by Mary K. Pratt

Cloud Computing Leads to Competitive Advantage for Healthcare Firm

Feb 26, 20133 mins
Cloud ComputingIT Strategy

A healthcare CIO moves aggressively to cloud computing so the IT staff is freed up to focus on IT innovations that advance the company’s core mission.

CIO Douglas Menefee put the question to his boss at Schumacher Group, a healthcare company: Do you want to run a software-development company, or do you want to deliver care?

Predictably, CEO William “Kip” Schumacher wanted to focus on healthcare. That’s how Menefee sold him on moving from on-premise applications to software as a service (SaaS) and, more recently, infrastructure as a service.

Menefee says this shift allows his IT staff to do less routine work and deliver more of the IT innovations that enable the company’s core mission.

The plan is to “purchase 80 percent of the solutions and customize the remaining 20 percent that drive the organization,” Menefee says. “We see our [IT] staff as difference-makers. They drive innovations, and for that, cloud is a competitive advantage.”

That perspective is driving many CIOs to put more of their IT operations in the cloud, says R “Ray” Wang, principal analyst and CEO at Constellation Research. “If you’re not doing it, you’re behind. You’re being outsold and outthought,” Wang says.

A December 2012 survey of 157 global CIOs done by Dimensional Research (and sponsored by Host Analytics) found that CIOs cite competitive advantage as one of their top three reasons for moving to the cloud.

Menefee says cloud-based systems provide the best way for IT to keep pace with the company’s 15 to 30 percent annual growth, because he can scale up IT resources quickly. He says cloud gives his staff the agility it needs to deploy custom apps quickly, too.

Cloud computing also mitigates the risks of having the company’s two data centers in hurricane-prone Louisiana and Texas. Menefee says he also believes he gets greater data security from his cloud vendors, who have been carefully vetted for that expertise, than he could hire on his own.

Menefee first used cloud in 2005 when he chose for CRM. Because it was successful, he continued with cloud. “We moved close to 80 percent of our processes into SaaS-type products,” he says. “And in 2012 we became very serious about infrastructure as a service.”

The company is moving about 70 percent of its data-center operations to Amazon Web Services, thereby slashing the number of in-house servers from 270 to 30.

Menefee acknowledges some challenges in the cloud migration, such as getting buy-in from IT staff and ensuring systems integration. But he says cloud computing delivers agility, redundancy, security and uptime, so his staff can focus on innovation in areas that matter to the business.

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