The debate over the viability of “the cloud” as a computing architecture is over. Fortunately, IT executives have moved past the coffee house chatter and sifted through the hype. By realizing the difference between the cloud as an architecture and the cloud as a third party service, most are now mired in sorting out how best to take advantage. Indeed, it’s not a matter of “if,” but “how” healthcare providers are going to implement “cloud computing” and according to a recent KLAS news release, 71% already have or are in the process.
Although security issues remain a hot topic of discussion, as well they should, some rational perspective has also been gained on this front. For example, when your cloud service provider (e.g. Amazon) has invested more in bullet-proofing its network security capabilities, policies and procedures than most healthcare provider IT departments can comprehend; those same service providers are offering Service Level Agreements (SLAs) that insure against the liability of a security breach and; the federal government (under provisions of the Affordable Care Act) is basically paying providers to make the move to “the cloud” (to accelerate their EHR implementations); the reasons to “play” far exceed the reasons to “watch.”
The point of this post isn’t to offer a tutorial on cloud computing or even laud the specific benefits. Rather, it’s meant to be more of a cattle prod to healthcare executives who control SCM budgets and continue to have a difficult time understanding why their SCM departments aren’t interested in their ERP vendor’s “SCM add-on.”
Like it or not, healthcare providers are moving to more of a community model of computing, where platforms play host to multiple business networks. Although the point is debatable, no corporate discipline may stand to benefit more in this context than SCM –and the best in class tool vendors who sell to them. Why?:
- For starters, most all best-in-class SCM tools are available as-a-service. These vendors have been offering “cloud based” e-procurement, planning, spend intelligence, inventory management and logistics solutions for several years now.
- Because enterprise software vendors of SCM tools (e.g. Oracle, SAP) are not yet able to support the kind diversity (across all computing dimensions, including mobile) that is required by departments who are dealing with, for example, hundreds to thousands of suppliers using a wide array of solutions.
- Cloud-based computing architectures promise solutions where all relevant data can reside in a distributed format across manufacturers, distribution and supply partners.
- Speed of acquiring badly needed capability (new apps) and the no-need-to-hype data integration facility of “the cloud” probably trumps total cost of ownership (TCO) as top benefits, which is ironic, given the stature TCO holds in supply chain.
The level of accessibility, visibility and collaboration that is inherent to cloud based architectures is just too rich for SCM professionals to ignore. Put another way, if Excel remains your department’s primary supplier collaboration mechanism, it’s time to get rid of that “clip on” and buy –or at least rent– a real tie.
–Tom Finn
{ 2 comments… read them below or add one }
I couldn’t agree with you more about the value of cloud-enabled supply chain management for healthcare, and I wanted to provide some additional perspectives: one, on the value of a collaborative community and two, on the opportunities the cloud provides to not only better manage the supply chain but also to create much needed linkages between the supply chain and the ability of hospitals to meet both their clinical and financial objectives.
You mentioned the challenge of technology diversity. I agree this was one of the primary barriers to automating the healthcare supply chain prior to the emergence of B2B exchanges in healthcare more than a decade ago. The key to overcoming this barrier was to create a trading exchange in the cloud and complementary SaaS applications that would help insulate both providers and suppliers from the wide range of technological capabilities (or lack thereof) at their trading partners. Today, e-procurement and e-commerce have become the norm, not the exception, with more than 4000 of the 5400 hospitals in the US (not to mention many other acute and non-acute providers in Canada and Europe) and the suppliers from which they purchase the majority of their products now transacting business through a single exchange (www.ghx.com).
Over the past 11 years, we have learned that the community of participating suppliers and providers may be even more important than the technology platform and solutions they now share. Real advancements are made when this community comes together to identify best practices on matters such as use of standard identifiers, communication protocols, and data sharing practices and policies. For example, one of the biggest time and money drains in the healthcare supply chain is lack of real-time data sharing among parties to a purchasing contract, something that can be effectively solved today as a result of broad participation in a cloud-based platform.
Data sharing is also critical to linking the supply chain to value for patients. If you define value (which will drive how hospitals will now be reimbursed) as the sum of cost plus quality, then the ability to capture data on the supplies used, especially implantables that can account for more than 50 percent of the cost of a procedure, is critical. Unfortunately, as hospitals scramble to meet stage one criteria for meaningful use of EHRs, little attention has been paid to the inevitable future, requirement that hospitals capture data on medical devices used in patient care. Accurately capturing this data at the point of use is key to solving a number of point points in healthcare, from revenue leakage, to inventory and demand management, to recall management and comparative effectiveness research.
As hospitals begin looking at the application of cloud-based solutions to meet the necessities of true healthcare reform, my hope is that they do not do so in traditional silos, but rather look at how to create an architecture and associated processes and policies that can meet the needs of multiple stakeholders, all of whom are working toward one end: better care at an affordable price.
Karen, thanks for your contribution. To me, it all comes down to the data integration facilities. The fact that relevant data and the applications they feed can be distributed and be easily refreshed/upgraded by those who own them is just too rich. Buyers and sellers in the most abstracted sense (i.e. regardless of who’s selling, who’s buying and what’s being sold, rented or borrowed), can be brought together in uniquely overlapping and ever-changing configurations, as needed. It’s a new playground for strategy development.