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The Fully Funded PeopleSoft Project : Funding your ERP Project with Non-Labor Cost Savings

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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 …

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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  • 1. © 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
  • 2. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Agenda  Introductions  Overview  Transforming Enterprise Systems  Reducing Non-Labor Spend  The Fully Funded ERP Initiative 2
  • 3. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Introductions Don Greenwood Senior Director Orlando, FL P 312-583-8253 F 312-880-3201 dgreenwood@huronconsultinggroup.com Jason Moebius Managing Director Chicago, IL P 312-583-8759 F 312-880-3201 jmoebius@huronconsultinggroup.com 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. 3
  • 4. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Overview 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. 4
  • 5. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Sustain and Extend Procurement Savings SUPPORTED 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 0 ERP 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 5
  • 6. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. About Huron Consulting Group Huron provides services to a wide variety of organizations, including leading academic institutions, healthcare organizations, Fortune 500 companies, medium-sized businesses and law firms. 6 Huron Consulting Group Huron 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. Locations Atlanta | 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.
  • 7. © 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 7
  • 8. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Transforming Enterprise Systems 8
  • 9. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Huron ERP Practice 9  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 Offerings IMPLEMENTATIONS, 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
  • 10. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Enterprise Transformation | Building Solutions That Last The 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 Non-LaborEfficiencies ERPImplementation ClinicalSystems OperationalEfficiency ChartofAccounts Enterprise Transformation and Return on Investment 10
  • 11. © 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.
  • 12. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Implementation vs. Installation Implementation Success Defined: Installation does not equal Implementation Installation Implementation  On Time  On Budget  Technical Objectives met  Business Objectives met  Human Objectives met
  • 13. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Change Management Methodology Framework PHASES & 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 1 Identify Phase 2 Assess Phase 3 Design Phase 4 Engage Phase 5 Support 13
  • 14. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Transforming the Supply Chain 14
  • 15. © 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. 15 Implementation Focus Senior Level Expertise Specialist Focus Independence Comprehensive Focus
  • 16. © 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 16
  • 17. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Project Approach ASSESSMENT SCOPE Sourcing Contracting ProcurementDistribution Value Analysis Supply Chain Functional Areas Reviewed Key Aspects Reviewed Organization al 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
  • 18. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Non-Labor Assessment Provides 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 Relationships Perioperative/OR Cardiovascular Medical Surgical Pharmacy Food Lab Cath Lab Interventional Radiology Linen Others Supplies Services GPO Relationship Biomedical Pharmacy Facilities Lab Environmental Services Information Technology Telecommunications Real Estate Leases and Rentals Transcription Others 18
  • 19. © 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 Opportunities Examples of Purchased Services Spend Categories Clinical Engineering Equipment Service Insurance Outsourced Management Service Contracts Clinical Services Bed/Clinical Equipment Rental Dialysis Laser Rentals Laundry and Linen Linen Items Cost Lithotripsy Medical Gases MRI/PET CT Perfusion Pharmacy Purchased Services Pharmacy 340B Employee Prescriptions Rehab Care Remote Radiology Distribution In/Outbound Freight Med/Surg Distribution Postage/Bulk Mail Environmental Services Housekeeping Supplies Outsourcing Agreements Pest Control Plant & Aquarium Maintenance Sharps Disposal Shredding Services Waste-Hazardous Waste-Medical Off-site Cleaning Facilities Elevator Maintenance Energy Conservation Facility Life Landscaping Lease Audit Property Management Security Space Consolidation Supplies Insurance – Property Utilities Financial Services Bank Card AP Payment Solution Banking Fees Corporate Card Purchasing Card Food Services Catering Floor Stock Utilization Food Cost Retail Revenue Enhancement Vending Rebates Information Management Answering Services Coding Medical Transcription Record Storage & Retention Release of Information Translation Services Marketing & Advertising Overall Spend Advertising Media Call Centers Community Newsletters Creative Agencies Donations Media Brokers On-line Health Information Patient Education Promotional Products Website Yellowpages Office Related Products Copiers & Multi-Functional Devices Furniture Office Supplies & Toner Printer Maintenance Printers & Fax Printing & Forms Professional Orgs & Meetings Dues Travel Architects Audit, Tax & Compliance Legal Services Management Consulting Revenue Cycle & Collections Temporary Labor Telecommunications Conference Services Data Network – WAN Internet Local Calling Long Distance Calling Maintenance Move/Add/Change/Disconn ect Networking Equipment Pagers PBX Telecom Expense Management Television Services Wireless (Cellular) Transportation Ambulatory Services Helicopter Services Local Couriers Parking Shuttle Services Valet Services
  • 20. © 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 Timeframe To Implement Initiative Synergies Success Enablers Time to Implement CategoryComplexity Shorter Longer LowHigh 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
  • 21. © 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 costs Obtain lower cost from incumbent supplier Consider alternate supplier(s) Concentrate volume System wide coordination Decrease items used Challenge product variability Simplify specifications to reduce cost Reduce usage Find alternative ways of fulfilling need Total cost of ownership Eliminate process waste Identify technology leverage opportunities Improve Value Analysis functions Objective make-vs.-buy decision process Benchmark 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 Approach SAVINGS LEVERS; MORE THAN PRICE
  • 22. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Non-Labor Results IMPLEMENTED RESULTS ACHIEVED 100% OF THE TIME Actual Implemented vs. the Project Goal © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. 22
  • 23. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Lost Time and Savings Time Opportunity to Implement Cost Savings Initiatives 6 months 12 months 18 months 24 months 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 Results Retrospective 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. 23
  • 24. © 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. 24
  • 25. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. The Fully Funded ERP Initiative 25
  • 26. © 2014 Huron Consulting Group. All Rights Reserved. Proprietary & Confidential. Sustain and Extend Procurement Savings SUPPORTED 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 0 ERP 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