INFORMATION TECHNOLOGY STRATEGY FOR AN ASSISTED LIVING DEVELOPER

ROBERT PAUL ELLENTUCK

ROBERT PAUL ELLENTUCK

INFORMATION TECHNOLOGY STRATEGY FOR AN ASSISTED LIVING DEVELOPER 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). The proposal consists of an identification, justification, and discussion of how a portfolio of IT products can better implement the organizations strategy. The proposal will describe the business of the organization, discuss the background 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 organizational structures set up to manage the IT. In addition, there will be an analysis of strategic opportunities available to leverage IT to meet specific business objectives of the organization, and IT strategy based on that analysis - along with corresponding technical, management, and organizational issues that need to be addressed. Finally, each IT project to be implemented to meet the IT strategy will be discussed in detail. The first section of the proposal discusses company and industry background. The second section of the proposal discusses proposed technologies one by one, along with current IT and management strategies and the business goals that they serve. The second section also discusses how the IT strategy can be augmented for the firm to become better at meeting its business goals. Models for analysis that will be applied include ROI/cost tables, the Emery and Trist Model, the QSPM Matrix, and the SWOT Matrix. All tables, models, and matrixes are included in the Exhibits section beginning on page A of this proposal. The firm being studied is an assisted living real estate development firm. In order to better understand the goals and direction of the firm, which will in turn guide the kind of IT strategy that best suits the client, it is necessary to discuss the background of the assisted living sector of the commercial real estate development industry. As its name implies, assisted living refers to housing in which elderly, frail, or otherwise physically compromised populations live (Schwarz & Brent 1999). The populations of assisted living facilities are not so ill that they require nursing home care, frequent interventions from a nursing staff, or

hospitalization. Instead, people who reside in assisted living facilities are selfsufficient in a number of ways. But, due to their age or other medical problems, they do require occasional assistance, which may be specifically oriented to healthcare or which may only pertain to the tasks of everyday living. The developer of such a facility may operate the facility or contract out the operation to a specialized operator. Assisted living facilities can be developed from the ground up or they can result from the redevelopment of existing structures. The exact operational challenges of an assisted living developer will vary depending on whether the focus is on ground up or redevelopment, though many developers undertake both types of projects. In this case, the client develops facilities both from the ground up and by redevelopment, by identifying land and existing buildings in suburban and urban areas of the Mid-Atlantic region and contracting with specialized architects to design the facility and contractors and subcontractors to construct or renovate the facility. In certain ways, the business goals (and related IT challenges) of the assisted living developer are similar to those of a construction firm. During the pre-development and development phase of the project, there is a strong emphasis on automating and tracking the many aspects of the project management process including design documents and contracts, amongst others. There is also a large department devoted to marketing the various facilities, under development and completed, to their target tenant population. The marketing department has a number of field offices that are networked together, and that share sales tracking, marketing, and other applications. Construction management project offices are also networked together, requiring access to design documents and contracts. According to the CIO, the stated IT goals of the organization are to lower operational costs, increase communication between stakeholders, and allow the organization to be more productive and efficient. The CIO works closely with the CEO and Senior Vice-President of Development, and has been at his current post for almost five years. The length of the CIOs tenure is unusual in modern business and the real estate industry specifically, in which there is frequent turnover for CIO's, and indicates the importance that the business arm of the organization places on a stable and well-supported IT strategy. The CEO indicated that the firms use of profit participation helps to improve retention for many strategic positions. Based on the foregoing analysis, the company could be situated on an Emery 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 companys current strategic position can also be depicted by a SWOT Matrix (See Exhibit Two) SWOT Analysis. The SWOT matrix indicates the strengths, weaknesses, opportunities, and threats to the client. This section will offer insight into three specific IT projects that it is proposed the client should adopt, against the backdrop of the firms current strategies. After discussing the content of these strategies, their relevance to the organizations business processes and business goals will be discussed, to show why these technologies should be adopted. The three technologies proposed for adoption are: a cloud computing infrastructure; project management software and data mining software. I) Cloud Computing Infrastructure - Cloud computing is the most basic part of the project. Because there is a great deal of confusion over the exact potential of cloud computing, it is important to begin with a comprehensive definition. Velte and Elsenpeter (2009) have provided the following overview: cloud computing is a construct that allows you to access applications that actually reside at a location other than your computer or other Internetconnected device; most often, this will be a distant data centeranother company hosts your application (or suite of applications, for that matter). This means that they handle the cost of servers, they manage the software updates, andyou pay less for the serviceBy having someone else host the applications, you need not buy the servers nor pay for the electricity to power and cool them (p. 4). As an organization with a good-sized IT infrastructure and substantial amount of IT assets (i.e., applications, servers, PCs residing on employee desktops, etc.) the client can benefit from cloud computing. The cloud computing industry is growing at a 17 per cent annual rate (McKinsey, 2010). For example, the biotechnology company Genentech uses Google Apps for e-mail and to create documents and spreadsheets, bypassing capital investments in servers and software licenses demonstrating the growing acceptance of cloud computing by large, established companies. Cloud computing has created a wave of computing capabilities delivered as a service, including infrastructure, platform, applications, and content. Such growth, and the increasing options, makes cloud computing more attractive to the client. Why would the client consider outsourcing the management of its data, applications, and computer infrastructure to an outside vendor when they most likely assume they can do it for less in house? Primarily because this assumption is incorrect. Cloud computing provides substantial cost savings and since it is billed like a utility, it will free up the clients capital; in addition this technological decision is actually motivated by a number of fundamental business considerations.

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

The client runs 11 servers of its own, which help to distribute 5 major software packages to its staff throughout the Mid-Atlantic States. The client has a staff of 6 full-time employees, who report to the CIO, to monitor, manage, maintain and repair IT assets including hardware, software, and services. The client hosts its own Web site and corporate intranet, and pays for the bandwidth costs accordingly.

When incurring these expenses, the client pays for its infrastructure whether or not it is needed. According to the clients CIO, the company very seldom uses more than twenty percent of the CPU power it has available. Despite the low 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 and Lozano (2010) have explained that, in cloud computing, expenses associated with 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, making the purchase of IT like a utility, and allowing for the outsourcing of nonessential activities to specialists resulting in cost savings. The final justification of cloud computing is business focus; the client is in the business of being an assisted living developer, not an IT company. If the client wishes to retain control over its own IT assets, it must pay for staff and resources, and devote a portion of its organizational energies to IT. However, the clients purpose is to profitably develop assisted living facilities, not to run an IT business. Turning over substantial aspects of IT maintenance to 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 management responsibilities and the client can then devote all of its resources to the reason it is in business. It is recommended the client transition the IT assets listed above to the custody of a cloud computing specialist who will then charge the client a utility-based fee based upon CPU usage and IT support. The transition to the cloud will allow the client to get out of an IT business, which is using up resources and where it does not belong and devote more of its time, money,

and organizational energy for assisted living development. The CIO will be better able to focus on how to leverage IT to meet specific business objectives. Exhibit 3 discusses the ROI and Cost Savings for Cloud Computing from 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 current infrastructure, and $142,000 saving from decommissioning current IT full time employees 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 Microsoft Project Professional a basic project management software program for the purpose of sharing information and coordinating activities action between itself and the contractors and subcontractors who come together to construct the assisted living projects. This software is considered rudimentary by more sophisticated real estate developers. It has a reputation for meeting the needs of smaller companies, but lacking the kind of advanced functionality needed by the client in its interactions with its contractors and subcontractors (see for example Harris 2007). In order to understand why the client needs more advanced project management software, it should be noted that the clients relationship with its contractors and subcontractors is based on the traditional construction risk management model (Sears, Clough, & Sears 2008). See Exhibit 4 Construction Risk Management Model (Lord Fraser, 2004, p. 1) which places construction management in its context alongside other models for construction project management. Notably, in construction management, the majority of the risk lies with the assisted living developer, not with its contractors. The legal and contractual ramifications of the construction risk management model are that the client itself bears responsibility for most elements of the construction project (Jackson 2010, p. 326). For example, were a dispute to arise over the width of doorways in the apartment units (larger than a typical apartment to accommodate wheelchairs and rolling beds), but the contractor or subcontractor failed to build according to specifications. If, for some reason, the client is unable to prove that it requested the specific width, the responsibility does not lie with the contractor, but with the client to correct the error. This example is just one of countless problems that can arise in the real estate development process. When a real estate developer engages in construction management, it must very carefully organize, index, and digitize all documents. Unfortunately, there are currently many shortcomings with the clients project management software. The clients CIO informed us that the

digitized documents associated with the firms construction management contracts are kept in a digital library on a separate server that cannot be accessed by the Microsoft Project Professional system. When a dispute or ambiguity arises on a project, which can only be resolved by looking at the construction documents, then the client managers on the project site have to request remote access to the digital library and comb through the documents manually to find the information they need. There are many commercial project management systems currently available that offer contextual digital indexing (Sears, Clough, & Sears 2008). Such a system allows all documents to be digitized, attached to other documents (for example the master contract), and then renders all digital images searchable to users. Searchability is a critical attribute to such a system. Since many digital documents associated with projects are not loaded on to Microsoft Project Professional but instead sit in a digital library on a separate server that does not come with a searchable interface, the only way to find documents is by manually poring through several files on the server. This slows the process of retrieving documents needed to solve contractual disputes with contractors. Furthermore, in case of a lawsuit, this method of archiving materials creates additional risks for the client, which will not be able to easily retrieve documents that it may need to successfully litigate a case against a contractor. The CIO explained that the limitations of the current project management system are a result of the companys rapid growth. The company has been working with Microsoft software since its founding eleven years ago. Since then the company has grown quickly and there has not been time for the entire company to recalibrate its IT strategy on the fly. Instead, the firm has taken a reactive approach to IT strategy, only fixing the most pressing projects when they became urgent. Since the company has not had a major lawsuit with a contractor, or lost a construction document that is necessary to enforce a contract, it has continued to use Microsoft Project Professional. However, as a result of the clients rapid growth rate, it is likely that the volume of digital documents it manages will double or possibly triple in the coming twelve to eighteen months, increasing the odds that an important document will be lost, or access to a document delayed long enough to damage a contractual relationship. As a result, even though the current system 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 legal risks and contractual disagreements, and increase the clients productivity by ensuring that contract disputes over terms and documents do not slow down projects. Because access to all project documents will be much simpler, the

firms stakeholders - regardless of their location - will have faster access to this data to guide them in the event of a dispute between the client and a contractor. Exhibit 5 discusses the ROI and Cost Savings from an investment in advanced project management software. Assuming $1,000,000 in potential losses, an initial estimate of the costs of a lawsuit and/or lost contract brought about 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 software maintenance charge. See Exhibit 5 ROI and Cost Savings Table for Project Management Software. III. Data Mining Software - Data mining is a function that the client currently carries out with Microsoft Excel and other manual methods. The basic uses for data mining (Ohsawa & Yada 2009) are to determine: (1) where to build and (2) to whom to market. Decision (1) is similar to the decision faced by other kinds of businesses that wish to know where to locate a new location. However, decision (1) is increasingly relevant to the assisted living developer as well, because the demographics of communities are changing at variable rates (Uhlenberg 2009). Some communities are ageing at a more rapid pace than others. Currently, the type of data mining carried out by the client is quite simple. The organization downloads spreadsheets that indicate the average age within a number of different communities, and then attempts to build new locations in those communities where the average age and net income is the highest. While this approach is theoretically sound, the problem is that the client lacks a true understanding of the demographic data. For example, that the situation may arise where, based on the demographics, a particular community will experience only a temporary increase in its average age and net income, and will then return to its previous demographic levels. Demographic analyses of aging and income are quite complex, and there are numerous variables involved. True data analysis, built on a foundation of statistical algorithms instead of basic spreadsheets, will allow the client to accurately determine the longer-term demographics of a particular community. In addition, by targeting only the communities that are demographically attractive now, the client is placing itself into competition with numerous assisted living developers that are targeting the same markets. The clients CEO indicated that the company desires to establish a longer-term strategy that will allow his firm to be present and established in a market before his competitors arrive. He stated that if they wait until afterwards, they will be competing with numerous other firms and will have to work harder to grow the business

One of the evolving analytical issues in market analysis facing the client is that demand for assisted living centers is not merely a factor of how quickly populations are aging, but where assisted living populations in particular are underserved. Golant and Hyde (2008, pp. 357-358) have pointed out that, in many U.S. states, there is a wide disparity between the number of nursing home beds and assisted living beds. Some states have far more nursing home beds. This is a result of the fact that while affluent individuals are able to pay for assisted living facilities, Medicaid frequently pays for nursing homes. The obvious result is that assisted living facilities follow the demographics, and there are more nursing homes in less financially attractive markets. In addition, this issue is complicated by the clients strategic considerations. The client has stated that one of its long-term business goals is to develop assisted living centers, which serve lower-income populations. It should be noted that, as Golant and Hyde (pp. 257-358) also disclosed, there are substantial difference between states in terms of how many low-income people already have access to assisted living. The client will have to perform a great deal of complex analysis in order to understand all the data available and to run analytical scenarios that are far more complex that their current software allows in order to identify what markets are most appropriate based on a large number of variables, including, but not limited to, a communities long-term demographic trends, existing competition of assisted living facilities, and the underserved population. Such a complicated analysis will require far more advanced data mining software than is currently used. The client will no longer be able to use Excel to meet their needs. Through the use of advanced data mining programs, the client will improve its ability to predict what communities might be the most appropriate markets over the long term. As the client stated they wish to continue to expand the geographic areas they serve then it will need to adopt a long-term strategy, and the utilization of data mining software will make a contribution to its ability to meet these needs in this regard. The client will also be able to utilize data mining applications to improve its marketing abilities. Currently, the client conducts none of its own data mining, instead renting lists from brokers who specialize in marketing information. The rented lists are made up mostly of residents in a target market who are over the age of 65. This approach has a number of shortcomings. First, not all people over 65 will be interested in assisted living centers. For example, some live independently without any care, some members of this population may receive long term care through a nurse or aid in their existing residence, may already be in nursing homes or under the care of family members. Second, the population of assisted living centers is not made 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 clients CIO stated that strong demand has allowed them to fill their new facilities without a focus on segmentation. The CIO further indicated that a simple direct mail campaign to those over 65 has been adequate to fill a facility, combined with the word of mouth that such a campaign creates. There are other issues for the client to consider. First, the clients failure to fully understand its market segments and to pursue them is causing the client to drift away from its traditional base of customers. For example, by relying on others to provide leads and segmentation, the client is missing a golden opportunity to get close enough to prospects to understand what it is they need. Second, eventually the demand for the clients product will peak, if the demand generates a greater supply of assisted living providers and therefore centers. The real estate industry is famous for its oversupply as a result of strong demand in a strong market or sector. More developers and facilities will split up the existing demand, and the client will have to work harder to identify and convert potential prospects that it identifies into customers. It is recommended that the client invest in advanced data mining software that will allow it to segment the market and create far more accurate lists of potential customers. This step should be the first part in an extended business transformation for the client. After creating lists with the new software, the client should move beyond simply sending out direct mailers. The client should take a further step and approach the identified prospect base from the tactic of doing surveys in order to further gather information. Surveys would be an incredibly powerful tool, because they would allow the client to understand the different needs of different populations (Jenster & Soilen 2009). This would allow the client to learn a great deal about the client base, whether the target assisted living population has unique in-home needs than individuals suffering from a particular illness. There might be an ethnic population, such as Asians or Hispanics, who while traditionally reliant on care from family members are now becoming reliant on assisted living centers. An extensive variety of actionable market data can be learned easily by reaching out to the prospect base, not through traditional direct marketing conversion, but through surveys to gather information. The survey information can further enhance the firms marketing efforts by allowing the marketing department to fine tune their efforts. It is important to note that the greatest value of data mining software is through intelligent human application of the information provided by what is only a tool. The generation of more sharply targeted prospect lists is a largely automated process, which will probably result in a quick improvement in the clients 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 clients long-term prospects for success. In the short run, the client should continue to achieve success without improving its data mining capabilities; but, in the long run, the clients current approach will not allow it to properly understand the market and their potential clients, and the company will not be able to compete with firms that are better able to predict and respond to the emerging needs of the market, as well as current and future customers. The client needs to utilize the data mining software not merely for marketing list generation but also to identify survey participants and process the data obtained from prospective customers to better understand the needs of the market. The hard ROI of improved data mining software will most likely be improved leasing success, higher conversion rates and a decrease in customer acquisition costs. Exhibit 6 discusses the ROI and Cost Savings from an investment in data mining software. Assuming $500,000 in lost conversion costs through inaction and the $150,000 cost of packaged software in year 1, the ROI of the investment is estimated to be $350,000 in year 1 ($500,000 potential loss mitigated by $150,000 investment). See Exhibit 6 ROI and Cost Savings Table for Data Mining. IV. Change Management - It is likely that the most important portion of the clients IT strategy will be convincing the employees to adopt the new technology, utilizing the new software that is available and adopting to the changes that the cloud infrastructure will bring, that will be introduced to the clients business environment. If the employees are unwilling to make the change 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 most important portion of this section will discuss the various means that the client can use to promote the adoption of their new IT strategy amongst their employees. One framework for understanding how to convince employees to adopt technological change was offered by Jensen and Kerr (1994, p. 408), who studied the topic of change management. Jensen and Kerr discovered that five questions must first be answered in a satisfactory manner in order for a 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. The five questions are: 1. 2. 3. 4. Why must we change, and why is this change important? What do you want me to do? What are the measures and consequences of change/no change? What tools and support will be available to me?

5. Whats in it for me? Sims (2002, p. 47) has warned that, if these questions are not answered to the satisfaction of employees, then proposed IT changes will be met with resistance and cynicism, essentially they are doomed before they start, as this will undermine the project before it can get off the ground. Therefore, it is a necessary part of the clients IT strategy to conclude this section by answering these questions. The answer to these questions will vary depending on which stakeholder they are addressed to, and there is not enough space to completely answer the questions for every possible group in the clients organization. Instead we will focus on the clients marketing department who will be utilizing the new data mining software to better prospect and segment the potential tenant population while adopting the new technique of utilizing the new technology to survey this population in order to develop market intelligence. The solutions offered for the marketing managers will serve as a model to answer the change management question for other groups within the firm, including project managers, support staff, analysts, and even the firms executives. 1. The firms marketing managers must be willing to change by committing to data mining software since such a change will play a key role in insuring the long-term success of the client. Improving segmentation will increase conversion of prospects to tenants. This will help the client in the increasingly competitive assisted living development arena. In addition data mining can be utilized to identify potential survey subjects, which will allow the client to build market intelligence. This information will assist the company in anticipating and exploiting market trends before competitors, giving the client another strong source of strategic advantage. 2. The firms marketing managers will be asked to engage in an training process in order to learn how they will utilize the data mining software in order to conduct segmentation of data, then they will engage in followup training that will explain how to conduct surveys then interview appropriate survey respondents in order to further build intelligence about market trends, and finally they will be trained to utilize the market intelligence that they learn. 3. The clearest measure of change will be whether there is an increase in the conversion rates of direct mail/telephone campaigns that are based upon the new information the data mining software helps to produce.

4. The firm that provides the client with the data mining software will train marketing managers at the clients locations. The training will need to be a combination of classroom and online exercises. Online and virtual follow up training will help to build the marketing managers skills and confidence. The flexibility, combined with the strong follow up training, is structured in order to allow the managers to learn and absorb at their individual pace. The utilization of change champions within the department, advanced users of the product, will provide additional support to the managers. As a result, managers will be able to learn from both the software providers and theirs peers, in a combination of offline and online formats so that they will have exposure to the product where they are most comfortable. This learning structure should result in making the necessary concepts easier to learn. The CIO should make himself available to the marketing managers so that at any time they can reach out for special training requests, with questions, or comments. 5. The change will make the marketing managers more skilled at their jobs and better prepared to increase the success of the marketing department and to the clients organization as a whole. The improved performance by the market managers that the change brings should also lead to an increase in both compensation and performance bonuses. In addition, such change will provide valuable professional development to the marketing managers. It is clear that the client will need to commit as much energy into carefully explaining and communicating the reason for the change as into purchasing and deploying the software. It is critical for the CIO to make clear to their employer that the selection of a vendor and purchase of the software while critical to the entire project is in reality just the start of what will be a complex process. Investment in new technology is not a cure-all for the problems a business might encounter during its existence. New technology needs to receive strong support from the C-level of the firm, who will provide definition of the scope and goals of any technology investment; and the technology must have adoption at the bottom, ordinary employees need to utilize fully the proposed technology changes. In any organization all such changes must be part of a unified, efficient business process where every member of the organization unites in order to guarantee the success of a technology project. This proposal has listed a number of IT initiatives that are in line with the clients business goals, that accord with best IT practices in line with the clients business goals, and that meet the best IT practices in the area of the

assisted living sector of commercial real estate development. All such changes must be part of a single, smooth business process in which all members of an organization come together to ensure the success of the technology project. In developing a successful IT strategy for the client it is important to note that the technology itself is only a portion of the solution for the client, and that is why this proposal has also focused on the importance of insuring that all of the firms stakeholders (including, but in no way limited to, the CEO, CIO, senior managers, and ordinary employees) fully support the change that the IT proposal would bring to the firm, in order to insure that the change is a closely-governed and supported part of the clients business instead of an attempt to force new technology on to users in the absence of any associated governance or motivation. The additionally important theme of this proposal is the necessity for the client to prepare for long-term trends affecting the assisted living development industry. Both the CEO and CIO indicated their desire to prepare their firm for long-term success and growth. While the current IT infrastructure meets the short-term needs of the client, this fact has lulled the leaders of the company into IT complacency. Since the assisted living development industry is currently experiencing a period of high growth, firms can experience shortterm success without optimizing their IT infrastructure. No period of high growth will continue indefinitely, as demand will draw competitors who will inevitably begin to utilize IT as a competitive advantage against one another. Therefore, the best support for implementing the IT transformation in this proposal is that it will prepare the client for the long term, allowing the client to continue expanding the geographic areas they serve. If the client adopts the strategy in this proposal, and the method of change management is fully embraced, the client should obtain both increases in operating efficiency and cuts in operating costs. The client should also see a growth in the productivity of employees and a resulting growth in revenues. These reasons strongly support the client adopting the changes recommended in this proposal and taking the steps necessary to successfully implement them. The result will be what Buchta, Eul, and SchulteCroonenberg (2009) have referred to as strategic IT management for the long term. With these arguments in mind, the QSPM Matrix (MBA Tutorials, 2009) in Exhibit 7 depicts the business case for acting now as opposed to choosing an ill-conceived course of inaction. See Exhibit 7 QPSM Matrix. It should be noted that the QSPM analysis supports the case for taking the actions recommended in this proposal.

EXHIBITS Exhibit 1 Position of Company on Emery & Trist Model

Number of Influences Fewer Greater Complex Stable Complex Dynamic

Simple Dynamic Simple Stable Speed of Change Slower

Faster

Exhibit 2 SWOT Analysis

STRENGTHS

OPPORTUNITIES

Strong book of business Established relationships with reliable contractors CEO and CIO cooperation

Assisted living market expanding rapidly in many regions New customer populations coming on board Lack of national competition

WEAKNESSES

THREATS

Paying too many unnecessary costs associated with IT management Lacks comprehensive intelligence on customer segmentation and regional market demographics

Exposure to potential lawsuit/contract loss from lack of proper document archiving and project management system Vulnerable to attack from costefficient and market-intelligent

competitor(s)

Exhibit 3 ROI and Cost Savings Table for Cloud Computing

Year 1 Cost Year 1 ROI Hardware $0 +$150,000 (savings from decommissioning and selling servers and other current infrastructure) Software $55,000 (cost of hosting) -$55,000 Infrastructure $0 +142,000 (savings from decommissioning current IT Full-Time Employees and associated expenses)

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

Exhibit 4 Construction Risk Management Model

Exhibit 5

ROI and Cost Savings Table for Project Management Software

Year 1 Cost Inaction $1,000,000 (lawsuit / lost contract costs) $1,000,000 Software $250,000 (cost of packaged software) -$250,000 Hardware/Infrastructure $0

Year 1 ROI

$0

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

Exhibit 6 ROI and Cost Savings Table for Data Mining

Year 1 Cost Inaction $500,000 (lost conversion costs) $500,000 Software $150,000 (cost of packaged software) -$150,000 Hardware/Infrastructure $0

Year 1 ROI

$0

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

Exhibit 7 QSPM Matrix

Alternative One: Inaction Key Factors Weigh Attractivene t ss Scores .25 .25 3 1 Total Attractivene ss Score .75 .25 Alternative Two: Cloud, PM, Data Mining Weigh Attractivene Total t ss Attractivene Scores ss Score .25 .25 1 4 .25 1

Costs Strategic Positionin g

Competitiv .25 e Advantage Risks of Change .25

.25

.25

.25

.50

Total Attractiveness Score: 2.25

Total Attractiveness Score: 2.75

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