Practice Management News

Healthcare Enterprise Resource Planning Systems Going to the Cloud

A KLAS market report finds that providers are replacing or selecting new healthcare enterprise resource planning systems to move to the cloud. But cloud solutions are coming with their fair share of challenges.

Providers increasingly seeking cloud-based healthcare enterprise resource planning (ERP) systems, KLAS finds

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By Jacqueline LaPointe

- Provider organizations are replacing or selecting new enterprise resource planning (ERP) systems to realize the benefits of a cloud solution, according to a recent KLAS Decisions Insights report.

In the report, the market research firm examined 73 ERP purchase decisions made since the beginning of 2019 to determine the reasons behind system replacements and new selections. The examination revealed that activity in this space has been primarily dominated by providers looking to move to the cloud to realize the “hoped-for benefits” of a cloud solution, including better system reliability and security, improved efficiency, and reduced capital investments.

Previous KLAS research has shown that healthcare organizations moving on-premise ERP systems to the cloud reported consistent upgrades and convenience, improved system reliability and uptime, enhanced security benefits, and improved efficiency due to organization integration and access.

Older, on-premises ERP solutions are outdated, according to respondents from the healthcare organizations recently replacing their system with a cloud solution. The report found that about a quarter (24 percent) of these respondents replaced their ERP system because of technology reasons, while 18 percent swapped out their systems for consolidation or functionality, respectively.

Technology and functionality topped the reasons why healthcare organizations selected an ERP system (18 and 15 percent, respectively).

A significant portion of both those replacing and selecting an ERP system, however, noted that current or user experience played a role in their decision on what system to use. Additionally, a small number of organizations replacing a cloud solution said it was because of relationship issues with the vendor, poor implementation of the system, or functionality gaps.

Implementing a cloud-based healthcare ERP system comes with its own challenges, such as poor implementations, limited functionality, and outages and connectivity issues, KLAS reported.

Even customers of healthcare ERP market leaders – Infor, Oracle, and Workday – reported challenges.

“A few Workday customers have moved to Oracle or Infor after insufficient issue resolution,” the report stated. “A couple of respondents are replacing Infor’s CloudSuite product because of a difficult implementation or poor support, and at least one Oracle Cloud client is replacing the product due to unmet expectations for system capabilities and speed.”

Despite some issues, the three vendors continue to dominate the competitive healthcare ERP market, according to the report.

Workday, Oracle, and Infor drove considerations for ERP replacement or selections since the beginning of 2019. Respondents from the healthcare organizations purchasing a cloud ERP solution during the period were most likely to consider or decide on a product from one of the three vendors.

Other vendors considered less frequently during the process included Kronos, SAP, ADP, Allscripts, Ultimate Software, and Premier, which offered the only healthcare-specific ERP solution at the time.

Larger organizations overwhelmingly went with or were likely to select Oracle, with 72 percent of organizations with over 3,000 beds looking at a cloud ERP from the vendor. Mid-size organizations with 1,501 to 3,000 beds largely went with Workday (78 percent), while it was more of a mixed bag with smaller organizations. About 46 percent of organizations with less than 1,501 beds selected or was likely to select Workday, while 31 percent cited Infor and 23 percent cited Oracle.

The selection/likely selection rates of Infor and Oracle indicated that the vendors are closing the gap on Workday, which saw considerations for their cloud ERP solution surge among healthcare purchasers by the end of 2019, KLAS reported.

Respondents selecting or considering Oracle often cited the vendor’s enterprise platform and full breadth of data, while those using or considering Infor commended the cloud ERP solution’s progress in the last couple of years and its value for the cost.

Additionally, the large number of respondents (38) who said they are replacing Infor’s ERP solution were almost all legacy clients, many of whom were migrated to the vendor’s cloud option. Nearly all Oracle customers considering a replacement of the ERP system (16 respondents) are also considering Oracle’s cloud ERP solution.