Healthcare is an industry that traditionally lags when it comes to technology. However, based on Accenture analysis, payers and providers are beginning to embrace new technology as fast as other industries. Many are transitioning their enterprise resource planning (ERP) and human capital management (HCM) solutions to the cloud, or more accurately, Software as a Service (SaaS). This is a technology and software relationship migration that should be carefully timed and planned to ensure the organization maximizes its benefits from this transition.
Ready or not?
There are five key considerations health organizations need to plan for and evaluate when making the move to a SaaS model:
How ERP-entrenched are you?
Based on Accenture analysis, 60 percent of those organizations that have substantial, long-standing investments and “company-specific” customizations in their existing on-premise ERP solution are opting to do an upgrade as an interim solution, before transitioning to cloud. This is especially true if there have deeply skilled support staff and a custom architecture with non-rationalized 1:1 interfaces already in place.
Conversely, of those health organizations that are less entrenched with their existing solution and/or have a broader change mandate, nearly 60 percent are likely to move to a SaaS solution.
How mature is the product suite under consideration?
SaaS solutions have varying levels of maturity. Some software vendors have more mature products than others. And, within a software vendor’s offering, one product suite may be more mature than others. According to Accenture analysis, 25 percent of clients cite software maturity as a key factor in their decision-making. Human capital and talent management applications are generally the most mature product suites. Finance applications, in turn, show greater maturity than corresponding supply chain products, many of which are still in their first release.
The varying degrees of product maturity have materially contributed to the rise of a “hybrid” solution in health. This means some portions of an organization’s ERP/HCM solutions are cloud-based, and other portions remain on-premise. Accenture analysis shows that more than 25 percent of health organizations that implemented SaaS solutions had a hybrid environment.
Is the organization ready to change its relationship with its software vendor?
In many SaaS environments, the software vendor hosts both the software and data. This “new” relationship requires careful planning and consideration for items such as transition, security and access protocols, data privacy and disaster recovery/business continuity planning.
How will the cost profile be different?
The biggest direct savings with SaaS solutions are in infrastructure costs, and ongoing upgrades and releases. Migrating to a SaaS environment also allows organizations to reengineer their business process to become more efficient and reduce cycle times. However, to maximize reductions in the total cost of ownership, organizations must aggressively reduce infrastructure and other costs used to support on-premise solution(s) and be comfortable with a fully vendor-supported model.
While subscription fees for SaaS solutions are typically higher than traditional annual maintenance charges, Accenture is seeing few instances where health organizations are choosing to postpone a decision to move to a SaaS solution solely based on cost differences.
Are all the required features and functions available now?
How much will the organization rely on future enhancements (from the software vendor) to their existing solution? Most software vendors plan to make little to no investment in developing new functionality for their traditional ERP solutions. So, if an organization expects product enhancements, those will likely come in the SaaS versions of the product. Healthcare organizations that want advanced features, such as reconciliations, governance and controls, mobility or complex revenue management features, will likely find them in SaaS solutions.
For on-premise ERP solutions, what you see is what you are going to get; both now and in the future.
The move to the cloud is happening now, and healthcare organizations are helping to lead the way. Careful planning and consideration needs to be given to these five questions to tailor the proper sequence and pace for each organization.