Running head: INNOVATION LEADER

Transforming Qualifacts into an Innovation Leader

Aaron Hall
Walden University

Executive Summary
Transforming Qualifacts into an Innovation Leader
Prepared by Aaron Hall
January 12, 2014
Introduction
The change management plan contained in this document represents a strategic response to
recent analysis of operations conducted by Topline Strategy Group. The plan outlines the
recommended actions to transition Qualifacts into an industry leading company in the areas of
product innovation and customer service. Changes to product development, sales, and client
services will be required to create and sustain competitive advantage.
Overview
The analysis conducted by Topline Strategy Group collected data from opportunities worked by
the sales division of Qualifacts over the past three years. The evaluation measured the success or

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failure of the organization to win new business in key markets. Finally, the report identified key
areas that threaten Qualifacts competitive advantage.
Summary of Results
The conversion rate of opportunities was approximately twenty-five percent with a high ratio of
fit- matching the operational areas of potential customers to the current functionality present in
the software. The contributing factors to Qualifacts low win rate were

Lack of specific functionality critical to operations

Poor product demonstrations by the sales team
Weak references from current customers or due to lack of presence in the state

A primary contributor to conversion was a strong presence in state(s) in which the potential
customer operated. The effectiveness of the product demonstration in modeling daily workflows
along with positive references from customers currently using the software in the state(s) were
additional factors. In order to remain competitive in the marketplace, Qualifacts must address
three primary areas: (1) product functionality gaps, (2) state regulations/reporting requirements,
and (3) increase reference ability with current customers
Recommendations

Create a product innovation advisory board and expand development resources to address

functionality gaps and required product functionality for new markets/states

Add a Sales Engineer position on the sales team to guide product demonstrations and

serve as a liaison on the innovation advisory board

Create a customer success team to work directly with customers on challenges with the

product and to identify product gaps for current customers

Realign Organizational structure to support ongoing communication and analysis about
market strategy, product innovation, and healthcare reform

Conclusion

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In order to increase competitive advantage in the Electronic Health Records market, Qualifacts
must become create an organizational structure and operating environment driven by product
innovation and customer service. Poor communication, product development gaps, and
inadequate customer focus threatens Qualifacts ability to not only support its current customer
base but also to win potential opportunities. The opportunity before the company is to become a
market leader or face customer attrition and a shrinking marketplace for its software solution.

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Transforming Qualifacts into an Innovation Leader

Qualifacts Systems Inc. experienced unparalleled growth over the past six years with
increases of approximately forty percent year over year. A primary contributor to the growth of
the company was the enactment of the American Recovery and Reinvestment Act (ARRA) in
2008 which created the Meaningful Use Incentive Program for adopting electronic health records
(EHR). Qualifacts EHR, CareLogic, became certified in 2011, and the company established
itself as an industry leader in assisting companies with the Meaningful Use program. While the
sales and marketing department leveraged the companys position in this area, problems arose in
product development due to the inability to deliver on promised functionality and use of
deprecated programming standards. The impact of these issues on customer satisfaction and
referencability directly impacted the ability of sales to win new business during the 2012 and
2013 calendar years. The problems became magnified with the release of new rules for the
second stage of the meaningful use certification in 2014. Qualifacts development resources were
unable to keep up with the demands of certification and deliver on product enhancements needed
to satisfy customers and remain competitive in the market. The company hired an external
consulting firm to conduct a market analysis, and the results showed significant problems in
product functionality gaps, the sales process, and customer satisfaction. The change agenda that
follows outlines steps to correct the issues found by the analysis and create an organizational
structure focused on ongoing innovation and customer satisfaction. These two features are
essential to protecting the current customer base and building competitive advantage for
continued growth.
The problem
The software industry dictates a strategy focused on innovation, and the number of vendors for
EHRs mandates stellar customer service. EHR & EMR Insights conducts market research about
adoption trends across the country and the website recently published an article detailing the top

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five reasons providers switch software vendors, (1) decreased productivity, (2) poor relationship
with EHR support team, (3) meaningful use requirements, (4) a lack of product updates, and (5)
missing functionality (2012). While Qualifacts performs well in supporting customers with
Meaningful Use, current and prospective customers complain about product functionality gaps
and timeliness of attention from support. The review conducted by Topline Strategy Group at the
end of 2013 supported concerns about product shortcomings. The review identified (1) cross
browser support, (2) disconnected or unplugged use, (3) reporting tools, (4) medication
administration, and (5) user interface updating as primary concerns, and additionally pointed to
the needs for state reporting support and improvements in demonstrations during the sales
process (Topline, 2013). The five product gaps have been on the development roadmap for over
two years, and the company does not develop state reporting requirements in the software
proactively to support selling in new and current states. Additionally, the coding of CareLogic
relies on deprecated standards in software development. The systems consultant team, which is
responsible for demonstrating the product during the sales cycle, encounters difficulty from
competitors which have functionality that addresses the five gaps of CareLogic, and individuals
on the team need to improve presentation skills and knowledge of the product. Finally, customers
express disappointment in the level of attention and timeliness of support staff in addressing bugs
and support tickets reported by users.
Recommended Changes
Qualifacts must develop a structure and culture based on product innovation and
customer satisfaction. Quinns features of an adhocracy culture depict the appropriate traits to
meet this goal, Adhocracy Culture increase means change as a rule, not as an exception, flexible
and adaptive, forward-looking organization, and bolder innovation of programs (1996, p. 185).
The application services division- responsible for product development- should be realigned to

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focus on proactive product development and innovation and create a plan to address coding and
product gaps. Creation of an innovation advisory board representing Sales, Client Services, and
Application Services will control the product roadmap and appropriate development resources. A
customer success team of product experts will be added to Client Services, and a Sales Engineer
will join the Systems Consultants team and serve as a liaison to the advisory board for sales.
Finally, marketing will be report to the Vice President of Business Development to assist with
conducting research and providing feedback to the advisory team.
Goals of the Change
The work of the advisory board will be to transition development from a maintenance
driven and myopic focus to a strategy of proactive development to expand into new markets.
Qualifacts currently operates in 29 states and supports state reporting requirements in fifty
percent of active states. Presence in a state is a key requirement down to the program level, a
must have (Topline, 2013), and proactive development will expand the number of prospective
customers by more than fifty percent. Increased development and customer success resources
will allow Qualifacts to close the functionality gaps both perceived and reported by customers,
and add modules to support expanded areas of service delivery such as Foster Care, In-patient,
and Primary Physical Health (Topline, 2013).
Business Needs Driving Change
The number of companies who implemented an EHR over the past decade grew
significantly as did the sophistication of the EHR buyer in the behavioral healthcare industry.
This combined with government regulation and healthcare reform intensified the basic
requirements for EHR vendors. Practices often have unique needs, and they demand very
specific, and comprehensive functionality from their EHRs, and as a result, many practices
realize their EHR lacks capabilities important to their specialty and are forced to look elsewhere
(EHR & EMR, 2012). In order to support business demands, EHRs must be flexible and capable

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of integration with todays technologies. The back-end infrastructure and code of CareLogic does
not support current web technologies. Competitive advantage through Meaningful Use
certification is not enough to maintain current sales growth, and the extended delivery timelines
for product enhancements for customers increased the probability that customers will look
elsewhere when contract renewal dates arrive, which will occur in nearly forty percent of
Qualifacts customer base in 2014.
Change Implementation Steps
The new structure and focus for Qualifacts requires both a change in the operating
environment and the departmental structure. According to Nadler, integrated change must
address the work, the people, the formal organization and the informal organization, because
each of these four components is directly tied to all the others (1998, p. 12-13). Qualifacts rests
in the middle of a period of discontinuous change. In order to implement change in this
environment successfully, the management team must work through the five phases outlined by
Nadler, (1) recognizing the change imperative, (2) developing a shared direction, (3)
implementing the change, (4) consolidating the change, and (5) sustaining the change. The
following steps ensure successful implementation of the agenda.
Appointment of Transitional Team
The executive team and senior managers from each department will make up the
transitional team. The executive team alone cannot lead the change. Each function must be
engaged in order to create support; it is imperative for the top team to construct human and
structural extensions of their leadership (Nadler, 1998, p. 282).
Define Core Values. The work of the transitional team will focus on developing a clear
definition of values to support the mission statement, To Sustain and Extend Our Customers
Ability to Serve (Qualifacts, 2014). The list of values will govern behavior among the
operational teams within the company.

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Perform a Gap Analysis. A thorough analysis of every department, and whether or not
they align with the values, is essential. Any gaps found beyond the problems outlined in this
agenda must be added to the strategic plan.
Map the Organizational Requirements. The integrated change agenda addresses the
principles that speak to the strategy, structure, and culture of the emerging organization
(Nadler, 1998, p. 139). The team will create an organization structure to represent the reporting
relationship for the product innovation advisory team, add the customer success team to Client
Services, and place the Sales Engineer in the sales organization hierarchy. The team will further
work with finance staff to define the budgets to support expansion of development and support
teams. Additionally, the team will set goals associated with the new strategy on (1) response
times for support requests, (2) delivery of promised features- the five areas of product gaps, and
(3) timelines for developing state reporting functionality to open new markets.
Conduct Strategic Selection Process. The transition team will be tasked with filling the
new positions in the company. The additional positions include a sales engineer, four customer
success positions, and a product innovation director. Nadlers strategic selection process will
serve as a guide for filling the new positions; (1) define the job requirements, (2) create a job and
candidate rating instrument, (3) create job and candidate analysis reports, (4) create a candidatejob fit report, and (5) finalize job offers and development actions (1998, p. 234).
Implement a Review Process
After filling the new positions and implementing the new organizational structure, the
transitional team will outline a review process to measure the changes effectiveness. The review
will assess what is working, refine the change agenda where needed, and bake in the change; this
must happen in the formal and informal operating environment through communication, HR
practices, and staffing (Nadler, 1998, p. 251-257).
Interventions for Execution

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The change agenda addresses problems within the company rooted in historical practice,
personal preference, minimal communication, and lack of analysis. Interventions in the areas of
communication, staffing, and analysis will be requirements to support the new agenda.
Communication
The change agenda introduction will be during the first available all hands meeting
following the transitional teams completion of the new organizational structure. The CEO must
clearly articulate the context for the change, the reason behind it, the overall strategy for change,
and the expected outcomes. Monthly updates will be a regular part of the all hands meetings
going forward. A customer facing announcement will be included in the first monthly newsletter
after the internal announcement as well as monthly updates. Finally, each department manager
will hold off-site team meetings to discuss the agenda and how it will affect the department and
the entire company. Managers will present Feedback from these meetings to the transitional
team.
Staffing and Analysis
The number of employees in application services must be increased to meet product
innovation requirements. The department currently has five scrum teams- including product
owners, developers, and quality assurance personnel- which will need to grow into ten scrum
teams. The development manager, product owner manager, and QA manager roles will be
eliminated, and management duties moved to the systems architect and development manager
who will serve on the innovation advisory team. Account managers will be eliminated, and their
duties moved to the customer success team which will answer to the director of Client Services.
Two statistical and data analysis roles will be created to work directly with the Vice President of
Business Development and the inside sales/business development team reduced from five
individuals to three. Qualifacts must move from being a task driven company to one driven by
data.

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Dealing with Resistance

People often stand in the way of change whether they are characteristically unable to
adapt to the new conditions or are simply resistant to change. Nadler suggests some techniques
for winning support; (1) participation- utilize people committed to the vision; (2) persuasionappeal based on a shared sense of values; (3) incentives- new career opportunities; (4) isolationreassign detractors to other areas not involved in the change; (5) ventilation- removing those who
refuse to support the change (Nadler, 1998, p. 97). An important element needed throughout the
process is education. People feel resistance to processes and changes that they do not understand.
Sharing the data behind the choices and the expected successes that should follow are paramount
to reducing resistance to change
Communication Plan
Communication is an obstacle in the current structure at Qualifacts. Departments feel
segmented or separated from one another and fail to understand how each ones work affects the
overall success of the company. The agenda must be communicated consistently and at every
level of the company. According to John P. Kotter, an error that contributes to the failure of most
change agendas is under-communicating the vision by a factor of ten (2007), and David Nadler
suggests most people, particularly during periods of stress, have to hear a message at least six
times before it starts to sink in (1998, p. 143). In addition to the approach proposed in the
interventions earlier in this agenda, the information should be part of the weekly operations
report emails, opening comments in manager meetings, and any other setting available. In more
successful transformation efforts, executives use all existing communication channels to
broadcast the vision (Kotter, 2007).
Implementation, Monitoring and Control
The technology industry moves at an incredible pace, and Qualifacts cannot afford to
delay implementing the new strategy. The transition team must be created and schedule the initial

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planning session for the first week of February. The executive team will need to present the
agenda to the board at the meeting in February, and the transition team should begin work by
March first on the values and structural design. The transitional team will meet the first and third
weeks of the month with the first meeting focused on feedback from each department. An
independent review committee selected from non-management personnel who support the
agenda will monitor the progress and report directly to the CEO. The executive team will present
its findings at the monthly all hands meeting.
Conclusion
Qualifacts is the second largest EHR provider in the behavioral healthcare industry, and
the companys record of growth is phenomenal. In order to maintain its position in the
marketplace and increase competitive advantage, innovation and customer services must be the
pinnacle of all operations. The success of the past six years threatens the stability of the business.
The success syndromes characteristics seem to be growing at Qualifacts as the company has
shown insularity, arrogance, and complacency partnered with an internal focus (Nadler, 1998, p.
70). The proposed changes in this agenda directly address these concerns, and if management
commits to the process, Qualifacts has the opportunity to become the largest and most successful
EHR provider in the behavioral healthcare industry.

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References

EHR & EMR Insights. (2012, August 16). 5 Reasons Why Practices Make the EHR Switch.
Retrieved from http://ehrinsights.srssoft.com/2012/08/05-resaons-why-practices-makethe-ehr-switch/.
Kotter, J. P. (2007). Leading Change. Harvard Business Review, 85(1), 96-103.
Nadler, David A. (1998). Champions of change: How CEOs and their companies are mastering
the skills of radical change. San Francisco: Jossey-Bass.
Qualifacts. (2014). Our Mission. Retrieved from http://www.qualifacts.com
Quinn, Robert E. (1996). Deep change: Discovering the leader within. San Francisco: JosseyBass.
Topline Strategy Group. (2013). Qualifacts Competitive Analysis. [Power Point Slides].
Retrieved from https://drive.google.com/a/qualifacts.com.