Chief Operating Officer David Goff learned his lesson when he missed a monthly IT steering committee meeting earlier this year: His peers kicked his technology project concerning quality control to the back of the line. Now Goff is repentant. "I'll try to make all meetings," he says.
Goff's words draw chuckles from other executives, including CIO Jonathan Loveday. "I don't think he'll ever forget it or let us forget it," he says.
Joking aside, this steering committee takes its charge seriously, which underscores the importance of technology's role at Crossville, Tenn.-based MasterCorp Inc., a provider of housekeeping services for time-share resorts.
But the 25-year-old, privately held company didn't start out as a master of technology. In fact, IT merely bubbled behind the scenes for nearly two decades and then exploded at the turn of the millennium when the company "webified" a critical homegrown application. Today the software is the company's greatest asset.
In 1981, CEO Alan Grindstaff opened a commercial and residential cleaning service company. One of his first clients was time-share resort Fairfield Glade in Crossville. The time-share industry -- where groups of strangers "buy" time as a way to own part of a property -- had started in Europe during the 1960s but was in its infancy in the U.S. Thus, resorts focused more on sales and marketing than on day-to-day operations.
Grindstaff saw an opportunity to serve time-share resorts exclusively; he understood the logistical challenges and the marginal value of housekeeping to a time-share resort's main business of selling time. Consider the dirty labor itself: A housekeeper typically cleans four to five units a day, depending on the size of the unit. Starting at the front door, the housekeeper works her way clockwise around the unit, spending an average of two hours to clean a two-bedroom space. She must have a working knowledge of cleaning products and processes to get any job done. Before the unit can be approved as clean, a supervisor must check the cleaner's work.
The industry involves myriad managerial headaches, such as matching oft-unreliable housekeepers and supervisors to various units that need to be cleaned by a certain time. Many resorts have thus offloaded these tasks to MasterCorp, which today boasts 300 customers in 70 resorts across 19 states (with each resort having an average of four customers, or property owner associations).
MasterCorp's sales have grown 40% every year for the past three years and are tracking to hit $70 million this year. That blistering growth far exceeds that of time-shares themselves, where U.S. sales grew 9% to $8.6 billion in 2005, up from $7.9 billion in 2004, according to a study conducted by Ernst & Young LLP and released by the American Resort Development Association. More than 4 million households own time-shares in the U.S., with occupancy rates far exceeding those at hotels (perhaps one reason that major hoteliers like Hyatt Corp. have entered the time-share business).
To support its growth, MasterCorp looked to IT.
In the Beginning
Back in 2001, MasterCorp's IT budget was a grand total of $27,000. Without an official IT department, the company spent that money on inexpensive technology like a $300 cable modem (though it had installed accounting software and built a workforce scheduling application some years earlier). In 2003, MasterCorp formed its first IT department and last year increased IT spending to a relatively high $340,000. IT continued its ascent this year when Loveday, who had joined the company two decades earlier as an accountant, became MasterCorp's first CIO, reporting to Grindstaff. Also this year, MasterCorp formed an IT steering committee to prioritize critical projects such as disaster planning.
Today it's virtually impossible to separate operations from technology. The now-webified homegrown application drives MasterCorp's core operations: recruiting, training, scheduling, managing, tracking and paying some 2,500 housekeepers, as well as helping with the procurement and distribution of housecleaning products. "Technology has really supported our growth," says Grindstaff. "We couldn't be doing what we're doing without it."
Actually, MasterCorp used to do everything without technology -- a Herculean task involving mounds of paper.
Here's how it worked: At each resort, MasterCorp has a satellite office with an executive housekeeper/site manager, an assistant housekeeper, and enough supervisors and housekeepers to keep units clean. Each morning the resort would give the executive housekeeper a list of units and corresponding guest checkout times and instructions for special projects, such as deep cleanings.
The executive housekeeper would thumb through the printout and identify which units needed to be cleaned, then create the day's schedule, which included handwriting an assignment sheet for the housekeeper and an inspector sheet for the supervisor for each unit. "At big sites, it would take three hours a day just to figure out what needed to be cleaned via paperwork," Loveday says. "The executive housekeeper would often try to get the information from the resort the day before and do the schedule at night."
At the end of each day, the executive housekeeper would collect the sheets, check them over, and then, once a week, send the pile by FedEx to headquarters in Crossville. There, a half-dozen clerks would sift through this mountain of paperwork every week to figure out how much to pay housekeepers (based on the number of units cleaned) and supervisors (based on the number of hours worked) and how much to bill resort customers (based on contract stipulations).
During the late 1980s, MasterCorp contracted with programmer Bob Potts to write a program that would calculate payroll and billing. At the very least, it would take the burden of calculations off clerks, essentially turning them into data entry workers.
Potts' initial attempts didn't match the way clerks wanted to enter data. "He'd work all day, and then we'd say, 'No, that's not what we want,'" says Loveday. And so Loveday, then assistant controller, sat with Potts for hours, advising from the business side while learning to write code himself. He also took technical courses at a local college to develop his IT skills. (It was Loveday's influence in the project that led to his becoming IT director in 2003 and, eventually, CIO.)
Potts and Loveday wrote the program in RPG and deployed it on a low-end AS/400 computer -- a platform in Potts' comfort zone. MasterCorp called the software "Bob's Program." Over the years, the program has undergone numerous enhancements, including the capability to calculate overtime in various time zones and states. The back-end automation enabled MasterCorp to acquire more customers without employing additional clerks.
"Our software allows us to do what our competitors" -- mostly mom-and-pop shops -- "can't do," says CFO Kevin Swafford, whom MasterCorp hired in 1997. "We can pay piece rate, comply with federal wage and hour laws."
If Bob's Program was MasterCorp's foray into the strategic use of IT, it was not to be alone for long. In 1998, MasterCorp bought Great Plains, which replaced accounting software Mapics, an application geared more toward manufacturing. The company bought two servers: a Dell 2300 to run the enterprise resource planning software and another AS/400 to balance the growing workload placed on Bob's Program. Consultants also integrated Great Plains with Bob's Program.
At the time, Loveday was still the lone IT guy on staff and reported to Swafford. Not all of their early purchases were top-notch: For example, they bought a server from a local techie that caught on fire. Along with MasterCorp, the two men were slowly learning about technology.
An Online Adventure
In 2001 the Web came to MasterCorp, and the company decided to make Bob's Program available to housekeepers, clerks and executives over the Internet. It wasn't an easy sell; Swafford, then de facto CIO, worried that a Web site might not be able to handle the transaction volume. Loveday and Potts spent six months convincing Swafford that a Web-based system was the way of the future. After Swafford went to an HTML class with Loveday to see how it could be done, Swafford approved the project.
Loveday hired Potts' son Blair to rewrite Bob's Program in an Active Server Pages environment and, later, ASP.NET. Loveday and the younger Potts spent nearly a year on the conversion, which also entailed rolling out networked PCs to the company's growing number of satellite offices and training executive housekeepers, many of whom speak only Creole or Spanish. They also added cleaning products procurement capabilities. In 2002, Bob's Program was officially decommissioned and the newly minted Web App took its place.
Today some 300 people -- most of whom are in the field -- tap into Web App. Now an executive housekeeper logs on in the morning and inputs the information she gets daily from the resort; Web App then uses that information to tell her how many hours of cleaning she needs to schedule as well as how to handle special cleaning jobs. She then creates a schedule using online tools and forms, prints out assignment and inspector sheets, and receives weekly demand forecasts based on historical data. The executive housekeeper inputs the data from the sheets at the end of each day.
Back at headquarters, clerks log on and mainly watch the workday unfold online. "It has become more of an auditing function," Loveday says. "It gives us another level of comfort knowing that there's another set of eyes looking at it." Executives can get financials in real time and anticipate demand; before they were in the dark for at least a week as paperwork was shipped to headquarters and clerks entered data.
Executive housekeepers no longer have to make daily calculations or produce paperwork, nor do clerks have to rekey data -- resulting in greater accuracy, particularly with paychecks. "Five to six percent of paychecks were incorrect before the [Web App]," COO Goff says. "Today, there's hardly any more calls to get checks fixed. It's maybe a half a percent. With the Web App, we can communicate with our employees on pay stubs and work assignments."
Web App also lets MasterCorp monitor the job performance of cleaning staff by matching ratings of room cleanliness (as determined by room inspections and visitor comments) with who cleaned them. MasterCorp can then reward top performers and assign more training to poor performers. On the recruitment side, Web App manages a referral program and taps into a 7-gigabyte database filled with present and past employees. Since many hires are re-hires, this database has become a goldmine for filling out worker rosters -- and avoiding problematic ex-workers.
Good workers beget happy customers, and part of what makes a good worker is training. Nearly two years ago, MasterCorp began developing an e-training program tied into Web App. Previously, MasterCorp executives had to visit sites and conduct training sessions. In many cases, site managers at remote resorts fell through the cracks and did not receive regular training. Now the company is more than halfway to its goal of creating a dozen e-courses covering everything from company values to cleaning carpets to the interaction of dangerous chemicals. All site managers are required to complete these courses every year.
"For us being MasterCorp everywhere, we can't do it without technology," says Nathan Bertram, director of employee development and training.
The Next Leg
Even with all MasterCorp's IT progress of late, CEO Grindstaff wants to continue on the journey and make smarter IT decisions. And so he sends Loveday, Swafford and others to executive events to learn more. That's where the idea to form an IT steering committee to prioritize and manage projects came from. Because so much of the company rides on Web App, the committee decided to focus first on the application -- specifically, its uptime and plans for business continuity.
Loveday estimates Web App is available 98% to 99% of the time. When the system does go dark, employees must resort to the paper-based way of scheduling and payroll processing, which doesn't sit well with Goff. "We've become so reliant upon this technology that when you have to do it by pen and pad, it gets tough," Goff says.
The committee weighed two options: either giving Web App to a hosting provider that had the expertise and resources to quickly take over the application and ensure its availability (with the provider as the primary host) or building a redundant data center at one of its 70 resort locations.
The latter choice would cost $150,000 and stress out the IT department of six people who would be responsible for managing it. "We would have had to add more staff, construction costs, security," says Loveday. And so MasterCorp struck a deal for outsourcer Rackspace Ltd. to become the primary hoster for Web App and the backup site for Great Plains. MasterCorp wanted to keep its financials close to the vest and the application running in its own data center.
Despite the merits of this plan, the hand-off ran into problems, mostly because of MasterCorp's less-than-state-of-the-art data center. "We never went through and made all our operating systems the same," says Loveday, adding that the data center has iterations of NT 4.0, Windows 2000 and Windows 2003. But a third party uses only one. Also, Web App's and Great Plains' databases ran on separate machines yet still accessed each other. They needed to be integrated more tightly before a third party could host them.
The thinking went, says Swafford, "Let's spend some money and update some of our equipment and redesign the way some of our databases work, and then outsource the disaster recovery piece." Loveday has led this effort, with plans to reconfigure the applications across four servers instead of two and combine the Great Plains and Web App databases onto a single server. He hopes to finish by January 2007, he says.
One project that's not going so quickly is Loveday's ongoing initiative to integrate Web App with his customers' systems. Doing so would mean the resorts could send their unit status information automatically every morning and the executive housekeeper wouldn't have to input the data. Loveday is looking at everything from ActiveX to FTP to XML to solve the integration issues. But it's a challenge, he says, because many resorts have IT bureaucracies that slow down or bring to a standstill any negotiations having to do with business partner integration projects.
Despite this tough leg of the high-tech journey, technology has come a long way at MasterCorp -- even if the company still uses that same $300 cable modem. Just how far? CFO Swafford sums it up best: "If somebody came in and said, 'Hey, we're going to buy MasterCorp,' what they'd be paying for is our IT systems," he says. "That's what makes us different, what makes everything work."
Tom Kaneshige was a senior features editor at CIO Decisions. To comment on this story, email [email protected].