The 50/80 Rule
Evaluating the risks, benefits, and costs of a new RMIS or Claims automation solution is changing from product-focused to a services-focused decision for many organizations. Why? The idea that “soft costs” are often 50% of the actual first year costs and ultimately 80% of the real risk for go live and post go live success is becoming very clear for clients that want to implement new systems with better results.
This new “50/80 rule” was recently coined my Mark Dorn, President & CEO of DAVID who has implemented over a thousand new system projects.
Streamlining business processes and replacing legacy systems with agile, data-driven solutions offers increased efficiency in the long run, but clients can sometimes incurring unforeseen costs during transition if they don’t fund or leave out soft cost topic risk areas in their planning. Major areas of soft costs are data services, professional services, project management, and training. Realizing that soft cost topics are high value areas, worth major vendor selection consideration is a smart first step in any new system evaluation process. Yet these are being more often ignored by RFP or generic committee decision processes as well as internal review work of buyers. Why? It takes time to get educated on the details and this step is often late in an already late process of vendor selection, so the topic gets treated as generic low value work. When in fact, it’s the most important part of the project that touches the client on a personal level.
The Importance of Service
With the new focus on data analytics and big data, new technology buyers must appreciate the importance of the skills and processes of service providers, which can impact the accuracy and usefulness of years of past data. A legacy system holds stores of information that must continue to be useful for a transition to succeed. Getting the data from the old system to the new system is a significant hurdle. It is not just mapping and copying data. Similarly, new data interfaces that are part of the new data-driven advances user want to include a touchless process of cloud-hosted systems. These equally need solutions that are all part of soft costs of projects. A typical RMIS or Claims project may have more than seven automated interfaces or integrations. These include document management integration for workflow, employee/HR interfaces, medical bill review vendor data interfaces, pharmacy bill review data, nurse case manager data, litigation data and more. Each of these requires cost investment with organizations that specialize in the magic of data transformation, integration and quality management.
Often ignored, but equally important, are the soft costs of professional services including business analysis and custom programming. The orchestration of workflows, user procedures, and KPI’s can increase productivity and lead to solutions with subject matter expertise. These customizations of workflow require skill sets that vary greatly, and in some cases are limited to very few service providers. Without their services, however, out-of-the-box solutions can lead to a chaos of non-optimized processes and reduced efficiencies. Business Analysts, Platform Engineers, and Programmers are expensive, but automating tasks, customizing KPI’s, and eliminating human error are a few ways which programmers can save staff time and increase productivity for every day forward. The return on investment in professional services is often 2X the costs in just the first year.
Staff and Project Management Costs
Project Managers not only help keep the project and teams in sync and on time, but they assess risks and offer solutions. They help define the Project Charter and fill a critically important task in handling project risks, scope changes, personalization of out of the box software and more. In addition, they allow risk and claim executives to focus on keeping the business running during the transition and can optimize the Go-Live process with transition planning. Sadly, most RMIS and Claim projects underfund this soft cost and short-change the project outcome in the process. Assume most projects can take three to six months allocate at least one day per week for external project management services is needed and also some basic internal project staff resources are also required.
Training on software is getting less funding now than ten years ago, and yet software programs are more intricate, have more features, and perform more tasks. The training gap is a real issue in achieving the best outcomes for success. Education industry data shows that users only retain 20% of a one day training event (even less from a Webinar) but retain 45% of a two day training event. The preferred two day or more of face to face training choice is a soft cost investment with obvious benefits and return on investment for the success of a new project. Given the fact that most users can gain a 10% productivity improvement using new programs, a small soft cost investment in training and skills certification is the most cost effective investment of any project. Trainers help users navigate transition and change with more confidence and less drama. Planning on additional user training later in the first year after the project go-live is a common mistake to avoid.
There are a number of out-of-the-box RMIS and Claim automation solutions. While it is important to look at the sticker price of licensing one of these new systems, it would also be even wiser to take a look at the software vendor’s value when it comes to delivering soft costs. And remember the 50/80 rule of services costs and project go-live risks.