The chief information officer of Healthscope tells us why, despite a stakeholder bent for an SAP or Oracle supply chain and financial system, the Australian healthcare giant opted for Queensland-based vendor Technology One instead.
CIO insight When Dougall McBurnie arrived at Healthscope in 2007, the company had amassed no less than six separate systems to manage the finance and supplies of around 200 healthcare centres across the region.
Those facilities included private hospitals, the Gribbles pathology network, radiology centres and a massive slice of the Malaysian pathology market.
"We went from 50 to 300 concurrent users in the period. Our systems previously were grinding to a halt every month and we couldn't add more people. We needed something that could handle a significant increase in the number of concurrent users," McBurnie, the company's chief information officer, says.
Before I got to Healthscope I had never dealt with Technology One. We were not sure who this organisation was
Healthscope CIO Dougall McBurnie
That monthly "grind" in fact stemmed from the group attempting to consolidate monthly financial data, leaving staff to manually patch system deficiencies with Excel spreadsheets.
"The state [back then] was completely unsustainable," he adds. "And if you think how quickly we grew — at roughly 600 per cent — if the current systems were unsustainable, you can imagine the nightmare if we doubled in size again."
Healthscope's systems had downstream impacts also. Organising supplies, for example, from Johnson & Johnson took days, says McBurnie, while structuring enterprise deals were near impossible.
"If you can put your finger on actual spends with suppliers, you're in the box seat, but this would take a number of days to organise across the organisation," he said. "Rather than taking two days, it should take two minutes. We needed real-time access without having to trawl through 50 different databases and send emails across the region to try to get information."
"Accountants were spending much of the time doing cost-accounting — getting things into the right buckets in order to finalise accounts — rather than having those details sorted automatically."
Like many companies, some of Healthscope's problems had stemmed from a succession of acquisitions, which expanded the group's operations across the Asia-Pacific region, boosted its headcount to 20,000 and its annual revenues from $245 million in 2003 to $1.6 billion last year.
McBurnie, the company's first ever group CIO, was brought in from Coles Myer in 2007 following the expansion to steer Healthscope's investments in technology. He had been the retailer's general manager of e-commerce.
Determining which vendor's technology would suit Healthscope would take McBurnie into unchartered waters.
Healthscope by no means is a small organisation, yet McBurnie was concerned that when seeking a software supplier to fix its woes, a US vendor would leave it high and dry if and when things went wrong.
"With revenues of $1.6 billion, we're an ASX150 company, but if we were dealing with a US-centric organisation, we are a rounding error of a rounding error. And if we have an issue I know where we are going to end up in the queue," he says.
With revenues of $1.6 billion, we're an ASX150 company, but if we were dealing with a US-centric organisation, we are a rounding error of a rounding error.
Healthscope CIO Dougall McBurnie
"We had a number of stakeholders that wanted to go down the SAP path, part cultural, part personal experience, and partly this view that if we're going to spend this amount of money, let's get the Rolls Royce. They couldn't articulate why they wanted it, but they wanted it."
After what he says was a competitive tender process, Healthscope's executive settled on one of Australia's only remaining software makers, ASX-listed vendor Technology One, a software company which has a strong hold over local councils, but had little presence in the SAP- and Oracle-dominated retail sector McBurnie had come from.
"Before I got to Healthscope I had never dealt with Technology One. We were not sure who this organisation was," he says.
McBurnie admits that the Gribbles pathology network had implemented an older version of Technology One's software, however, he insists the only advantage this gave it was the opportunity to pitch for Healthcare's business.
"And we were willing to walk away from them and say this software is not for us and we can go for Oracle or SAP," he says.
McBurnie reckons skills were a major consideration for Healthscope's choice of vendor. Although he wouldn't provide actual costs, he reckons the total cost of ownership of the system is around 30 per cent less, inclusive of labour and maintenance, than working with international vendors.
"The other thing is that you're competing with NAB or CommBank for SAP skills. I mean, when you train someone up on SAP, are they going to work for a healthcare company or take $2,000 a day working for a bank?" he asks.
Not impressed However, during the selection process in May 2007, when McBurnie asked Technology One to submit a detailed design which would be presented to and eventually approved by Healthscope's C-level executives, he was far from impressed — Technology One's proposal did not meet McBurnie's vision for how the project should proceed.
Many CIOs say they will do it all for you, but that's going to end up a disaster. It's our responsibility to get thorough business engagement
Healthscope CIO Dougall McBurnie
"They said it would be four weeks and were going to give us two consultants," he says. "I threw it back to them and said: 'There's no way you can do a detailed design to the level required with two people in four weeks'."
Healthscope ended up getting four consultants for eight weeks, which McBurnie says was critical: "so that the output was something we could hand to the guys that would install the software, and implement it very quickly."
Following the executive team's approval of the initial design by Technology One, Healthscope agreed to the plan in September, and the board had locked down the deal in October.
"That effort up-front paid for itself in spades at the end of the project: if you start off unsure of what outcomes you want, then your project's in trouble from the start," he says.
The CIO says his greatest efforts have not been focused on technology, but garnering the support of key project sponsors, such as the national line of business, finance and supply chain managers. "Many CIOs say they will do it all for you, but that's going to end up a disaster. It's our responsibility to get thorough business engagement... That process takes time, but it gets their heart into the project," he says.
"And you know from their body language whether you have them on board or not," says McBurnie. "If not, they're not going to give you the time later in the project."
Healthscope goes under the knife
Healthscope and Technology One commenced software configuration immediately after signing the deal, with the system planned to sit within a mixed Citrix/VMware virtualised server environment. It would use Microsoft SQL 2005 and be underpinned by several IBM quad-core blade servers and an EMC CX-340 Clariion storage area network.
Following user acceptance testing in January 2008, the project was kicked off by six Healthscope and five Technology One staff, who began implementation across Healthscope's Australian clinic pathology network.
The implementation then expanded to hospitals, targeting 15 sites in Victoria and the Northern Territory, 11 sites in Queensland and Tasmania, and by July 2008, with the Australian implementations almost complete, its NSW corporate headquarters in conjunction with 13 sites across South Australia and New Zealand. By July 2008 Australia was complete, leaving the team to tackle Healthscope's Malaysian and Singaporean pathology centres, which were complete by December last year.
The project officially closed on 19 December last year, leaving McBurnie with around 50 more projects on the boil, including a data warehousing project with SAS, disaster recovery, a new pathology system in New Zealand and a network upgrade using Cisco routers.
About 70 per cent of our applications are already web-based, with Technology One running on virtualised Citrix servers.
Healthscope CIO Dougall McBurnie
McBurnie says the new system caters to between 250 and 350 concurrent users, with a peak load of around 22,000 invoices per month, while hospital inventory management has been brought down to a ward rather than hospital level.
The healthcare giant in January this year also signed a $4.2 million, three-year deal with IBA Health, building on a previous $14 million deal, to implement a web-based version of its iSOFT patient administration system across 30 hospitals.
The CIO reckons two key components of implementations under his command have been that Healthscope's software assets are now predominantly web-based and offer standard configurations, which in the latter case, he says, means lower costs upgrades in the future.
"As soon as one person touches that code, you have an issue with orders, repeatability and project budgets," he says.
McBurnie says Healthscope has transitioned to a predominantly web-based application model, which is likely to have an impact in two years, when he says it will be ready to upgrade its Windows XP desktop operation system.
The question then, he says, will be to assess the business case for upgrading its Windows XP desktop operating system to Windows 7.
"About 70 per cent of our applications are already web-based, with Technology One running on virtualised Citrix servers. It doesn't mean that I won't go down the Microsoft path again, but I have a lot more flexibility. I could stay on XP or I could deploy a thin terminal with an embedded operating system for around 300 bucks," he says.
Liam Tung travelled to TechnologyOne's Brisbane user conference as a guest of the company. Information for this article came from an interview as well as McBurnie's presentation at the conference.