in the Frequent Renters Club. Whenever a member rents a streaming video, he or she will receive points. The number of points will depend on such factors as the popularity and availability of the video, the date and the time of day the video is requested, and any special promotions offered at that time. Points can be redeemed for free videos, movie paraphernalia, and priority to video downloading at peak times.

Mia: That's excellent. It is clear, concise, and provides enough detail. Now let's hear your solutions.

Alice: I have identified three possible alternative solutions. The first one uses stamps. When a member orders a movie online, a stamp is sent to them by mail. When they have enough stamps, members return the stamps for rewards. The second alternative uses the monthly billing statement. The current billing statement is sent monthly listing the member's account balance and the movies rented for the month. The program that generates the statements could be revised to also calculate and report reward points. Members redeem their reward points by mail or over the Web. The third alternative uses a Web page to immediately record, report, and redeem award points. Whenever a member downloads a movie, reward points are awarded and reported. Members redeem their reward points over the Web.

Mia: I think you've got it. Now, we need to prepare a two- or three-page report presenting the problem definition and outlining each of your alternative solutions. If you could prepare a draft, we could revise it on Thursday, and I'll present it to the Oversight Committee on Friday. Alice: I'll have the draft ready by Thursday morning. ANALYSIS

Alice and Mia complete the report as scheduled and Mia presents it to the Oversight Committee on Friday. Late that day Mia enters Alice's office with a big smile on her face.

Mia: Alice–good news! The Oversight Committee has given us the go-ahead to continue the project.

Alice: Great! I'm so relieved. Let's get started programming the new system!

Mia: Not so fast. Our next phase is analysis. Before building something new, we need to know what we currently have. And we still have three alternative solutions. Before we can select one, we need to understand how the current information systems at DVD Direct work and how they might be affected by the Frequent Renters Club.


Alice: Of course you're right. Where should I start?

Mia: Start by talking with people in areas that might be affected by the new system. Learn about their operations and procedures. What areas do you think would be most affected by the Frequent Renters Club?

Alice: That would be Accounting and Production. Accounting produces the monthly billing statements and Production will be responsible for delivering the videos.

Mia: Start with Accounting. Learn more about their accounting software. Be particularly mindful of any documents that are created including managerial reports. Determine how a member's credit history is maintained and used. Consider any modifications that may be necessary for the expanded model.

Alice: Right. I'll do some interviewing and keep my eyes open for any documentation on current processes.

Mia: Next, visit Production and follow the same procedure. See if you can locate any documents that describe how current orders are processed and how DVDs are shipped out. Then consider how these documents might be altered to fit the expanded model.

Alice: This should be pretty interesting, but I think it will take some time.

Mia: I agree. It's important that we don't rush through this process. The success of this project is dependent on a thorough understanding of exactly what is needed. Let's meet again in three weeks, okay?

During the following three weeks, Alice interviews a number of people in Accounting and Production and collects numerous documents. She learns a great deal about how DVD Direct currently records and processes orders from their members. At the same time she identifies numerous changes or modifications that may be required for the expanded business model.

In her next meeting with Mia at the end of the three weeks, Alice discusses her findings and presents the documents she has collected related to DVD Direct's accounting and production systems. The documents include a decision table and a data flow diagram. Mia and Alice discuss the requirements for the new system and formulate a tentative schedule to design, build, and implement the necessary systems to support the Frequent Renters Club. Over the next several days they prepare the systems analysis report that Mia will present to the Oversight Committee.


After her meeting with the Oversight Committee, Mia goes to Alice's office to report the committee's recommendation.

Mia: Alice, the committee is very interested in our project and has given approval for the design phase. The first design step is to evaluate the economic, technical, and operational feasibility of each alternative we identified in the first phase.

14-4.jpg Alice: Sounds good! I'm so pleased. But I don't know much about computer technology.

Mia: No problem, that's my area. I'll take care of that and you focus on the economic and operational feasibility. I suggest that you consult with the people in Accounting and Production that you met with during the analysis phase.

Alice: Several of them seemed very interested in the project and asked me to keep them up-to-date. I'm confident that they will have some opinions regarding the feasibility of the different alternatives. This looks like a big job. Mia: Yes it is and an extremely important one. Based on our findings, we'll select one system to recommend to the Oversight Committee. We need to take our time, be thorough, and not rush through this step. My guess is that it will take three to four weeks.

As they thought, the feasibility investigation does take nearly a month, during which Alice consults with people in Accounting and Production and Mia evaluates technical requirements. Let's follow them as they meet once again to discuss their findings.

Mia: Let's start with the first option involving stamps that are mailed. From a technical standpoint this is pretty low tech and would not be a problem.

Alice: From an operational standpoint it is very straightforward too. However, economically it may not be feasible. In addition to postal costs, we would need to hire additional staff to send out the stamps and record redemptions. Another issue, perhaps more significant, is counterfeiting. We would need to develop a system to ensure that redeemed stamps are actually authentic.

Mia: Good point. Also, while technically this approach is obviously feasible, this low tech approach is inconsistent with the high tech streaming video delivery system.


Alice: I agree. Our high bandwidth members would not be too impressed with a manual system. So let's forget that one. This leaves us with the other two alternatives, using the billing statement and using a Web page.

Alice and Mia conclude that both remaining alternative systems are economically, technically, and operationally feasible. Each system is similar, except that the Web site alternative supports immediate updates of reward points, while the monthly billing cycle alternative performs this operation just once a month. There may be more than meets the eye at first, however.

Mia: Some of the accounting programs would have to be modified for the monthly billing cycle approach. Even more changes, however, would be required for the new Web page approach.

Alice: Good point. The billing cycle approach would essentially be an extension to our existing information system.

Mia: Another factor to consider is the ability of the selected system to be modified or changed over time. For example, what if we ran a special promotion that allocated more reward points for certain movies?

Alice: Seems to me both would be equally capable of being modified. What about security? Does one alternative offer better security?

Mia: Our current billing system has built-in security measures, and we have never experienced any security problems. As an extension of this system, the monthly billing alternative would be just as secure. While the Web page alternative would present more security concerns, current Web technology is available that provides good security. But it would require more time and money to implement.

Alice: Both approaches have unique benefits and costs. The Web site provides the faster and better customer support. Monthly billing is a good fit with our current information systems. Both can provide security. However, the Web site approach will require more time and money.

Mia: While the immediate tabulation of club points by the Web site approach seems to offer more benefits, it would be more expensive. I think, from this perspective, we should go with modifying the monthly billing statement to include calculation and report of reward points.

Alice: I agree. Let's write our systems design report to include the costs and benefits of all the alternatives and recommend proceeding with the Monthly Billing approach.


The Overview Committee reviewed the systems design report presented by Mia and approved the funding and support for final phases of the project. Alice and Mia have been working on the development of the Monthly Billing option for the past six weeks. Let's check on them as they discuss their progress on the development phase.


Mia: Alice, because our Frequent Renters Club rewards are similar to airlines's frequent flyers rewards, I decided to talk with some of my contacts in the airline industry. They purchased their software from a company that specializes in sales and support of these types of programs.

Alice: Great. If we don't have to create our own programs, that would save a lot of development time. Have you contacted the software company?

Mia: Yes. I've met with them several times to discuss modifying their standard programs to meet our needs. Purchasing the modified programs will cost less than developing them on our own.

Alice: How about hardware? Will we have to purchase and install any new equipment?


Mia: Originally I thought we would need to buy a new Web server. However, I located a company in Canada that provides Web server support and extensive data storage. Leasing the services from this firm is more cost effective than purchasing the equipment ourselves.

Alice: So did you manage to outsource all hardware and software?

Mia: Almost. I had to write some code for a login screen to integrate the new Web site for users to redeem their club points. But for the most part, I worked on integrating pre-existing software. We are ready to test the hardware and software.

Using the modified software and the Web services from the Canadian firm, Mia and Alice, along with a team from the Accounting department, tested the hardware and software. Numerous issues surfaced, including changes in the Web login screen and some minor errors in the procedures to calculate reward points. But after three weeks, the system was ready to go.

Let's look in on Alice and Mia as they discuss the completed design and prepare for the next phase, implementation.


Mia: So, we have a working, tested system. Now we need to implement it. Any ideas on how we should do it?


Alice: I assumed we were going to promote the system to our members and make it available as soon as possible. If any problems arise, we'll fix them as they occur.

Mia: We could do that. But I think we should expect the unexpected. Even though we have carefully tested the system, it is very likely that problems will surface when our members use it. Alice: That could be a challenge! I estimate that several hundred members will initially use the Frequent Renters Club. If the system blows up the first time our members use it, we're going to have some frustrated users on our hands. Some may never use the system again. Do you have any ideas how we can minimize this risk?

Mia: There are alternative ways. Instead of implementing the new system to everyone at one time, let's initially offer it in the southwest region. It is the smallest region. As problems arise we can quickly fix them. Then, after the system is working smoothly, we can expand the system throughout the country. This approach will cost a little more, and it does not eliminate all problems. But it does minimize the impact of the problems while we are working out the kinks in the system.

Alice: Sounds good to me.

For the next two months, the members in the southwest region used the Frequent Renters awards program. In the first two weeks, several minor problems surfaced and were quickly addressed. Since that time, the system has been working smoothly and has been implemented countrywide. Again we find Alice and Mia in discussion, this time reviewing how the system has been performing and what needs to be done next.



Alice: Our new system is working great and our high bandwidth members have reported that they like using it. Thanks for all your help on this project, and I hope that we'll work together again sometime in the future.

Mia: We're not done yet. We have one final phase to complete–maintenance.

Alice: I thought that you and information services would be responsible for ensuring that the hardware and software continued to operate correctly.

Mia: That's true. We will address hardware and software problems as they occur. And we will periodically review the entire system to ensure that it is operating efficiently. But first you and I need to conduct a systems audit.

14-6a.jpg Alice: Audit, as in accounting?

Mia: The kind of audit I'm referring to evaluates how well the actual system performs relative to the requirements we originally specified. Maintenance may not be exciting, but it is a highly valuable effort. It starts with confirming that we have truly solved our initial problem!

Alice and Mia spend the next week evaluating the system's performance and comparing it to their original design specifications. They are very pleased to see that the system meets their expectations, the expectations of their managers, and the expectations of the Frequent Renters Club members.

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