Healthcare organizations make significant investments in information technology (IT).
These organizations expect that these investments will increase revenue, reduce costs, enhance service, and improve the quality of patient care. Yet all too often, the results are disappointing. The expected gains seem to have vanished or diminished. The estimated cost of the investment appears to have been a down payment rather than a total cost. Placing the cash under the mattress appears to offer a better return on investment.
The good news? It doesn't have to be this way.
The Path to Success
Organizations that adopt the following seven strategies based on industry best practices can best position themselves for increasing returns from IT investments.
Make sure that the homework was done. IT investment decisions are often made based on proposals that are not resting on solid ground. The proposer has not done the homework, and hence the risk of a suboptimal return has been elevated.
Clearly, the track record of the investment proposer has a significant influence on the likelihood of an investment decision leading to an investment that delivers value. However, regardless of track record, IT proposals should enable the audience to respond with a strong "yes" to each of the following questions:
- Is it clear how the plan advances the organization's strategy?
- Is it clear how care will improve, costs will be reduced, or service will be improved? Are the measures of current performance and expected improvement well-researched and realistic? Have the related changes in operations, workflow, and organization been defined?
- Are the senior leaders whose areas are the focus of the IT plan clearly supportive, and could they give the presentation?
- Are the resource requirements well understood and convincingly presented? Have these requirements been compared with those experienced by other organizations undertaking similar initiatives?
- Have the investment risks been identified, and is there an approach to addressing these risks?
- Have the right people been assigned to the project, has their time been freed up, and are they well organized?
A "no," a "maybe," or an uncertain "yes" to any of these questions should lead one to believe that the discussion is perhaps focusing on an expense rather than an investment.
Increase the accountability for investment results. Few meaningful organization initiatives are accomplished without establishing appropriate accountability for results. Accountability for IT investment results can be improved by taking two major steps during the budget process.
First, during the budget request, the business owner of the IT investment should defend the investment. For example, the head of clinical laboratories should defend the request for a new laboratory system. Information systems (IS) staff will need to work with the business owner to define IT costs, establish implementation time frames, and sort through application alternatives. The IS staff should prepare the budget needed to support existing applications and infrastructure. And the CIO should defend new infrastructure initiatives, such as improved network security or the purchase of new storage technologies. However, the IS staff should never defend an application investment.
Second, the project should be presented as part of the overall organizational capital and operating budget development process; there is no separate track for IT discussions. For example, budget requests for new IT applications should be reviewed with budget requests for new clinical services diagnostic equipment. Keeping these two points in mind, sponsors (e.g., clinical vice presidents) would defend "their" IT request in front of "their" colleagues.
Structuring project ownership this way is important because if the IT proposal is approved, there will be less money available for other initiatives. Also, it forces the defender to be convinced of the value, have a good understanding of how to achieve the value, and be committed to achieving the value. The defender also knows that if the value being promised is not delivered, credibility during budget discussions the following year will be diminished. Accountability is thus accompanied by consequences.
Conduct post-implementation audits. Rarely do organizations revisit their IT investments to determine if the promised value was actually achieved. Organizations believe that, once the project is implemented, value will be automatically achieved-which is highly unlikely.
Post-implementation audits can be conducted to identify value-achievement progress and steps still needed to achieve maximum gain. An organization may find great benefit from auditing two to four systems each year and selecting systems that have been "live" for at least six months. During the course of the audit meeting, five questions should be asked:
- What were the goals of the investment that were expected at the time the project was approved?
- How close have we come to achieving our original goals?
- What do we need to do to close the goal gap?
- How much have we invested in the implementation of the system, and how does it compare with our original budget?
- If we had to implement this system again, what would we do differently?
Post-implementation audits assist value achievement by signaling leadership interest in ensuring the delivery of results, identifying steps that still need to be taken to ensure value, supporting organizational learning about IT value realization, and reinforcing accountability for results.
Celebrate value. Business value should be celebrated. Organizations typically hold parties shortly after application "go live." These parties are appropriate; a lot of people worked hard to get the system up and running. However, up and running does not mean that value has been delivered. In addition to go-live parties, organizations should consider holding business value parties to celebrate achieving value. For example, the organization may host a party that celebrates the achievement of service-improvement goals. Limiting the focus of celebrations to go live risks sending an inappropriate signal that implementation is the end point of the IT initiative.
Leverage organizational governance. Creating an IT subcommittee of the board can enhance organizational efforts to achieve value from IT investments. At times, organizational leadership may be uncomfortable with some or all of the IT conversation. They may not understand why infrastructure is so expensive. Or why large implementations can take so long and cost so much. By creating a subcommittee that has members more experienced with these discussions, the organization can help ensure that hard questions are being asked and that the answers are sound. The leadership should not believe that such a subcommittee gets them off the hook for having to deal with IT issues. Rather, the subcommittee should be viewed as a way for the leaders to continue their efforts to become more knowledgeable and comfortable with the IT conversation.
Shorten the cycle of deliverables. When possible, projects should have short deliverable cycles. Rather than waiting 12 or 18 months for the organization to see the first fruits of its application system implementation labors, efforts should be made to deliver a sequence of smaller implementations. This shortening can take the form of pilots of an application in a subset of the organization followed by a staged rollout, or the serial implementation of 25 percent of the eventual 100 percent of application features.
Pilots and staged rollouts or the implementation of a portion of the application are not always feasable. However, they enable the organization to achieve some value earlier rather than later, support organizational learning about what system capabilities are really important, facilitate the development of reengineered operational processes, and create the appearance-not to be underestimated-of more value delivery.
Benchmark value. Organizations should benchmark their performance with their peers. Common benchmarks may be process performance-for example, days in accounts receivable or average time to get an appointment. An important aspect of these value benchmarks is the identification of critical IT application capabilities and related operational changes that enabled the achievement of superior results. By understanding how other organizations achieved superior IT-enabled performance, leaders learn how to achieve the best possible value from their organization's IT investments.
Achieving value from IT investments is hard, ongoing work, but it does not involve magic or require that leaders learn new techniques. Asking hard questions, holding people accountable, and reviewing investment performance are attributes of good management whether the topic is IT, finance, or patient care.
John P. Glaser, PhD, FHIMSS, is vice president and CIO, Partners HealthCare System, Boston.
Questions or comments about this article may be sent to the author at email@example.com.
Publication Date: Wednesday, October 01, 2003