9 things organisations underestimate or overlook when considering total cost of ownership
For most organisations, evaluating new electronic patient record (EPR) solutions is a relatively rare occurrence. It can be difficult for even the most experienced information systems professionals to calculate an accurate total cost of ownership (TCO) for each option.
When reviewing carefully-worded contracts it’s important to know what you’re getting. Here are some questions to ask to make sure you’re not missing some of the most commonly overlooked costs:
1) What resources are we expected to provide?
Contracts are generally clear about what the vendor will provide in terms of man hours, equipment and software. But your obligations are often not clearly spelled out. For example, which team is doing the testing? Where will training take place, and who pays for travel costs?
2) Does the contract reflect what we saw in the demo?
During exploratory meetings, suppliers will often show everything a solution can do. But sometimes what you see in a demonstration is not what is eventually written into the contract. Make sure your deal includes the specific functionality you expect within the contract price and not as optional extras.
3) What are the ongoing staffing requirements?
Consider how many technical people it will take to manage certain solutions on the back end. If you underestimate, you might be forced to ask the supplier to take it on as a managed service – which can be an unpleasant, unexpected expense.
4) Who is responsible for data cleansing?
It might be clear that the supplier is handling the data migration, but the resource-intensive data cleansing work isn’t always clearly defined. Ask who will be putting in the time to get the data ready for use and make sure you have a clear understanding of the Trust resource required for the work involved.
5) What will it cost to update an interface?
Every organisation retains a large number of systems – such as laboratory or patient management systems – that must interface with the EPR. If any change occurs – regulatory or otherwise – will you bear the costs for updating each end of these interfaces.
6) Have we accounted for upgrades?
Remember that no software solution lasts forever. Estimate how often and how many man hours to set aside for periodic upgrades. Also, are the supplier upgrade costs for both the software and the services required included in the contract price.
7) What are the training requirements?
Whether training new employees, or training all employees with each upgrade, you should account for the hours that will be required for traveling and participating in training sessions.
8) Do we own the license, or are we renting it?
Know which of your costs are one-time fees, and which ones are recurring expenses. Some financial models may include fees to extend the period of use of the software that would not be included with outright software purchases.
9) Does the solution exist yet?
Delivery promises sound great, and contract obligations bring some comfort. But if the solution does not yet exist, you carry the risk of that delivery coming late and dealing with the impact of missed promises. If that is a risk you cannot accommodate, go for the option that exists today.
When organisations begin the procurement process, it’s important to be very clear about what they want. They should define what they want, and ask suppliers to commit to an objective, not a deliverable. The world does not stand still. To be successful, organisations should avoid tying themselves to static requirements and instead focus on desired outcomes.