Potential Problems Associated with Outsourcing Software Applications - Case Study Example

Strategic IS Management Name: Tutor: Course: Date: Table of Content Table of Content 2 Introduction 3 Benefits of Outsourcing software application 3 Potential problems associated with outsourcing software applications 4 The problem situation 6 Hospital Background 6 Situational challenges commonly occurring in the hospitals 7 The latest incident 7 The Physician Manager rich picture 9 Implementing the POE and managing change 10 The new POE Rich Picture 12 Conclusion 13 List of References 14 Introduction Benefits of Outsourcing software application Outsourced systems applications can offer important business benefits over in-house developed software in many situations. Jens Dibbern (2004, pp 215) asserts the cost effectiveness of outsourced applications in maintenance, labor and supports cost as reduced or avoided entirely. The potential benefits from outsourced technologies can be broken down into two areas, the first relates to the quality of the deliverables while the second relates to reduction of risk during the project. On the first account, improved quality of development work includes acquisition of superior or sophisticated specialist resources, which would rather have not been available locally or developed locally. It saves the organization time taken to acquire new systems. This process of system implementation, avoids the conventions Systems Development Life Cycle which is time inside. Staff also get minimally involved as they are only trained on how to derives quality from the outsourced application or utilize the software. It easier to incorporate existing facilities teams with established software development processes in place (Ash J. et al, 2000: pp 118). The other array of benefits from outsourced software applications is associated with the reduced risk of failure and cost. By outsourcing, the organization reduces cost of development and tight control over project resource costs. This process also enable the company to reduce permanent staff cost as well as reduced training costs. There will be no need to employee support staff who will be maintaining an outsourced system unlike in in-house software applications development. This thus provides an opportunity to reduced management costs since the system will be managed offshore (Aydin et al. 1998 pp 64). Outsourcing suppliers have a stake in delivering a high quality solution within time and budget agreed. Testing and reevaluation of systems development and its budget is not a problem since the budget does not have to be adjusted they way it often occurs in SDLC process. Once the supplier has been identified, and all terms agreed, there is a shorter lead-time for recruitment and training of system users. Most outsourcing companies are seasoned suppliers and hence by outsource an organization can enjoy quality service from experienced project management. The process of developing an outsourced service largely depends on the nature of understanding of the customer and the supplier. The success or failure of the process is a product how the two parties understand the objective and the requirements of the new system (Dibbern, 2004 pp 121). Potential problems associated with outsourcing software applications Martin-Baranera and others (1999 pp 75) cautions that While there seems to be wide array of benefits from outsourcing application, the process may inherit several problems of human integration into the company’s IT processes; slow, costly and error prone responses to issues. Outsourced software development can introduce issues for the project and the long-term success of the resulting solution. One most likely problem is miscommunication due to differences in language and culture. The Potential problems can be broken into two categories. The first set of potential problems affect the running of the project itself, whilst the second affect the support and maintenance of the solution once delivered. There is serious risk of poor understanding of customer business objectives and software requirements by the supplier. Due to the geographical distance and cultural setting differences, there may be poor communication between supplier and customer during the development period. Another potential challenge is the failure to agree on ownership/licensing issues prior to delivery of the developed applications. The cost of updating and maintaining the systems may also be contentious. The greatest danger is the lack of in-house solution knowledge to faults in the systems. This may result in long term before a problem is diagnosed and solution fixed, even if the fault is a minor one (Lorenzi, and Riley, 2000 pp 119). In other cases, the suppliers tying themselves in by not releasing sufficient information to enable 3rd parties to perform updates, maintenance or address expansions or modification on the programs. This weakens the company’s ability to source for more economical alternative in addressing issues related to the existing outsourced applications. The company is forced to work with one supplier even on non-cost-effective services, thus the process may be expensive in the end. On other circumstances, the supplier may be reluctant to offer support services. This lack of interest in providing technical support from the supplier may paralyze operations in the organization. Ash and others (2000 pp 121) commends that all though majority of these potential issues may be addressed before the project begins, at the supplier selection and contract negotiation stages, other complex issue may come up in the life of the systems. Let’s consider the hypothetical problem situation of acquiring an outsourced service faced by doctors at Dapharn Medical Center, a medical institution which has successfully been bidding for medical contract. The problem situation Hospital Background DMC, a 400-bed community hospital, recently acquired an outsourced service of a new order entry (POE) application to be used in the entire ordering processed and recording of patient details. With over 150 medical staff who some of them reside within the hospital premises its partnership with an offshore IT Solutions Firm, was part of its plan to remain competitive in the medical marketplace. The hospital regularly handles large volumes of clientele having collaborating with insurance companies. The hospital has a lot of contractual agreement for medical covers from major players in the insurance industry. These contracts are sought after because the hospital tends to employ lots of young and versatile medical practitioners. The company is also perceived as using modern technology in its information systems. A leading IT solutions offshore, has partnered with the hospital to provide the POE software. Top executives in the medical industry recommend the software, saying, software is suitable for a technologic revolution driven by consumers which will advance the medical institutions the way it has transformed other business sectors like banking industry, retailing, investing amongst others. They are opined that the “health industry is lagging behind the corporate world due to” use old fashioned inefficient and ineffective information systems. With exception of its POE system, the Dapharn Medical Center’s state of information systems are almost the same those of the other major health systems players in the region. Situational challenges commonly occurring in the hospitals Two years ago, the hospital implemented a documentation system called Physician-Manager, which has ended up destroying the image of the DMC. The main user, the doctors and nurses, had been reluctant to accept just have being briefed about and their preview. Some of them claimed it was going to lengthen the time of attending patients thus causing service inefficiency. It was implemented without any consideration of their opinions. The Physician-Manager was a synchronized application with multiple users including the receptionist nurses, doctors, the pharmacists, procurement being partition to receptionists etc. As a rule, apart from paper registration of patient’s details which was a must, the same has to be entered into the system before the patient is directed to the next steps. This became a long-time consuming process. Apart from the sluggishness of the system, it is prone to failure, sometimes mixing up the information therein. The receptionist take too long to clear existing patients and attend to incoming since the system is not automated to be switching between the two sections of the incoming and outgoing patients, they seem to operate on parallel programs. Doctors on the other end must enter all the prescription and diagnosis details in the system which because of its shared nature is often slow. The pharmacists are facing similar challenges. The latest incident The system is also prone to errors. Recently, the worst technical problem occurred which has threatened the reputation of the hospitals in the industry. Though a substantial amount of money was spent in the purchasing the software offshore, the DMC’s information services department’s image has severely been tarnished following a paralyzed service delivery to patients that occurred recently. Of the patients who have been suspecting wrong diagnosis in the hospital, the latest incident has proved it all right. The incident is about a 35-year-old woman, who was admitted to DMC through its emergency department. The synchronization of, therefore new orders had to be written when the woman was transferred to be admitted in the ICU. Due to the failed synchronization of the ordering systems, three different orders were issued, with one copy going to the pharmacy. Drugs issued at the pharmacy were different from the doctor’s prescriptions. A nurse receiving the drugs from the doctor’s assistant, a seasoned staff at the intensive care unit, recognized the size of the drugs and noticed the difference from what had been prescribed. She recalled the pharmacies order and noticed the errors, but two hours elapsed by the time correct orders were processed manually. Unfortunately, the young woman’s complications worsened and, she suffered irreversible brain damage. Whiles the company is struggling to restore its reputation, the procurement departments are pursuing their overseas supplier of the software who has since then accused the medical centre is mis-application of their products. Local experts in software developments have been consulted to review the systems, but due insufficient documentation of the system, there is little they can do to correct the system. The supplier claim the warranty for maintenance expired 4 months ago. DMC has since stopped using the application since then. The Physician Manager rich picture The new Information Systems The newly acquired POE is intended to replace the old Physician-Manager System. The failure of the Physician-Manager System and the resulting hospital staff’s concern over the matter, forced the hospital’s Board of Directors to come up with an immediate solution. The board created the position of Medical Director of Information Services (MDIS) who would be a medical information specialist to work closely with the CIO to the medical staff’s confidence in implementing the POE. The MDIS has excellent informatics background and is working closely with the supplier to ensure no similar mistakes occur. The implementation of the POE has also seen the medical staff heavily involved and trained. Unlike, Physician-Manager System, the POE is fast with full synchronization of all the users. It share a common database, and easy to use. The supplier shared full documentation of the software and their help is available 24/7 online for all the time the application will be in use. The hospital Board created a formal IT department and employed five other IT technical experts to work closely with the MDIS and support the staff in using the system. The newly created positions are two support technicians, a network analyst, and two technical specialists. Knowing the recent development in the companies Information’s systems challenges, the team is highly alert of the dangers of imposing a faulty system on unwilling users. Their overall supervisor, the MDIS has employed measures to gain the respect and trust of the medical staff in the new system. While having their interest’s foremost in mind, she has set high benchmarks customer service (Medical team support) for everyone in her department. Saia & Kastner (2006) commending about a similar situation, advises that the new office incumbent has to conquer distrust and some other challenges, since most of the hospital staff perceives her as part of administration. Together with her team, the MDIS, has demonstrated a ‘‘walk the talk’’ policy. With her technical team, she has scheduled several regular trainings for all the staff, with some of the trainings repetitively conducted in alternative hours to accommodate the on-duty staff. The nurses who are more tech-savvy have been motivated teach and help the doctors one-on-one to use the new POE information system to look up or update patient data. The POE recording processes in the hospital efficient is getting better. Implementing the POE and managing change While full and successful implementation of the POE system has been identified as the immediate future objective, the MDIS knows that this will be a challenge at DMC, given its previous history. She is working towards full implementations and total involvement of the all the users step-by-step. Her knowledge of other hospitals in implementing POE systems has come handy, and she is devoted applying all her skills and knowledge for successful results. The newly hired experts have witnessed and contribute profoundly to change when the organization acquires new technology. They acknowledge and understand the challenges that come with such situations. As the new organizational structure get configured, the new set objective of the system take time before they are fully adopted by administration and require more time to accepted fully by the personnel at all levels. To successfully harmonize the new system into the existing services processes, the technical team and the medical staff require ought to heavily collaborate and each party contributes (Nicholson et al; 2004 pp 284). The creation of the executive Doctor’s Information Systems Council which is composed for the technical team and representative of the medical staff has made them own the facility. The heavy involvement of the medical community in the hospitals has enabled the staff to better understand the potential and efficiency of the technology. They also have suggested on ways of improving the system. The technical team through the Council and their understanding of the nature of hospital operations acknowledge that the doctors need a reliable and accurate system that is fast, and more user-friendly. Martin-Baranera and others assert that an effective system requires a minimum of training, is fast and help should be available through out on line or by telephone. Any new system must thoroughly address the need of the users prior to implementation, and their consent is paramount. The nature of hospital operation demands that the system must enable users to review a patient’s record on demand. To motivate the users especially in hospital setting, to appreciate the system, the new POE systems ought to proof to the doctors that their time is being maximized as they use it (1999 pp 75-76). The new POE Rich Picture The MDIS anticipates managing the imminent change by carefully leading the medical personnel to accept the new system. Her mechanisms include working on substantial physician involvement plan and leadership in the process of application execution, testing, and implementing. While focusing on speed and convenience, the users will be thoroughly oriented into the system. Saia & Kastner (2006) recommend that in any other systems devolvement processes, whether outsourced or developed in-house, this level of involving the users is commendable. The users essentially ought to own the systems and the views taken seriously. Conclusion In general, the initial burden because they were not involved in the implementation process. Pressure could surmount the doctors and nurses; they were exceedingly being forced to attend to more patients in less time information system, the Physician Manager, was perceived by the medical staff as more of a despite the compulsory procedure of recording details in a slow and faulty system. The receptions could be overwhelmed in handling the long waiting by the patients both these leaving and the incoming. The extreme it was distorting prescriptions and diagnoses and the reputation of hospitals went down. Similar challenges are facing the other organizations also in other industries (Lorenzi & Riley 2000 pp 123). Dibbern (2004 pp 217) allude that inorder to maximize benefits from an outsourced software development project, a number issues need to be clearly addressed and streamlined before acquiring and implementing any software. The terms of relationship between the organization and supplier relationship need to be defined. Development methodology, system requirements and documentation, project management system and solution support and maintenance need a thorough scrutiny. List of References 1. Ash J., Anderson J., Gorman P., Zielstorff R., Norcross N., Pettit J. & Yao P. Mar / Apr 2000. Managing Change: Analysis of a Hypothetical Case Journal of the American Medical Informatics Association Volume 7 Number 2 Med Inform Assoc. pp 116–24. 2. Aydin C. E, Anderson J. G, Rosen P. N, et al. 1998. Computers in the consulting room: a case study of clinician and patient perspectives. Health Care Manage Sci.; pp 61–74. 3. Dibbern J., 2004. The sourcing of application software services: empirical evidence of cultural, industry and functional differences. Germany: Springer Press, pp 214-218. 4. Lorenzi N. M., & Riley R. T. 2000. Managing change: an overview. Jam Med Inform Assoc.; Volume 7: pp 116–24. 5. Martin-Baranera M, Planas I, Palav J, Miralles M, Sancho J. J, Sanz F. 1999. Assessing physicians’ expectations and attitudes toward hospital information systems. The IMASIS experience. MD Comput. Volume 16: pp 73–6 6. Nicholson L., Vakharia A. J. and Erenguc S. S. April 2004. Outsourcing inventory management decisions in healthcare: Models and application. European Journal of Operational Research, Volume 154, Issue 1, 1, pp. 271-290 7. Saia R., & Kastner P.S., 2006. “Outsourcing Application Development and Maintenance”, Aberdeen < http://www.aberdeen.com/Aberdeen-Library/3597/RA_ADMoutsourcing_RS_3597.aspx> Read More