Whether your M&A strategy has left you with a patchwork of systems and disparate processes, your vendor has announced plans for decommissioning its legacy solution, or your 20+ year old system fails to make operations more efficient, it’s time to upgrade your infrastructure. Staying with legacy systems is not an option; it is only a path to being left further behind.
If the time has come to select a new cloud ERP system to automate workflows, better manage costs, and lower the maintenance burden on your IT organization, there is a proven selection methodology for selecting ERP in the cloud. At Avaap, we’ve been assisting healthcare organizations through system selections and implementations for more than 15 years and are sharing top lessons learned for selection success.
What's Changed?
For healthcare organizations or leaders that haven’t been through a cloud ERP selection, the decision factors have changed since the days of on-premises selections. With legacy systems, there wasn’t much flexibility, so buyers selected the system that best fit their current requirements and customized the solution to fill in the gaps. This led to highly customized systems that required specialized skills and a lot of testing with every upgrade or patch application.
In addition to highly customized client instances, legacy systems operate with inherent challenges from single tenancy. While single-tenant environments provided health systems the level of control to code their instance to their needs, it also stifled innovation by requiring vendor and/or client to update code in each unique tenant when fixing patches, adopting the new functionality, or updating compliance requirements. As a result, product upgrades were often delayed to avoid associated cost and time. When upgrades were deemed necessary or mandated, they typically required substantial effort to maintain core elements such as workflows, security, reporting, and integrations.
On-Premises ERP Selection |
Cloud ERP Selection |
-Customizable Code
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With today’s cloud-based ERP systems and the shift to multi-tenant environments, you no longer have to choose between a system that can manage your current healthcare requirements and one that can support continuous innovation. As a result, we have witnessed healthcare system selection and RFP criteria shifting away from “What” functionality is delivered to “How” each vendor delivers functionality. This approach helps avoid many of the common pitfalls associated with legacy systems while enabling innovation, ease of use, and lower total costs (maintenance and subscription fees).
Recent cloud ERP software selections have also migrated towards assessing a vendor’s ability to source, select, and adopt industry best practices instead of analyzing each vendor’s ability to support a comprehensive list of current workflows and functionality. We find this approach better aligns with overall health system strategy in terms of transformation and agility. Cloud systems are designed to improve operational processes and allow organizations to leverage automation and modern analytics for increased efficiency and more informed decision-making. New approaches to evaluating technology are recommended to ensure healthcare systems realize each of these benefits and maximize their technology investment.
Determining Future Goals
As one of the first steps in your selection journey, consider creating a business case that defines future benefits and strategic intents. Our approach is to include organizational strategy, down to functional and technical configuration, to identify the project goals, success criteria, scope boundaries, and impacted stakeholders. Take stock of existing investments to ensure they continue to meet current and future requirements. Your organization may be able to consolidate third-party systems through cloud ERP. A well-defined business case, with consensus support from stakeholders across all functional areas (ie. HR, IT, Finance, Payroll, Supply Chain, etc.), will help ensure the project has the proper support when a system is selected. Well-defined strategic intents can be carried forward into your implementation plan and system adoption plan. This will help ensure your implementation is delivered on schedule and within budget with high employee self-service and manager self-service adoption rates.
Tip for integration: Ensure the new system is able to be integrated with the EHR to help build a clinically integrated supply chain, eliminating silos, and bringing together decision-makers from within clinical specialties, supply chain, and finance to drive efficient and effective supply chain strategies and management practices.
Vendor Evaluations
After attaining stakeholder alignment of the future vision, it’s time to develop the selection and evaluation criteria for the new system. With success criteria in mind, your organization and selection partner will source proposals from leading cloud ERP vendors, coordinate vendor demonstrations, and set up customer reference calls.
Tip for insight: In addition to reference calls, leverage firms such as KLAS and Gartner to get real customer feedback and insight into how vendors stack up in key focus areas.
The Power of Partnership
Because cloud ERP is a large change and investment for your health system, it is highly encouraged to bring on an advisory partner to help lay the groundwork and leverage best practices to ensure your organization selects the best fit solution while considering future scalability and flexibility.
LCMC Health CIO Tanya Townsend said in a conversation about ERP system selection, “One thing to keep in mind with total cost of ownership (TCO) negotiations and contracting with the top ERP software vendors is that they require you to have an implementation partner. When you’re having conversations around the various implementation phases, understand that who you choose for your implementation partner is a huge part of the negotiations.”
Tip for your selection: Leveraging a selection partner with deep industry knowledge and proven selection methodologies will ensure you select the right solution, negotiate the best possible contract, have the right governance, and apply best practices and risk mitigation.
Phase Zero
Once you’ve selected your new cloud ERP vendor, you’ll begin building your pre-implementation strategy. This activity is often referred to as “phase zero” when working with a certified software firm like Avaap, or it may be incorporated into the first phase of your implementation. This phase will focus on aligning your organization’s people, process, and technology with the strategy to set a strong foundation for replacing legacy systems with cloud-based technology. The main focus areas of building your strategy will include:
Build Your Pre-Implementation or Phase Zero Strategy
- Project Management and Governance
- Systems, Interfaces, Data, and Reporting
- Change Management Preparation
- Business Process Alignment
Tip for planning: Watch this on-demand session for a deep dive into the phase zero activities your organization should implement for project success, regardless of the system you choose.
Implementing cloud ERP is a novel experience for many individuals and organizations and there is pressure for getting it right. Proactively preparing for change, thoughtful planning, and tapping into the experience of organizations that have traveled a similar path can provide a seamless transition and path to move forward.