In a competitive industry like healthcare, having a solid financial foundation is more important than ever. Margins can be razor-slim, and with myriad options for consumers to choose from, a provider needs to be best-in-class just to stay in the game. That means that they need to run lean, and channel their savings into growth and innovation. This ambition also needs to be tempered by the fact that most healthcare organizations are large enterprises that are managed prudently, and they must prioritize concrete ROI when it comes to new initiatives.
In that spirit, Northwell Health leveraged Apptio’s Financial Management solution to help them optimize their spending and increase business agility. With purpose-built solutions for managing IT finances, they’ve moved on from legacy tools such as spreadsheets, and now spend less time wrangling data, and more time analyzing it, to provide useful information and actionable insights. This shift in productivity makes for a better-informed business and facilitates data-driven decision-making—innovations that bode well for future growth and expansion.
Northwell Health corporate overview
Northwell Health is New York state’s largest healthcare provider, operating 23 hospitals and 750 outpatient facilities, and treating more than 2 million patients annually. With $12B in OpEx spend and 69,000 employees, it’s also the largest private employer in the state. Like many large enterprises, Northwell has historically managed its financial planning (including IT financial planning) through various manual methods (such as spreadsheets), which not only leaves much room for error, but also hampers the speed and agility of the business. To maintain it’s role as a leading healthcare provider, Northwell recently launched a system-wide, comprehensive fundraising campaign to propel innovation, and to transform the state of healthcare.
The “old” way of budgeting
Northwell Health used to do their budgeting process annually, and as with many other large enterprises, Microsoft Excel was the de facto tool for managing the annual operating budget. As such, the process was entirely manual, which exposed them to the multiple complications inherent in spreadsheets: the potential for human error, data redundancy and version control issues –not to mention the difficulties of collaborating.
“We were spending 90% of our time aggregating the data and 10% of our time analyzing the data. And that is not the position you want to be in”, says Addison Paige, Director of IT Financial Operations.
In fact, such a scenario is fairly common in many organizations that don’t leverage purpose-built tools to manage their IT finances. For most legacy businesses, getting mired in spreadsheets is “just the way it is”—an everyday hurdle that needs to be surmounted. Not only is this an intensely time-consuming process—some finance teams spend hundreds of man-hours reconciling budgets and wrestling with spreadsheets—the time-suck means that these teams aren’t doing enough of the meaningful and “real” work of analyzing IT spending and generating actionable insights. Without dedicated tools to help handle the grunt work, IT finance teams are stuck making sense of chaos, which leads to very little sense at all.
An additional downside—beyond the obvious one of wasting time on busy work—is that when IT Finance analysts can’t present concrete actionable data on spending, investments, and performance, they cannot earn the trust of other business stakeholders. IT gets pigeonholed as “just another cost center”, a black box of finances that can’t articulate its value or demonstrate worth. To earn its seat at the table, IT must be able to manage itself like a business, and that means using tools that are more sophisticated than spreadsheets. When the rest of the business has corporate performance management (CPM) and enterprise resource management (ERP) systems to leverage, IT can’t just get by with a web of interlinked spreadsheets to crunch its data.
There must be a solution
This state of affairs couldn’t last long. Luckily, that realization came fast. “We knew we needed a single source,” says Paige. They needed a single system to accommodate all of their disparate data systems, which would serve as the inputs. “We needed a robust data warehouse. We needed a tool that could accommodate data entry at very granular levels for both operating and project spends. And lastly, we needed a tool that had business intelligence capabilities in terms of dashboards and drill-throughs.”
In the search for better IT financial management, they came across Apptio. However, one final hurdle remained. Margins tend to be slim in the healthcare industry—doubly true for Northwell Health as a non-profit. Before committing to any initiative, they needed to ensure that there was a clear level of value and an expected ROI. As such, getting executive buy-in for Apptio IT Financial Management Foundation was a key step in the journey towards building a discipline for IT financial management.
Getting stakeholder buy-in
Fortunately, it was clear to many of the decision-makers that there was an absolute need for an ITFM solution. One main reason was to escape the overly-manual processes their IT Finance team used because the frequency at which they were providing data to the business stakeholders was not conducive to timely decision-making, nor did it match the pace at which the business wanted to grow. Thus, Northwell Health was primed for a robust solution to their IT financial management woes. This was evident when Apptio was proposed.
“We ultimately presented to the CIO, who was in full support of the initiative. One of Northwell’s five core values is to be truly innovative. That tone really resonated at the top. And this is an innovative thing that we are doing”, says Paige.
The new normal
With Apptio, Paige’s team has entirely changed the way they work. They spend more time doing the meaningful work of analyzing their data and gleaning insights, rather than just pulling the data from various sources, cobbling it together, and ultimately struggling to get a full picture of their IT spend. Having a single source for all their data has enabled the team to not only focus on the core work of analyzing and optimizing their IT spend, but has also led to better alignment with the business. With clarity and transparency of data, the team has more confidence to present their data to other teams.
In the initial stages of adopting Apptio, Northwell Health was wise to set their ground-level goals. They realized the importance of having a solid financial foundation before attempting to tackle the long-term goal of leveraging cost transparency, in order to fully understand infrastructure costs at a more granular level, as well as application costs from a total cost of ownership (TCO) perspective. Apptio IT Financial Management Foundation helped set the stage for those future successes by helping Northwell refine its internal processes.
“My team has communicated to me that they saved anywhere between 30-50% of preparation time”, says Paige. “Essentially, we have mitigated or eliminated that initial step, which on average took them 2-3 days to realign, validate, verify, before they were comfortable sharing that information with stakeholders. All the changes to the budget and iterations we do now are transparent, and we have an additional level of confidence from our Corporate Finance function.”
The time savings at Northwell Health have translated into a newfound ability to question and investigate variances. With the additional time, the team is able to focus on the variance between the actuals and the forecast, investigate the reasons, and resolve them in a timely manner. This has helped the team more closely align forecasts to be well-aligned to the actuals, thereby reducing the budget variance.
The future with ITFM
An added benefit of a single-source-of-truth solution such as Apptio IT Financial Management Foundation is that it helps facilitate transparency and collaboration. Using a consolidated tool allows end users across the business to share data and analyze for insights. This is a far cry from the days of spreadsheets, where version control issues and reconciliation meant that often only one person could work on them at a time. With sophisticated purpose-built tools, teams can collaborate on financial planning and management with minimal friction –and all the data and work is captured in the system.
With Apptio, Northwell Health has a newfound agility to examine their IT financials. Historically, the team was providing only financial data, infrequently and on a monthly basis. Now, bolstered by the technological capabilities of Apptio’s solutions, they can provide financial and project-related metadata, on a daily basis, and with relative ease. By delivering such insights, IT has earned the trust of fellow stakeholders, and demonstrated its value as a strategic business partner. The information and insights that IT provides fuel the business, enabling them to make decisions more rapidly. Informed decision-making at speed is what will allow Northwell Health to grow and expand, and evolve to meet changing customer needs.