Evaluating Total Cost of Ownership for Clinical Technology Solutions: A Guide to Ensuring that Your Purchase Stays on Task and on Budget
Executive Summary Evaluating purchase price is part of any standard buying process, but in a recent GovLoop survey, 68% of respondents noted they also consider ongoing operating and service costs to be as or more important. Understanding all combined initial and future costs of technology solutions can be difficult when evaluating buying or building a technology solution. Not understanding those costs, however, can lead to budget issues and project failures. In fact, the Project Management Institute reported that 14% of IT projects outright fail, and of those that did not fail, 43% exceed budget.
IT Project Success Rates 14% of projects fail
49% are late
43% exceed budget
31% did not meet goals
So how can you ensure that the technology solutions you are purchasing will be able to meet your ongoing needs without any hidden costs that exceed your budget?
AB O UT AP P RI SS HE ALT H Appriss Health has developed a robust cloudbased IT solution to consume, transform and deliver data and analytics in a usable format. Its solutions are developed in collaboration with state governments, healthcare systems and pharmacies. More than 4 billion times a year, through many individual integrations, Appriss Health technology delivers prescription insights to healthcare providers sharing knowledge for the good of public health. It is important for their infrastructure to be secure, uniform, flexible and consistent. The initial use of the Appriss Health infrastructure was to support state governments in efforts to combat the opioid crisis. More recently, it has enabled patient access to behavioral healthcare services. Both have been achieved by leveraging technology in collaboration with state prescription drug monitoring programs (PDMPs), vendors, hospital systems, pharmacies and behavioral health providers.
The answer is to carefully research and understand total cost of ownership. Total cost of ownership (TCO) is used to calculate the total cost of purchasing and operating a product or service throughout its life cycle. This measure can help prevent the budget issues seen in so many IT projects. It is important to be able to articulate direct and indirect costs to conceptualize, configure and implement a new product. This research brief provides a comprehensive guide for evaluating the total costs of technologies and provisions that might not be reflected in upfront pricing. Additionally, we will include Appriss Health’s development, delivery and support of a highly regulated and security-sensitive IT infrastructure for states as an example of how to consider direct and indirect financial impact in a TCO evaluation.
Acquisition Hardware/Software
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Implementation Man hours of people in your organization/people to be added
Of projects that succeed...
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Operation Any external costs from vendors, ongoing licenses, support services
= TOTAL COST OF OWNERSHIP Evaluating Total Cost of Ownership for Clinical Technology Solutions
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Improvement Additional development and enhancements
Initial Project Perspective Working with a range of government entities, Appriss Health had to create a uniform, systematic and timely way to collect, process and deliver data through multiple systems to be successful. An affordable, fast, reliable system requires a robust infrastructure. A detailed review of TCO has shown that Appriss Health’s integration solution has lower overall costs compared to other solutions. Appriss Health found by delivering a robust integration solution, not just an integration tool, its customers and users experience a lower total cost of ownership. The cost savings come from Appriss Health’s deep expertise and the team’s ability to define, facilitate, deploy, manage, support and evolve a successful integration strategy and create enablement for users. Project insights from Appriss Health will be shared throughout this research brief to provide examples of total cost of ownership elements to consider for a successful project that stays on budget.
P R E PA R I N G Understand the project scope It is impossible to estimate TCO without understanding all resources involved in a project, and underestimating project complexity is a leading reason why IT programs exceed budget. It is easy to list primary project components, but smaller project elements can add up quickly. Business requirements should be developed to document the critical enterprise activities needed to meet organizational objectives. Best practice is that business requirements be independent of a specific solution and instead detail the organization’s needs and expectations. Clearly defining business requirements will increase the likelihood of a more successful IT project outcome. Taking time to write a detailed project scope will uncover any items not considered.
Visible Cost Price of integration technology
Invisible Costs Concept
Customer service
Design
Relationship management
Engineering Development
Project management
Legal
Customer support
Support
Partner relations
A clear view of the desired results for all users will allow project owners to determine the best technology needs. Understanding the functionality and financial impact of a technology on an organization today and in the future will help calculate the return on investment, which will help determine an appropriate TCO.
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Project Insight #1 How Appriss Health developed Gateway, a nationwide integration solution, to meet the varying unique needs of many customer types To build Appriss Health’s Gateway technology solution, the Appriss team partnered with different types of external stakeholders nationwide to fully understand what challenge each group was looking to solve. Appriss Health’s architecture and software engineering teams were able to quickly understand data requirements of the 130-plus electronic health record (EHR) and 18 pharmacy management systems, ensuring the lowest impact to these companies and their sponsors: health systems and pharmacies nationwide. The team also collaborated with state PDMP administrators and healthcare legal and compliance teams to ensure that the many federal- and state-specific legal and regulatory requirements were met and all project needs were understood. For administrators, vendors and users of the Gateway integration, concerns included:
Using this comprehensive user feedback, a team of Appriss Health Business Analysts built out application programming interface (API) requirements to meet the needs of more than 150 integration points that continue to be used and maintained today. This allowed Appriss Health to anticipate multiple customer types’ unique needs and provide a more accurate upfront cost with fewer additional costs over time.
TOTAL COST OF OWNERSHIP TAKE-AWAY Full cost can be evaluated only with a complete perspective of project needs, including requirements from the customers, users and partners.
• Platform security • Meeting government standards • Intuitive use of the application for administrators and all user types • User adoption of the application with no negative impact to existing workflows • Ability to reference documentation and training for administrators and users • Ability to customize and deploy future enhancements • Consistent presentation of data to ensure interpretation was as intended • Management of the build, enhancements and overall support of the project and users
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Technology review checklist Before evaluating various technology platforms, review the business requirements. There are many technology solutions to choose from, and costs can vary greatly — from free for open source solutions to platforms costing millions. Upfront costs for software and hardware can have wide variances, too, so it’s important to conduct a detailed technology evaluation to ensure long-term scalability and viability. 1. Scalability. How easy is it to expand the platform? What are the associated costs to scale (i.e., costs per users, records stored, etc.)? What is the expected system performance at scale? 2. Security. Is your data safe in the technology and during transmission? How is that verified? Does your compliance team agree? What is the process in case of a security breach? 3. Interoperability. Can the technology work with existing tools and integrate with other resources to create the needed result? Should an integration support one-way or bidirectional data? How many applications and users will be connected to the solution? Who is responsible for API development? 4. Configurability. What level of customization needs to happen? What is required to customize the application? 5. Features. Is the out-of-the-box functionality adequate? 6. Consolidation. Will technology implementation create any redundancies in process? Is there an opportunity to sunset other technologies already in place and possibly show savings? 7. Transition. If an existing solution is in place, how easily can the data and processes be shifted to the potential new technology?
8. Maintenance. What resources are needed to maintain and adapt the technology? Are the resources readily available or difficult to find? 9. Storage. What data will need to be stored? How much will live on premises and be potentially vulnerable vs. in the cloud? 10. Monitoring. How are systems and data stores monitored and by whom? 11. Support. Is support available around-theclock? Where do users access Tiers 1, 2 and 3 support and how timely is that support? 12. Recovery. How are the application and data recovered in case of natural disaster, hardware failure or malware attack? 13. Service-level agreement. Has the business unit, including IT, legal and compliance, reviewed the agreement? Is there anything that would prevent moving forward with a solution? 14. Innovation. How frequent are releases? Is there a history of success for evolving the product to meet user needs? Is customer feedback considered when developing new features and solutions? Will this technology be relevant in five, 10 or 15 years? 15. Reliance. Is the application built on a proven technology capable of handling billions of transactions in a secure and timely manner?
TOTAL COST OF OWNERSHIP TAKE-AWAY A full cost evaluation will include direct and indirect impacts to all users. Consider any costs not incurred in the scope that may be passed to a user group and that may negatively impact project success.
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Closely consider solutions’ abilities to meet your complex API needs A technology solution may be useless if it cannot integrate with your existing systems. APIs support your overall business strategy by bringing data together. It is important in any technology purchase scenario to evaluate needed API development. Many application integration projects fail because the complexity of the build was not recognized during initial development. When this happens, technology teams must scramble to quickly create a solution. These types of costly surprise builds, such as an unforeseen data feed, can have a significant negative impact on TCO. Additionally, if the team cannot accommodate complex needs, the project may not be completed on time, which also can negatively impact overall solution usability and end-user adoption.
Cloud vs. on-premise Review your immediate and future needs when determining if a solution should be cloud-based or on-premise because deployment, management and updates will have major cost differences. Cloud-based solutions are often less expensive to start, but future storage costs should also be considered. Not considering future data storage, expansion and needed employee hours for updates can greatly impact a TCO evaluation.
I N D U ST RY A V E RA G E API development costs vary.
The average cost per connection is $20,000. Range is $12,000 – $25,000, depending on data direction. To calculate API costs, remember to include: • • • • • • • • • •
Research time Database design time Prototype time Minimum viable product time Transaction management Logging integration time Monitoring and alerts time Documentation time Maintenance time Employee cost
TOTAL COST OF OWNERSHIP TAKE-AWAY Lower-cost technology solutions can lead to additional costs during implementation and ongoing maintenance.
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Project Insight #2 How Appriss Health delivered configured APIs and cloud-based client solutions to improve cost efficiency Integration is important: More than 100,000 organizations are connected to Gateway, and they all rely on Appriss Health’s ability to share data in real time. Appriss Health found it better served its customers and end users by handling API development as part of the Gateway relationship. Upfront engineering costs add up quickly, and configuration can take months. Appriss Health saves its customers from any budgetary or project management issues down the road by addressing all unique API issues at the outset. More than 40 state government customers benefit from the pre-built connections to hundreds of EHR and pharmacy management systems. This is a significant savings the states then pass on to their healthcare end-users. Thousands of hospitals, doctor’s offices and pharmacies benefit from the pre-built configurations and connections already available in Appriss Health’s Gateway. Alternatively, requiring hospitals and pharmacies or their vendors to build custom APIs is a burdensome development cost involving months of development time that is passed to healthcare providers and ultimately impacts adoption. As a result, when providers have a choice, they overwhelmingly choose Gateway.
Why More Hospitals & Physicians Choose PMP Gateway Physicians Love:
Multi-state dispensation data access
130 already established seamless EHR integrations
Uninterrupted Physician clinical workflow
One click PDMP data access while in the patient’s chart
24-7-365 days a year end-user support
Hospitals Benefit:
Trusted by the nation’s top hospitals
Audit ready data collecting
40+ 0
40+ states use Gateway to access their PDMPs
Up-to-date with state requirements
Compliant state controlled HTML reporting
Supports mandatory provider tracking use access
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AWS Cloud Computing Benefits*
EXECUTION & LAUNCH Implementation
Scalability • Agile deployment Sustainability • Utility based
31% 7x
average infrastructure cost savings vs. on premises
62%
more efficient IT infrastructure management vs. on premises
fewer downtime hours
Using the cloud Appriss Health selected Amazon Web Services (AWS) for present and future needs. Appriss Health customers store and access sensitive data that requires a high level of security. AWS can handle large influxes of data, which is required to meet customer needs. The cloud solution’s flexibility helps support and meet the ever-changing healthcare data requirements and workflows. Appriss Health regularly accepts and delivers new data in the Gateway framework, based on customer needs.* Choosing superior technology for the Appriss Health solutions showed an increased upfront cost, but TCO is lower, according to evaluations. Gateway has a lean technology stack. Gateway’s built-in features lower costs over time — from initial deployment to periodic upgrades and continuing maintenance — in no small part by eliminating financial outlays that are required when using tools that lack robust support.
Most common causes of inaccurate project cost estimates • Lack of experience with similar projects • Prolonged length of the planning horizon and of the project • Incomplete estimates of human resources and labor involved
Time is money. The Project Management Institute reported that almost half of all completed projects were late, and prolonged project schedules translate into more time and money. A solid consensus around the business requirements can help. Project management is an important part of operating expenses in the TCO equation. On average, project management accounts for 15% of effort hours. Project management helps organize time frames, align internal and external resources, and build out a launch plan. A wellorganized project management plan should incorporate timing of training, communications and utilization checks for success. Project management is an often-forgotten but crucial factor of the TCO equation, specifically in the operational cost category. Weak project management can result in a higher-than-expected TCO. Done right, project management will lower TCO by reducing unexpected costs.
Planning for support Catching issues early can reduce costs and improve project results. Providing help-desk support can be just as beneficial for the end users as it is for program owners. Operating live support can be expensive but sharing the cost with a large set of customers helps ease the burden. A lack of support impacts the program owner — in this case state governments — in addition to hospitals and pharmacies, and user engagement. Who provides help-desk support and how much support will impact TCO?
TOTAL COST OF OWNERSHIP TAKE-AWAY Consider designing technology solutions that minimize end-user development and support an overall positive customer experience.
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Project Insight #3 How Appriss Health project and customer management practices produce onbudget, on-time and successful project implementations A strong project management methodology is key to delivering the intended solution on time and encouraging end-user adoption. At Appriss Health, each customer implementation is defined by their project management team. Having implemented integrations in more than 40 states and across 130-plus EHRs and 18 pharmacy management systems, the Appriss Health team relies on lean principles and has extensive experience in complex implementations. This experience helps keep projects on track and within scope. The Appriss Health Project Manager coordinates the training and communication efforts for implementation and each new release. Release notes and new training materials are developed, rolled out and used to facilitate end-user training. Along with a Project Manager, each customer also works closely with their assigned Appriss Health Customer Relationship Manager (CRM). CRMs coordinate any needed communication and ongoing training, and monitor success. They are dedicated to customer success, support customer project goals and help customers prepare for future development. For the Gateway solution, business intelligence reporting shows how the CRM works with the customer to ensure that metrics are on track to meet program goals. This allows for any hesitations in platform adoption to be addressed quickly.
Human capital expenses are equivalent to more than $1 million of annualized salary costs for the individuals specific to a project • • • • • • • • • • • • • • • • •
Business Intelligence Manager Engineering Manager Platform Engineer Platform Services Manager ScrumMaster Software Engineer Quality Assurance Manager QA Engineer Client Relationship Manager Compliance Officer Implementation Support Analyst Legal Officer Project Manager Sales Engineer Security Officer Communications Lead Support Lead
TOTAL COST OF OWNERSHIP TAKE-AWAY Ensure your project managers are empowered to speak up. Their voice and guidance can keep projects moving forward.
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M OV I N G F O RWA R D I N TO T H E F U T U R E The launch is not the end of the journey. Once your product launch is complete, there is still a great deal of work to ensure that the solution keeps advancing. After all, 35% of products fail to deliver significant return. Continuous monitoring and planning should happen to define the next phase.
Incorporate a product manager
Maintain a roadmap
Continue communicating
Consider shifting ownership from the project manager to a product manager. For many organizations, this person has a large role in maintenance, development, planning and evolving iterations of the product. The product manager collects customer feedback, support submissions and other industry insights. She/he is the subject-matter expert for the product. A strong organization has product managers taking on a methodical approach to plan and drive product potential. An optimized product will show a longer life and lower TCO.
A good plan will include a broad view of all product evolution aspects, including goals, timelines, features and resources. An effective roadmap will also serve as a project management tool, providing visibility to stakeholders. The roadmap will help take into consideration future changes, whom they impact and where the cost is carried.
Technology and security update, upgrade and change frequently. It is important for all involved to be aware of this, especially with integration solutions. Minor modifications can have significant impacts. Clear communications can help eliminate issues and surprise costs to all parties. Consider tools such as release notes and product pop-up modals to share updates.
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Project Insight #4 How Appriss Health plans for the future with flexible technology For Appriss Health and its clients, data security is paramount, so the company moved forward with an API model rather than a client server model. AWS helped Appriss Health bring scalability and security to customers and users in the sensitive environment of patient healthcare. With AWS, users get the architecture, best practices, policies and processes required to meet healthcare’s strict security requirements. Little time or planning is needed for customers to be quickly accommodated with any needed security engagement, and the AWS infrastructure eliminates future security concerns. The flexibility of AWS allows Appriss Health customers to scale their integration needs easily, without buying additional hardware, which can be cost prohibitive to some projects.**
Summary Relying solely on price can be an expensive mistake. It is estimated that IT project failures have a $50 billion to $100 billion impact each year. Indeed, the average IT project runs 27% over budget. Evaluating TCO can help mitigate many common problems and set you up for a more successful project. With so many variations in technology delivery, there is a great deal to consider. Lean on an expert to help develop a robust evaluation. Understanding TCO will help an organization achieve sustainability and long-term cost savings. We hope through sharing TCO points of consideration, others may be able to adopt the concept and realize efficiencies.
Final Project Perspective Appriss Health’s Gateway provides nearinstantaneous drug prescription information from state PDMPs to doctors, pharmacists and other healthcare workers inside of their existing healthcare workflow. This integration makes it possible for providers to make better decisions about dispensing drugs, improving public health outcomes. For any integration to facilitate a successful process, there are many things to consider – data extraction, transformation, mapping into a database, mapping into a workflow and integration maintenance, for example. These moving parts make integration projects with large datasets complicated, and complicated projects can get messy.
For this reason, Appriss Health does not just sell an integration tool. Rather it helps facilitate a successful integration strategy, working closely with customers and end users to meet their immediate and future integration needs. The built-in features, services and support included with the Gateway solution lower customer costs up to 50% over time – from initial deployment to periodic upgrades and continuing maintenance – in no small part by eliminating financial outlays that are required over time when using tools that have leaner technological profiles and require less support.
TOTAL COST OF OWNERSHIP TAKE-AWAY Lower your cost of ownership by building a flexible solution that will last and support customer success.
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Facts & Figures considered by Appriss Health customers include:
49% of IT projects are late
35% of products fail to deliver significant return
15% of total project hours associated with project management
Appriss Health... ions PI connect Value of A 8M–$3M ............... $1. s m e st sy to 150+ 00 ........ $468,0 housing...... re a w ta a D 0 .... $230,00 port........... p u S 5 6 /3 24/7 m e nt n manage ,000 Informatio ...........$14 4 .................. .. .. . . m e st sy ...... $79,663 ure design ct e it h rc a Data $123,367 ment......... e g a n a m Product nent, mainte , developm n g si e 00 d ,0 L 6 T E ...... $9 port........... p su d n a ance telligence lization, in Data visua . $81,865 .................. .. .. .. . . cs ti ly and ana tion 00 Documenta ........ $68,9 .................. . . g in in a tr and .... $76,115 r.................. e g a n a m Project ,310 ...........$68 urance....... ss a y lit a u Q ation and Communic .. $70,235 .................. .. .. .. .. ... g n marketi
...... TOTAL........
... $4 ,506,4
• Is used by every major pharmacy chain • Supports 1.35M physicians, providers and pharmacists • Processes over 1 billion patient encounters annually • Is trusted by 72% of U.S. health systems
55+
Appriss Health supports partners through each step in the process: planning, configuration, rollout, integration, user adoption, support and continued customer success. Leveraging expertise, shared technology and employee resources helps share costs throughout a network of customers, lowering TCO for the customer and the users. This process prevents large costs from being passed to healthcare systems. The result is an improved impact to public health by state administrators and healthcare providers nationwide.
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About Appriss Health
About AWS
Appriss Health has developed a robust cloudbased IT infrastructure to consume, transform and deliver data and analytics in a usable format. Its solutions are developed in collaboration with state governments, healthcare systems and pharmacies. More than 4 billion times a year, through many individual integrations, Appriss Health technology delivers prescription insights to healthcare providers sharing knowledge for the good of public health. It is important for their infrastructure to be secure, uniform, flexible and consistent. The initial use of the Appriss Health infrastructure was to support state governments in efforts to combat the opioid crisis. More recently, it has enabled patient access to behavioral healthcare services. Both have been achieved by leveraging technology in collaboration with state prescription drug monitoring programs (PDMPs), vendors, hospital systems, pharmacies and behavioral health providers.
Government, education, and nonprofit organizations face unique challenges to accomplish complex missions with limited resources. Tens of thousands of public sector organizations around the world engaged in cloud computing projects overwhelmingly turn to the power and speed of Amazon Web Services (AWS) when they want to serve citizens more effectively, achieve scientific breakthroughs, reach broader constituents, reskill existing teams, attract the brightest minds, and put more of their time and resources into their core missions. Public sector organizations of all sizes use AWS to pave the way for innovation and, ultimately, make the world a better place through technology. To learn more about AWS in the public sector, visit us at aws.amazon.com/publicsector.
To learn more, visit apprisshealth.com.
This resource was created in partnership with GovLoop, the knowledge network for government. Learn more at govloop.com.
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Sources • AWS: Cloud Migration for Free on AWS* • AWS: “Security and Compliance”** • DreamFactory: “API Cost Calculator: How Much Does it Cost to Build an API?” • Gartner: “Product Management Secrets of Successful Tech Companies” • Harvard Business Review: “Why Your IT Project May Be Riskier Than You Think” • Harvard Business School: “The Architecture of Platforms: A Unified View” • Lansa: “The Eight Most Common Reasons Integration Projects Fail” • Mavenlink: “21 Shocking Project Management Statistics That Cost Business Owners Millions Each Year” • Medium: “How Much Does it Cost to Build an API?” • Midnight Blue: “7 Critical Factors to Consider When Choosing IT Solutions” • Salary.com: “Help Desk Support Salary in the United States” • UserVoice: “7 Reasons New Products Fail” • Vera Solutions: “10 Criteria to Evaluate When Choosing a New Technology”
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