Selling Your Soul: Part Two

Yesterday I made the observation that there are healthcare organizations around the country who have abdicated their duty to manage their IT operations responsibly. Sometimes it’s hard to tell the difference between those who are doing legitimate outsourcing and those who are selling their soul to their vendor.

Let me talk a little about the general principles that are important to keep in mind when you’re evaluating your vendor relationships…

Don’t overgeneralize from other industries.

If you want to hire help with non-core functions, make sure they are core for the people you are hiring to do them.

There are areas that you may have problems staffing or supporting adequately. One of our key systems runs on VMS, and I’ve had trouble getting and keeping people who know that operating system. Even if we trained someone, they aren’t going to spend enough time administering that one system to stay sharp. Despite the cost, we finally signed a remote system management deal with the vendor of that system, because they have people who eat, drink and sleep VMS and do nothing but remote management of those systems.

Would I hire the same vendor to manage my Cisco network? Almost certainly not.

Never expect an outsourcing arrangement to save costs.

I can already hear the howls from vendors and probably some customers who sold their Board on the idea that this big outsourcing deal would cut costs out of their IT budgets that could be allocated elsewhere. I’m sorry, but I’ve never seen it, and I don’t really buy it.

The argument is that a service provider can be more efficient and can spread multiple customers’ work across fewer people and still provide adequate service levels. My test of reasonableness for such arguments is always, “How many layers need to profit from this arrangement?” Don’t count on adding layers and saving costs.

Don’t put all your eggs in one basket.

Cliché? Sure. But there’s important truth there.

What I’m talking about specifically is throwing more and more of your critical systems and services at a single vendor. I know that we all dream of integration across our application suites, but don’t confuse the number of contracts you have with a single vendor with having integrated systems.

There are at least two reasons that this is important. The first goes back to the question of core competency that I raised before.

When most of us think of our key vendors, the first people that come to mind are the ones that we’ve been buying applications from all these years. You know the list as well as I do- Cerner, McKesson, Epic, IDX (now GEHealthcare), Allscripts, Meditech, etc. All have made really remarkable contributions to our industry by creating innovative clinical and business applications.

Does that success automatically translate into expertise in hardware engineering, operating system support, networking support, middleware, system hosting, and Internet services? Of course not. And I would suggest that a company who seeks to tackle all those areas risks diluting their expertise in the areas that have been and should be their core.

The second reason I think it’s important to diversify your vendor profile is probably not the one you expected. I don’t really worry about the risk exposure of any of the companies we’re talking about here going under and leaving you holding the bag. (I might feel differently if your key vendor is “Joe’s Bits’RUs”)

My concern is almost the opposite of that one. How much power can you afford to cede to a single vendor over your organization?

Which brings me to the last major vendor principle…

You and your vendor should be roughly equal partners.

“Wait a minute, Harvey… My vendors work for ME. I’M in charge of the relationship. After all, I’m the CUSTOMER here.”

Yeah, but…

Go back to principle number one. The systems we are running are not mature, they are not standardized well, they are not plug-n-play. They are not utilities.

If you were to sign a contract today with one of the big vendors to implement a comprehensive suite of their products, you would likely be taking the first step along a two-year path of blood, tears, toil, and sweat to get that product fully functional. That’s the best case. There’s a good chance it will take longer and cost more. Most of that effort will be melding together your organization’s workflows and the new system, and dealing with the politics of change.

The day that vendor disappoints you, do you kick ‘em to the curb? How about the tenth time they disappoint you? Is it then that you throw away, say, 20 months of work and start all over? Got your résumé ready?

Do you suppose these vendors that are 100 times bigger than you don’t know that too?

Which is why you need all the leverage you can get.

Sure, I’d have to get really ticked off to rip-and-replace my whole Centricity Practice Management system. But I don’t have to buy my next MRI unit from GE, either.

Allscripts has a big, significant part of our business. But they don’t have it all.

McKesson will not have our software, and servers, and storage, and networking, and support, and help desk, and data center, and EDI, and Internet connectivity.

My people give me a hard time sometimes, because I say that our relationship to our IT vendors is kind of like a marriage. But think about it. A marriage is probably dysfunctional if both parties don’t have some degree of power, responsibility, control, and dependency within the relationship- and recognize that they do.

Do those same characteristics describe your relationship with your vendors? Or are you the helpless spouse who has to stay in the abusive relationship because you’ve got nowhere else to go and nothing else to do?

Next:

Dysfunctional vendor marriages…