Case Study
Case Study: Transforming the Organization
Use the Week 5 Case Study Template to complete this assignment.
Congratulations! The executives are taking your information system proposal seriously. In fact, they thinkit has the potential to transform the way the organization works.
The CIO asked you to read Too Much of a Good Thing to think about what resources you will need to get your newinformation system up and running. Please also review the five case studies in The Leader’s Role in Managing Change soyou can recommend a change management pattern for your company to follow.
Write a memo to the CIO that describes how to implement your information system into the organization. Please focus on these topics:
How much of the implementation work can you handle? What additional resources (people, information, time, money, etc.) will expedite the process so you don’t end up like Susie Jeffer?
What is your change management strategy? Provide an outline. Consider:
What new equipment and software are necessary?
What training and support will the staff need?
How will the staff complete their work during the transition period?
Do you anticipate other areas of resistance?
The CIO is very skeptical, so provide evidence that your assessment is accurate and complete. It can be difficult to admit to personal limitations!
Your memo should be 35 pages long.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course.
The specific course learning outcome associated with this assignment is:
Develop an information systems solution to address an organizational problem.
Case Study A: Business and Technology Transformation in Utilities
In 1994, the management of a leading water service company in the United Kingdom looked to business and technology transformation to explore new ways of working with new customers and to provide greater commercial focus, flexibility, and growth. The motivation for this was provided by the global financial crisis and tighter regulatory price control. As with other transformations, there are patterns of sequence such as crisis, exploration, awakening, followed by visioning and engagement with the organization (Ruddle, [23] , p. 138).
The transformation resulted in fundamental shifts in processes, behaviors, ways of working, and the enabling mechanisms of the organization. The change took more than three years and demonstrated both emergent and intentional change as it evolved. Contextual issues like politics, governance, and organizational structure influenced success at a number of points. The leadership team remained largely unchanged. The members experience was limited to single large projects but not of such a massive complex scale. The resulting leadership style meant more emphasis on factors such as vision, coaching, empowering the front line to lead change, balancing change coordination and control with local ownership, and use of balanced scorecards (Ruddle, [23] , p. 139).
The leaders faced dissatisfaction in the workforce and lack of consistent ownership and values across the company. Early involvement of all stakeholders and consistent and continuous communication were the keys to success for the initiative. Ruddle ([23] ) summarized the factors influencing the successful transformation at the company as follows:
Establishing a business case for readiness to change;
Having a clear, wellarticulated, and owned strategic intent and vision;
Energetic, involved, and visionary leadership demonstrated in the top team;
Focusing on customer propositions and the core processes and capabilities to deliver them;
Ownership of the values outlined throughout the organization;
Alignment of the enabling factors, particularly reward, performance, and structural mechanisms;
Change style that used highlevel outcomes across a spectrum of balanced measures; and
Exploring and experimenting with new ways of working to shape intent for success of the program.
Case Study B: MarketDriven Technology Transformation in Health Care
HCA, one of the world’s leading health care facilities operators, embarked on multiple initiatives over a period of years to deploy technology solutions to improve health care. Significant projects included establishing a clinical data warehouse and a big data resource to support predictive modeling. The organization’s leaders also aimed to leverage size and scale to drive cost efficiencies, using our multimarket positions to test new and innovative ideas, using our collective operating intellect to drive best clinical and management practices across the enterprise (McKinsey, [16] ). They implemented strategic pilot initiatives to ensure people closest to execution could provide input and solutions based on their collective experience to ensure effective skills transfer and planning. Specialists met with staff to mentor them and transfer knowledge and staff were trained in proven bestpractice processes.
The significant leadership characteristics identified from this case study are:
Identification of improvement opportunities. Leadership recognized the opportunities in the industry.
Rightsizing. The right team, with the right skills was in place to execute the plan with the abilities to adapt appropriately, when circumstances changed.
Detailed plan. A clear and detailed operating plan was in place with appropriate metrics and checkpoints (balancing both shortterm and longterm goals) and was communicated across the organization.
Alignment of technology with business. The operations team was made an integral part of strategic planning and development.
CEO’s regular interaction with employees. Relationships with people across all levels ensured better buyin of a new initiative.
Case Study C: IndustryFocused Technology Transformation in Financial Services
As in other parts of the world, the banking sector in India strongly emphasizes technology and innovation. Initially used to provide support for internal requirements pertaining to bookkeeping and transactions processing, technology soon enabled banks to provide better quality services at greater speed. Internet banking and mobile banking made it possible for customers to access banking services from anywhere at any time.
The banking sector is an example in which IT infrastructures have had implications for economic development. A customer is now empowered to choose a service from a range of providers. Customers are increasingly individualistic and choosy and have started to demand transactions on their own terms. The predicted entry of nonbanks in retail banking has made this scenario even more competitive (Padmanabhan, [21] ).
The significant leadership characteristics identified from this case study are:
Planning for increasing customercentric products and intensifying competition. This may also imply a change in strategy for marketing hightechnology products that result in a probable change in mission and vision in some cases.
Achieving a balance among people, process, and technology involved in the transformation. This may also mean that you have to press the pause button while engaging the top management once in a while, for effectively bridging gaps between the IT and business teams, said G. Padmanabhan, executive director of Reserve Bank of India, at a conference of the Institute for Development & Research in Banking Technology in Hyderabad (Padmanabhan, [21] ). The support of top management for IT was crucial.
Technological transformation leaders drive the scientific and technological innovation processes in hightechnology industries to improve operations by innovation. The entire organization gets involved in the innovation process and is aligned with the organization’s strategy.
Case Study D: Postmerger Technology Transformation in the Technology Sector
Lenovo’s acquisition of IBM’s PC operations implied a technology transformation to support the new operating model, spread across 160 countries, and the need for standardization of operations. Legacy IT systems were replaced by a global enterprise resource planning (ERP) system to standardize processes while remaining receptive to local variations and statutory requirements (McKinsey, [15] ).
The PC market has traditionally had a very thin profit margin. The new IT solutions were needed to enable the company’s global operating model with new business capabilities and support the newly diversified customer base and global backend operations. There was a clear need to link business strategy with the IT transformation road map. Rather than outsourcing, the focus was on building an internal team. The major releases of the new system were delivered on schedule and on budget. Standardized global operations for finance and the supply chain were launched and migrated to all strategic platforms. Overall, IT spending as a percentage of revenue dropped from 2.8 percent in 2008 to 1.3 to 1.4 percent in 2010 because of the initiative.
The significant leadership characteristics identified from this case study are:
Because it had a globally dispersed and transformation inexperienced team, the people strategy was to gradually build the internal IT team. Culture integration was critical. According to the company’s vice president of human resources, It’s not about what Lenovo used to do or what IBM used to do, but rather what we want to do together, combining the best of both organizations (Tang, [24] , p. 43).
ITbusiness alignment was important, as was understanding that not all business requirements can be accommodated. The initial focus was on delivery of functionalities that are critical to business operations; fancy features/enhancements were secondary.
Supportive leadership from the very beginning was key to success.
Robust monitoring and continuous impact assessment led to resource coordination and benefits realization. The responsibility and scope of the ERP implementation project was clearly defined and controlled. The project team was balanced between IT professionals and end users.
Change champions/agents were deployed who consistently advocated the benefits of ERP systems to engender commitment.
There was a clear understanding of the business model, as well as a deep understanding of the legacy systems that were being phased out.
Case Study E: ERPEnabled Business Transformation in Manufacturing
To support its newly developed centralized supply chain and year 2000compliant general ledger system, a supplier of wiring harnesses for the automotive industry with facilities in the United States, Mexico, and Canada embarked on a plan to implement ERP.
A teamapproach was followed that eventually received consensus to proceed at a corporate level. A learning environment was established based on appropriately responding to technological changes or learning from other organizations that had achieved best practices in the industry (Motwani, Subramanian, & Gopalakrishna, [18] ). The significant leadership characteristics identified from this case study are:
Communication was open, leading to information sharing, crossfunctional training, and personnel movement within the organization. Use of external information included employees, consultants, and customers.
Three crucial teams were deployed to ensure successful implementation: a strategic thinking team, a functional consultant/business analyst team, and an operations team.
Leaders worked very closely with the ERP vendor during the implementation process with appropriate process metrics.
Leaders had accepted that there would be glitches and did not point fingers when they occurred; instead, lessonslearned documents were compiled to avoid repetition of mistakes.
Managers were able to take all employees in their fold. Thus, they willingly went the extra mile to support the project. Change champions were deployed for change advocacy. Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016
2016 ISCAP (Information Systems and Computing Academic Professionals) Page 34
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Teaching Case
Too Much of a Good Thing:
User Leadership at TPAC
Brett Connelly
[emailprotected]
Tashia Dalton
[emailprotected]
Derrick Murphy
[emailprotected]
Daniel Rosales
[emailprotected]
Daniel Sudlow
[emailprotected]
Douglas Havelka
[emailprotected]
Information Systems & Analytics
Miami University
Oxford, Ohio, 45255, USA
Abstract
TPAC is a small third party health claims business that was seeking avenues for revenue growth and
opportunities to increase efficiency. One course of action that management selected to achieve these
goals was a change in the software application used to process claims. The new application was
adopted to increase the speed and accuracy of claims processing. Given the enthusiastic motivation of
the claims department manager, Susie Jeffer, and the importance of the new application to the Claims
department; Susie was selected to lead the project. The case details the challenges the organization
faced by selecting a leader for this critical project that had no project leadership experience or IT
background. The implications of this decision on the business operations are presented and then
solutions to the situation are explored. This case is targeted for an MBA IT management or strategy
course; but could be used in an introductory course, a systems development course, or a senior-level
undergraduate IS/T capstone course.
Keywords: teaching case, systems selection, project management, leadership
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Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016
2016 ISCAP (Information Systems and Computing Academic Professionals) Page 35
http://www.isedj.org; http://iscap.info
1. INTRODUCTION
It was a Monday morning in late October, a chill
wind was in the air. Susie Jeffer leaned back in
her chair, reflecting that her over-priced Chai
tea latte and dry scone were not going to be
enough to get her through the difficult meeting
scheduled in the next hour with the company
president.
Recently hired as a claims manager, Susie Jeffer
had joined TPAC after 15 years in the healthcare
industry. TPAC is a small third party health
claims business located in El Paso, Texas. The
company recently hired a new President with
over 20 years’ experience from a large third
party health claims competitor and was planning
to grow the business. To facilitate this growth, a
review of the IT (information technology)
infrastructure had been performed and a
recommendation made to update the claims
processing software application to lower costs
which would allow TPAC to compete with its
larger competitors and attract new customers.
The previous claims processing system did not
have necessary capabilities to meet client needs.
TPAC had become known for its flexibility in
customizing benefit plan designs to help clients
provide their employees an affordable benefit
package that fit within the companys budget.
The previous system did not have the ability to
auto adjudicate claims without manual
intervention. Auto-adjudication is the ability to
approve (or deny) a claim based on the facts of
the claim and the benefits plan, without needing
a human to validate it. Being a small company,
it was difficult for TPAC to expand business
without a claims system that could auto
adjudicate claims. The primary benefit of having
a system that requires less manual intervention
is to allow the Benefit Administrators (claims
processors) the ability to focus on clients higher
value needs; such as reports, claim
adjustments, phone calls and other necessary
tasks. The current system was restricting
TPACs potential to capture a larger market.
From Jeffers perspective, she had done her level
best to implement the Presidents new vision for
TPAC. It had taken great courage volunteering
to take responsibility for the implementation of
the new IT system without any prior background
in IT. Further, she had been the sole TPAC
associate to receive the training on the new
system! Further still, the training had only
lasted two weeks she was doing her best with
what shed been given. As far as she was
concerned, her best had been stellar.
However, Jeffer was still fuming over senior
managements recent criticism concerning the
lack of programming she had put into the new
system. If more capabilities were to be wrung
out of the system, she would need a team to
implement additional upgrades.
Jeffers upcoming meeting with company
president Sandy Davis had her worried, since
Davis had become critical of Jeffers handling of
the implementation. Davis unabashedly voiced
the opinion that TPAC now found itself back in
the same spot they had been with the old
system: it needed manual intervention, it was
error prone, and it slowed claims turnaround. As
she sipped at her Chai tea, Jeffer contemplated
the long hours of work ahead. How will her
employees adapt? Will her customers see a
benefit? Or, will the company lose customers
rather than grow the business?
2. THE ROLE OF A TPA
The traditional value stream (Exhibit 1) within
the health care industry was for an employer to
find a health care insurance company like Blue
Cross, Anthem, or United Health Care to provide
health benefits, assume payment risk, and
process claims and payments for employees and
service providers. This value chain came at a
very expensive premium cost to the employer.
As health care costs continue to rise, employers
have been searching for ways to reduce the cost
of employee healthcare.
A recent change in the value stream (Exhibit 2)
in the administration of health care for
employees has been for the employer to assume
all payment risk as a self-insured company and
contract a Third Party Administrator (TPA) that
will handle the health claims and payments.
The TPA is neither the insurer nor the insured.
Their task is to handle the administration of an
agreed upon benefits plan that includes the
processing, adjudication, and negotiation of
claims. They also provide record keeping and
general maintenance of the plan. The only
difference in a TPA role versus a fully insured
carrier is the TPA doesnt fund the payment of
the claims; rather, the payment of claims is
funded by the client.
The two main drivers for the use of third party
administrators is lowering health care costs and
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Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016
2016 ISCAP (Information Systems and Computing Academic Professionals) Page 36
http://www.isedj.org; http://iscap.info
better plan design for company specific
employee demographics and needs. Savings are
significant because the company only pays for
the administration of actual claim costs versus
an insurance benefits offerings that may or may
not be used. Insurance company administration
of claims is also much higher than a specialized
TPA (whose focus is only on creating and
administering the plan).
The TPAs have specialized software and
processes that allow for timely and less
expensive alternatives than the insurance
companies. Typical cost savings a company can
expect when moving from a fully insured plan to
a self-insured plan with a TPA can be seen in
Exhibit 3. An added benefit to the TPA business
model is that it shelters the company from any
concern of HIPAA (privacy) violations.
3. TPA PROCESSES
The claims system is programmed to process
claims according to the plan design. One of the
major benefits of being self-insured is that each
client (employer) can customize their healthcare
plan based on the needs of their company and
their budget. This means clients are not sold
cookie cutter plans that may include features
that are not needed or may not include features
that are very desirable. As each clients plan is
designed uniquely for them, the claims
processing system needs to be a robust system
without plan setup limitations.
Every client has a different plan design which
includes items such as:
Eligibility – Determines the requirements
of the employer regarding the number of
hours an employee must work to receive
benefits.
Dependent Age.
Timely Filing – Each employer
determines the length of time within
which a claim must be filed in order to
be considered for processing (standard 1
year).
Plan Design – This includes deductible,
copays, and coinsurance
Benefit Structure this includes the
definition of services that are covered or
excluded and defines visit maximums on
necessary services (physical,
occupational, and speech therapy; and
chiropractic services).
The goal of the system is to auto-adjudicate as
many claims as possible, thus limiting the need
for manual intervention while maintaining the
quality guidelines. Auto-adjudication simply
involves checking each of the claims for required
information and restrictions and determining the
amounts to be paid.
Also, the system needs to be able to
accommodate any clients reasonable request.
The more adaptive the system, the more able
the claims administrator is to retain clients and
increase future business. Providing quality
healthcare for employees is expensive;
therefore, employers need to rely on innovative
TPA companies to assist in cost containment
solutions.
4. NEW CLAIMS SOFTWARE APPLICATION
SELECTION PROCESS
As TPACs new president, Sandy Davis first
decision was to upgrade the IT infrastructure;
and specifically the claims processing
application. Davis convinced the board that a
new system was necessary to achieve revenue
growth and capture top-tier clients. A new
application would increase flexibility for creating
benefit plans and offer scalability allowing TPAC
to grow by capturing larger volume clients.
With the prior system, each claim was manually
processed by a Benefits Administrator. Since
there was no auto processing of claims, the old
system allowed room for more errors and
inconsistency. There were instances where
claims for the same procedure were handled
differently: one claim was entirely covered,
another partially covered, and a third denied.
Ultimately, this slowed the process of claims
processing and inflated the claims error
percentage.
Davis tasked the Executive Management Team
to narrow the choices for the new system. An
industry consultant was retained to assist the
Executive Management Team in exploring the
alternative software solutions that would
adequately fit their needs. Following weeks of
debate, the options for the new application had
been narrowed down to two: TreatFirsts
Excaliber system and BigHealths Benefitica IT
suite.
The system finalists were very comparable.
They both met the requirements for benefit plan
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Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016
2016 ISCAP (Information Systems and Computing Academic Professionals) Page 37
http://www.isedj.org; http://iscap.info
design flexibility and allowed for Consumer
Driven Service products to be linked to each
client rather than requiring a separate
application to administer Health Savings
Accounts, Flexible Spending Accounts, and
COBRA (COBRA is health insurance that must be
provided to employees when they are
terminated).
TreatFirsts main disadvantage was that
Excaliber took more time to set-up each benefit
plan. However, this was mainly true because
the application allowed the benefit plan design to
be more detailed, thus increasing the accuracy
rate of claims processing as well as tightening
up measures to increase the auto adjudication
rate. With the Excaliber system, TPAC could
place more clients on the system without having
to hire more Benefits Administrators to handle
the additional work load.
On the other hand, BigHealths Benefitica
application was easier to use when building the
benefit plans. There was less coding to be done
which resulted in less time setting up a plan.
The Benefitica system still increased efficiencies
and also had a higher auto-adjudication rate.
However, the integrated details in TreatFirsts
Excaliber were marketed as having a higher
accuracy rate.
The Executive Team invited the five Team Leads
from each department to test the applications.
After each lead was given a demonstration of
both systems capabilities, the Executive Team
interviewed them for feedback. Team Leads
cast their vote on which application they thought
would best deliver functionality and
performance.
Despite their desire to get broad-based input
from all of the departments that would be
affected by the new application, the voting was
rigged. Although each Team Lead had their
opportunity to vote, the voting wasnt kept
confidential. Since the Executive Management
Team had already cast their votes, the decision
came down to the five Team Leads. Jeffer, the
Claims Lead made no qualms about her choice.
(Jeffer would have primary oversight of the
application, it is a claims application and she is
the claims manager.) She cajoled the four other
leads to vote for her choice. The persuasion
worked, as they felt pressured to vote for her
preferred system.
The voting over, Davis revealed that TPAC would
pursue Jeffers choice: the BigHealth system.
Feeling confident by her win and eager for a
promotion, Jeffer volunteered to take on the
configuration and implementation of the
Benefitica IT application. Seeing potential in
Jeffer, Davis tasked her with creating a roadmap
for configuration and implementation of the new
software.
5. TRAINING AND IMPLEMENTATION
The following week, Jeffer was on a plane to
New York to receive training at BigHealths
corporate office. She received training on all of
Benefiticas functionality, as well as how to
configure the software to best fit TPACs
customized needs. Two weeks later, on the
plane ride back to El Paso, Jeffer quickly
sketched a roadmap for master data conversion,
training, and implementation of Benefitica IT.
Concerning an implementation plan, Jeffer
ranked the clients on a schedule based on their
size (A-D, A being largest, D being smallest),
and planned to convert the larger clients first
hoping to realize improvements in productivity
as quickly as possible. The conversion process
involved duplicating all the unique attributes for
each clients Summary Plan Description into a
unique plan profile in Benefitica IT.
Jeffer was excited from her training and ready to
get started on data conversion. She began the
process of taking the Summary Plan Description,
the guidelines of each clients plan, and
translating the data into Benefiticas plan profile
manager. After working 70 hours the first week,
Jeffer enthusiasm quickly waned as she realized
the magnitude of the workload.
As the Claims department manager, Jeffer
oversaw 10 Benefit Administrators (BA). She
changed her conversion strategy, delegating the
benefit plan set-up and data entry load to the
BAs. Over the next week she scheduled several
lunch-and-learns to familiarize the BAs with this
additional responsibility.
Each BA was tasked with completing benefit plan
profiles for clients according to the clients
personalized Summary Plan Description. As
each plan profile consisted of numerous
attributes and settings the data entry was time
consuming and prone to user error. The process
was rushed because the number of clients
assigned to each Benefits Administrator was
roughly 15 to 1, with daily work still needing to
be completed. As accuracy was vital, any
incorrect setups resulted in claims being
processed incorrectly.
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Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016
2016 ISCAP (Information Systems and Computing Academic Professionals) Page 38
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6. PROBLEMS ARISE
Problems started to arise when the first batch of
clients; i.e. Group A, the largest clients TPAC
had, went live on Benefitica. Each client
transferred to the new system without incident;
however, the process was so quick that there
was not enough time to iron out any issues
before the next client went live.
With the new claims processing system, the auto
adjudication rate was expected to increase to at
least 90%. When a claim is auto-adjudicated
through the system, the claim should be
processed and paid correctly with no errors. If a
claim doesnt meet all the requirements to go
through the adjudication process, then it is
pended for manual intervention.
During the benefit plan set-up these tight
measures were not configured, which allowed
more claims to adjudicate through the system
and led to more errors. The industry accuracy
rate was 96%, a metric shared with every
prospective or current client. The increase in
errors meant an increase in manual intervention
for claims adjustment. It also resulted in
increased calls from members, clients, and
providers concerning incorrect claim processing.
Because of the extra errors and an already
heavy workload, the BAs grew agitated with
claims manager Susie Jeffer. Since the Benefits
Administrators had daily contact with the clients
and their employees, this required each BA to
take extra time out of the day to explain to
upset clients why there were errors.
This created friction internally from senior
management all the way through the company.
David, a Senior Benefits Administrator, could not
understand why after so much time and effort
there were so many issues and increased work.
The new claims application was presented to his
team as a change that would make their lives
easier. Instead, the team received an increased
work load which required more and more
overtime. When Susie approached David about
the amount of overtime the team was using,
David could not control his emotions. David
could not understand why Susie did not
comprehend the volume of errors and problems
with the new system. As David continued to
document the errors and issues, Susie did not
believe these errors were due to the new
application and denied that they were due to any
type of implementation error. She flatly stated
these were not system related errors. Instead
of reviewing the issue log, Susie ignored the
errors. Instead she continued to forge ahead
with the remaining client benefit plans. She was
adamant that her project plan would meet the
original deadlines.
Due to the deteriorating climate in the claims
department, the Director of Operations decided
it was time to take part in the weekly BA
meetings. She hoped to drill down to the
underlying problem and to understand what was
happening from the source. Although she quickly
realized the issue was related to the
implementation of the new application; she
added fuel to the fire by defending Susie. The
team was furious.
7. THE FALLOUT
The Director of Operations began mentoring
Susie to help fix issues, but glossed over the
gravity of the situation to Senior Leadership to
protect Susies job (and her own reputation as
well, she had been a supporter of Susie as a
promising manager). Although system
implementation was completed after nine
months, issues were still being addressed and
claim adjustment rates were at an all-time high.
This had ramifications throughout the entire
company. Phone calls for adjustments were
increasing, Account Management was receiving
requests for meetings by unsatisfied clients, and
the overall morale was very poor.
In spite of it all, TPAC managed to retain its
current clients and actually added new ones. As
the company grew, the need for additional IT
support was recognized and a new system
administrator was hired. Jeff, the new system
administrator, spent 6 months working with
Susie to learn the syst
