Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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To be able to discuss the nature of IT-enabled value.
To review the components of the IT project proposal.
To be able to understand steps to improve IT project value realization.
To be able to discuss why IT investments can fail to deliver returns.
To review factors that challenge the realization of IT value.
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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The definition of IT-enabled value
The IT project proposal
Steps to improve value realization
Wht IT investments may fail to deliver returns
Analyses of the IT value challenge
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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Is both tangible and intangible
Can be significant
Can be diverse across IT proposals
Can be diverse within one proposal
Appropriate analysis techniques depend on the nature of the value
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

Strategic Considerations
Strategic Objectives of
Investment in IT,
Support for Corporate
Strategy,
Top Management
Support
Competitive Performance
Objectives,
Long-term Costs and
Benefits.
Tactical Considerations
Performance Indicators
Generating Data
Evaluation Methods
Security
Involvement of Senior
Managers
Operational
Considerations
Existing IT Systems
Data Migration
Software
Users Perceptions
Servers
Systems Integration
Existing Operations
System
Intangibles
Competitive Advantage
Service to Society
Job Enrichment
Quality Improvement
Improve Customer
Relationships
Enhance Confidence
Securing Future Business
Risk of Not Investing in IT
Teamwork
Good Image
Justification of
Investment in IT
Projects
Tangibles Considerations
Financial
Budgets
Priority of Investment
ROI
Product Cost
Market Research
Alternate Technology
Profit Level
Revenue
Non-Financial
Lead-time
Inventory
Labour Absence
Defective rate of Products
Set-up Time

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Tangible (can be expressed in terms of money)
 Increased revenue
 Reduced labor costs
 Reduced utilization of ancillary services
Tangible (can be measured in terms of process improvements)
 Fewer errors
 Faster turnaround
 Reduced time to get an appointment
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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Tangible (can be measured in terms of strategic importance)
 Growth in market share
 Reduced turnover
 Improved patient satisfaction
Intangible
 Improved decision making
 Improved collaboration
 Increased agility
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

Type of Value
Infrastructure
Improvements
Mandated
Cost reduction
New products and services
Quality improvement
Major strategic initiative
Type of Analyses
Ability to meet organizational goals, e.g., agility
Least expensive approach
ROI/NPV
ROI/NPV and sensitivity analyses
Change in service measures
All of the above and management “hunches”
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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The proposal is the cornerstone of the IT value examination
 Defines intended value
 Presents application
 Reviews related changes, e.g., process re-engineering
 Reviews costs
Sources of value information
 Consultants
 Conferences
 Colleagues
 Publications
 Vendors
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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Fractions of effort
Reliance on complex behavior
Unwarranted optimism
Shaky extrapolations
Phantom square feet
Underestimating the effort
Fairy-tale savings
Failure to account for post implementation costs
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

Popular Estimation Methods
Popular Estimation Methods Better estimation Methods
Estimation by analogy
Off-the-cuff estimation
Using expert judgment
Wide-band Delphi
Cocomo II
Decomposition
Proxy-based estimation
Function point estimation
The PERT Formula
Putnam’s Method
The Function Point method was selected for illustration, since it can be used during a feasibility study before most design and infrastructure decisions are made.

measurement parameter number of user inputs number of user outputs number of user inquiries number of files number of ext.interfaces
count-total complexity multiplier function points
Function point estimation count
X
X
X
X
X
3
7
5
3
4 weighting factor simple avg. complex
4
5
4
10
7
6
7
6
15
10
=
=
=
=
=

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Make sure that the homework was done
Require formal project proposals
Increase accountability for investment results
Conduct post implementation audits
Celebrate value achievement
Leverage organizational governance
Shorten the deliverables cycle
Benchmark value
Communicate value
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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 Fails to clearly link IT investments and organizational strategy
Asks the wrong question
Conducts the wrong analysis
Does not state its investment goals
Does not manage outcomes
Leaps to an inappropriate solution
Mangles the project management
Fails to learn from studies of IT effectiveness
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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What are the steps and investments, including IT, that we need to take in order to achieve our goals?
Which “business” manager owns the achievement of these goals? Do they have our confidence?
Do the costs, risk and timeframe for the implementation of the set of investments, including the IT investment, seem appropriate given our goals?
Have we assessed the tradeoffs and opportunity costs?
Are we comfortable with our ability to execute?
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

Days in A/R
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
Qtr 3-96 Qtr 4-96 Qtr 1-97 Qtr 2-97 Qtr 3-97 Qtr 4-97 Qtr 1-98 Qtr 2-98 Qtr 3-98 Qtr 4-98
Days in A/R
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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Innovation in business practices
Economic value results from incremental innovations rather than “big bang” initiatives
Strategic value results from the cumulative effect of sustained initiatives to innovate business practices
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser

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IT value is complex, multi-faceted and diverse
The project proposal is a core means for assessing value
There are many factors that can dilute value
There are steps that can be taken to improve the achievement of IT value
Health Care Information Systems: A Practical Approach for Health Care Management 2nd Edition Wager ~ Lee ~ Glaser