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Funding your ERP Project with Supply Chain Transformation: Large systems projects are an opportunity to dramatically improve business processes, increase efficiency, and improve the end user experience. In today’s economic reality of tighter budgets and rising costs, some organizations are forced to put off systems projects. However, by simultaneously undertaking a supply chain transformation savings initiative that will reduce procurement and services costs and streamline processes throughout the organization, organizations can achieve the Fully Funded PeopleSoft Project.
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
The Fully Funded PeopleSoft Project Funding your ERP Project with Non-Labor Cost Savings
June 24, 2014
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Agenda
Introductions Overview Transforming Enterprise Systems Reducing Non-Labor Spend The Fully Funded ERP Initiative
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Introductions
Don GreenwoodSenior DirectorOrlando, FLP 312-583-8253F [email protected]
Jason MoebiusManaging DirectorChicago, ILP 312-583-8759F [email protected]
Jason has a deep knowledge of the healthcare industry and large scale technology projects, with more than ten years of experience assisting hospitals and universities implement business critical applications. His technical expertise lies in implementing PeopleSoft and research administration applications
EXPERTS IN THE AREAS OF HEALTHCARE AND ENTERPRISE SYSTEMS
Don has over 25 years of healthcare supply chain medical and pharmaceutical supply chain operations, financial, general management, advanced logistics distribution experience, including executive leadership roles with several of the nation’s largest wholesale distributors.
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
OverviewFUNDING YOUR ERP PROJECT WITH SUPPLY CHAIN TRANSFORMATION
Large systems projects are an opportunity to dramatically improve business processes, increase efficiency, and improve the end user experience.
In today’s economic reality of tighter budgets and rising costs, some organizations are forced to put off systems projects.
However, by simultaneously undertaking a supply chain transformation savings initiative that will reduce procurement and services costs and streamline processes throughout the organization, organizations can achieve the Fully Funded PeopleSoft Project.
4
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Sustain and Extend Procurement SavingsSUPPORTED SUSTAINMENT WITH ERP AND BUSINESS INTELLIGENCE
Institutionalize improved processes
Configure system to enforce new savings
Utilize BI to monitor and extend contract pricing and find new opportunities
Maximize EDI deployment to generate efficiencies and potential discounts
Optimized workflow
How we achieve additional savings:Sustained Improvement and Increased Value over Time
0ERP Installation
*Note: Additional sustainment savings are possible through implementation of Business Intelligence
ERP Sustainment with Supply Chain Transformation (SCT)
ERP Implementation
Time
Value/ROI Attainment
SCT with Huron assistance
SCT without Huron assistance
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 6
About Huron Consulting GroupHuron provides services to a wide variety of organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses and law firms.
Huron Consulting GroupHuron Consulting Group History Formed in March 2002 by a core group of
experienced financial and operational consultants, including CEO and President Jim Roth.
2,237 consultants company wide, and approximately 50% consultants comprise Health & Education Consulting practice.
We have conducted more than 11,000 engagements for over 4,100 higher education, public sector/government, and commercial clients.
LocationsAtlanta | Boston | Charlotte | Chicago | Dallas | Detroit | Houston | London | Los Angeles | New York | San Francisco | Tokyo | Washington, DC
Our Value Proposition Focused and integrated - financial and
operational consulting – implementation service provider
Combination of deep functional and industry expertise
Independence and objectivity
Working with Huron, institutions can experience dramatic transformation across the entire organization. We partner with institutions to help them become better positioned to achieve strategic and financial goals, compete for scarce resources, and plan for the future.
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Huron Healthcare is the largest performance improvement consulting firm to hospitals, with almost 1,000 professionals
Non-labor practice has over 120 professionals Specialist model with highly experienced consultants We evaluate 85% of cost structure and 100% of
revenue Non labor has a 100% success rate achieving targets
on integrated projects and averages 149% to low end target
Collaborative and flexible - We fit into to your organization – we don’t try to fit you into our organization
Tools, sustainability and knowledge transfer (front-line manager focus)
Speed, certainty, sustainability
Huron’s Background and Approach
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Transforming Enterprise Systems
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Huron ERP Practice
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Over 100 PeopleSoft professionals with wide-ranging expertise in all PeopleSoft applications
Platinum member or Oracle’s Partner Network
Experience in more than 90 large-scale PeopleSoft ERP planning, implementation and upgrade projects in Financials, Grants, eProcurement, HCM and Campus Solutions
Active implementation and upgrades in every major pillar of PeopleSoft
Current healthcare engagements with HCM and Financials PeopleSoft suites and over a dozen Healthcare ERP clients
Partnered with Oracle Development for continuous improvement initiatives and testing with the Grants suite, Labor Distribution and Procurement
ERP Service OfferingsIMPLEMENTATIONS, UPGRADES, ASSESSMENTS, AND QUALITY ASSURANCE
New ERP Implementations
ERP Upgrades
Implementation Quality Assurance
Post Implementation/Process Improvement
IT Strategy Roadmap and Governance
Optimization and Cost Reduction
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Enterprise Transformation | Building Solutions That LastThe Pillars of Huron Enterprise Transformation:
Business Process Transformation, which capitalizes on our deep healthcare and change management expertise
Process Focused ERP Implementation directed with rigorous project management and focused on redesigned process and optimized supply chain
Optimal Integration with Clinical Systems through best practice based interface and process design
Sustainment and extension of Non-Labor savings through a coordinated implementation effort, which will involve members of our non-labor practice with detailed knowledge
Flexible Chart of Accounts design based on Healthcare best practices and reporting requirements
Focusing on Partnership and Shared Responsibility through achieving broad based buy in and realization of project goals
Business Process Transformation
No
n-L
abo
r Efficien
cies
ER
P Im
plem
entatio
n
Clin
ical System
s
Op
eration
al Efficien
cy
Ch
art of A
ccou
nts
Enterprise Transformation and Return on Investment
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Huron ERP Implementation Approach
Phase 1
Initiate
Phase 2
Analyze
Phase 3
Design
Phase 4
Develop
Phase 5
Test
Phase 6
Implement
Phase 7
Support
T
Technical IT Support
Project Management
Organizational Readiness
Data Conversion
Business Process Redesign
11
We assist organizations through successful technology transformation and implementations across a wide variety of large, complex initiatives through collaboration – by working side by side with our clients, sharing accountability, transferring knowledge, and helping transform the culture to embrace and sustain lasting change. The benefits of our methodology and approach include the following:
Result-focused. Measurable. Flexible. Reduces risk. Tools streamline the process. Facilitates consistent, overall quality.
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Implementation vs. InstallationImplementation Success Defined:
Installation does not equal Implementation
Installation
Implementation
On Time On Budget Technical Objectives met
Business Objectives met Human Objectives met
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Change Management Methodology FrameworkPHASES & PERSPECTIVES
Communication Change Readiness
Business Process Impact
Organizational Context
Assessment
Value Attainment Training
Huron’s Change Management Methodology is comprised of 5 phases, and throughout each phase, we address 6 inherent perspectives.
Recognizing that organizational change is actualized and institutionalized through the individual organizational members.
Phase 1Identify
Phase 2Assess
Phase 3Design
Phase 4Engage
Phase 5Support
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Transforming the Supply Chain
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.15
Huron Non-Labor Solution Results 100% of the time. We quickly sort through clients’ unique problems and set
priorities to implement results right away. Repositioning a hospital’s non-labor costs for long-term
success is our goal.
Non-Labor consultant leaders are senior level experts with an average of more than 20 years of experience.
We have a great depth of clinical and purchased service specialty expertise. Clinical breadth: Peri-operative, Critical care, ED,
General medical, Cardiology, Laboratory, Pharmacy and others
Non-clinical breadth: Food, EVS, Facilities, Support services, IT/telecom, Administrative services, Clinical services and others.
We are completely independent from any GPO, distributor, manufacturer, HR broker, or IT vendor whose interests and goals may not be aligned with our clients.
Our work focuses on more than just contracting/sourcing. Additional savings include utilization, standardization and contract maximization.
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Implementation Focus
Senior Level Expertise
Specialist Focus
Independence
Comprehensive Focus
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Key Success Factors of Performance Improvement
Client-driven with appropriate support
Continual communication to staff and other stakeholders (formal plan)
Strong executive support and involvement (same page)
Clear vision and broad perspective
Speed to execution (keep momentum)
Build infrastructure for
sustainability of results and constant improvement
Measuring, monitoring and sustaining performance
Message: Opportunity identification is a good thing, not an indictment of the past
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Project ApproachASSESSMENT SCOPE
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Sourcing
Contracting
ProcurementDistribution
Value Analysis
Supply Chain Functional Areas Reviewed
Key Aspects Reviewed
Organizational Structure
People
Process
Technology
Performance Metrics
Assess roles and responsibilities, reporting and alignment that optimize the organization’s current resources
Evaluate of staffing levels, training and onboarding processes that enhance staff’s capability to execute and deliver services
Map workflow of each key supply chain function that enable effective delivery of services to key customers and end-users
Assess technology utilized to support the delivery of services across all supply chain functional areas
Analyze key supply chain performance metrics that provide accountability for the organization
Vision and Strategy
Review vision and goals that provide strategic direction for the organization to achieve the hospital’s overall mission
Organizational Structure
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Non-Labor AssessmentProvides the most comprehensive approach to non-labor cost reductions in the industry. Our approach is broader, we uncover more opportunities for cost savings and efficiencies, and we work collaboratively to implement them quickly.
Distributor RelationshipsPerioperative/OR
CardiovascularMedical Surgical
PharmacyFoodLab
Cath Lab Interventional Radiology
LinenOthers
Supplies Services
GPO RelationshipBiomedicalPharmacyFacilities
LabEnvironmental ServicesInformation Technology
TelecommunicationsReal Estate Leases and
RentalsTranscription
Others 18
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Purchased services is broadly defined as any purchased, contracted or outsourced service across all functional areas of a health system.
Identification of PS Cost Reduction OpportunitiesExamples of Purchased Services Spend Categories
Clinical EngineeringEquipment Service InsuranceOutsourced ManagementService Contracts
Clinical ServicesBed/Clinical Equipment RentalDialysisLaser RentalsLaundry and LinenLinen Items CostLithotripsyMedical GasesMRI/PET CT Perfusion Pharmacy Purchased Services Pharmacy 340B Employee PrescriptionsRehab CareRemote Radiology
DistributionIn/Outbound Freight
Med/Surg DistributionPostage/Bulk MailEnvironmental ServicesHousekeeping SuppliesOutsourcing AgreementsPest ControlPlant & Aquarium MaintenanceSharps DisposalShredding ServicesWaste-HazardousWaste-MedicalOff-site Cleaning
FacilitiesElevator MaintenanceEnergy ConservationFacility LifeLandscapingLease AuditProperty ManagementSecuritySpace ConsolidationSuppliesInsurance – PropertyUtilities
Financial ServicesBank Card AP Payment SolutionBanking FeesCorporate CardPurchasing Card
Food ServicesCateringFloor Stock UtilizationFood CostRetail Revenue EnhancementVending Rebates
Information ManagementAnswering ServicesCodingMedical TranscriptionRecord Storage & RetentionRelease of InformationTranslation Services
Marketing & AdvertisingOverall Spend
Advertising MediaCall CentersCommunity NewslettersCreative AgenciesDonationsMedia BrokersOn-line Health InformationPatient EducationPromotional ProductsWebsiteYellowpages
Office Related ProductsCopiers & Multi-Functional DevicesFurnitureOffice Supplies & TonerPrinter MaintenancePrinters & FaxPrinting & Forms
Professional Orgs & MeetingsDuesTravelArchitects
Audit, Tax & ComplianceLegal ServicesManagement ConsultingRevenue Cycle & CollectionsTemporary Labor
TelecommunicationsConference ServicesData Network – WANInternetLocal CallingLong Distance CallingMaintenanceMove/Add/Change/DisconnectNetworking EquipmentPagersPBXTelecom Expense ManagementTelevision ServicesWireless (Cellular)
TransportationAmbulatory ServicesHelicopter Services
Local CouriersParkingShuttle ServicesValet Services
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Screening
Drop /Postpone /Reassess
Category Prioritization
Notes: Size of Circles = Typical Area Spend relative to size of organization. Based on healthcare client experience.
Opportunity Plot
Contract Term
TimeframeTo
Implement
Initiative Synergies
Success Enablers
Time to Implement
Cate
gory
Com
plex
ity
Shorter Longer
Low
Hig
h
Clinical PS
Collection & Compliance
EVS
Food Services
HIM
IT
Lab
Legal Services
Office Related
Staffing & Recruiting
Telecom
Clear Vision Organizational
Commitment Broad Perspective Cross-functional
teams Performance
Measures
MULTI-DIMENSIONAL REVIEW - ILLUSTRATIVE
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 21
TacticsOpportunities Huron Support
Cost Reduction
Utilization
Outsourcing / Insourcing
Standardization
Process Improvement
Buying Power Leverage
Evaluate supplier costsObtain lower cost from incumbent supplierConsider alternate supplier(s)
Concentrate volumeSystem wide coordination
Decrease items usedChallenge product variabilitySimplify specifications to reduce cost
Reduce usageFind alternative ways of fulfilling needTotal cost of ownership
Eliminate process wasteIdentify technology leverage opportunitiesImprove Value Analysis functions
Objective make-vs.-buy decision processBenchmark internal functions vs. market
- Policy and procedures- Analytical support- Development, management and
analyses of RFPs- Prioritized plans- Clearly defined clinical and
business cases - Thoroughly planned negotiation
process- Savings measurement tool- Knowledge transfer- Sustainable annual savings
Multi-Tiered Savings ApproachSAVINGS LEVERS; MORE THAN PRICE
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Non-Labor ResultsIMPLEMENTED RESULTS ACHIEVED 100% OF THE TIME
Actual Implemented vs. the Project Goal
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 22
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Lost Time and Savings
Time
Opportunity toImplement Cost
Savings Initiatives
6months
12 months
18months
24months
25%
50%
75%
100%
With Huron Healthcare assistance – expect 100% initiatives to be implemented in 6 to 10 months
Self-implementation results: less than 35% implemented in 24 months
Non-Labor ResultsRetrospective studies of clients who choose to self-implement show much lower achievement of savings and typically longer timeframes. On the other hand, Huron has never failed to reach our targets on any engagement and typically does so within 6 to 10 months.
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Healthcare Non-Labor Cost Reduction Experience Los Angeles - Non-Labor, Clinical Operations and Clinical Documentation Improvement. Implemented over
$7.0M in recurring non-labor savings, original target was $5.5M . Overall project implemented $39.3M in annual benefit.
Houston, TX - Non-Labor, Labor, Clinical Documentation Improvement, and Physician Services. The Non-Labor target range was $8.8M as the threshold and $12.8M as a stretch target. The project achieved over $17.0M of implemented Non-Labor annual benefit.
Dallas, TX - Non-Labor, Labor, and Clinical Operations Solutions. The Non-Labor target range was $12.5M as the threshold and $14.8M as a stretch target. The project achieved $16.4M of implemented Non-Labor annual benefit.
Cincinnati, OH – Assessed the organizational structure, duties, skill sets and duties of the supply chain organization as well as the effectiveness, timeliness and cost efficiency of their processes. Huron assisted to facilitate the reorganization of their supply chain department, redesign key processes, and implement a value analysis program to drive cost savings.
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© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
The Fully Funded ERP Initiative
25
© 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential.
Sustain and Extend Procurement SavingsSUPPORTED SUSTAINMENT WITH ERP AND BUSINESS INTELLIGENCE
Institutionalize improved processes
Configure system to enforce new savings
Utilize BI to monitor and extend contract pricing and find new opportunities
Maximize EDI deployment to generate efficiencies and potential discounts
Optimized workflow
How we achieve additional savings:Sustained Improvement and Increased Value over Time
0ERP Installation
*Note: Additional sustainment savings are possible through implementation of Business Intelligence
ERP Sustainment with Supply Chain Transformation (SCT)
ERP Implementation
Time
Value/ROI Attainment
SCT with Huron assistance
SCT without Huron assistance
26