CASE STUDY IV-1 The Clarion School for Boys, Inc.?;Milwaukee Division: Making Information Systems;Investments;John Young, Controller of the Clarion School for Boys, Inc.?Milwaukee Division, hung up the;telephone as the school bell signaled the end of another day?s classes. Young?s conversation with;Sean McHardy, the Superintendent and Chief Operating Officer of Clarion?Milwaukee;Division, was short and to the point. McHardy had called to confirm that Young would be;prepared to present his assessment of the current information systems (IS) at Clarion and propose;a direction for information systems at the organization for the next fiscal year at the quarterly;Board of Directors meeting scheduled for next week (June 13, 2006) in Chicago.;As an MBA student, Young had learned about the importance of an overall information systems;strategy. McHardy?s request, however, required Young to formalize a full plan, complete with an;assessment of the current situation as well as future projects and budgets. As Controller, Young;knew that the members of the Board of Directors were anxious to hear how Clarion?;Milwaukee?s current investment in information technology was paying off. Since 1998, when the;Board had approved a sizable investment in hardware and software, there had been little formal;monitoring of the system?s benefit.;Young had joined the Milwaukee Division of Clarion in November 2005. His previous job had;been as assistant controller in one of the divisions of American Chemical Company (ACC) in;Chicago, he;Copyright ? 2010 by Stephen R. Nelson and Daniel W. DeHayes. This case was developed to support classroom;discussion rather than to illustrate either effective or ineffective management practices.;After 10 years, Young had tired of big companies and narrow jobs and decided to move into a;position with broader responsibility. However, most of his days at Clarion?Milwaukee had been;spent ?fighting fires? rather than planning business strategy. Although his position was quite;different than he had expected, he felt the intangible rewards clearly surpassed those at American;Chemical. Young had developed several good friends at Clarion?Milwaukee and enjoyed his;daily routine.;The Clarion School for Boys, Inc.;The Clarion School for Boys, Inc., was founded in 1989 as ?a refuge for wayward boys? by a;group of investors from Chicago, all of whom had grown up in foster homes but accumulated;considerable wealth during their lives. Their vision was to create an environment for boys who;had got into trouble that would provide them with a diagnosis and treatment plan as well as the;discipline and support needed to become productive members of society. They felt that they;could operate these schools efficiently and make a small profit in the process. During the next 10;years, Clarion established a diverse program of care that relied on the dedication and devotion of;this group of investors. The first school was opened near Chicago, Illinois, in 1991. Later;Clarion opened additional schools near Detroit, Michigan (1995), Indianapolis, Indiana (1998);and St. Louis, Missouri (2000).;The Milwaukee division was the second oldest school in the Clarion system, opened in 1993. It;was housed on the grounds of a former monastery and contained several buildings and 80 acres;of land on the edge of the city. As in other states, Clarion?Milwaukee Division depended;somewhat on the parents for financial tuition. However, over 80 percent of the revenue came;from per diem charges paid by government agencies for the housing and treatment of problem;boys.;The Clarion School for Boys?Milwaukee Division was classified as a private, for-profit;residential treatment facility for delinquent boys between the ages of 10 and 18. In 2006, there;were 128 full-and part-time employees who provided care and treatment to 120 students. Of the;9 residential child-care facilities operating in Wisconsin, Clarion?Milwaukee was the second;largest in terms of enrollment and the third most expensive in per diem charges. Unlike Clarion;?Milwaukee, most other child-care facilities were not designed to help children who were;exhibiting severe behavioral problems. As a result, Clarion?Milwaukee often functioned as a;?last resort? before a child was placed in a mental hospital or state correctional institution.;Clarion?Milwaukee?s ability to manage difficult cases was largely the result of its;comprehensive treatment program. The treatment effort was supported by a faculty-managed;school program along with modern crisis-management facilities and tracking devices. Since;1999, Clarion?Milwaukee?s strategy to differentiate itself from its competitors emphasized the;importance of using modern information technology in combination with a caring staff attitude.;Because the school typically dealt with potentially dangerous students, the ability to contact;support staff and access student records quickly was considered essential to effective;performance.;As operational expenses and capital requirements continued to rise, the Milwaukee school;became more dependent on increased per diem charges and higher enrollments to balance the;budget. During the 2005?2006 fiscal year (ending June 30, 2006), Clarion charged placement;agencies or families $150.50 per day for each student enrolled in the regular treatment program.;For students enrolled in the ISIS program, a premium care/rehabilitation facility opened in 2001;for students whose next option was a juvenile delinquency institution, the charge was $197.00;per day. Total per diem revenue for the 2005?2006 fiscal year was budgeted at $4,891,000, but;enrollment had been running well ahead of projections. As a result, there was considerable;interest in expanding the school?s capacity in fiscal 2006?2007.;All capital expenditures were allocated from the Capital Assets Fund of Clarion, Inc. Each;division competed with the other operations for access to this fund. Clarion?Milwaukee was;proposing three major projects for fiscal year 2006?2007;? 1. a major upgrade to the IBM AS/400 computing system and associated software;personal computers, and network;? 2. the remodeling of a living unit to expand the ISIS program, and;? 3. the construction of a cottage that would accommodate 10 additional students for the;regular program.;Young would have responsibility for managing each of these major capital projects. All capital;projects exceeding $25,000 had to be approved by the Board of Directors of Clarion, Inc. The;Board was known for reviewing each capital request carefully.
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