| | December 20179UTLOOK Healthcare Tech most dangerous position you can find yourself. Have a plan for the team to work from as you approach the market or negotiations. Equally important is that all of this must occur early enough to implement effectively.Business ConsiderationsKnow what the business needs. Overbuying is all too common. It is vital that a methodology be used to scrutinize what is needed, that the business has taken the time to evaluate its practices and processes, and you have clearly articulated what each component will accomplish. Evaluating when to purchase new hardware or software is a strategic decision to which supply chain can add value. For example, weighing the costs of support or maintenance on an aging server against investing in a new one (TCO approach). Timing is key to securing the best overall value for your organization and not running into a break or fix scenario in which the supplier has all the leverage.Define performance requirements. The lack of performance measurements in contracts is far too common and goes beyond the basics of uptime guarantees and initial service response time. Including a clear description of the objectives the software is to accomplish and financial consequences if it does not meet those requirements is critical. It is remarkable how often teams focus on the nuances of terms and conditions that will never get used but gloss over language that will hold the supplier accountable for the very reason you are buying it.Don't let maintenance start before implementation. There is probably nothing more frustrating for IT leaders and business owners than paying for something you are not using. Unfortunately, business process changes, conflicting priorities and unexpected delays all can lead to software sitting on the proverbial shelf. The maintenance or subscription costs may include some development and enhancement of the software, but it often does not make business sense to pay for something until you use it.Watch annual escalators. I am always amazed that hard asset manufacturers can drive down costs more than 5 percent each year of a contract without stifling innovation yet software costs rise annually at alarming rates. This is not sustainable for healthcare, in particular, and will be an area of increased scrutiny for us. Contract ManagementQuote detail. Take the time to educate your team and supplier representatives on the level of detail you expect. This can include line-level detail of hardware, licensing, support, consulting, etc. that can later be used for effective cost accounting by application or even greater detail. This can be especially challenging for value-added resellers that tend to bundle pricing. It all starts with the quote, as this is the basis for effective purchase orders.Use purchase orders. Partner with your supply chain team to get maximize hardware, software and purchased services on PO. This will accomplish several key business objectives: collect purchase detail into your financial or accounting system; automate management of payments; require invoice errors to follow a dispute process; and in general use all key business controls your auditors expect.Don't code invoices. As mentioned under the PO section above, coding of invoices erodes established business controls around procurement. Double payments can occur, invoices can be taken at face value versus validated against the contract, and you will have virtually no purchase detail to perform cost accounting or even a simple purchase history review.Conduct business reviews. The review should follow a standing agenda that includes transparent discussions on performance against the contract, technical performance, new and sun-setting technologies, product life cycles and a host of other technical areas. Include supply chain in these meetings to assist with documenting contract performance, benchmarking services and supporting business owner feedback.While not all of these areas may exist in your organization, your supply chain organization would likely welcome the opportunity to discuss how it can help accomplish your objectives. We have certainly benefited by engaging all members of our enterprise team--business owner, IT, legal and supply chain--as a united front with suppliers, resulting in the best possible outcome in a shorter period of time. HTEvaluating when to purchase new hardware or software is a strategic decision to which supply chain can add value Tom Harvieux
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