INFORMATIONTECHNOLOGYSTRATEGY FORAN ASSISTEDLIVINGDEVELOPER

ROBERT PAULELLENTUCK

ROBERT PAULELLENTUCK

INFORMATION TECHNOLOGY STRATEGY FOR AN ASSISTED LIVINGDEVELOPER

ORIGINALLY POSTED ON 10/03/2010

This document is a proposal for an Information Technology (IT)strategy for an assisted living real estate development firm (client). Theproposal consists of an identification, justification, and discussion of how aportfolio of IT products can better implement the organization’s strategy. Theproposal will describe the business of the organization, discuss thebackground of the industry, and explain the background, strategies, history,and implementation of business processes used in the industry value chain.There will also be a discussion of how the organization currently leverages IT,including analysis of the current IT infrastructure and the organizationalstructures set up to manage the IT. In addition, there will be an analysis ofstrategic opportunities available to leverage IT to meet specific businessobjectives of the organization, and IT strategy based on that analysis - alongwith corresponding technical, management, and organizational issues thatneed to be addressed. Finally, each IT project to be implemented to meet theIT strategy will be discussed in detail.

The first section of the proposal discusses company and industrybackground. The second section of the proposal discusses proposedtechnologies one by one, along with current IT and management strategiesand the business goals that they serve. The second section also discusseshow the IT strategy can be augmented for the firm to become better atmeeting its business goals.

Models for analysis that will be applied include ROI/cost tables, theEmery and Trist Model, the QSPM Matrix, and the SWOT Matrix. All tables,models, and matrixes are included in the Exhibits section beginning on page Aof this proposal.

The firm being studied is an assisted living real estate developmentfirm. In order to better understand the goals and direction of the firm, whichwill in turn guide the kind of IT strategy that best suits the client, it isnecessary to discuss the background of the assisted living sector of thecommercial real estate development industry.

As its name implies, assisted living refers to housing in which elderly,frail, or otherwise physically compromised populations live (Schwarz & Brent1999). The populations of assisted living facilities are not so ill that theyrequire nursing home care, frequent interventions from a nursing staff, or

hospitalization. Instead, people who reside in assisted living facilities are self-sufficient in a number of ways. But, due to their age or other medicalproblems, they do require occasional assistance, which may be specificallyoriented to healthcare or which may only pertain to the tasks of everydayliving. The developer of such a facility may operate the facility or contract outthe operation to a specialized operator.

Assisted living facilities can be developed from the ground up or theycan result from the redevelopment of existing structures. The exactoperational challenges of an assisted living developer will vary depending onwhether the focus is on ground up or redevelopment, though many developersundertake both types of projects. In this case, the client develops facilitiesboth from the ground up and by redevelopment, by identifying land andexisting buildings in suburban and urban areas of the Mid-Atlantic region andcontracting with specialized architects to design the facility and contractorsand subcontractors to construct or renovate the facility.

In certain ways, the business goals (and related IT challenges) of theassisted living developer are similar to those of a construction firm. During thepre-development and development phase of the project, there is a strongemphasis on automating and tracking the many aspects of the projectmanagement process including design documents and contracts, amongstothers. There is also a large department devoted to marketing the variousfacilities, under development and completed, to their target tenantpopulation. The marketing department has a number of field offices that arenetworked together, and that share sales tracking, marketing, and otherapplications. Construction management project offices are also networkedtogether, requiring access to design documents and contracts. According tothe CIO, the stated IT goals of the organization are to lower operational costs,increase communication between stakeholders, and allow the organization tobe more productive and efficient. The CIO works closely with the CEO andSenior Vice-President of Development, and has been at his current post foralmost five years. The length of the CIO’s tenure is unusual in modernbusiness and the real estate industry specifically, in which there is frequentturnover for CIO's, and indicates the importance that the business arm of theorganization places on a stable and well-supported IT strategy. The CEOindicated that the firm’s use of profit participation helps to improve retentionfor many strategic positions.

Based on the foregoing analysis, the company could be situated on anEmery and Trist model, on the border of Simple Stable and Simple Dynamic(See Exhibit One) “Position of Company On Emery and Trist Model” (Emery &Trist, 1965).

The company’s current strategic position can also be depicted by aSWOT Matrix (See Exhibit Two) “SWOT Analysis.” The SWOT matrixindicates the strengths, weaknesses, opportunities, and threats to the client.

This section will offer insight into three specific IT projects that it isproposed the client should adopt, against the backdrop of the firm’s currentstrategies. After discussing the content of these strategies, their relevance tothe organization’s business processes and business goals will be discussed,to show why these technologies should be adopted. The three technologiesproposed for adoption are: a cloud computing infrastructure; projectmanagement software and data mining software.

I) Cloud Computing Infrastructure - Cloud computing is the most basicpart of the project. Because there is a great deal of confusion over the exactpotential of cloud computing, it is important to begin with a comprehensivedefinition. Velte and Elsenpeter (2009) have provided the following overview:“…cloud computing is a construct that allows you to access applications thatactually reside at a location other than your computer or other Internet-connected device; most often, this will be a distant data center…anothercompany hosts your application (or suite of applications, for that matter). Thismeans that they handle the cost of servers, they manage the softwareupdates, and…you pay less for the service…By having someone else host theapplications, you need not buy the servers nor pay for the electricity to powerand cool them” (p. 4). As an organization with a good-sized IT infrastructureand substantial amount of IT assets (i.e., applications, servers, PCs residingon employee desktops, etc.) the client can benefit from cloud computing. Thecloud computing industry is growing at a 17 per cent annual rate (McKinsey,2010). For example, the biotechnology company Genentech uses GoogleApps for e-mail and to create documents and spreadsheets, bypassing capitalinvestments in servers and software licenses demonstrating the growingacceptance of cloud computing by large, established companies. Cloudcomputing has created a wave of computing capabilities delivered as aservice, including infrastructure, platform, applications, and content. Suchgrowth, and the increasing options, makes cloud computing more attractive tothe client.

Why would the client consider outsourcing the management of itsdata, applications, and computer infrastructure to an outside vendor whenthey most likely assume they can do it for less in house? Primarily becausethis assumption is incorrect. Cloud computing provides substantial costsavings and since it is billed like a utility, it will free up the clients capital; inaddition this technological decision is actually motivated by a number offundamental business considerations.

The first justification of a cloud computing strategy is cost-effectiveness(Mather, Kumaraswamy, & Latif 2009, p. 226). To understand the importanceof this concept, the following information about the client’s IT infrastructureand organizational structure set up to manage the IT should be considered:

The client runs 11 servers of its own, which help to distribute 5 majorsoftware packages to its staff throughout the Mid-Atlantic States.

The client has a staff of 6 full-time employees, who report to the CIO, tomonitor, manage, maintain and repair IT assets including hardware,software, and services.

The client hosts its own Web site and corporate intranet, and pays forthe bandwidth costs accordingly.

When incurring these expenses, the client pay’s for its infrastructure whetheror not it is needed. According to the client’s CIO, the company very seldomuses more than twenty percent of the CPU power it has available. Despite thelow level of CPU usage, the client still must pay for all of its available capacity,regardless of whether it is being used.

The second justification of cloud computing is capital, Marks andLozano (2010) have explained that, in cloud computing, “expenses associatedwith cloud-provided resources, e.g. IT infrastructure, platforms as a service,software as a service, vary more directly with your output or sales volume,and you can add or reduce capacity based on sales volume or output volume”(p. 56). Cloud computing enables a shift from fixed to variable costs, makingthe purchase of IT like a utility, and allowing for the outsourcing of non-essential activities to specialists resulting in cost savings.

The final justification of cloud computing is business focus; the client isin the business of being an assisted living developer, not an IT company. Ifthe client wishes to retain control over its own IT assets, it must pay for staffand resources, and devote a portion of its organizational energies to IT.However, the client’s purpose is to profitably develop assisted living facilities,not to run an IT business. Turning over substantial aspects of IT maintenanceto an outside vendor will allow the client to be a better real estate developer,as outside IT experts will take over the day-to-day IT managementresponsibilities and the client can then devote all of its resources to the reasonit is in business.

It is recommended the client transition the IT assets listed above to thecustody of a cloud computing specialist who will then charge the client autility-based fee based upon CPU usage and IT support. The transition to thecloud will allow the client to get out of an IT business, which is using upresources and where it does not belong and devote more of its time, money,

and organizational energy for assisted living development. The CIO will bebetter able to focus on how to leverage IT to meet specific businessobjectives.

Exhibit 3 discusses the ROI and Cost Savings for Cloud Computingfrom a move to cloud computing. Assuming a $55,000 year 1 cost of hosting,a $150,000 savings from decommission and selling servers and other currentinfrastructure, and $142,000 saving from decommissioning current IT full timeemployees the ROI of the investment is estimated to be $237,000 in year 1.See Exhibit Three “ROI and Cost Savings Table for Cloud Computing.”

II. Project Management Software - The client currently uses MicrosoftProject Professional a basic project management software program for thepurpose of sharing information and coordinating activities action between itselfand the contractors and subcontractors who come together to construct theassisted living projects. This software is considered rudimentary by moresophisticated real estate developers. It has a reputation for meeting the needsof smaller companies, but lacking the kind of advanced functionality neededby the client in its interactions with its contractors and subcontractors (see forexample Harris 2007).

In order to understand why the client needs more advanced projectmanagement software, it should be noted that the client’s relationship with itscontractors and subcontractors is based on the traditional construction riskmanagement model (Sears, Clough, & Sears 2008). See Exhibit 4“Construction Risk Management Model” (Lord Fraser, 2004, p. 1) whichplaces construction management in its context alongside other models forconstruction project management.

Notably, in construction management, the majority of the risk lies withthe assisted living developer, not with it’s contractors. The legal andcontractual ramifications of the construction risk management model are thatthe client itself bears responsibility for most elements of the constructionproject (Jackson 2010, p. 326). For example, were a dispute to arise over thewidth of doorways in the apartment units (larger than a typical apartment toaccommodate wheelchairs and rolling beds), but the contractor orsubcontractor failed to build according to specifications. If, for some reason,the client is unable to prove that it requested the specific width, theresponsibility does not lie with the contractor, but with the client to correct theerror.

This example is just one of countless problems that can arise in thereal estate development process. When a real estate developer engages inconstruction management, it must very carefully organize, index, and digitizeall documents. Unfortunately, there are currently many shortcomings with theclient’s project management software. The client’s CIO informed us that the

digitized documents associated with the firm’s construction managementcontracts are kept in a digital library on a separate server that cannot beaccessed by the Microsoft Project Professional system. When a dispute orambiguity arises on a project, which can only be resolved by looking at theconstruction documents, then the client managers on the project site have torequest remote access to the digital library and comb through the documentsmanually to find the information they need.

There are many commercial project management systems currentlyavailable that offer contextual digital indexing (Sears, Clough, & Sears 2008).Such a system allows all documents to be digitized, attached to otherdocuments (for example the master contract), and then renders all digitalimages searchable to users. Searchability is a critical attribute to such asystem. Since many digital documents associated with projects are not loadedon to Microsoft Project Professional but instead sit in a digital library on aseparate server that does not come with a searchable interface, the only wayto find documents is by manually poring through several files on the server.This slows the process of retrieving documents needed to solve contractualdisputes with contractors. Furthermore, in case of a lawsuit, this method ofarchiving materials creates additional risks for the client, which will not be ableto easily retrieve documents that it may need to successfully litigate a caseagainst a contractor.

The CIO explained that the limitations of the current projectmanagement system are a result of the company’s rapid growth. Thecompany has been working with Microsoft software since it’s founding elevenyears ago. Since then the company has grown quickly and there has not beentime for the entire company to recalibrate its IT strategy on the fly. Instead, thefirm has taken a reactive approach to IT strategy, only fixing the most pressingprojects when they became urgent. Since the company has not had a majorlawsuit with a contractor, or lost a construction document that is necessary toenforce a contract, it has continued to use Microsoft Project Professional.However, as a result of the client’s rapid growth rate, it is likely that thevolume of digital documents it manages will double or possibly triple in thecoming twelve to eighteen months, increasing the odds that an importantdocument will be lost, or access to a document delayed long enough todamage a contractual relationship. As a result, even though the currentsystem works, it is not ideal for the clients needs, and it invites a host of legal,contractual, and operational risks that could seriously jeopardize its future.

Therefore, improved project management software will reduce legalrisks and contractual disagreements, and increase the client’s productivity byensuring that contract disputes over terms and documents do not slow downprojects. Because access to all project documents will be much simpler, the

firm’s stakeholders - regardless of their location - will have faster access tothis data to guide them in the event of a dispute between the client and acontractor.

Exhibit 5 discusses the ROI and Cost Savings from an investment inadvanced project management software. Assuming $1,000,000 in potentiallosses, an initial estimate of the costs of a lawsuit and/or lost contract broughtabout by un-archived documents, the ROI of the investment is estimated to be$750,000 in year 1 and closer to $950,000 in future years, as the initial$250,000 investment in software will dwindle to an annual $50,000 softwaremaintenance charge. See Exhibit 5 “ROI and Cost Savings Table for ProjectManagement Software.”

III. Data Mining Software - Data mining is a function that the clientcurrently carries out with Microsoft Excel and other manual methods. Thebasic uses for data mining (Ohsawa & Yada 2009) are to determine: (1) whereto build and (2) to whom to market. Decision (1) is similar to the decisionfaced by other kinds of businesses that wish to know where to locate a newlocation. However, decision (1) is increasingly relevant to the assisted livingdeveloper as well, because the demographics of communities are changing atvariable rates (Uhlenberg 2009). Some communities are ageing at a morerapid pace than others. Currently, the type of data mining carried out by theclient is quite simple. The organization downloads spreadsheets that indicatethe average age within a number of different communities, and then attemptsto build new locations in those communities where the average age and netincome is the highest. While this approach is theoretically sound, the problemis that the client lacks a true understanding of the demographic data. Forexample, that the situation may arise where, based on the demographics, aparticular community will experience only a temporary increase in its averageage and net income, and will then return to its previous demographic levels.Demographic analyses of aging and income are quite complex, and there arenumerous variables involved. True data analysis, built on a foundation ofstatistical algorithms instead of basic spreadsheets, will allow the client toaccurately determine the longer-term demographics of a particular community.

In addition, by targeting only the communities that are demographicallyattractive now, the client is placing itself into competition with numerousassisted living developers that are targeting the same markets. The client’sCEO indicated that the company desires to establish a longer-term strategythat will allow his firm to be present and established in a market before hiscompetitors arrive. He stated that if they wait until afterwards, they will becompeting with numerous other firms and will have to work harder to grow thebusiness

One of the evolving analytical issues in market analysis facing theclient is that demand for assisted living centers is not merely a factor of howquickly populations are aging, but where assisted living populations inparticular are underserved. Golant and Hyde (2008, pp. 357-358) havepointed out that, in many U.S. states, there is a wide disparity between thenumber of nursing home beds and assisted living beds. Some states have farmore nursing home beds. This is a result of the fact that while affluentindividuals are able to pay for assisted living facilities, Medicaid frequentlypays for nursing homes. The obvious result is that assisted living facilitiesfollow the demographics, and there are more nursing homes in less financiallyattractive markets. In addition, this issue is complicated by the client’sstrategic considerations. The client has stated that one of its long-termbusiness goals is to develop assisted living centers, which serve lower-incomepopulations. It should be noted that, as Golant and Hyde (pp. 257-358) alsodisclosed, there are substantial difference between states in terms of howmany low-income people already have access to assisted living. The client willhave to perform a great deal of complex analysis in order to understand all thedata available and to run analytical scenarios that are far more complex thattheir current software allows in order to identify what markets are mostappropriate based on a large number of variables, including, but not limited to,a communities long-term demographic trends, existing competition of assistedliving facilities, and the underserved population. Such a complicated analysiswill require far more advanced data mining software than is currentlyused. The client will no longer be able to use Excel to meet their needs.

Through the use of advanced data mining programs, the client willimprove its ability to predict what communities might be the most appropriatemarkets over the long term. As the client stated they wish to continue toexpand the geographic areas they serve then it will need to adopt a long-termstrategy, and the utilization of data mining software will make a contribution toits ability to meet these needs in this regard.

The client will also be able to utilize data mining applications toimprove its marketing abilities. Currently, the client conducts none of its owndata mining, instead renting lists from “brokers” who specialize in marketinginformation. The rented lists are made up mostly of residents in a targetmarket who are over the age of 65. This approach has a number ofshortcomings. First, not all people over 65 will be interested in assisted livingcenters. For example, some live independently without any care, somemembers of this population may receive long term care through a nurse or aidin their existing residence, may already be in nursing homes or under the careof family members. Second, the population of assisted living centers is notmade up exclusively of individuals who are over 65. The challenge for the

client is to use the data to better segment the target population of residents.The client’s CIO stated that strong demand has allowed them to fill their newfacilities without a focus on segmentation. The CIO further indicated that asimple direct mail campaign to those over 65 has been adequate to fill afacility, combined with the word of mouth that such a campaign creates.

There are other issues for the client to consider. First, the client’sfailure to fully understand its market segments and to pursue them is causingthe client to drift away from its traditional base of customers. For example, byrelying on others to provide leads and segmentation, the client is missing agolden opportunity to get close enough to prospects to understand what it isthey need. Second, eventually the demand for the client’s product will peak, ifthe demand generates a greater supply of assisted living providers andtherefore centers. The real estate industry is famous for its oversupply as aresult of strong demand in a strong market or sector. More developers andfacilities will split up the existing demand, and the client will have to workharder to identify and convert potential prospects that it identifies intocustomers.

It is recommended that the client invest in advanced data miningsoftware that will allow it to segment the market and create far more accuratelists of potential customers. This step should be the first part in an extendedbusiness transformation for the client. After creating lists with the newsoftware, the client should move beyond simply sending out direct mailers.The client should take a further step and approach the identified prospectbase from the tactic of doing surveys in order to further gather information.Surveys would be an incredibly powerful tool, because they would allow theclient to understand the different needs of different populations (Jenster &Soilen 2009). This would allow the client to learn a great deal about the clientbase, whether the target assisted living population has unique in-home needsthan individuals suffering from a particular illness. There might be an ethnicpopulation, such as Asians or Hispanics, who while traditionally reliant on carefrom family members are now becoming reliant on assisted living centers. Anextensive variety of actionable market data can be learned easily by reachingout to the prospect base, not through traditional direct marketing conversion,but through surveys to gather information. The survey information can furtherenhance the firms marketing efforts by allowing the marketing department tofine tune their efforts.

It is important to note that the greatest value of data mining software isthrough intelligent human application of the information provided by what isonly a tool. The generation of more sharply targeted prospect lists is a largelyautomated process, which will probably result in a quick improvement in theclient’s conversion rates. The real strategic value in the use of data mining

software lies in the client gathering data about the needs of future customers.Understanding the future direction of the market will aid the client’s long-termprospects for success. In the short run, the client should continue to achievesuccess without improving its data mining capabilities; but, in the long run, theclients current approach will not allow it to properly understand the market andtheir potential clients, and the company will not be able to compete with firmsthat are better able to predict and respond to the emerging needs of themarket, as well as current and future customers. The client needs to utilize thedata mining software not merely for marketing list generation but also toidentify survey participants and process the data obtained from prospectivecustomers to better understand the needs of the market.

The hard ROI of improved data mining software will most likely beimproved leasing success, higher conversion rates and a decrease incustomer acquisition costs. Exhibit 6 discusses the ROI and Cost Savingsfrom an investment in data mining software. Assuming $500,000 in lostconversion costs through inaction and the $150,000 cost of packagedsoftware in year 1, the ROI of the investment is estimated to be $350,000 inyear 1 ($500,000 potential loss mitigated by $150,000 investment). SeeExhibit 6 “ROI and Cost Savings Table for Data Mining.”

IV. Change Management - It is likely that the most important portion ofthe clients IT strategy will be convincing the employees to adopt the newtechnology, utilizing the new software that is available and adopting to thechanges that the cloud infrastructure will bring, that will be introduced to theclients business environment. If the employees are unwilling to make thechange to the new technology, it will basically be useless to the organization.In order to insure that the changes are utilized, the final and possibly the mostimportant portion of this section will discuss the various means that the clientcan use to promote the adoption of their new IT strategy amongst theiremployees.

One framework for understanding how to convince employees toadopt technological change was offered by Jensen and Kerr (1994, p. 408),who studied the topic of change management. Jensen and Kerr discoveredthat five questions must first be answered in a satisfactory manner in order fora firm's employees to be willing to embrace change within their organization.These questions apply to IT change as well as other types of change. Thefive questions are:

1. “Why must we change, and why is this change important?2. What do you want me to do?3. What are the measures and consequences of change/no change?4. What tools and support will be available to me?

5. What’s in it for me?”

Sims (2002, p. 47) has warned that, if these questions are not answered tothe satisfaction of employees, then proposed IT changes will be met with“resistance and cynicism,” essentially they are doomed before they start, asthis will undermine the project before it can get off the ground. Therefore, it isa necessary part of the clients IT strategy to conclude this section byanswering these questions.

The answer to these questions will vary depending on whichstakeholder they are addressed to, and there is not enough space tocompletely answer the questions for every possible group in the client’sorganization. Instead we will focus on the client’s marketing department whowill be utilizing the new data mining software to better prospect and segmentthe potential tenant population while adopting the new technique of utilizingthe new technology to survey this population in order to develop marketintelligence. The solutions offered for the marketing managers will serve as amodel to answer the change management question for other groups within thefirm, including project managers, support staff, analysts, and even the firmsexecutives.

1. The firms marketing managers must be willing to change by committingto data mining software since such a change will play a key role ininsuring the long-term success of the client. Improving segmentation willincrease conversion of prospects to tenants. This will help the client inthe increasingly competitive assisted living development arena. Inaddition data mining can be utilized to identify potential survey subjects,which will allow the client to build market intelligence. This informationwill assist the company in anticipating and exploiting market trendsbefore competitors, giving the client another strong source of strategicadvantage.

2. The firm’s marketing managers will be asked to engage in an trainingprocess in order to learn how they will utilize the data mining software inorder to conduct segmentation of data, then they will engage in follow-up training that will explain how to conduct surveys then interviewappropriate survey respondents in order to further build intelligenceabout market trends, and finally they will be trained to utilize the marketintelligence that they learn.

3. The clearest measure of change will be whether there is an increase inthe conversion rates of direct mail/telephone campaigns that are basedupon the new information the data mining software helps to produce.

4. The firm that provides the client with the data mining software will trainmarketing managers at the client’s locations. The training will need to bea combination of classroom and online exercises. Online and virtualfollow up training will help to build the marketing managers skills andconfidence. The flexibility, combined with the strong follow up training, isstructured in order to allow the managers to learn and absorb at theirindividual pace. The utilization of change champions within thedepartment, advanced users of the product, will provide additionalsupport to the managers. As a result, managers will be able to learnfrom both the software providers and theirs peers, in a combination ofoffline and online formats so that they will have exposure to the productwhere they are most comfortable. This learning structure should resultin making the necessary concepts easier to learn. The CIO should makehimself available to the marketing managers so that at any time theycan reach out for special training requests, with questions, orcomments.

5. The change will make the marketing managers more skilled at their jobsand better prepared to increase the success of the marketingdepartment and to the client’s organization as a whole. The improvedperformance by the market managers that the change brings shouldalso lead to an increase in both compensation and performancebonuses. In addition, such change will provide valuable professionaldevelopment to the marketing managers.

It is clear that the client will need to commit as much energy into carefullyexplaining and communicating the reason for the change as into purchasingand deploying the software. It is critical for the CIO to make clear to theiremployer that the selection of a vendor and purchase of the software whilecritical to the entire project is in reality just the start of what will be a complexprocess.

Investment in new technology is not a cure-all for the problems abusiness might encounter during its existence. New technology needs toreceive strong support from the C-level of the firm, who will provide definitionof the scope and goals of any technology investment; and the technologymust have adoption at the bottom, ordinary employees need to utilize fully theproposed technology changes. In any organization all such changes must bepart of a unified, efficient business process where every member of theorganization unites in order to guarantee the success of a technology project.

This proposal has listed a number of IT initiatives that are in line withthe client’s business goals, that accord with best IT practices in line with theclients business goals, and that meet the best IT practices in the area of the

assisted living sector of commercial real estate development. All suchchanges must be part of a single, smooth business process in which allmembers of an organization come together to ensure the success of thetechnology project. In developing a successful IT strategy for the client it isimportant to note that the technology itself is only a portion of the solution forthe client, and that is why this proposal has also focused on the importance ofinsuring that all of the firms stakeholders (including, but in no way limited to,the CEO, CIO, senior managers, and ordinary employees) fully support thechange that the IT proposal would bring to the firm, in order to insure that thechange is a closely-governed and supported part of the clients businessinstead of an attempt to force new technology on to users in the absence ofany associated governance or motivation.

The additionally important theme of this proposal is the necessity forthe client to prepare for long-term trends affecting the assisted livingdevelopment industry. Both the CEO and CIO indicated their desire to preparetheir firm for long-term success and growth. While the current IT infrastructuremeets the short-term needs of the client, this fact has lulled the leaders of thecompany into IT complacency. Since the assisted living development industryis currently experiencing a period of high growth, firms can experience short-term success without optimizing their IT infrastructure. No period of highgrowth will continue indefinitely, as demand will draw competitors who willinevitably begin to utilize IT as a competitive advantage against one another.Therefore, the best support for implementing the IT transformation in thisproposal is that it will prepare the client for the long term, allowing the client tocontinue expanding the geographic areas they serve.

If the client adopts the strategy in this proposal, and the method ofchange management is fully embraced, the client should obtain bothincreases in operating efficiency and cuts in operating costs. The client shouldalso see a growth in the productivity of employees and a resulting growth inrevenues. These reasons strongly support the client adopting the changesrecommended in this proposal and taking the steps necessary to successfullyimplement them. The result will be what Buchta, Eul, and Schulte-Croonenberg (2009) have referred to as strategic IT management for the longterm.

With these arguments in mind, the QSPM Matrix (MBA Tutorials,2009) in Exhibit 7 depicts the business case for acting now as opposed tochoosing an ill-conceived course of inaction. See Exhibit 7 “QPSM” Matrix. Itshould be noted that the QSPM analysis supports the case for taking theactions recommended in this proposal.

EXHIBITSExhibit 1Position of Company on Emery & Trist ModelNumber of InfluencesFewer Greater

ComplexStable

ComplexDynamic

Simple Stable

Simple Dynamic

Speed of ChangeSlower Faster

Exhibit 2SWOT Analysis

STRENGTHS

Strong book of business Established relationships with

reliable contractors CEO and CIO cooperation

OPPORTUNITIES

Assisted living market expandingrapidly in many regions

New customer populations comingon board

Lack of national competition

WEAKNESSES

Paying too many unnecessary costsassociated with IT management

Lacks comprehensive intelligenceon customer segmentation andregional market demographics

THREATS

Exposure to potentiallawsuit/contract loss from lack ofproper document archiving andproject management system

Vulnerable to attack from cost-efficient and market-intelligent

competitor(s)

Exhibit 3ROI and Cost Savings Table for Cloud Computing

Hardware Software InfrastructureYear 1 Cost $0 $55,000 (cost of

hosting)$0

Year 1 ROI +$150,000 (savingsfromdecommissioningand selling serversand other currentinfrastructure)

-$55,000 +142,000 (savingsfromdecommissioningcurrent IT Full-TimeEmployees andassociatedexpenses)

TOTAL YEAR 1 ROI: $237,000 ($292,000 profit on a $55,000 investment)

Exhibit 4Construction Risk Management Model

Exhibit 5

ROI and Cost Savings Table for Project Management SoftwareInaction Software Hardware/Infrastructure

Year 1 Cost $1,000,000(lawsuit / lostcontract costs)

$250,000 (cost ofpackagedsoftware)

$0

Year 1 ROI $1,000,000 -$250,000 $0

TOTAL YEAR 1 ROI:$750,000 ($1,000,000 in potential loss mitigated by a $250,000 investment)

Exhibit 6ROI and Cost Savings Table for Data Mining

Inaction Software Hardware/InfrastructureYear 1 Cost $500,000

(lost conversioncosts)

$150,000 (cost ofpackagedsoftware)

$0

Year 1 ROI $500,000 -$150,000 $0

TOTAL YEAR 1 ROI:$350,000 ($500,00 in potential loss mitigated by a $150,000 investment)

Exhibit 7QSPM Matrix

Alternative One: Inaction Alternative Two: Cloud, PM, DataMining

KeyFactors

Weight

AttractivenessScores

TotalAttractiveness Score

Weight

AttractivenessScores

TotalAttractiveness Score

Costs .25 3 .75 .25 1 .25StrategicPositioning

.25 1 .25 .25 4 1

CompetitiveAdvantage

.25 1 .25 .25 4 1

Risks ofChange

.25 4 1 .25 2 .50

Total Attractiveness Score: 2.25 Total Attractiveness Score: 2.75

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