by Ken Ume and Robert Saxby

NHS Trusts: Paying too much for IT?

Apr 25, 2011
GovernmentIT LeadershipIT Strategy

The typical NHS Trust is a complex organisation with an IT infrastructure that spans multiple departments often within multiple sites and supports both internal and remote staff.

IT costs are always an issue and never more than now. Against this backdrop of tightening budgets, Trust CxOs are constantly looking for ways of analysing and lowering their cost base.

In response to these issues, we have just completed a survey designed to provide some insight and solutions.

The survey, completed in March 2011, was conducted across the NHS in England and involved over 60 Trusts from smaller acute trusts to large teaching hospitals.

Comparisons were then made between the Trusts themselves, and also with peer organisations (those of a similar size and IT environment) in the NHS generally and across the commercial sector using this benchmarking database.

Above-average costs

So far, the study has delivered up a wealth of insights, both expected and unexpected. Overall, there was a greater than anticipated intricacy and range of infrastructure costs and deployment models amongst the respondents.

One of the more surprising insights was the fact that there seemed to be little, if any, relationship between IT support costs and the overall size or complexity of the facility.

While nearly one-third of the Trusts have an above-average population of IT users there appears to be little correlation between operational costs and the user count.

What is clear, however, is that a total of 40 per cent of the Trusts have above-average operational spend per user (IT Services to maintain the operation and services) as measured against the NHS average and cross-industry data.

On the face of it, it is tempting to attribute these above-the-norm costs to overstaffing, waste and other management and technology shortfalls.

However, equating high costs with inefficiency can be misleading because it doesn’t take into account the many variables that impact IT infrastructure costs in healthcare.

These range from supporting complex networking technologies through to storage services designed to improve data transfers between consultants and radiology departments to comprehensive service support.

This is the mission-critical domain that many NHS Trust CIOs operate in. Frequently they are not allowed to settle for the average standard and must be prepared to pay a premium to deliver high quality.

Mobility driving up costs

To focus on one area— PC’s — the study also revealed a broad difference in costs among the respondents. All of the Trusts did, however, have one thing in common. All had higher-than-average per-user device costs (see diagram below).

The cost of desktop computers ranged from £230 up to £1088 per unit, while laptops showed an even greater divergence from £348 to £1500.

The higher costs of mobile devices can be attributed to the more rapid technology evolution and comparatively immature management systems that have oversight of the mobile user.

Also, the increased availability of laptops, smart phones and tablet PCs is encouraging the expansion of remote workers and field staff who, in turn, are demanding ever more sophisticated devices.

This trend is driving up IT costs across the NHS, putting increased pressure on management and highlighting the need for greater sharing of best practice around device management and upgrade-purchasing discipline.

Whether desktop or laptop, when compared with cross-industry benchmarks, a large number of the NHS survey respondents reported an above-average device cost.

For desktop PCs, this ranged from 24 per cent to 43 per cent higher than average, and for laptops the range was between 27 per cent to 59 per cent higher than average.

What can account for:

– A) the divergence in costs among the respondents? – B) the Trust’s unanimous overspend compared to peer average?

Accounting for the Cost

One clue to this disparity is the way in which respondents compile their desktop costs. Some included productivity software and support in their unit costs, whilst others only included the cost of the device itself.

Curiously, in some cases the total cost of hardware and software was less than others who only included the hardware. The suggestion here is that the former were able to negotiate more favourable terms from their suppliers.

There are several ways this might have been achieved. One is to enter into a procurement consortium with other Trusts. Another is to standardise device replacement cycles internally. Both strategies provide volume pricing advantages.

It is interesting to note that some of the higher-cost Trusts demonstrate characteristics similar to commercial sector organisations in the cross-industry database. One of the common patterns being a longer than recommended device replacement regime.

While sweating an asset may minimise costs in the short term, it often results in an overly-complex environment with disparate generations of equipment — each with different software upgrade cycles and connectivity requirements — all of which has to be maintained at the same time.

Evidence suggests that standardising the replacement cycle delivers up much greater savings: in the short term because of volume discounts, and in the long run because it streamlines maintenance costs.

Collaborative Procurement

The results of the study also highlight the importance of gaining pricing advantage through collaborative procurement which is already in place through Strategic Health Authorities although not always followed.

This trend is growing in the NHS and is helping to ensure best practice.

By working together, Trusts can share expertise and achieve volume pricing advantage from suppliers. That is, providing they are able to identify and understand best-practice processes and then negotiate the best terms that will safeguard against downstream risk — scope creep, additional costs and implementation failures.

A well-executed procurement ensures a best balance between quality service delivery and cost management for all Trust partners. By implementing best practices, on-going support and deployment costs will also improve.

In approaching a collaborative procurement project it is vital to first identify those areas where sharing responsibilities and costs will bring tangible efficiencies.

It is equally important to ascertain, but not assume, that all of the partners have complementary IT strategies.

Some, for example, may require a best-in-class level of IT service, while for others this isn’t a priority. In any case, determining what characterises a best-in-class service, and what real benefits it delivers, is not necessarily obvious.

Before embarking on a major collaboration, it may be advisable to first conduct a comparative study of the partners’ IT environments to assess the viabilities, and then to benchmark these against the peer universe for best practice solutions.

Ken Ume is consulting director and Robert Saxby is business development director at ImprovIT

Pic: Wonderlanecc2.0