Grant Thornton: Guiding Organizations Through Cloud-Based ERP Adoption

David Reitzel is principal for Grant Thornton LLP Health Care Advisory Services. This article is based on a presentation he gave at the January meeting of the HFMA Large System Controllers Council, of which Grant Thornton is a sponsor.

Despite the current push toward cloud-based technology, most healthcare organizations have had mixed interactions with software-as-a-service (SaaS) programs. Even if a hospital or physician practice has embraced integrated clinical and practice management solutions, it may not have started transitioning these products to the cloud. On the whole, health care is somewhat behind in shifting away from on-premise software. The need to embrace a cloud strategy is becoming more critical as it is the hosting venue of choice for most business applications—including enterprise resource planning (ERP) offerings.

“Every ERP solution available today is offered via the cloud, and the expectation is that users will start implementing this option,” says David Reitzel, principal for Grant Thornton LLP Health Care Advisory Services. “Healthcare organizations must determine the best ways to move their operations into this new ecosystem to stay current and remain viable. To make the shift, they need to understand their existing footprint, what data would be moving to the cloud, and what the impacts of the migration could be.”

Appreciating the scope

For most healthcare organizations, onboarding a cloud-based business solution represents a medium-to-large initiative, and there are different variables that could influence the project’s size and scope. For example, if an organization has had a lot of mergers and acquisitions activity, that can rapidly advance the complexity of implementation efforts. “Since organizations are extremely sensitive around resource demands and capabilities given the thin margins present in health care right now, they must carefully consider how they can execute these large-scale initiatives while limiting the impact on clinical operations, patient safety, and financial performance,” says Reitzel. “The reality is there is no small change when it comes to technology adoption in health care. As organizations start to alter some of their core systems, the resulting ripple effects can be substantial. Changes to applications can affect third-party relationships, interdepartmental processes, cross-continuum data sharing, and other factors. Without giving due consideration to the possible ramifications, an organization can quickly get in over its head.”

Start with the data

To lay the foundation for a move to the cloud, an organization must first understand where its data resides. “Data can live in several different systems, including revenue cycle solutions, electronic health records (EHR), enterprise resource planning applications, which include financial and supply chain data, and human capital management solutions,” says Reitzel. “A change in any one of these systems could have downstream effects that impact them all. The more an organization appreciates how the various types of data are transferred, managed, and transformed, the more successful it will be in realizing a smooth shift.”

To better understand data locations and interactions, organizations may want to consider creating a data and application map that illustrates where information lives. This tool should note which systems and departments access and interact with various kinds of data; which areas control the different information; and whether there are third parties involved. “As part of this process, organizations should also factor in certain attributes, such as whether the data includes protected health information (PHI) or personally identifiable information (PII), which would warrant specific security and privacy protocols,” says Reitzel. “The more thorough an organization is at mapping the data, the more likely it will proactively identify potential problems or unintended consequences before a system goes live. For example, there may be some departments outside of information technology or financial services that are using applications that interact with ERP data. Without acknowledging these relationships and understanding how the new solution will preserve them, an organization could make a change and inadvertently derail the outside department’s work.”

Organizations should also strive to establish a single source of business information. “Health care has gone through a decade of standardizing clinical and revenue cycle data to develop a single source of truth for these areas; however, organizations continue to have a hodgepodge of back office functions around supply chain, finance, and human resources that pull data from a variety of places and breed duplication and inconsistency,” says Reitzel. “Before implementing a new cloud-based ERP or other business solution, organizations must clean up the relevant data to gain a clear and simple vision of how a program will handle and integrate the information. Without this exercise, an organization may struggle to derive value from its investment.”

Commit to change management

Onboarding a complex technology solution will most certainly have an impact on an organization and preparing how to navigate the effects is a critical next step in the implementation process. “Different degrees of disruption will require varying levels of change management,” says Reitzel. “For example, if an organization is merely focused on enhancing existing technology and making limited process improvements, that will require less change management than if the organization is pursuing transformational change with complete process and cultural overhaul. Transformational change by its definition requires higher-touch communications and stronger senior leadership commitment and involvement. Organizations engaging in this level of project should think about how they are going to define ROI, measure outcomes, and proactively anticipate and address any negative ramifications. In some cases, the ecosystem an organization is changing extends beyond its four walls to include outside stakeholders as well. In these instances, organizations will need to consider the implications for those entities to make sure there is a solid plan for how to effectively share information.”

To anticipate the necessary degree of change management, organizations should denote some of the potential pain points for the project and determine how they are going to manage them. “All stakeholders must recognize and acknowledge the scope of the project, the potential impact of the change, and be aligned in their communications—before the system goes live,” says Reitzel. “Everyone should appreciate whether the organization is pursuing a slight adjustment or wholesale process rework. This effort is similar to what entities have done before in garnering physician buy-in and alignment for clinical systems. Now, they need to go through this alignment with financial, supply chain, and human resource functions as well. This will require substantial training and communication, and the organization should be prepared to invest in those areas.”

An expert guide can be beneficial

Transitioning to a cloud-based ERP can be a complex endeavor, and this article has merely scratched the surface on what’s involved. Organizations thinking about this type of project may want to reach out to a knowledgeable partner that has deep experience in onboarding business solutions in health care. This will allow the hospital, health system, or physician practice to fully appreciate where data resides, develop a single source of truth, proactively anticipate possible impacts to existing data, and plan for change management, including creating a framework for expectation setting, communication, and training. Organizations that work with a partner to identify potential risk points upfront and put plans in place to mitigate them can set the stage for a successful onboarding effort, as well as sustained performance over the long term.

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