e Study: A new ERP for the LaTrobe Valley Foundation12
Submission: Please submit this assignment to provided links in Canvas
Size: Group Task (3 – 4 students)
3500 ± 10% words
Value: 40% of the total mark
Due Date: Week 12, Friday 30 October 2020, 11:59 pm AEST
Despite the potential benefits of electronic information management, including increased patient safety and more cost-effective health care delivery, few countries report the adoption of electronic systems for managing hospital information. On 1 January 2012, the LaTrobe Valley Foundation (LVF), a university hospital in regional Australia switched from paper to electronic documents to manage medical records (MR) and all related clinical and administrative procedures. The LVF, which reported revenues of AU$450 million in 2014, is ranked the third best hospital in regional Australia. The hospital made the ambitious decision to simultaneously implement electronic medical records (EMR), computerised physician order entry (CPOE), and enterprise resource planning (ERP).
1 This case study is adopted from Juanita Cajiao and Enrique Ramírez’s work published in the International Journal of Case Studies in Management:
Cajiao and Ramírez (2015), Surviving SAP Implementation in a Hospital, International Journal of Case Studies in Management, Vol. 14, No. 2
2 Some names, processes, and figures in this case study are modified and they may not be accurate or real.
1. The LaTrobe Valley Foundation
The LaTrobe Valley Foundation is a private non-profit organisation founded in 1982 to deliver tertiary medical care. The LVF was the brainchild of two cardiologists from Melbourne who identified the need for a regional healthcare institution to deliver specialised care to medically complex cases and critically ill patients. They were later joined by Vicente Borr, a public health physician, who has been CEO since 1986. Bringing together regional civic and political leaders and donors, they collected the necessary funds to launch the project. Initially focused on cardiology cases, they gradually expanded their service offer. Today, the LVF offers clinical care in more than sixty medical specialties and serves as a teaching hospital, where medical students receive training.
In December 2015, revenues totalled about AU$450 million. The previous year, the Australian Economic magazine had ranked the LVF the 4th best hospital in the Australasia region and the best in Australia based on clinical, administrative, and financial indicators. In 2014, the LVF was ranked the third best hospital in Australia and Newzealand region and the best in Australia. These awards confirmed the LVF’s long-standing commitment to delivering excellent health care services in patient safety- centred environment.
In 2008, the LVF embarked on an ambitious plan to expand its service offering by constructing new facilities to house additional beds, an emergency room (ER), and ambulatory care services. By December 2010, the number of beds had increased by almost 60%. This growth put tremendous pressure on all patient care delivery procedures.
1.1. Medical Staff
The LVF is a hierarchical, top-down hospital composed of medical units, each headed by a specialist physician. The CEO, the chief medical director, the chief nursing officer, the chief administrative officer, and the heads of the medical units form the physicians’ medical council are responsible for communicating all senior management decisions to their units.
Physicians have to comply with the policies of the medical directorate and the physicians’ executive council regarding quality and patient safety issues, the terms agreed to by the LVF and insurers, and standard administrative procedures. Physicians are paid according to the number of patients they see, charging at the rates established by the insurance contracts. Approximately 20% of total LVF billing is for medical fees. Additionally, all doctor-patient contact takes place within the LVF facilities; full-time medical staff are not permitted to see patients or deliver clinical services outside the LVF. Given the hospital’s high occupancy rates, doctors don’t need to go elsewhere to find patients.
1.2. Patient Care Delivery before IT Implementation
A patient can enter the LVF in one of four ways: ER, outpatient services, ambulatory procedures (diagnostic or other), or surgery. A patient may be admitted through the ER, be referred for surgery, be sent to recovery, be transferred to the ICU, be sent to a hospital floor unit, and finally be discharged. While in the hospital, the patient may have been treated by a group of specialists in medicine or other disciplines such as nursing, respiratory therapy, nutrition, physiotherapy, and pharmacy. The patient may have been given various diagnostic tests and received specialised medical treatment such as chemotherapy, radiation therapy, and cardiac rehabilitation. Patients generally pass through many hands during their stay at the LVF, requiring close coordination between administrative and patient care personnel. This coordination is based on medical records (MR) containing the record of every medical and clinical procedure performed and all supplies and medicines used.
1.3. Medical Records and Medical Orders
MR are clinical documents containing information about patients and their clinical course; they are created by healthcare staff while patients are under their care. MR thus contain information essential to both patient care and administrative procedures and must be managed and stored in such a way as to ensure the confidentiality of the information and the physical integrity of the records. In Australia, medical records are legal documents.
In the case of the LVF, all professionals who dealt with a patient made a note of the procedures done. All these notes were made on paper or, in the case of the epicrisis (the final report of a physician summing up the medical case when a patient is discharged), dictated by the attending physician into a recording machine and then transcribed by one of a pool of secretaries. The transcription was then printed out and attached to the patient’s chart. This procedure had several implications for the quality and availability of the information contained in the MR. Doctors aren’t known for their legible handwriting, secretaries can make transcription errors, and documents can be lost, mislaid, or filed with the wrong MR. Sometimes a patient’s chart is required by different departments at the same time, affecting its availability. A critical care physician who has worked in the adult ICU since 2007 explained this situation: “In the ICU, there was this paper form on which different team members of the unit worked – doctors, anesthesiologists, nurses, physiotherapists; and sometimes we all needed that paper form at the same time. In addition, it was possible that the chart was in another unit, or that it was being audited by the insurance company.”
An ER physician who has worked at the LVF for five years added: “Sometimes a patient arriving in the ER could not remember what their physician had said, or what medications he was taking. In the case of a the LVF patient, all of that was written on the patient’s MR, but it took some time for us to get the patient’s chart and review the necessary information.”
Medical orders provide additional information to that found in medical records. These are the instructions from attending or consulting physicians on the course of action to be taken. Physicians use medical orders to request diagnostic tests, stipulate outpatient procedures, prescribe drugs, order surgery or hospitalisation, and terminate the treatment and discharge the patient. Various health professionals then carry out the physician’s orders. Doctors would handwrite orders either directly on the patient’s chart or on a separate form, and the professionals who carried them out needed to see the physical chart. An order could involve several people, as in the case of medicines, for example, which involved the pharmacy that dispensed the drugs, the nurses who administered them, and the billing clerk who invoiced customers.
Betty Smith, a nurse and the chief nursing officer, has worked for the LVF since 1995. She explained: “When a nurse administered the medications ordered by an attending physician, she would make a note on the pink nursing form. In the case of inpatients, they would use blue ink in the morning, green ink in the afternoon, and red ink on the night shift. These sheets were then attached to the charts. We wanted traceability of pharmacy-related procedures, but this was time-consuming and not always reliable.”
A 2000 study by the Institute of Medicine concluded that, in most Western countries, more people die from human error in hospitals than in car accidents. Among the problems that commonly occur during the course of providing healthcare are adverse drug events: preventable injuries resulting from improper order processing, dispensing, or administration of drugs.
Jaime Gable, a physician who has worked at the LVF since 2001, explained: “In past, illegible handwriting on medical orders was one cause of adverse drug events, but it was not the only one. The person transmitting the order might confuse the names of similar medications, or trailing zeros might make the dosage unclear. But one of the biggest risks was drug-drug interactions. With the kind of patients, we handle, and the involvement of several specialists, unforeseen or unwanted reactions could take place between the drugs prescribed by different specialists.”
There was also the possibility of duplicate orders for diagnostic tests, which could impact patient safety – in addition to the needless discomfort of undergoing them and the extra costs for insurers.
1.4. Back-Office Procedures
Parallel to medical care is administrative procedures, which are governed by regulations, and they are mostly concerned with:
Insurance contract guidelines and billing: Under the health funding system, insurers have agreements with CDOs (such as the LVF) for the healthcare of their members. The hospital’s Insurance contract department was in charge of negotiating and managing contracts with insurance companies. Because it handled some 70,000 billing items, tracking them manually was an enormous challenge. The department knew there could be problems with allocating the costs of services delivered and thus negotiating reimbursement terms with insurers. “We were not always certain whether the LVF was profiting or losing with some procedures,” explained Danny Moreano, head of insurance contract management and chief operating room physician.
The terms of managed care contracts sometimes differ, making it difficult to standardise patient admission procedures and charges for clinical procedures and supplies and medicines used while providing services. Billing clerks thus had to memorise the contract terms or look them up in hard- copy manuals.
All fees charged to patients, whether they be for supplies, drugs, procedures, equipment use, room fees, or doctors’ fees, had to be typed into the billing system. But this did not always happen. Valencia, chief OR nurse, explains: “Although the required supplies and medications were pre-ordered, the surgeon or anesthesiologist would sometimes request additional supplies during the surgery. The nurse assistant would go to the operating room supply store, request what was needed, and say, ‘I’ll get you the written form in a minute.’ But with over 1,000 surgeries per month, emergencies, and the pressure for rapid room turnover, some charges may not have been entered into the system for billing purposes.” The billing manager explained the impact of this situation: “Billing clerks were never sure whether they could close the patient’s account or if there were still pending charges to be entered. They would try to contact people by telephone, but those people were not always available; after the account had been closed, they sometimes got calls telling them there were still pending charges; all this delayed the process even further.”
Insurers had bills reviewed by medical auditors and required documentation of all fees charged to patients’ accounts. This meant that documents had to be manually collected, organised, and attached to invoices. In addition to requiring physical space to organise an average of 43,000 monthly hard-copy bills, this manual procedure affected the timing of invoicing, which had a major impact on the LVF’s cash flow. The head of billing and accounts receivable explained: “It was time-consuming to track bills to know whether they had been finalised, were in the billing department for prior medical auditing, or had already been sent to insurers. Invoice processing was equally difficult – tracking every invoice to establish whether they had annotations, had been returned, had debit notes, or had already been paid.”
Supply chain management. Australia is no stranger to the pressures to cut healthcare costs experienced by many countries around the world. The efficient management of supply and drug inventories is critical, and the hospital strived to maintain just enough stock for day-to-day operations while avoiding out-of-stock situations. The complexity of the billing process created frequent inconsistencies in the information required for the efficient supply chain management.
Archives. Until 31 December 2009, the LVF’s medical records were on paper. Back then, an average of 50,000 hard copy charts had to be moved back and forth between the archives and the medical units. This had significant logistical implications and created a growing demand for physical storage space. All units were affected by these logistical problems. Walk-in patients might arrive at a doctor’s office before their chart did, for example.
As they struggled to gain control of their physical space, the archives developed a spreadsheet system for keeping track of medical records; missing charts were becoming a problem. “Given the number of charts we were dealing with, plus the projected growth in service delivery, we knew we would continue to have major problems managing records efficiently,” explained the head of inpatient registration and archives.
1.5. IT Architecture
By December 2008, there were at least thirty information systems working somewhat independently at the LVF; they provided partial solutions to the needs of some users but did not allow for information integration. There were electronic systems for laboratory and diagnostic imaging, and some software developed in-house for support processes such as a scheduling module. In addition, some doctors had developed software tailored to their specific needs. Generally speaking, software developments were aimed at administrative and support processes rather than clinical procedures directly related to patient care. Until 2010, the hospital had software to handle back-office procedures, accounting, billing, accounts receivable, supply management, and medical fee management. Given the many disadvantages of its inventory module, it developed its own system. All this software was connected via interfaces. The opening of new beds and the resulting increase in related clinical services – e.g., surgery and outpatient care – placed additional pressure on procedures related to healthcare delivery.
The problems with medical fee management had become critical, as the head of information technology, recalled: “We had developed an application for managing medical fees, but it was causing problems. The interface could bog down for a day, even two days!” In addition, the information was sometimes inaccurate. An anesthesiologist and anesthesia group coordinator explained: “There were times when your numbers didn’t match the payments you received; you could always recheck your bills, but it was a drain on everyone. It was time-consuming, and, as a doctor, you prefer to spend that time with your patients.”
A comprehensive IT project would enable the LVF to improve patient safety, make healthcare services more efficient and cost-effective, and increase revenues in the medium term. The productivity of medical staff would also benefit from the streamlining of healthcare delivery, since it was expected to improve patient flow/throughput.
2. Searching for an Integrated Enterprise-Wide Solution: ERP, CPOE, EMR
In late 2008, an interdisciplinary team led by a cardiologist familiar with state-of-the-art technology began looking for an application that would provide an integrated hospital-wide solution for patient care and administrative procedures. This was the launch of the Synergy project. The initial team was made up of the cardiologist, the chief medical director, the chief nursing officer, the chief administrative officer, and the head of insurance contract management. It was important that those using the macro-processes that would be affected by systematisation – both clinical and administrative – had a voice in the project. Any option would have to include complete electronic health records. The team began by visiting other hospitals in Australia and New Zealand to see firsthand what electronic devices they were using to manage their medical records.
3. Choosing the system
When an organisation implements an Enterprise Resource Planning (ERP) system, it undergoes major changes because a single database must be shared by the entire organisation to achieve centralised management and integrated information processing. The implementation and adoption by end-users of ERP affect the ways people work and disrupt organisational routines. But the LVF was even more ambitious: along with ERP, it wanted to integrate all core business processes by implementing a comprehensive healthcare solution that, in addition to back-office procedures such as billing and accounts receivable, included electronic medical records (EMR), Computerized Physician Order Entry (CPOE) and pharmacy management. With this in mind, they began their search.
SAP was known as a powerful ERP system for administrative and operational support processes. However, its healthcare solution was developed for less clinically complex environments and health systems that differed greatly from Australia’s. The healthcare-specific functions of SAP ERP were based on a German business model, German culture, and healthcare regulations quite different from those in place in Australia. All this created significant gaps at every level between what SAP offered and what the LVF believed it needed: 1) at the level of the LVF itself, given the complexity of its cases, e.g., pharmacy management of patients undergoing chemotherapy, 2) at the level of the healthcare industry, e.g., reimbursement terms and 3) at the legislative level, e.g., Department of Health and Human Services conditions.
At the end of the vendor selection process, they had two top offers. One, SignSystems proposed to make over 1,000 software developments; the other, ComputWorld – a local SAP partner firm – proposed just 350. Emily Wu, head of IT, explained: “That was a key factor in our decision. Anyone who knows SAP knows that it can be parameterised. Someone who does not know it well makes software developments, not knowing that those options already exist in SAP. With SAP, it’s better to integrate than to develop. When you integrate, you are adjusting to what the program offers, to what is there already, and when upgrading to a new version, you have no trouble. That is not the case for the software you develop yourself.”
On 1 October 2009, the LVF decided to hire ComputWorld to implement SAP and develop the applications needed to carry out the Synapsis project. It proposed an ambitious schedule: the project roll-out would occur over thirteen months and include some 2,200 end users.
4. Communicating the decision
Synergy was seen as a strategic imperative to meet the growing demand for services facing the LVF; its main objective was not to cut jobs but to improve service delivery and efficiency. Communicating the rationale for the change to all stakeholders – with varying interests and incentive structures – was a major challenge. It was decided that each department head should ensure that their members fully understood the project and its benefits. Jessica Martin, head of insurance contract management and chief operating room physician, recalled those days: “I have a vivid memory of the meeting of the physicians’ medical council when Dr Sahil told us about the IT project. The message came through loud and clear: SAP was not a systems-driven initiative; it was a strategic decision to support the LVF’s growth while ensuring patient safety. His support for the project was impressive, and we were held accountable for communicating the project rationale to our doctors.”
In addition to stressing the reasons for paperless care delivery, the department heads were to stress that the system’s implementation would lead to major workflow changes at all levels. The role and workload of physicians would be greatly affected, in fact, since the new system would upgrade the medical order process, making order entry the responsibility of physicians. There would no longer be an intermediary – be it a nurse, a pharmacist, or a clerk – implementing verbal orders from doctors. Additionally, medical notes would be typed by doctors in SAP. Wu explained: “For us, it was clear that one of the most critical issues throughout this project was that doctors understand its benefits. We did not want them thinking this was an administrative project and that suddenly they would be doing clerical work, typing into a computer what had previously been done with pen and paper or dictated to a secretary. If they did not see the benefits for the patient, for the LVF, and for themselves, there was a good chance they would be reluctant to use SAP.” It was stressed that doctors would benefit from decision-support processes that would help reduce medical errors and that patient flow would improve. They would be able to access MR anywhere, anytime, and view online information about lab tests and other diagnostic procedures before seeing patients, significantly improving the quality and efficiency of care delivery. As healthcare needs grew, these improvements were expected to positively impact patient care.
When informing administrative staff about the need for change, managers were to relieve their anxiety about the possibility of losing their jobs. The head of inpatient registration and archives explained: “For many support staff, it was clear that their jobs would disappear when the doctors begin typing clinical notes themselves. We assured them that since the demand for services kept growing, most of them would be assigned to different units. And that is what ended up happening.” As the head of billing and accounts receivable explained, it was also important to lower expectations about the system’s benefits: “Some employees, particularly billing clerks, thought the new system would provide a tailor-made solution to all their problems by handling all the same processes electronically; we knew that would not be the case and tried to communicate a more realistic view. Long-held routines and practices would also change.”
Martin explained her approach with her subordinates: “We had many meetings with assistive personnel to inform them about the decision to have paperless care delivery processes, which would significantly improve safety and quality of care. We wanted to be sure they understood why the change was necessary, but most of all we wanted to assure them we would be offering the necessary training and support to smooth the transition.”
Health insurers would also be affected by the systematisation and had to be informed about the project. They would benefit from improved care delivery safety for their members as well as potentially decreased/better use of tests and medications. The billing process would be more efficient, and audit procedures could be dramatically improved. Several meetings were held to communicate the scope of the project.
5. Change management at every level
Inadequate attention paid to the importance of effective change management when making changes of this magnitude has been identified as a barrier to greater use of IT in hospitals. To mitigate this problem, the LVF implemented a learning-based strategy to ensure end-users’ adoption of the system. It installed computer labs with SAP modules that were available 24/7 to facilitate familiarisation with basic transactions. Additionally, it offered special training sessions based on each functionality, e.g., for physicians, back-office personnel, and assistive personnel, etc.
Physicians. Mechanisms were sought to facilitate the transition of physicians to EMR and other support processes involved in the systematisation. Eight general physicians who had just graduated from medical school were recruited and hired by the LVF based on their interest in and understanding of IT. They joined Jaime Garcia’s team and were actively involved in training medical personnel in the use of SAP, working at the help desk, offering go-live support to ease the transition and the late stages of stabilisation and end-user adoption of the system. The LVF wanted its doctors to be trained by doctors. When Wu was asked about physicians’ response to the training sessions, he noted a range between enthusiasm and cynicism, more in favour than against the IT initiative. “Many doctors were already regular users of technology, so they were strongly in favour of having electronic MR and all the associated processes.”
Assistive Personnel. Familiarity with IT systems varied greatly; some were very comfortable with them, while some others had barely never touched a computer. This presented a major challenge since once all clinical procedures were systematised, all these people would have to use the IT system, either to electronically capture information or to read the medical orders that were electronically input into SAP. A training program was launched in the second month of the project providing modules of different levels of complexity so that no one was left untrained. Computer rooms were set up where people could learn the rudiments of Word and Excel and become familiar with a keyboard and a mouse. There was also training in SAP modules for various departments (outpatient, emergency, hospitalisation, etc.), and clinical documents such as medical orders and physicians’ and nurses’ notes. The training was mandatory, and time was set aside for training sessions. “We knew that training was critical to the successful implementation of SAP, so we began it early on in the project. Not knowing generates fear and the best way to overcome that fear is by learning,” Gomez noted.
Administrative staff. For the administrative staff, the situation was different, but the challenge was equally great. Most back-office processes (invoicing, supply management, human resources, archiving, accounting, etc.) already used information systems that met their needs to some degree. So many of those people were already familiar with one system or another, and some resistance to learning new software was to be expected.
6. Ready to Go Live
During the final development phase, unit tests were run to check the system’s performance for specific processes, such as scheduling an outpatient appointment. System integration testing was then done, simulating a full scenario to assess the entire process, including EMR, CPOE, and ERP. Wu, head of IT, recalled what happened: “In the first comprehensive test, many inconsistencies surfaced, especially related to billing, giving strong indications that we were not yet ready to go live.” In view of this and based on the recommendation of the Synergy executive committee, the CEO decided to postpone the system roll-out, originally scheduled for 1 November 2011, to 1 January 2012. This decision was communicated via the physicians’ executive council, and all leaders were made accountable for informing their teams, and most of all, for being on the front lines while the system was stabilised.
Many industries are seasonal, with peak workloads and low-flow periods. These are taken into account by companies determining the best time to go live. Hospitals such as the LVF are open 24/7, all year long, making it difficult to determine the best way to minimise workflow disruptions. Still, it was helpful to know when the zero-hour would be. The ComputWorld consultant explained: “The go-live was traumatic, but it was a learning curve we knew we had to navigate; there was a zero hour, and whether that was 1 January, or 28 February, or any other day, we would just have to get through it. People would be anxious and unsure of what to do in the beginning. The system had to be calibrated, and the only way to do that was by operating it. It was a step we had to take.”
Contingency plans were in place throughout the hospital to avoid delaying critical patient care. Change management included communications with patients and their families, as they would also be affected by the implementation of the new system and its possible implications for service delivery. Notices were posted in all units; flyers were distributed to patients and their families; announcements were inserted in answering machine messages, and explanations were posted on the website.
7. Taking advantage of IT
After go-live, Dr William joined the projects department and, as of the case date, is still there. “My role now is basically the same as when we started Synergy: to serve as an intermediary between the medical staff and SAP functionality; we are still receiving requests from various clinical units and some doctors.” Since SAP has integrated all information in a single database, any initiatives the LVF wishes to undertake must take into account SAP’s functionality, whether it be a new clinical procedure or a new service such as home care or a new extended care facility. The Projects department is accountable for upgrading SAP performance to meet the specific needs of the medical units. This was the case for an ICU module that was modified to better meet end-user needs, for example, and user interfaces with specialised medical applications such as lab tests, diagnostic imaging, endoscopy, and the blood bank. One of the major benefits of having all patient-related information on a single platform has been the implementation of a bar-code system for pharmacy management, launched in 2012. This module includes the entire medication administration process, from the time the drugs reach the LVF and are entered into the inventory database to the time they are distributed in the satellite unit stores, e.g., OR, ER, and ICU,
dispensed at those unit stores, administered to patients in accordance with medical orders, and finally, charged to the patient’s bill. In addition to supply chain processes is the advanced clinical decision support (CDSS) system paired with a computerised provider order entry (CPOE) system that checks for drug-drug interactions, drug allergy, and other patient-specific alerts that help to reduce adverse drug events. The entire pharmacy process is thus trackable. This new module, developed by the Projects department and ComputWorld, was certified by SAP.
Administrative departments such as billing and supply chain management also continued to benefit from having centralised data and processes. The billing process was significantly improved since physicians now placed medical orders in SAP, specifying which supplies and medicines were to be used for each case; the system alerted physicians when the insurer required that the use of a drug or procedure be justified. Insurance auditors reported substantial improvements in information traceability, and the audit process became faster and more accurate. With online inventory information, supply chain management-related processes also reported significant progress; this was the case for planners, who finally had accurate information with which to predict inventory requirements and reduce out-of-stock events.
As users took ownership of the system, many wanted more of their job-related activities to be supported by SAP, leading to many requests to the Projects department for new developments. To maintain its policy of standardisation vs. customisation, the Projects department prioritises requests coming from units or departments, rather than individuals. Today the LVF is a national benchmark for healthcare providers seeking to improve patient care delivery processes.
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Your group has to complete the following eight tasks:
1) Provide a brief background of the LVF and its operation. You need to identify the key areas of the LVF’s operation, its key strengths, and challenges. The background should also identify the LVF’s key stakeholders and the factors that affect their relationships with the LVF. You also need to highlight what is the LVF’s vision about growth and how they aim to achieve it. (15 marks)
2) Create a table that lists key business problems of the LVF, as discussed in the case study. Against each business problem in the table, you also need to identify which one has a higher priority and whether you think an ERP solution can address that problem. You need to justify your answer. You can use this table to inform your answer to task 3. (15 marks)
3) Create a table that lists key business requirements of the LVF, as discussed in the case study. Against each requirement in the table, you also need to identify an ERP functionality(s) that can address that particular requirement. You can use this table to inform your answer to task 4. (15 marks)
4) In addition to what is mentioned by Emily Wu in Section 3, you need to develop a set of selection criteria for choosing a vendor who can offer the LVF a suitable ERP solution. You need to suggest between 6 to 8 criteria for selecting a vendor. For each suggested criterion, a clear explanation must be provided to justify why it is a suitable gauge to select a vendor for the LVF. Note that your justification should consider the implementation and operation requirements of the LVF. (10 marks)
5) The LVF has adopted a learning strategy for managing change resulted from the implementation of the new ERP systems. Explain what change management challenges they faced and how they addressed those challenges. Explain the strengths and weakness of their approaches. You can use Kotter or Lewin’s model of change management to justify your answer. (15 marks)
6) A common practice with such IT projects, particularly the implementation of an ERP system and its associated modules, is to introduce elements in a planned sequence, replacing the old system gradually, i.e., one module at a time, such as human resources and inventory management. Another option is called the big bang, or live start, with all modules and related processes, launched simultaneously. Both options have potential risks and benefits. A gradual release entails fewer risks and allows end-users to become familiar with the new system more gradually; but it also means making interfaces required to maintain parallel systems – the old and the new – meaning that information processing has to be done twice. A big-bang implementation makes it possible to calibrate and stabilise the system much faster because it allows prompt online identification of possible inconsistencies. Additionally, since patients and doctors move between units, a phased or partial implementation – excluding some units, such as ER – would create problems. But a big- bang approach could also be risky.
Which implementation method do you recommend? Justify your answer by taking into account the nature of the LVF workplace. (10 marks)
7) For many end-users, care delivery processes became more efficient and integrated as a result of the implementation of a new ERP system. For example, for nurses, the pharmacy management module made it possible to check compliance with the “five rights” – right patient, right drug, right time, right route, right dose. This had been much more difficult to trace in the paper-based world.
How do you think the implementation of the new ERP system can support the following areas of the LVF operation? (20 marks)
a. Inpatient registration and archives
b. Billing process
c. Employee retention
d. Patient privacy
e. Patient safety
8) We are now in 2020, and the LVF is considering upgrading their current ERP system to SAP
S4/HANA. Consider your answer to tasks 2, 3, and 4. Do you think that SAP S4/HANA is a suitable ERP solution for the LVF? Justify your answer by highlighting, capabilities, strengths, and weaknesses of SAP S4/HANA and by linking them to the LVF requirements. Also based on the outcome of your analysis provide a set of recommendations to the LVF as whether they should consider SAP S4/HANA. (25 marks)
Summary of the tasks
No. Task Mark
1 Background 15
2 Business problem 15
3 Business requirements 15
4 Vendor selection criteria 10
5 Change management evaluation 15
6 Implementation strategy 10
7 Value realization 20
8 SAP S4/HANA analysis and recommendations 25
9 Writing style and referencing 15
*Actual mark = Total mark ÷ 3.5
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e Study: A new ERP for the LaTrobe Valley Foundation12