290
CHAPTER 7 Processes, Organizations, and Information Systems
Ironically, because of prior problems with technology proj-
organizational information system.
7-12. Explain why a healthcare exchange requires an inter-
ects, the Oregon legislature required the state to hire a quality
assurance contractor, Maximus Corporation, to oversee the
7-13. Using knowledge from this chapter, summarize the
difficulties and challenges of developing interorgani.
zational information systems.
project. From the project's start, Maximus reported significant
problems involving divided control, lack of clear requirements,
inappropriate contracting methodology, lack of project plan-
ning, and lack of progress. It is unclear to whom those reports
were delivered or what was done with them. In January 2013,
when the head of the OHA project received another negative re-
port in a long string of such negative reports, she threatened to
withhold Maximus' payment.
Alas, when, in January 2013, The Oregonian asked Rocky
King, the director of Cover Oregon, whether the system would
work, he responded, “I haven't the foggiest idea."25 Sadly, when
the fog cleared, the exchange failed. In March 2015, Cover
Oregon was shuttered.
dential data about their users. Write a one-paragraph
7-14. Healthcare exchanges must utilize personal and confi-
policy that stipulates responsible processing and star-
age of this data.
Access CT success.
7-15. Explain what you believe are the reasons for the
7-16. Read the Executive Summary of the First Data report
located at www.oregon.gov/DAS/docs/co_assessment,
pdf. Summarize the report's findings.
Questions
7-17. Using the facts described in this case and your answer
to question 7-16, list five key learnings you can take
7-11. Summarize the purpose and intended benefits of a
healthcare exchange.
from the Access CT and Cover Oregon projects.
Sonora
shellano
TM
MyMISLab
Go to the Assignments section of your MyLab to complete these writing exercises.
7-18. Using the patient discharge process in Q7-3, explain how the hospital benefits
from an ERP solution. Describe why integration of patient records has advan-
tages over separated databases. Explain the value of an industry-specific ERP
solution to the hospital.
7-19. Go to www.microsoft.com and search for Microsoft Dynamics. Ignore Dynamics
CRM. Have any important changes occurred in Microsoft's ERP product offer-
ings since this edition was written? Has Microsoft brought a cloud-based ERP
solution to market? Have any of the four ERP systems described in the chapter
been better integrated with Office or the Microsoft Developer's platform?
Using your knowledge guided by experience, what do
intentions with regard to ERP?
you think are Microsoft's
ENDNOTES
пороті.
SV
inside-the-mind-of-the-white-collar-criminal
.
8 Ibid.
1 The subject of this chapter is structured processes, and we will discuss
process quality in terms of them. Note, however, that all of the
concepts in this question pertain equally well to dynamic processes.
2 D. Peak, "An Interview with John Halamka, MD, Chief Information
Officer, Harvard Medical School and CareGroup Health System, USA."
Journal of IT Case and Application Research, 10, no. 1 (2008): 70.
3 Panorama Consulting Solutions, "Clash of the Titans 2016."
Panorama-consulting.com, November 2015, http://go.panorama-
consulting.com/rs/603-UJX-107/images/Clash-of-the-Titans-2016.pdf
.
4 Brian Krebs, “Data Theft Common by Departing Employees,
Washington Post, March 7, 2016, www.washingtonpost.com/wp-dyn/
content/article/2009/02/26/AR 2009022601821.html.
5 Devlin Barrett, "FBI Warns of Rise in Disgruntled Employees Stealing
Data." Wall Street Journal, March 7, 2016, www wsi com
6 Bill Barrett, "Inside the Mind of the White-Collar Criminal " Amund
Web, March 7, 2016, www.accountingweb.com/technology/trends/
7 Krebs, "Data Theft Common by Departing Employees.
9 Stacy Collett, “5 Signs an Employee Plans to Leave with Your
data-protection/5-signs-an-employee-plans-to-leave-with-your-company
Company's Data," CIO, March 7, 2016, www.cio.com/artide/29377
Health Exchange Software Used in Connecticut.” Baltimore Sun
11 Andrea Walker, Meredith Cohn, and Erin Cox, "Md. Votes to Adiya
data.html
720
ſhimar
April 2, 2014
Health
Insurance
Company
Stata
Stata
State
State
Agency
IO GO
Web Site
Back-End
Analysis
Processes
Individuals and
Small Businesses
Federal
Federal
365 dni bodia
organelor
Healthcare Exchange
Interorganizational IS
Federal
FIGURE 7-23 10 1700 bar
obnosti bo
Federal
Federal
Agency
for CIGNA, a health services organization. 14 Wadleigh's primary
system.
assignment was to hire and manage an outside contractor to de-
velop the exchange Web site and supporting backend code and to
manage the implementation of the exchange information
VDS 2511201009
9
02
By June 2012, Access CT had created a project plan and be-
gun a search for the contractor to develop the site. By September
2012, it selected Deloitte Consulting LLP. At the time, Wadleigh
stated, "With only 12 months until the Exchange goes live, we
look forward to beginning our work with them immediately."15
That summer, in an interview on July 13, a local press re-
porter asked CEO Counihan, "Can you get it done on time?" His
response: "This state's going to get it done in time."16
And it did. By the end of the federally mandated deadline,
Access CT had enrolled 208,301 Connecticut residents,
Connecticut had become a model for state-run exchanges.
22
17
and
gone operational on October 1, and it strains credulity to believe
that it took 3 weeks for the news of the failure to reach him. In
any case, it is safe to assume the governor was not a “hands-on
manager" of the project, nor did he delegate any senior elected
official to take that role.
According to First Data,21 from the onset, the project suf-
fered from divided direction. Cover Oregon is a quasi-indepen-
dent corporation as is Access CT, but the exchange information
system was to be developed by a different governmental agency,
Oregon Health Authority (OHA). Personnel in the two agencies
engaged in turf battles and held deep differences about project
requirements. These differences resulted in always-changing,
inconsistent direction to software developers.
Further, unlike Access CT, OHA did not hire a supervising
contractor for the project, but instead decided itself to take an
active role in the software's development. Unfortunately, the
agency suffered high employee turnover and had difficulty hir-
ing and keeping qualified personnel. OHA did hire the services of
a professional software development company to create major
software components. However, of the three finalists for this
work, two dropped out at the last minute, and the winner by de-
fault, Oracle Corporation, became in essence a sole source ven-
dor. Consequently, Oracle was able to negotiate time and materi-
als contracts rather than contracts for specific deliverables at
specific prices. Later, when problems developed, Oracle was paid
tens of millions of additional money for change orders on that
same time and materials basis. OHA also attempted to do much
of its own programming, but the team had no experience with
Oracle and lacked both developers and managers.23
Cover Oregon
The outcome was not so positive in Oregon. After spending near-
ly $250 million, the exchange was clearly inoperable, and the
exchange's board of directors decided to stop development and
utilize the federal exchange instead 18 After this decision, the
Oregon legislature hired an independent company, First Data
Corporation, to investigate the causes of this debacle."
Unlike in Connecticut, neither Oregon's governor nor any
other elected official was directly involved in the project. In fact,
in January 2014, the governor stated that he'd only become
aware of the failure in "late October "20 The site was to have
which olyo
you think is better? Justify your answer.
7-10. Assume your team is in charge of the implementa-
tion of the system you recommend in your answer to
CASE STUDY 7
A Tale of Two Interorganizational IS
simplify and partially automate the selection process. Exchanges
also promote fair competition among health insurers.
other goal for exchanges is to help consumers navigate the com-
Besides simplifying the selection of health insurance, an-
plex array of governmental assistance options and possibilities,
Depending on income, family size, and other circumstances,
some consumers are entitled to Medicare and a variety of other
sumer provides personal data about income and family situa-
tion, and the exchange uses automation to contact various gov-
ernmental agencies to determine that consumer's eligibility.
Given this determination, the exchange then offers insurance
products appropriate to that particular consumer's situation.
exchange, a con
The Affordable Care Act (also known as Obamacare) requires
the creation of healthcare exchanges that necessitate the devel-
opment of interorganizational information systems. States were
encouraged to set up exchanges for their own residents, but if
they elected not to do so, the states' residents could use an ex-
change developed by the federal government. About half of the
states decided to use the federal exchange. The remainder devel-
governmental programs. Thus, when using an
oped their own exchanges (and supporting information sys-
tems). These many parallel development projects give us a
unique opportunity to learn from the experience of similar proj-
ects that had, in some cases, very different outcomes.
Consider, for example, Connecticut and Oregon. The state of
Connecticut created an exchange named Access CT. It was deliv-
ered on time and on budget and has been such a success that the Exchanges are supposed to pay for themselves by charging a
state of Maryland stopped developing its own system and li- modest fee to insurers.
censed the Access CT solution instead. Other states are consid- Figure 7-23 shows some of the organizations involved in a
ering licensing Access CT as well. On the other hand, the state of healthcare exchange. Clearly, an interorganizational informa-
Oregon created an exchange named Cover Oregon that was a tion system is needed. As you know from this chapter, such proj-
complete and utter failure. Cover Oregon was never operable de- ects are difficult to develop and manage, and it is not surprising
spite costing more than $248 million in U.S. and Oregon tax dol- that some states failed.
lars. In May 2014, the U.S. attorney's office in Portland opened
a grand jury investigation into the project.
Access CT
Why were there such different outcomes? The two states
qonu
started their projects about the same time, they had the same Access CT is a quasi-public corporation. The chairman of the
scope and goals, they began with about the same funding (Cover board is Connecticut's Lieutenant Governor, Nancy Wyman,
Oregon eventually spent nearly twice as much as Access CT), who set out in the summer of 2012 to find an appropriate CEO.
and they had the same required finish date. There is no substan- A nationwide searched identified 74 candidates, and in July
tial difference in the population of the two states; Connecticut
has about 3.5 million people and Oregon about 3.9 million.
2012, the Connecticut governor hired Kevin Counihan.
What caused the different outcomes?
12
president of a private health exchange in California.''
What Is a Healthcare Exchange?
To begin, a healthcare exchange is an online store that offers
health insurance products to individuals and small businesses.
Choosing medical insurance is a complex process with many dif-
ferent levels of coverage and costs, and selecting the right policy
is difficult and confusing for most people. Exchanges are thus
created not only to offer medical insurance policies, but also to
Counihan had more than 30 years of experience working in
the insurance industry and had been a key player in the develop-
ment of the Massachusetts healthcare system (widely regarded
as the model for Obamacare). Most recently, he had been the
Counihan holds a master's degree in marketing, and it
shows. As soon as he was hired, he began a series of press confer-
ences to explain the nature and goals of the project to the public
Within a few months, Counihan hired senior staff with deep ex-
perience in insurance, including Jim Wadleigh, Chief Information
Officer. Wadleigh had been director of application development
i
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