Avoiding Traditional Mistakes in Product Selection.

Many, if not most, long-term care providers are struggling to respond sensibly to new technology developments that are now arriving with increasing speed. Whether these developments relate to e-business applications, wireless communications, e-consumer communications, new enterprise-wide software suites, application service providers, new cost-management tools, etc., providers are increasingly challenged to make cost-effective technology decisions to meet basic organizational requirements.

At the same time, organizations continue to register a number of complaints about the costs, quality and service support provided by technology vendors. Upon review, up to half of these complaints could have been avoided if the proper technology planning steps had been followed.

"New" technology is subject to the same objective principles of planning, requirements definition, review, evaluation and selection, installation and implementation as any technology purchases in the past. If these principles are not followed thoroughly, the risk of making incorrect decisions increases dramatically, and this leads to very high expenses, far exceeding any possible return on investment. While there are times when rapid decisions are essential for business success, these types of decisions often prove to be very costly when information technology investments are involved.

Fortunately, based on the experiences of several industries purchasing information technology, as well as our experience with many long-term care organizations, a set of best practices in selecting information technology has emerged.

1. Establish Goals and Expectations

Not taking the time for this step usually has negative consequences because of initial and continual confusion at both executive and management staff levels. Before taking any other steps, executive leadership should identify the business goals for any new systems to be purchased. The goals might be to install an integrated system, automated staff scheduling, an improved clinical documentation system, a case-management system, an Internet system, etc. These goals should be clearly defined in written form so that they are not overlooked or misinterpreted as the organization moves forward to select new technology.

Closely related to goal definition is establishing reasonable and realistic expectations. First, everyone must understand that there are major differences among system vendors and in the functionality of their products. Some systems are much better than others for certain functions, such as billing, accounts payable/accounts receivable, clinical documentation, quality/risk management, etc. Some vendors are much better than others at implementation and providing ongoing support. Also, it should not be expected that all parts of a new system will be equally functional for the organization; there might be trade-offs involved.

Systems should generally automate the organization's existing processes and procedures, and not require the organization to arbitrarily change its processes to accommodate the new system unless this has otherwise been agreed upon.

There should be no expectations for purchasing "plug-and-play" systems. Most new systems require multiple-month installation periods, as well as significant amounts of training to use the various modules in the system. In some instances, the technology might require that the organization assign "super users" to assist with implementation and ongoing systems support, and perhaps appoint a project manager. Staff assigned to assist with implementation should not have to continue their regular work at the same time.

It might be necessary to upgrade computer hardware to take advantage of new technology applications. Hardware systems become obsolete more quickly than in the past, and use of Internet applications can require more disk and memory capacity.

2. Perform a Needs Assessment

After defining goals and expectations, the needs assessment is the next most important step. The needs assessment should identify the key processes and functions that require improved automation and ensure that any operational changes to improve efficiency and effectiveness are either in place or fully understood. Frequently, the needs assessment will also define the specific functional performance requirements needed in the new technology applications.

3. Systems Evaluation

Before investing in additional technology, a review of current systems' capabilities (and problems) is always advisable. Are current versions of software in use? Have system upgrades been performed? Do staff know and use available functions in current software applications? Do current systems meet most requirements, but require redundant data entry and have limited integration of functions? Does the current vendor provide the level of technical support required? How serious are the current system's deficiencies, and can the current vendor improve system functionality to meet the deficiencies?

The results of a systems evaluation are the documentation of systems' gaps and unmet requirements.

4. Strategic Planning 

Usually, a strategic plan is needed for any major systems improvement project. This need not be a voluminous document or require many months of staff time to produce. The plan is basically a guide to what is needed. The plan essentially includes the design for information systems and needed functions, and it should include the following components:

* Information Technology (IT) Objectives and Approach

* IT Goals and Requirements

* IT Infrastructure

* IT Staffing Requirements

* New Management Functions

* IT Investment Requirements and Return on Investment(s)

* Implementation Steps

5. Vendor Identification and Screening

This step is the one where most often mistakes are made. It is at this step that objectivity matters the most but is very hard to maintain. Vendors and products are selected based on nonobjective factors that are later viewed as inappropriate, inadequate or nonfunctional in meeting organizational needs. "Short cuts" occur because it so happens that some people in the organization have systems that they like or have been personally impressed with, because another organization they know uses that vendor and its product(s), or because a key executive or manager prefers certain systems, etc.

The first and most important step is to objectively identify all potential vendors that have technology that could meet organizational requirements. Vendors sometimes offer entire suites of integrated products--so-called enterprise-wide systems--and/or provide independent products for key functional areas, e.g., clinical, billing/accounts receivable, admission/discharge/transfer, human resources. Vendor products will usually meet certain technical standards, such as HL-7 and ODBC, so that interfacing their applications is easier.

However, many "total enterprise" long-term care products have difficulty in meeting the requirements of multicompany accounting and have limited human resource functions, focusing primarily on payroll. For this reason, using a mix of vendor products (known as the "best of breed" approach) might be more appropriate.

Once potential vendors are objectively identified, the next step is normally to send each vendor a Request for Information (RFI), a detailed requirements document including a numerical grading format, used for both quantitative and qualitative ranking of vendors. (A more comprehensive approach involves sending vendors a Request for Proposal [RFP],but this is usually done only when the response will be used as part of a contractual agreement). The RFI (or RFP) also includes requests for information on system design, platforms, hardware specifications, the operating system, system support, references, costs and other related information.

Vendors develop responses to the RFI, and these are compiled by the organization (usually an automated process). Once the responses are compiled and reviewed, it is relatively easy to identify the three to five top-ranked vendors in relation to your organizational needs.

6. Software Demonstrations

Demonstrations of systems and software should be scheduled for these top-ranked vendors. These demonstrations should involve most of the key staff who will be using and supervising the use of the technology applications. Time and time again, "arbitrary" technology selection decisions have been made with minimal or no staff participation. The results have been that, once the systems are installed, they are not used, are underused or even undermined, because their functionality is not suitable for the organization or for the way the staff functions. If staff know that their input is critical to the decision made on the technology they will be using, they usually will provide sound and valuable input during demonstration and reference-checking steps.

These staff should grade the vendor products using objective grading forms during or just after the software demonstrations. These grading reports should be used in making final software selections. The result of the demonstrations usually is to enable the organization to select the two top vendors for further review and reference checking.

7. Reference Checking, Due Diligence and Cost Analysis

Most organizations check vendor references before selecting a system and completing contractual arrangements. Reference checking usually involves site visits with one or two system users to determine its functionality and support firsthand. It can also include obtaining vendor financial statements and related information to determine vendor viability, and checking other financial references and customer references regarding relationships with the vendor, vendor responsiveness, etc.

Another critical task is completing a cost analysis that includes not only system purchase costs, but also the costs of installation, implementation, training and ongoing support. Cost analysis is best performed using prepared forms allowing the vendor to fill in the prices for the various components. Conversely, the organization can extract the costs from vendor proposals and enter them into the form for comparative analysis.

Once reference checks, due diligence and cost analysis have been completed, this information can be combined with the results of the RFI, the vendor demonstrations and grading. Then a final vendor selection(s) can be made.

8. Contractual Agreement

Contract negotiations with the vendor(s) selected require patience and careful attention to detail. Aside from the basics of price, timing of installation, implementation, training and initial support, there are several other key issues that should be addressed in the contract:

* Having the right to the software source code if the vendor stops supporting the software, goes out of business or otherwise defaults on its obligations. At a minimum, the vendor should place the software code in an escrow account.

* Holding back at least 25% of the purchase costs until at least 90 days after the system is fully implemented (according to pre-established acceptance criteria), to ensure that it is working properly.

* Requiring the vendor to provide a detailed implementation plan, identifying all key components, including staff training.

* Being able to obtain a full refund of all costs if the vendor is unable to deliver the product as specified in the pre-established acceptance criteria. If products still under development are being purchased, the vendor should be required to establish contractually binding due dates for providing the applications, with financial consequences if delivery dates are not met.

Summary and Conclusion

To prevent predictable problems in selecting and implementing new technology, it's best to follow these steps closely and fulfill each one thoroughly. The results in customer satisfaction and functionality are usually worth the effort. Although an organization might be tempted to hold back from purchasing new technology because of the time, expense and amount of change involved, this is often impractical in today's business environment. In foregoing the efficiencies that new technology offers, other costs are incurred that might be higher than the amortized cost of a new technology system.

Malcolm H. Morrison, PhD, is president and CEO of Morrison Informatics, Inc., an information technology and data analysis consulting firm specializing in long-term and post-acute care.