REQUIREMENTS
Proposal for change: You will write a proposal for changing this system, of five to six pages plus a brief single-page cover letter. Address this proposal to whatever decision-making authority is appropriate for your software: perhaps the company that publishes it, perhaps an individual or committee in your own organization. Try to find out the actual name of the actual person or group who actually has the authority to make the changes you suggest, and write your proposal with that person or group in mind. Your goal should be to produce a proposal you can actually send.
PROFESSOR'S COMMENT REGARDING HOW THE PROPOSAL SHOULD BE WRITTEN
you may use figures to illustrate any changes you are proposing (like always though, you should never rely on your figures for explanations and they should be used to supplement your written content. Also, I noticed a lot of students simply embed pictures in their text. A more "polished" way of doing this is to have your figures and label them with captions. In your text, you can refer to the specific figures).
The requirements for this assignment is five to six double-spaced pages (and as all assignments, it can be longer if you include figures ... we're looking for 5 - 6 pages of written content) as well as a one-page cover letter. The report should be in 3rd person, but your letter can be in 2nd person since it should be addressed to the appropriate decision-making authority.
In terms of categories and headings, that really depends on what you're trying to propose. For example, you can have a brief "Introduction" section talking about the current state / main features of the system (you don't want to focus on this too much since you can assume the target is already familiar with high-level functionality of the system ... or at least you would hope so since they're supposed to be a higher-level manager of the system). You can then break down your proposal into sections / sub- sections for each change you're pitching. Within each of these sections should be a strong analysis of why the change you're proposing is important (cost / benefit analysis, user adoption, user experience, ...). Of course, you should have a conclusion reiterating the main arguments for your changes.