Providers Benefit from Moving ERP Systems to the Cloud, KLAS Finds

April 22, 2019 - Healthcare organizations are benefitting from moving their on-premise enterprise resource planning (ERP) systems to the cloud, according to a new KLAS market report.

In the report, ERP 2019: Performance in the Cloud, C-suite executives, IT leaders, and other healthcare managers and directors say moving the ERP system to the cloud provided consistent upgrades and convenience, improved system reliability and uptime, enhanced security benefits, and improved efficiency due to organization integration and access.

Respondents also say cloud-based ERP systems reduced the capital investments needed for on-premise staff, hardware, and infrastructure.

“In the traditionally stagnant market of ERP (HR, finance, and/or supply chain), aging on-premises solutions are giving way to several cloud options now on the table,” KLAS states in the report. “Given the significant lift required to move to a new ERP system, many organizations contemplating the cloud are taking the opportunity to consider all vendors, not just their incumbent.”

The market report shows that realizing the benefits of cloud-based ERP systems hinges on which vendor the healthcare organization chose. Some vendors in the market are better than others when it comes to addressing the top challenges of moving an ERP system to the cloud.

READ MORE: Top 10 Enterprise Resource Planning (ERP) Vendors By Hospital Use

According to healthcare organization leaders, cloud-based ERP systems come with their fair share of issues, including poorly-led implementations, difficult operational change management with internal staff, limited or missing functionality after go-live, and upgrade outages, downtime, and internet-connectivity problems.

Implementation is a significant challenge for healthcare organizations and vendors, the report stresses.

“Product success is often heavily influenced by implementation quality,” KLAS writes. “While the vast majority of interviewed organizations (with the exception of Premier customers) used third-party implementation services, they still expected a certain level of support from their software vendor.”

Healthcare organizations frequently expect ERP vendors to be in the background of cloud-based ERP implementations through a third-party. Executives and other decisionmakers want the vendor to be involved with implementation strategy and design development, as well as conduct proactive check-ins.

Being available to quickly resolve technical or other issues and taking ownership of implementation and customer success are other common expectations healthcare organizations have.

READ MORE: NYC Health’s ERP System to Bring Business Ops to Digital Age

Two of the four cloud-based ERP vendors analyzed in the market report – Infor, Oracle, Premier, and Workday – fell short of meeting implementation involvement expectations, the report shows.

Fifty-seven percent of Infor customers feel the vendor did not meet implementation involvement expectations, and 43 percent of Oracle customers say the same.

“Those customers disappointed in Infor’s implementation involvement view the vendor as reactionary and feel they had to force Infor to get involved. A few also feel Infor didn’t have the right resources or expertise. A couple of more-satisfied customers report that their customer success manager (a new Infor initiative for cloud customers) stayed connected during the project,” the report states.

“Oracle customers with unmet expectations often describe the vendor as uninvolved during implementations and apt to fault the services partner for post-go-live issues,” the report continues. “Additionally, some are dissatisfied that more robust training (beyond the free online resources) costs extra. Other Oracle customers feel their expectations were met or exceeded—some mention having a helpful, knowledgeable assigned representative; some did not expect strong involvement from Oracle.”

In contrast, 43 percent of Workday customers believe the vendor exceeded implementation involvement expectations with third-party implementations.

READ MORE: Data Analytics Add Value to Healthcare Supply Chain Management

Premier customers did not use a third-party to implement the vendor’s cloud-based ERP system. But respondents rank the quality of Premier’s implementation as 7.4 out of nine points.

Workday and Premier’s success with implementation helps the vendors to take top spots in the overall performance category, the report states.

Customers describe Workday’s cloud-based ERP system as user-friendly and view the HR component as mature and complete. Premier customers like the solution’s supply chain module, calling it intuitive and innovative with strong capabilities.

However, customers note that Workday’s finance module is less mature and its supply chain component struggles.

Premier customers also point out that the vendor’s solution lacks an HR component completely. They also say they need “more guidance on how to fully leverage the solution’s robust functionality, and a couple would like the finance tool to be given more priority.”

Each cloud-based ERP vendors have their strengths and weaknesses. But Workday and Infor are the most considered vendors for cloud-based ERP solutions, the report shows.

“Those interested in Workday like the product offering, including the integration between the modules, and often reference Workday’s reputation in the industry. Organizations that are hesitant about Workday cite concerns about supply chain immaturity,” KLAS writes.

“While organizations have expressed interest in Infor’s new cloud solution and broad suite of tools, the cloud solution’s lack of a proven track record gives some organizations pause,” the organization continues. “The Oracle system is seen as having robust functionality. Some organizations rule it out due to price. Premier has comparatively lower mindshare but is considered by organizations who use Premier’s other software or services. Potential customers cite the lack of an HR component as a downside.”

The ERP market is maturing as more hospitals look to implement the solutions that can manage HR, finance, and/or supply chain processes.

Hospital interest and adoption of such systems has been historically low, with just 18.8 percent of hospitals using an ERP system in 2008, HIMSS Analytics reports. Hospitals are warming to the idea of implementing an ERP solution, resulting in the percentage of hospitals using a system to increase to 38.4 percent by 2018.

The healthcare data company projects hospital ERP adoption to steadily increase in the near future as organizations look to improve business operations, contain costs, and move to value-based care.