REPLACE OR UPGRADE ERP IN THE CLOUD

TO IMPROVE SERVICE AND REMOVE
OBSTACLES
March, 2015
In order to improve services, keep costs in check, and report effectively, constituent and patient-oriented organizations are
often forced to rely on disconnected, outdated technology. When top performers choose to replace or upgrade their
solutions, what aspects of cloud solutions do they use as selection criteria?
 Nick Castellina, Research Director,
Business Planning and Execution

Time for a Change

This report examines constituent or
patient-centered organizations. These
include the 31 healthcare, government,
and education organizations that
participated in Aberdeen's 2014
Business Management and ERP
Benchmark Survey.

Constituent or patient-oriented industries, such as government
and education institutions or healthcare providers, are faced
with a unique set of challenges that are often exponentially
increased due to inadequate technology infrastructures. These
organizations must optimize their labor costs, improve the flow
of service, maintain compliance, and increase their ability to
utilize assets while keeping costs low. Oftentimes, these tasks
are managed in completely different business systems to
manage an organization's finances, supply chain, purchasing
and workforce that may not be integrated effectively.
Unfortunately, Aberdeen's 2014 Business Management and ERP
Benchmark Survey found that only 38% of constituent or
patient-centered organizations have integrated business
systems that serve as a complete and auditable system of
record. This can cause major problems such as poor service, high
costs, and inaccurate, fragmented data that is difficult to use
and support. On the other hand, Best-in-Class organizations are
49% more likely than All Others to have these integrated

For this reason. On the other hand. But even with outdated ERP.aberdeen.systems. AP/AR. Enterprise Resource Planning (ERP) solution to integrate core back office functions across accounting. it becomes difficult for IT staff to ensure that all technology is up-to-date. The best way that this can be accomplished is through the implementation of an end-to-end. and unable to mesh with other new technologies. both options would provide the organization with an end-to-end solution. personnel and benefits administration. webbased systems that support self-service processes for staff. When managing multiple systems. unsecure. Regardless of the exiting technology environment. inflexible. In fact. Ideally. Implementing a new solution or upgrading an existing one is a way to ensure that technology is up-to-date and effective. many of these same problems can persist. the Best-in-Class organizations are more likely than All Others to take advantage of available upgrades to their business systems (Figure 1). Managing this type of landscape can be expensive. old systems can cause problems. supplier relations.com . purchasing. www. unsupported. some administrative systems may become obsolete. another 38% of constituent or patient organizations plan to implement this capability in the near future. Stay On Top of Things Best-in-Class organizations understand the pitfalls of obsolete technology. and payroll. Therefore. This leaves organizations with a choice: replace the technology they have. budgeting. As a result. or upgrade existing technology. 65% of ERP implementations in constituent or patient-centered organizations are over eight years old. this could mean consumer-like. constituents and suppliers. For example. those that are not the Best-in-Class are more likely to be two or more releases behind.

. August 2014 So why would a constituent or patient-centered organization choose to upgrade their existing solutions? When polled. n = 31 Source: Aberdeen Group. features related to maintaining compliance to new regulatory mandates.aberdeen. or simply new best practice workflows and processes supported in the most current release.) 36% New version is more flexible 29% Performance of old version is inadequate 29% 0% 20% 40% Constituent or Patient Oriented 60% 80% Percentage of Respondents. etc.com . Figure 2: Why Upgrade? Want to take advantage of new functionality 64% Vendor no longer supports old version 36% Old version is incompatible with emerging technologies (i.Figure 1: The Best-in-Class Stay Updated 50% Implemented on latest release 31% 35% One release behind 27% 6% Two releases behind 12% Best-in-Class All Others 3% 7% Three or more releases behind 0% 20% 40% 60% Percentage of Respondents. social. This could mean emerging technologies such as social or mobile. mobile.e. the number one reason that these organizations cited for upgrading their solutions is the need to take advantage of new functionality (Figure 2). n = 201 Source: Aberdeen Group. August 2014 www.

it's all about a lack of technology that can support the needs of a constituent or patient-centered organization in the current environment. Unsurprisingly. This is important for both commercial and federal healthcare organizations that are tasked with sharing data with outside healthcare systems. and changing reimbursement initiatives. enhanced views into executing workflows across the entire business process. On the other end of the spectrum. or in order to provide mission relevant information to program managers. This includes better tracking of costs. the reasons chosen are similar to the reasons that organizations upgrade (Figure 3). This includes the ability to alter processes to maintain compliance as well as the ability to connect with other organizations in order to provide clinically relevant information to care providers. and it is very likely that they are inflexible to modification. Again. and replace their ERP because it lacks features. Constituent and patient-centered organizations upgrade their ERP because their existing solution is inadequate. For constituent or patient-centered organizations.But it's about more than just providing new functionality. Figure 3: Why Replace? Obsolete technology foundation or infrastructure of ERP system 35% Lack of features 29% Constituent or Patient 24% Oriented Cost of maintenance and support 0% 10% 20% 30% 40% Percentage of Respondents. Disconnected systems that were created before these requirements became essential are inadequate and lack the transparency afforded with upgraded technology.aberdeen. managing flexible labor. among other reasons. Ultimately. Upgrading solutions can ensure that these new processes are supported and that the organization can focus on patient care. improving patient outcomes.com . August 2014 www. some constituent or patientcentered organizations may choose to replace their existing technology environment. avoiding readmissions penalties. upgrading is essential when the existing technology versions can no longer support the organization or agency. upgrading brings more flexibility. and more robust reporting. n = 31 Source: Aberdeen Group.

Leading organizations with over 1. solutions delivered in the cloud can be an attractive option. Twenty-nine percent (29%) of solutions in constituent or patient-centered organizations are hosted by the software vendor.Either Way: Consider the Cloud Whether replacing. While this is still an emerging trend. n = 74 60% 50% 40% 44% Followers 54% 48% 39% 30% 20% 10% 0% On Demand / Software as a Service (SaaS) / Cloud Traditional licensed on premise Source: Aberdeen Group. August 2014 There are many reasons that constituent or patient-centered organizations cite for implementing their solutions in the cloud (Figure 5). For constituent or patient-centered organizations.aberdeen. an organization is going to end up with a solution that can change the way the organization works.com . cloud technology is an emerging trend for organizations of all types. upgrading. or implementing a new ERP solution. constituentcentered organizations are actually more likely to have implemented their solutions in the cloud. In fact.000 employees are more likely than All Others to deploy their ERP solutions in the cloud (Figure 4). Why is that? Figure 4: Shifting Focus to the Cloud Leaders Percentage of Respondents. Unsurprisingly. the top reason is the lower total cost of ownership. When faced with cost constraints and limited IT www. This is a perfect opportunity to reassess how the technology is delivered and supported.

¹ 59% Ease of use 48% Ease of implementation 38% Ability to scale solution 34% Lower risk 34% Reduces the cost and effort of upgrades 31% 0% 20% 40% Constituent or Patient Oriented 60% 80% Percentage of Respondents. and letting the software vendor handle the hard parts of supporting the technology. For constituent or patient centered organizations. The organization can simply focus on serving its constituents or patients. n = 31 Source: Aberdeen Group. compared to 6 incidents for those that are cloudbased. can integrate with other organizations.com . This is accomplished through more robust solutions that can improve visibility into financials and spending as well as staffing and supply needs and costs. they want easy to use solutions that can support new and changing business models and regulations. Aberdeen’s Web Security in the Cloud: More Secure! Compliant! Less Expensive! found that. No longer will the organization have to rely on a technology environment with varying components or disparate ages.aberdeen. constituent or patient-centered organizations want to look to solutions that require lower capital investments and allow them to rely on the resources of the software vendor to manage the IT infrastructure and operations. please email member. as well as the application. the ability to be constantly updated with little disruption to the organization. and can help to improve service quality and cost controls. This leads to one of the biggest benefits of cloud solutions for constituent or patient-centered organizations. which are actually more secure. Cloud solutions.com. Figure 5: Why Cloud? Lower total cost of ownership on average. If you would like a copy. August 2014 But selecting a business solution should never rely simply on costs. on-premise solutions had 11 incidents of data loss or data exposure in the previous 12 months.services@aberdeen. provide an attractive option. Cloud solutions can continually provide the latest functionality and user experience trends. Security is extremely important for protecting information in government organizations.com and reference the following information: #6572 and "Web Security in the Cloud: More Secure! Compliant! Less Expensive!" www. ¹ This report is no longer available on Aberdeen.staffs.

useable software brings capabilities that can help to improve constituent or patient-centered organizations (Figure 6). n = 74 120% 100% 80% 100% 83% 80% 56% 60% 40% 29% 20% 67% 50% 50% 35% 35% 40% 20% 0% Real-time visibility Decision-makers A fully integrated view of all can drill down into status of all constituent or from summary processes patient data to information transactions Unified view of labor costs and workforce data Automatic Workforce scheduled based notification based on defined on patient or conditions constituent demands Source: Aberdeen Group. In the case of cloud ERP. August 2014 For example. due to having one complete system of record that can be accessed from anywhere.aberdeen. including non-PAR purchases  Track receivables  Monitor claims and service requests  Maintain and utilize assets more effectively www. Note that 83% of organizations with cloud ERP enable decisionmakers to drill down to individual transactions from summary data. the organization can:  Identify labor costs. including spending for contract labor  Identify supply costs. Therefore.com .But ultimately. end-to-end. Figure 6: Improved Service and Administration with the Cloud Cloud On-premise Percentage of Respondents. This visibility can impact a constituent or patient-centered organization in many ways. the benefits of any technology come from the ways in which organizations can be improved and transformed through the capabilities contained within that software.6 times as likely to have real-time visibility into the status of all processes. frequently updated. organizations with cloud solutions are 2.

With a unified workforce. from workforce to finance through managing patient care needs.aberdeen.com . smarter decisions can be made in relation to staffing. or improve constituent engagement in government or education. can costs be contained. For example. For example.Additionally. supply and financial data. For example. the workforce can also be scheduled based on patient census and acuity. This technology can provide the foundation for a successful constituent or patient-centered organization. this could help organizations to improve Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores in healthcare. Lastly. these capabilities enable an organization to work in a more holistic manner. immediate notifications can ensure that the organization as a whole is managed in an agile manner. Another example would be to track citizen requests for first responder. Aberdeen has uncovered improvements in a variety of metrics (Table 1). can patients or constituents be serviced more effectively and efficiently. The Benefits The success of an ERP implementation really comes down to whether or not the organization is able to use the emerging technology to induce improvements to the organization. www. public sector and healthcare institutions with cloud ERP saw a 38% improvement in time to decisions over the past year as a result of their solution. real time visibility can help to provide insight into patient or constituent information. And since this information is integrated with other operational data. But really. nonemergency (311) or tax-related services in real-time. and is decision-making more effective? In the case of constituent and patient-centered organizations with cloud ERP. Service can become more effective.

and there is high pressure to maintain care or service levels while providing high visibility into essential data. there is a need for a change in the technology that supports the organization. this will require organizations to either upgrade or replace their existing business solutions. Ultimately. August 2014 In constituent or patient-centered organizations. technology is outdated and disconnected.com . ERP delivered in the cloud is an attractive option for constituent or patient-centered organizations. As a result. These solutions are cost effective. www. not disruptive. where costs are constrained. and will enable constituent or patient-centered organizations to focus on servicing their constituents' and patients' needs.aberdeen.Table I: The Results Average Performance Improvement in operational costs as a result of ERP Cloud On-premise 25% 7% Improvement in complete and on-time service delivery as a result of ERP 26% 9% Improvement in internal schedule compliance as a result of ERP Improvement in profitability/balancing budgets over the past two years 19% 11% 19% 6% Improvement in time to decisions over the past year 38% 12% Improvement in the cycle time of key business processes over the past year 31% 14% Source: Aberdeen Group. A modern ERP system that is updated with the latest advances in best practices and supports constantly changing regulatory mandates is the solution. The goal is to provide a single solution that enables improved processes while providing security and reliability at a lower cost.

Unless otherwise noted. and may not be reproduced. or transmitted in any form or by any means without prior written consent by Aberdeen Group. We identify Best-in-Class organizations by conducting primary research with industry practitioners. Inc. the entire contents of this publication are copyrighted by Aberdeen Group.com . www. custom research. Located in Boston. archived. Aberdeen Group is a Harte Hanks Company.aberdeen. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision making and improve business strategy. distributed. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. vendor-agnostic insights from a proprietary analytical framework independent of outside influence. Our team of analysts derives factbased. This document is the result of primary research performed by Aberdeen Group. Inc. Aberdeen Group has published research that helps businesses worldwide improve performance. MA. and content creation services. speaking engagements. Aberdeen's content marketing solutions help B2B organizations take control of the Hidden Sales Cycle through content licensing.About Aberdeen Group For 27 years.

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