Jonathan P. DeShazo, Laishy Williams-Carlson, Rich Pollack

 Jonathan P. DeShazo, MPH, PhD, Assistant Professor, Virginia Commonwealth University, Richmond, Virginia  Laishy Williams-Carlson, Vice President and CIO, Bon Secours Health System Inc. Richmond, Virginia  Rich Pollack, MS, Vice President and CIO, Virginia Commonwealth University Health System, Richmond, Virginia

 This lecture will enable the student to:  Understand health IT governance structures  Discuss IT decision-making  Describe the purpose of chargebacks and chargeback alternatives  Compare methods of IT acquisition  Understand budgeting process for acquisition, upgrades and management

 Boards  Senior leadership forum  Committees  Processes  IT liaison relationships

 Business Monarchy – A senior business executive or group of senior executives  IT Monarchy – CIO or groups of IT executives  Federal – Representatives from each C-level suite or function  IT Duopoly – Two party decision-making between IS and one business group  Feudal – Business unit or process leaders making own separate decisions based on their needs Weill, P., & Ross, J. W. (2004). IT Governance on One Page. CISR Working Paper No. 349.

 Promote equity, alignment, and transparency  Ideally these are your operationalized governance principles Example: you may want a system that allows strategic control at the top while empowering decision-making at multiple organization levels  Are more necessary the more centralized structure you use

 IT Steering Committee comprising of 4 top executives responsible for major investment decisions  IT Governance Committee may be 4 top IT executives responsible for architecture decisions  A formal charter process that winnows down project proposals to those best aligned to organization objectives (We call it “the funnel”)  An escalation process to handle exceptions

 Too little end user decision-making influence Too much emphasis on technology Failure to achieve value Excess IT budget devoted to infrastructure Less business innovation  Too much end user decision-making authority Poor integration between systems Insufficient attention to infrastructure Excess IT budget due to poor economies of scale Wager, K. A., Lee, F. W., & Glaser, J. P. (2009). Health Care Information Systems: A Practical Approach for Health Care Management (2nd ed.): Jossey-Bass.

 Funds associated with purchasing and deploying assets Hardware Software Initial consulting or implementation Training Testing

 Funds associated with support and ongoing costs Staff Software licenses Upgrade/repair hardware User/data/system maintenance costs

 Budget categories Ongoing Support Strategic  Are used to measure and achieve organizational objectives using targets “7% growth in operating budget related to strategic initiatives” “reduce support costs by 2%”

 Acquisition budget challenges Rarely happen on time Cost can change dramatically  Multiple projects Can be hundreds Economies of scale Priorities can change  Support costs get neglected  Plan for upgrades (even when not expected)

 Internal costing mechanism for IT services  Thought to reduces wasteful demand for IT services  User paying for service creates legitimacy  Lead to extra effort ‘calculating the effort’ and perceived inequity between departments  Can also lead to inefficiencies created by user control (e.g. everyone wants own server, best of breed shop)

 Simplified chargebacks Flat, fixed, or per head fees  Bundled charges  Partial chargeback % of cost Easily identifiable things (licenses, telecommunications)  Notional charging

 Outsourcing or ‘Insourcing’  Hardware & Data Centers  Software (SaaS)  Services Call centers User support Maintenance  Entire IS functions

 Lease payments are viewed similarly to debt obligations However operating leases are not on the books as capital expenses Claim depreciation every year as well as deduct interest  Leasing A lower initial cost Greater ongoing costs More flexibility in later adjustments due to no commitment

 Whether you lease or own  Patterns of costs and benefits vary over time Costs are typically incurred early Benefits and value accrue over time  Incorporate these into your planning and ROI

 In this lecture, we discussed  Governance structures  How decisions are made, (e.g. prioritization, process for decision making)  Leasing and other capital financing of information systems  Outsourcing  Chargebacks  Budgeting for IS acquisition, upgrades and management