The New Reality for Customer Engagement
Before Williams created the new alignment positions, there was no formal effort to align IT at HCA, and that led to some cultural problems. "It was felt that a lot of decisions were made by IT without proper input from those of us on the business side," Fitzgerald says.
Meanwhile, among IT managers, there was a sense that the businesses did not solicit their input. Says Williams, "The business side sometimes tried to determine how to use technology to solve a business problem without involving IT, and then would come back to us and say, 'This is what we need.' Often, this would include predetermined schedules, and sometimes we were in the awkward position of having to explain why it wouldn't work. Today, we are at the table understanding and defining business needs and solutions together."
When IT's Egger first joined up with Fitzgerald, however, it wasn't exactly love at first sight. The initial sentiment Egger sensed, he says, was, "This is business strategy. I don't necessarily need you here for that. After a while we'll give you a call and tell you what we've decided." IT was looked at as a separate entity, there simply to do the bidding of the business units. "It was pretty much 'dump it over the wall and see what happens,'" says Egger.
Even worse, many of the supply chain executives looked upon Egger as little more than an on-site help desk. Tough as that was to swallow for an executive with more than 15 years in healthcare IT at HCA and its predecessors, Egger went along in the interests of building the relationship. "We made a decision to support those kinds of requests because the onus was on us to develop a relationship," he says. "We had to prove the value we were bringing. It may not have been the value we initially set out to bring, but if you answer a couple of questions like 'Why is my computer locking up?' you find that the relationship sweetens a little."
It took a while to get his new colleagues to talk to him about strategy, Egger says, but they eventually saw that his knowledge of technology and his willingness to understand their business needs made him invaluable on the team. "Larry steered us in a better direction once we gave him our objectives and priorities," Fitzgerald says. "I work with him just as I would with my direct reports. He's involved in planning, implementation, identification and resolution of issues. I don't know how you get any better aligned than having that start-to-finish, day-to-day involvement."
Egger's move couldn't have come at a better time, considering HCA's recent restructuring. Responsibility for purchasing and stocking medical supplies was moved from individual hospitals to 11 centralized purchasing centers aligned with 11 regional divisions, each with a supply chain officer responsible for procurement and distribution. These officers report to Fitzgerald, who holds quarterly strategic meetings with them as a group. IT issues are on the agenda, and Egger attends. He also meets independently with each of the divisional supply chain officers at least once a year. "That allows me to take back to IT opportunities to improve the systems that support supply chain operations," he says.
For example, Egger and his business cohorts determined early on in the consolidation that the system each hospital was using to purchase and distribute supplies for its own stockroom was heavily dependent on paper pick lists and would no longer work at the 40,000 to 60,000 square-foot warehouses to be built under the new plan. The answer: an automated system using Dick Tracy-like radio frequency devices that warehouse workers wear on their wrists. The system knows the locations of each item in the warehouse, plots the most efficient route up and down the aisles and relays the route to the workers. As the workers scan bar codes on each item, inventory is adjusted in real time. Meanwhile, the hospitals are tied into the system through bar-code scanners at nursing stations. The system greatly reduces the risk that doctors and nurses won't have the supplies they need. When nursing floor stock hits critical levels, the system generates warnings to replenish. Real-time inventory at the warehouse ensures that the right product is delivered at the right time to the right location. The system was first instituted at a warehouse in Richmond, Va., and six more will be up and running by the end of the year.
Were it not for Egger being at Fitzgerald's management table, things would not be as far along as they are. "We had an earlier start on a system than we would have if that strategy had become known to IT later," Egger says. He recognized immediately the limits of the old system, and "we were able to deliver when the business required it."
Egger and his four alignment team counterparts also help business executives decide whether to buy or build new technology. Such was the case with the automated warehouse and scanning technologies; Egger set up the process to help Fitzgerald and his people evaluate companies selling those systems. A newer and better version of the accounts payable software for purchasing, on the other hand, is being developed in-house, with Egger's guidance.
In another example of this kind of cooperation, the supply chain group is collecting ideas from hospital workers and administrators on ways to cut supply costs. Egger and his IT team created a database to share these ideas across the company. "That's been very effective for us in reducing cost," Fitzgerald says. Savings have been more than $100 million in three years. For example, a suggestion to use unbleached paper towels led to savings of $40,000 to $50,000 annually. Egger and supply chain executives also worked together to develop a system that allows HCA to get volume discounts by aggregating the purchase of items that cannot be negotiated nationally.
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