Mitigating the top 5 risks of moving to a cloud ERP system | Chris Luoma

Healthcare executives need to take note of these overlooked areas in order to avoid unnecessary costs and frustration.

Driven by external pressures and internal demands from the very highest levels of the organization, healthcare providers are moving enterprise systems to the cloud to improve care delivery, minimize the impact of staff vacancies and reduce costs.

In fact, 96% are expected to move to the cloud by 2024, according to Accenture. Yet there are critical factors that can impact the success of a cloud migration.

Based on more than two years’ worth of insights across more than 4,500 providers and suppliers, GHX has found there are five often overlooked areas when it comes to cloud ERP migrations. Unfortunately, they are usually discovered after the migration is already underway, affecting implementation timelines, costs and labor requirements.

In turn, this negatively impacts hospital operations and ultimately patient care. Healthcare executives – and ERP implementation teams – need to take note of these five overlooked areas and consider best practice recommendations for mitigating their risks to avoid unnecessary costs and frustration.

Risk #1: Purchase order (PO) transaction failures lead to patient care risks and lost revenue.

Reason: PO failures are often due to an inadvertent lack of diligence in the supplier setup process. This can result in multiple transaction failures that impede clinical supply inventory and invoice payments. Once a PO failure is identified, administrative staff must then step in to do manual PO processing, putting the provider at risk of lost time, human error and supplier credit holds until the issue is resolved.

Resolution: At the onset of the project, fully vet all suppliers, properly set up their profiles and automate processes whenever possible.

Risk #2: Migrating item data with errors.

Reason: A weak foundation for item data makes it difficult to load data into multiple systems. It also makes it difficult to properly maintain the information necessary for understanding the true cost of delivering care while protecting margins.

Resolution: Apply a strategy that prioritizes a reliable data foundation to ensure clean item data and price information across the organization. This will help improve order cycles, bolster contract compliance and support timely revenue capture.

Risk #3: Not fully automating the invoice-to-cash process across all invoices.

Reason: The cloud migration process creates an opportunity to automate processes but skipping this important step can result in increased labor costs, delayed payments and an inability to maximize working capital.

Resolution: Use invoice process automation tools because they have proven to reduce work by up to 90%. Along with reducing labor costs, invoice process automation enables early payment rebates from suppliers, which also helps offset some of the cloud migration costs, which can frequently range between 50 to 200 million dollars for the first year.

Risk #4: Clinicians are missing item information needed for patient documentation.

Reason: A lack of deep clinical integration between operations and the supply chain creates unnecessary administrative burdens on clinicians, impacting their ability to spend as much time as possible focusing on patient care.

Resolution: During the cloud migration design phase, take into consideration additional data attributes such as item dimensions and product classification that must be managed within the contract catalog and item master. This will reduce clinical supply variation and help improve patient outcomes.

Risk #5: Integration problems arise as new releases are issued by the cloud ERP provider.

Reason: The healthcare organization’s solution provider doesn’t have a strong relationship with the ERP vendor. This limits their ability to test integrations and APIs prior to new releases. Therefore, every time operations are disrupted by cloud updates, already-over-burdened hospital IT staff must quickly reassign resources to address the integration issues, impacting productivity and revenue.

Resolution: During the solution provider qualification process, ask about their relationship with the ERP provider as well as their experience with cloud ERP migrations and certifications. This will help protect against disruptions as new releases are issued.

Healthcare providers are eager to accelerate cloud ERP migrations and quickly realize ROI from their efforts. Yet the project’s success hinges upon the proper strategy, awareness of potential risks and how to resolve them and a qualified solution provider to support the migration and ensure its ongoing success.

Only then can the benefits be fully realized – from the C-Suite down and throughout the entire provider’s organization to its suppliers and, ultimately, the people and communities they serve.

Chris Luoma is senior vice president, product management at GHX, a software company that helps healthcare organizations automate supply chain processes.