Organizational Effectiveness in Implementing IT

By John Glaser	December 13, 2011
Health care organizations face a dizzying array of information technology priorities, forcing executives to carefully consider how they allocate resources.

Whether it's the quest to achieve ACO status, the financial allure of meeting meaningful use criteria of the Health Information Technology for Economic and Clinical Health Act, the must-do ICD-10 conversion, or preparing for evolving pay-for-performance and value-based purchasing initiatives, today's health care organizations face a dizzying array of information technology priorities. As a result, providers not only must consider carefully their spending allocation for health care information technology, but also their own organizational effectiveness in implementing IT.

A variety of studies have identified organizational attributes that appear to have a significant influence on the effectiveness of an organization in applying IT. These factors include:

• the relationship between the IT group and the rest of the organization;
• top managers' support for IT and the quality of the leadership;
• organizational comfort with visionary IT applications and ability to experiment with new technologies;
• organizational experience with IT.

If an IT department has a poor working relationship with clinical staff, it is hard to imagine that the organization would be effective in implementing an electronic health record. If leaders believe that IT is a necessary but barely tolerated expense, it will be difficult for the organization to invest in IT initiatives that push a strategic envelope. If the organization has a troubled history with IT implementations, it will hesitate to take on another strategic IT initiative that suggests another expensive disappointment.

Critical Factors

Two other key characteristics influence the effectiveness of an organization in applying IT: change management and IT governance.

Change management skills enable the organization to direct its identity, processes and structures according to its strategy. An IT initiative often is used as a catalyst for change just as it is used to enable and support change. Even if material change is not envisioned, the implementation of an application system will require some change in workflow and information provision. Organizations that are poor at managing change will be less effective in applying IT.

IT governance consists of the organizational mechanisms by which IT priorities are set, IT policies and procedures are developed, and IT management responsibility is distributed. The effectiveness, transparency and inclusiveness of governance can give IT a boost.

These factors, which are different from the applications being implemented, can be created or changed. The IT strategy development must encompass both the application agenda and improvement in these characteristics and capabilities.

Managing Change

A majority of IT initiatives require organizational change ? change in processes or structure, change in the roles of individuals, or change in the services provided by the organization. IT-enabled or IT-driven organizational change has several possible origins:

• The new IT system has capabilities different from those of the previous system and, hence, workflow has to change and the tasks that staff perform have to change.
• The discussion about the desired capabilities of a new application can lead to a reassessment of current processes, workflow and distribution of tasks among staff and a decision to make changes that extend well beyond the computer system.
• The organization decides to engage in substantial change in its functions and operations. For example, the organization may decide to move aggressively to protocol-driven care.

Change management, an essential skill for leaders of health care organizations, is a facet of virtually all implementations of such applications.

The management strategies and skills required to manage change depend on the type of change. As one moves from modest to transformative, the magnitude and risk of the change increases enormously, as does the uncertainty about the form and success of the outcome.

IT Governance

IT governance strategies must address several governance questions, which can be a complex exercise:

• Who sets priorities for IT and how are those priorities set?
• Who is responsible for implementing information system plans, and what principles will guide the implementation process?
• What organizational structures are needed to support the connection between IT and the rest of the organization?
• How are IT responsibilities distributed between IT and the rest of the organization, and between central and local IT groups?
• How is the IT budget developed?

Problematic governance confuses the organization and creates the risk that the IT department ? as well-meaning and competent as it might be ? will make decisions that are not aligned with the organization's direction.

Good IT governance matters. Peter Weill and Jeanne Ross conducted research that compared organizations with similar strategies. Their study showed that organizations with superior IT governance mechanisms had more than 25 percent higher profitability than those with poor mechanisms. (See IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, Harvard Business Press Books, 2004.) The study showed that just as corporate governance aims to ensure quality decisions about all corporate assets, IT governance links IT decisions with company objectives and monitors performance and accountability.

Strategy Considerations

Perhaps you've heard the adage, Effective implementation of an average strategy beats mediocre implementation of a great strategy every time. Organizations, nonetheless, often fail to operationalize their IT strategies in ways that improve the likelihood of success.

Now more than ever, when a failed IT initiative is no more an option than standing still, the experiences of several industries over many years provide considerations that can help guide IT strategy development. Consider the following:

The realization of IT-enabled value.As the organization develops its IT strategy, it must understand that the acquisition and implementation of an application does not per se lead to value ? i.e., streamlined processes, improved decision-making capabilities or reduced medical errors. This is evident in the wide variety of health care experiences with IT: At times the implementation of an electronic health record clearly improves care, and at other times it has resulted in no significant improvements. For value to result, IT must be well-managed, change in processes must be thoughtfully considered, and ongoing efforts to benefit from the IT investment must be put in place. If value is desired, approaches that manage value into existence need to be developed.

The recognition that IT strategies evolve.IT strategies must evolve. An application system that provides a competitive advantage today becomes an industry commodity tomorrow. The use of ATMs by banks is an example. At one time ATMs provided a bank an advantage. Today ATMs are a stay-in-business expense borne by all banks and distinguishing none of them. In health care, an organization that is in the process of implementing an electronic health record must understand that there will be a day when that implementation is done and when most organizations have an electronic health record. What then?

An organization could argue that it will worry about evolution when the day comes that it needs to do so. However, it is useful to anticipate evolution so steps can be taken to enhance the organization's ability to capitalize on that future.

IT as a way to enhance a competitive position.The organization may need to determine if an IT investment provides a strategic or competitive advantage. An important aspect of competitive strategy is identifying goals and ways to: (1) achieve those goals that are materially superior to the way that a competitor has defined them; and (2) develop organizational capabilities that are materially superior to the capabilities of a competitor. For example, our competitors and we both may decide that we need to implement an electronic health record. However, we might believe that we can move faster and be more effective at managing process change, arriving at a superior outcome earlier.

Competitive strategy should attempt to define superiority that can be sustained. For instance, we may believe that if our organization moves quickly, we can extend the reach of our electronic health record to affiliated providers, making it difficult for a competitor to do the same. First to market can provide a sustainable advantage, although very few IT-enabled advantages are sustainable for long periods of time.

Bringing It All Together

As the industry continues to ready itself for the significant changes expected in the years ahead, we must remember that an IT implementation is not simply about technology. It's about equipping organizations to achieve strategic business gains by providing the tools that make organizational improvements possible. With thoughtful consideration given to strategy, IT governance, and the ability to engage staff members successfully in changing processes to use new technological capabilities effectively, today's health care providers will be well-equipped to face an ever more daunting IT implementation agenda.

John Glaser, Ph.D., is the CEO of Siemens Health Services in Malvern, Pa. He is also a regular contributor to H&HN Daily.

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.

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