Funding ERP Projects with Supply Chain Savings

© 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

Agenda
 Introductions
 Overview
 Transforming Enterprise Systems
 Reducing Non-Labor Spend
 The Fully Funded ERP Initiative
2

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

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

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

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.

 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

Transforming Enterprise Systems
8

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

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

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.

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

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

Transforming the Supply Chain
14

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

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

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

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

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

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

© 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

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

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

The Fully Funded ERP Initiative
25

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

Funding ERP Projects with Supply Chain Savings

Funding ERP Projects with Supply Chain Savings

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