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eCommerce Enablementat CareFirst
Revised Approach and ProposalAugust 6, 1999
July 30, 1999
2©Andersen Consulting 1999
How can I grow both my top line and my bottom line with the internet and eCommerce?
How can we use it to enable my business strategy of growth and consumerism?
What are my competitors doing? What happens if I don’t get a stake in the ground
soon? What investments will I have to make? What will the political ramifications be? Where do I start in order to get the highest value?
Many eCommerce questions are core to CareFirst’s business strategy.
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
4©Andersen Consulting 1999
Conservatively estimated, CareFirst’s potential annual cost savings and revenue enhancements exceed $100MM.
Enhance Revenue
Reduce Costs
Reduce Non-Care Related Costs
Reduce Care Related Costs
Potential eCommerce
Benefits
Attract/Retain More Members
Expand Share of Each Customer
eCommerce Economic Value Tree
(9.1)
Value Potential ($MM)
(90.0)
$ 22.0
$ 16.5
($ 99.1)
$ 38.5
July 30, 1999
CareFirst's Current Positiong
5©Andersen Consulting 1999
CareFirst has significant work to do to move up the curve of eCommerce capabilities. Many health plans are ahead, yet few are personalized.
Source: Andersen Consulting research, industry literature
Healthcare eCommerce Service Spectrum
Information
Commerce
Personalization
Inquiry
Transaction
ILLUSTRATIVE
Oxford
BS CA
AetnaCigna
KaiserWellpoint
UHG
CareFirst
High
Low High
Low
Degree of Buyer Focus In CustomerService
eCommerce Interactivity Level
July 30, 1999
Objectives
6©Andersen Consulting 1999
This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible in 1999.
Choose the highest-value eCapabilities
Design the high-level business, technical and security architectures
Lay out business case and implementation plan
Understand business, technical and political implications
Project Objectives
July 30, 1999
Approach and Deliverables
7©Andersen Consulting 1999
Andersen Consulting has worked with CareFirst to design a two-phase approach which will deliver capabilities to the marketplace by 4Q99.
Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
Phase 1 Approach
= Scope of this proposal
3 Weeks
Design eArchitectureDesign short- and long-term development and run-time environments
6 Weeks
Plan RolloutDevelop business case and plan rollout timeline and approach
3 Weeks
Phase 2 Prioritized set of
eCapabilities Market assessment of
potential consumer/ provider uptake of eCapabilities in CareFirst’s markets
Summary of competitors and potential alliance partners
eVision prototype demonstration
Conceptual design for eCommerce environment
IT strategy and IT Blueprint implications
eCommerce organization chart
Executive-level business case
Assumptions, technical risks and political risks documents
Deliverables
July 30, 1999
8©Andersen Consulting 1999
The CEO’s role is critical to selecting the right eCapabilities and partnerships to pursue, addressing any board or constituent concerns, and setting the tone for cultural change.
During the project, Bill Jews should play a critical role in several areas, dedicating a recommended one to two hours per week. Suggested areas for participation include:
Participate in steering committee meetings Provide input on prioritization criteria and lead the selection of
eCapabilities Provide guidance on political considerations regarding CareFirst
constituents (providers, members, legislators, brokers, purchasers) and work with these constituents as necessary to set direction
Choose and approve any recommended partnerships for either eCapabilities or content
Make resource decisions regarding CareFirst team member priorities Set tone for CareFirst’s overall cultural change by becoming more
informed about eCommerce and advocating its use where appropriate
July 30, 1999
Why Andersen Consulting?
9©Andersen Consulting 1999
Andersen Consulting is uniquely qualified to assist with this work. Our price for this work will be $700,000 plus out-of-pocket expenses.
Alignment• We understand your business strategy intimately from its genesis
• We quantified the benefits CareFirst can achieve with eCommerce
Commitment• We worked with your team to scope and structure the work
• We developed a vision prototype aligned to your strategy
Capability• We have invested significantly in developing our eCommerce assets
• We are the largest eCommerce consultant in the business
• We have worked with 8 out of 10 of the largest health plans
Why Andersen Consulting?
July 30, 1999
Why Partner with Andersen Consulting?
10©Andersen Consulting 1999
E-CommerceStrategy
Formation
Electronic Marketplaces
Customer Insight
IntentionsValue Networks
New Business Models
Commerce TransformationElectronic
DistributionVirtual
Corporation
Enterprise Process Virtualization
New Product Introduction
Generate Demand• Selling Effectiveness• Internet Commerce
Fulfill Demand• eProcurement• Customer Self Service• Internet Ordering
Plan & Manage• Virtual HR
Technical Architecture• Net Centric Architecture• Architecture Assessment
Information Mgmt Program Management
Solution Enablement
eCommerce InfrastructureDevelopment
Website Creation• Planning / Design • Construct/ Prototyping• Integration / Delivery
REPRESENTATIVE
We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas…
Our eCommerce offerings cover a broad continuum.
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
eCommerce Overview and Dynamics
12©Andersen Consulting 1999
Nature of DemandProduct Intentions
Virtual
Accessand Delivery
Method
PhysicalSeller-Driven Model
Customer-Centric Model
Buyer-Driven Model
Business models are expected to evolve from seller-driven to buyer-driven as the electronic marketplace matures.
Buyer-Driven • Hybrid Product and Market dynamic, defined by
buyer’s intention and measured by wallet share captured
• Virtual delivery of a network of alliance-sponsored products and services represents a generally leading edge approach to market
Customer-Centric• Market focused segmentation and differentiation
strategies generally characteristic of competitive, near commodity markets
• Multiple touch points with a bundled product set generally represents today’s mainstream market strategy
Seller-Driven • Product-focused market strategies generally
characteristic of unique, high margin offerings • Physical delivery of seller-controlled products and
services represents a generally traditional approach to market
Business Model Options
July 30, 1999
eCommerce Overview and Dynamics
13©Andersen Consulting 1999
Old AssumptionStrategic Principle
1. Create a business model with several business partners around a single value proposition
eEconomy Assumption
Fewer economic constraints on size, complexity and scope of enterprises and enterprise networks
Consequence
High interaction and collaboration costs drove high levels of vertical integration
Low interaction and collaboration costs drive “best of breed” specialization and networked-based value delivery
3. Gain first leader advantage
Early market share leadership, once achieved, can lead to dominance
Fast followers could leverage learnings of leaders, since diminishing returns to scale limited optimal size of enterprise
Increasing returns to scale enables unlimited size of enterprises focused on information components of offerings and channels
2. Generate greater returns on intellectual property and relationship assets
Competition is heightened for capturing information and owning customer relationships
Return and valuation were derived from bundles of physical assets, intellectual property and customer relationships, but primarily driven by physical assets
Return and valuation are derived independently from asset components, with returns primarily driven by intellectual-property and customer relationship assets
Strategic Principles in the eEconomy
As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past.
July 30, 1999
eCommerce Overview and Dynamics
14©Andersen Consulting 1999
Old AssumptionStrategic Principle
4. Don’t rely on returns based on information asymmetry
eEconomy Assumption
Margins based on imperfect markets will erode
Consequence
Returns by producers could be protected by high search and comparison costs incurred by customers
Fewer opportunities by producers to capture returns based on price differences for similar goods and services
6. Expand rapidly into markets, in particular, through disintermediation
New entrants and fast-moving competitors emerge quickly and capture market share without expanding to build distribution channels
Cost and time of entry into markets required creation and coordination of physical assets, means of production and distribution points
Virtual presentation of goods and virtual points of sale enable inexpensive and rapid entry into new global markets
5. Expand product diversity and broaden value propositions to buyers
Companies, products and business models will cater profitably to smaller customer bases
Variety was limited by a segment-level understanding of buyer preferences
Declining information and communication costs enable more granular understanding of buyer preferences
Strategic Principles in the eEconomy (cont’d)
As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past (cont’d).
July 30, 1999
eCommerce Overview and Dynamics
15©Andersen Consulting 1999
Emerging eCommerce Roles
New eCommerce roles are forming and competition to be a recognized player is intense. Large companies are also stepping out of their traditional roles to position themselves in new ways.
Access e.g., Netscape
Buyer Agencye.g., Amazon.com
Search and Evaluation Needs Assessment and
Product Matching Product Information
Dissemination Purchase Influence Aggregation
BuyersSellers
Financial/Risk e.g., VISA
Fulfillmente.g., FedEx
Seller Agencye.g., Equifax
Market Makinge.g., eBayAccess
e.g., US Web Integration of Producer and Consumer Needs
Market Management
Information About Customers
Customer Service Aggregation Quality Assurance
Product and Service Distribution
Customer Service
Payment Clearing and Settlement
Risk Management
Seller Process Support
Buyer Process Support
July 30, 1999
eCommerce Overview and Dynamics
16©Andersen Consulting 1999
The current structure in the healthcare industry presents tremendous opportunity for value creation by moving to an eCommerce-based model.
Healthcare is fundamentally an information business
• Account and member data• Network and benefit data• Encounter data and clinical history• Diagnostic information, treatment paths• Medical and pharmaceutical research
Information, money, and services must be exchanged across fragmented entities
• Many diverse participants, including thousands of niche players
• Dramatic variations in practice patterns and utilization among entities and regions
• Fragmentation and specialization• Complex financial interdependencies
1 Milliman & Robertson, 1998 data
Large number of entities must exchange information, services and money... ...which has proven difficult to do well
Healthcare entities still exchange substantial information on paper
• Reliant on closed, inflexible legacy systems• Few information exchange standards• Nearly half of health claims are still
processed manually and a quarter are so delayed that the claims are filed again1
Healthcare entities are confronted with overwhelming amounts of data and are struggling to glean insight
• Limited ability to understand and segment consumer wants, needs and behaviors
• Limited ability to compare providers meaningfully and develop care paths
• Lack of flexible, evidence-based standards by which to aggregate clinical data and evaluate patient outcomes
July 30, 1999
eCommerce Overview and Dynamics
17©Andersen Consulting 1999
Abaton.com
Access Health
Avicenna Systems
Axolotl
Healtheon
Daou Systems
iTrust
Health Desk Corp.
Patient Infosystems
Shared Medical Systems
Status One Health System
Web M.D.
ManageInternal
Operations
ProcessTransactions
DeliverCare
ManageCare
ManageProviderNetwork
ManageCustomer
Relationships
ManageProducts &
Risk
Market andAcquire
Customers
Develop Products and
Services
Advanced Health
Covation
Claimsnet
Kinetra
Healtheon
Melophis
Quadra Med
Proxymed
PointshareOfficemed.com
MEDE America
Araxsys
Ariba Technology
Concur Technologies
Envive
IndX Software
Luminate Software
BroadVision
Calico Technology
ChannelPoint
InsWeb Corporation
Siebel Systems
Xyber Net
@Outcome
Caresoft
Enact Health Mgmt. Systems
KnowMed Systems
See Appendix for detailed description of services and offerings for these companies.
Cerner
Network Alchemy
Neoforma
TIBCO Software
A large number of new internet-focused companies are moving quickly to populate the healthcare eCommerce space.
July 30, 1999
eCommerce Overview and Dynamics
18©Andersen Consulting 1999
These internet-based players are exploiting the eEconomy opportunities by providing eCommerce capabilities in many aspects of the healthcare value chain.
Sample of Enablers’ Offerings*
*A comprehensive list of new entrants can be found in the Appendix
InsWebNow offers extensive advice and comparison capability for life and auto policies and is expected to add healthcare
CovationFacilitates exchange of healthcare information over the internet, e.g., patient enrollment, claims, and medical data
CaresoftOffers web-based disease management solutions
Shared Medical SystemsOffers groupware to streamline workflow across health enterprises
iTrustOffers web-based physician practice management solutions
Abaton.comEmploys web-based software to automate transactions across all classes of healthcare participants
ManageInternal
Operations
ProcessTransactions
DeliverCare
ManageCare
ManageProviderNetwork
ManageCustomer
Relationships
ManageProducts &
Risk
Market andAcquire
Customers
Develop Products and
Services
July 30, 1999
eCommerce Overview and Dynamics
19©Andersen Consulting 1999
Portals
Full Service sites
Physician Advice sites
Physician-Targeted Sites
Type of Online Community Companies
Healthfinder HealthGate Medical Networks Medisite
Accent Health.com A HN.com iVillage On Health.com
Americas Doctor Online BestDoctors.com Sapient Health Network
American Health Consultants Medical Economics Company Medical Networks Mediconnect
Intelihealth Mediconsult.com Mylifepath.com Third Age
Do not contain content per se but instead function as targeted search engines for health information
Offer a variety of services including chat rooms, recent medical discoveries, health policy information, product offerings, personalized newsletters and health risk assessments
Physician-targeted sites: Contain information of interest to providers, including continuing education courses and journal articles
Designed to fulfill a specific informational need for a targeted audience
A number of healthcare online communities have surfaced to serve a spectrum of audiences, ranging from general information seekers to consumers with specific interests.
July 30, 1999
eCommerce Overview and Dynamics
20©Andersen Consulting 1999
For example, iVillage is an online community for women that provides healthcare information through betterhealth.com as one of its many product offerings.
Interact Hosts health chat rooms and
live health discussions Allows members to send
emails to health experts Allows members with
similar interests and health concerns to locate one another through a member directory
Publish Healthcare library Weekly newsletter Access to MedLine Information for women on
many non-healthcare topics
eCommerce Products
July 30, 1999
eCommerce Overview and Dynamics
21©Andersen Consulting 1999
Transact Online bookstore for medical,
nursing, and health-science related textbooks
Interact Journal scan Email service Medline searches Career center Continuing Medical Information
Publish Clinical practice guidelines
eCommerce Products
Medscape specializes in providing peer-reviewed clinical articles and is an example of an interactive website community for clinicians and consumers.
July 30, 1999
eCommerce Overview and Dynamics
22©Andersen Consulting 1999
Current Health Plan eCommerce Activities - Admin. Cost Reduction
ManageInternal
Operations
ProcessTransactions
DeliverCare
ManageCare
ManageProviderNetwork
ManageCustomer
Relationships
ManageProducts &
Risk
Market andAcquire
Customers
Provide website self-service health plan rate calculation
Provide rate quotes for brokers and consultants
Enable electronic annual enrollment
Use sophisticated data mining/ analysis for pricing and product development
Set up recredentialing process on the Internet so paperwork can be submitted online
Set up network to disseminate administrative, financial and clinical patient data with providers
Post a searchable provider directory on website
Order ID cards, change address or PCP on the website
Enable member self-service with online access to account information
Provide online expert to help physicians resolve claim problems
Schedule appointments through the website
Communicate health info to physicians and members through the Internet
Enable real-time referrals mgmt.
Expand electronic claims submission
Provide an automated claims adjudication system
Enable provider self-service (e.g., referrals, eligibility, claims status)
Send payments electronically to providers
Enable online purchasing of insurance
Use automated antifraud solutions to reduce suspect claims and run fraud audits
Install a coherent enterprise management system
Post employment listings on the web
Publish internal policies and procedures on an intranet
Develop Products and Services
Health plans are starting to use these enablers, especially to reduce administrative costs.
July 30, 1999
eCommerce Overview and Dynamics
23©Andersen Consulting 1999
Current Health Plan eCommerce Activities - Care Cost Reduction
Profile providers Use triage systems in conjunction with an EMR for demand management
List clinical guidelines online
Offer an online physician newsletter (e.g., info on disease management programs)
Use data mining to identify people who are susceptible to certain illnesses
Provide healthcare information to members
Provide risk assessments and wellness advice to members
Provide an online drug formulary
ManageInternal
Operations
ProcessTransactions
DeliverCare
ManageCare
ManageProviderNetwork
ManageCustomer
Relationships
ManageProducts &
Risk
Market andAcquire
Customers
Develop Products and Services
In addition to administrative cost reduction, health plans are also leveraging eCommerce technology companies to reduce the cost of care.
July 30, 1999
eCommerce Overview and Dynamics
24©Andersen Consulting 1999
Current Health Plan eCommerce Activities - Revenue Enhancements
Offer marketing and enrollment information on websites
Engage in data mining to target appropriate customers
Provide tailored risk assessments and advice on website to maintain loyalty
Provide customized health related web pages for Members
Offer Internet solutions to sell and distribute health insurance online
Create cross industry destinations and portals (e.g., mylifepath.com)
ManageInternal
Operations
ProcessTransactions
DeliverCare
ManageCare
ManageProviderNetwork
ManageCustomer
Relationships
ManageProducts &
Risk
Market andAcquire
Customers
Develop Products and Services
Although revenue enhancement is the major play, there are only a few health plans currently implementing initiatives to achieve this objective.
July 30, 1999
eCommerce Overview and Dynamics
25©Andersen Consulting 1999
Features Personalized health and wellness information
on fitness and nutrition, parenting, women’s health, pregnancy, and alternative health
Discounts on mylifepath alternative health and wellness services, such as nutrition counselors, massage, yoga classes, acupuncture, exercise classes, etc.
Reference materials and screened site links to health and wellness information
Savings on health and wellness products (baby supplies, books, etc.)
Interaction with Blue Shield of California
Blue Shield Role Content provider — provide consumer-
focused information and content organization Integrator — partner with BabyCenter, Barnes
& Noble, Fogdog Sports as well as numerous alternative and traditional healthcare practitioners to provide intentions-focused experience
Blue Shield of California’s mylifepath.com offers consumers personalized health information.
July 30, 1999
eCommerce Overview and Dynamics
26©Andersen Consulting 1999
Website Offers customized lifestyle appraisals Provides a searchable provider directory Plans on expanding website capabilities by:
Creating customized web pages for members based on their specified interests
Enabling members/benefits managers self-service with online access to account information
ChannelPoint Piloting a ChannelPoint product to automate
process of selling health insurance Will handle price quotes, underwriting, rating
and other tasks with ChannelPoint solution
Back Office Uses data mining to identify members
susceptible to certain illness and to identify unusual healthcare utilization patterns
Will install computer workstations that enable customer services agents to quickly access membership information
Plans to offer an automated adjudication system
eCommerce Activities
United Healthcare is using eCommerce to streamline administrative processes and manage customer relationships.
July 30, 1999
eCommerce Overview and Dynamics
27©Andersen Consulting 1999
Approximate eCommerce Position of Health Plans*
* Top nine by membership
With few notable exceptions such as United and Aetna, no one has made a major entry into the eCommerce space; however, all are poised to do so.
Humana
Principal
Oxford
Cigna
PacifiCare
FHS
WellPoint
Aetna
United
HealthAxis
Conservative Aggressive
July 30, 1999
eCommerce Overview and Dynamics
28©Andersen Consulting 1999
Nonetheless, most healthcare players have not formed a coherent eCommerce strategy.
Large plans and provider organizations are distracted by operating concerns and are experiencing unprecedented financial difficulties, due in part to acquisition integration challenges and difficulty sustaining earlier gains in controlling medical costs• Companies are focusing on “doing the basics right” to regain
profitability and improve service performance • Health plans and providers are also increasingly absorbed with
dissatisfied stakeholders, including more demanding members/patients, more sophisticated purchasers and more activist legislators
• IT staffs are distracted by Y2K and overwhelmed by demands to absorb new technologies
Health plans are reacting to the opportunities and competitive pressure presented by the advent of eCommerce and have not taken the time to chart their course in the future market environment
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
Context and Project Objectives
30©Andersen Consulting 1999
Several business issues drive the need to accelerate eCommerce capabilities.
CareFirst has developed an eCommerce strategy overview and white paper which describe desired eCapabilities
This project is designed to take that work to the next level
There is a strong need for customers to perceive CareFirst’s innovation capabilities and differentiation through eCommerce
The newly-developed business strategy requires eCommerce capabilities to support geographic dominance, consumer-centric focus, and to more quickly integrate acquired businesses
There is a desire to “productize” technology capabilities and link them with marketing messages
Project Context
July 30, 1999
Context and Project Objectives
31©Andersen Consulting 1999
This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible.
To confirm and augment the concepts of the existing eCommerce strategy and to choose the highest-value eCapabilities
To design the high-level business, technical and security architectures required to support eCapabilities and scale them up as demand increases
To lay out a business case and game plan for quickly rolling out eCapabilities to each constituent (members, providers, brokers and purchasers)
Understand the business, technical and political implications of the strategy
Detailed Project Objectives
July 30, 1999
Context and Project Objectives
32©Andersen Consulting 1999
Business Processes
Information
Applications
IT Infrastructure
IT Architecture
Business
Enables
Drives
InformationTechnology
IT Alignment with Business
The eCommerce strategy touches many components of the overall IT blueprint.
Overall ITStrategy
eCommerceStrategy
IT Management & Delivery
Leadership
SourcingStructure & Governance
Processes
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
Proposed Approach and Deliverables
34©Andersen Consulting 1999
Winning requires a different strategy from traditional investments.
1999 2000 2001 2002
eCom
mer
ce P
erfo
rman
ce
2
Minimize risk of disruption to cost containment, merger integration and Y2K efforts
Demonstrate proof-of-concept “Reserve the right to play” where major uncertainty exists Introduce simple, quick experiments
Start Small
Scale quickly to protect existing customers Leverage new enablers alongside current
technology Acquire customers through new value
propositions, speed and excellence of execution Exploit new technology mid-ware to connect legacy
applications
3
Determine implications of possible market outcomes
Identify actions to move market to preferred outcomes and to make the best of other outcomes
Develop a flexible roadmap1
Years
Think Big
July 30, 1999
Proposed Approach and Deliverables
35©Andersen Consulting 1999
Piecemeal efforts by marketing (website) and IT (EDI)
Director-level commitment
Cross-functional strategic initiatives Aligned incentives Executive team commitment
Months planning the “best” solution Safe bets only Funded from operating budgets for
same-year payback
A portfolio of experiments Mix of quick hits, capability builders and
option plays Shareholder value, return on investment
Focus on automating current business processes
Local market autonomy
Re-invention of administrative processes, care management processes and revenue generation
Corporate franchise development
Typical Winning
Existing business units Entrepreneurial ventures that can grow rapidly and be owned flexibly
New management approaches are also needed to win in the eCommerce space.
July 30, 1999
Proposed Approach and Deliverables
36©Andersen Consulting 1999
Design eArchitectureDesign short- and long-term development and run-time environments
We propose a two-phase approach which will deliver capabilities to the marketplace by 4Q99.
Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
Pinpoint eCommerce implications from business strategy
Identify successful external eCapability examples to supplement existing eStrategy
Identify potential external content or eCapability alliance partners
Assess CareFirst’s market demographics and constituents’ potential use of the eCapabilities defined
Perform data and call volume analyses to gauge value priorities across providers, consumers, brokers and purchasers
Adjust existing eStrategy documents based on emerging ideas and business drivers
Enhance eVision prototype demonstration to showcase potential eCapabilities
Develop and use evaluation framework to prioritize eCapabilities based on business value, cost, technology implications, business strategy linkages and potential constituent political implications
Develop conceptual design of development, execution and operations environments in the context of existing infrastructure (short-term and long-term)
Identify scalability constraints in the execution environment
Design high-level security architecture for short- and long-term execution environment
Identify implications to overall IT strategy and IT Blueprint
Phase 1 ApproachPhase 1 Approach
= Scope of this document
Plan RolloutDevelop business case and plan rollout timeline and approach
Specify organization, skills and sourcing strategy required to launch and sustain both the eArchitecture and selected eCapabilities
Develop business case for investments (including high-level FTE and capital budget estimates for FY99 and FY00)
Develop implementation plan and timeline for eCapability rollout
Develop assumptions and technical risks documents
3 Weeks 6 Weeks 3 Weeks
Phase 2Phase 2
Launch PilotsBegin delivering capabilities while laying critical infrastructure
Adjust SpeedContinuously evaluate progress and adjust speed of investments
Scale FastAssure that infrastructure can support unexpected growth
July 30, 1999
Proposed Approach and Deliverables
37©Andersen Consulting 1999
Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
Design eArchitectureDesign short- and long-term development and run-time environments
Deliverables include choosing priority initiatives, developing the conceptual design of the new architecture, and planning the rollout.
Prioritized set of eCapabilities, including business drivers, constituent input and key issues to be addressed
Market assessment of potential consumer/ provider uptake of eCapabilities in CareFirst’s markets by segment or product
Market scan summary of competitors and potential content or eCapability alliance partners
Enhanced eVision prototype demonstration
Conceptual design for development, execution and operations environments, including security architecture and scalability constraints
IT strategy, IT blueprint and business architecture change implications discussion document
Phase 1 Summary DeliverablesPhase 1 Summary Deliverables
Plan RolloutDevelop business case and plan rollout timeline and approach
eCommerce organization chart, list of key skills required, and sourcing strategy
Executive-level business case, including timeline, resource requirements and high-level costs and benefits
Assumptions, technical risks and political risks documents
3 Weeks 6 Weeks 3 Weeks
July 30, 1999
Proposed Approach and Deliverables
38©Andersen Consulting 1999
Pinpoint eCommerce implications from business strategy Identify successful external eCapability examples to supplement
existing eStrategy Identify potential external content or eCapability alliance partners Assess CareFirst’s market demographics and constituents’
potential use of the eCapabilities defined Perform data and call volume analyses to gauge value priorities
across providers, consumers, brokers and purchasers Adjust existing eStrategy documents based on emerging ideas
and business drivers Enhance eVision prototype demonstration to showcase potential
eCapabilities Develop and use evaluation framework to prioritize eCapabilities
based on business value, cost, technology implications, business strategy linkages and potential constituent political implications
Key Activities Key Deliverables Prioritized set of eCapabilities and key
functionality that will be delivered to the marketplace. These will be shown as capabilities linked to each constituent (providers, members, purchasers and brokers)
Market assessment of potential consumer/ provider uptake of eCapabilities in CareFirst’s markets by segment or product
Market scan summary of competitors and potential content or eCapability alliance partners
Enhanced demonstration to showcase eVision capabilities
Phase IA will identify the highest value opportunities.Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
July 30, 1999
Proposed Approach and Deliverables
39©Andersen Consulting 1999
Design eArchitectureDesign short- and long-term development and run-time environments
Develop conceptual design of development, execution and operations environments in the context of existing infrastructure (short-term and long-term)
Identify scalability constraints in the execution environment
Design high-level security architecture for short- and long-term execution environment
Identify implications to overall IT strategy and IT Blueprint
Key Activities Key Deliverables Conceptual design for development,
execution and operations environments, including security architecture and scalability constraints
• Architecture component analysis• Physical environment blueprint• Interface and connectivity diagram• Application component diagram• Component interaction diagram• Technical architecture requirements
IT strategy, IT blueprint and business architecture change implications discussion document
Phase 1B will create the conceptual design for CareFirst’s net-centric architecture.
July 30, 1999
Proposed Approach and Deliverables
40©Andersen Consulting 1999
Plan RolloutDevelop business case and plan rollout timeline and approach
Specify organization, skills and sourcing strategy required to launch and sustain both the eArchitecture and selected eCapabilities
Develop business case for investments (including high-level FTE and capital budget estimates for FY99 and FY00)
Develop implementation plan and timeline for eCapability rollout
Key Activities Key Deliverables eCommerce organization chart, list
of key skills required, and sourcing strategy
Executive-level business case, including timeline, resource requirements and high-level costs and benefits
Assumptions, technical risks and political risks documents
Phase 1C will prove the value and lay out the plan.
July 30, 1999
Proposed Approach and Deliverables
41©Andersen Consulting 1999
Phase 2Phase 2
The scope and plan for Phase 2 will evolve as eCapabilities are identified; some potential components are shown below.
Develop and launch initial eCapability projects with 60- to 90-day debuts
Experiment with some eCapabilities to test value or sustainable differentiation
Pilot the eCapabilities with select groups of members, purchasers, physician offices, and/or administrators
Begin laying critical infrastructure components to prepare for required eEnablement and scalability
Set specific timelines for project value assessments, as drug companies do in their research projects
Stop projects which haven’t proven out; speed up others that show promise
Continually innovate with new capabilities
Continue infrastructure investments to enable further automation and interactivity
Launch PilotsBegin experimenting with capabilities while laying critical infrastructure
Adjust SpeedContinuously evaluate progress and adjust speed of investments
Continue infrastructure investments to enable further automation and interactivity
Over-size to stay ahead of market demand
Scale FastAssure that infrastructure can support unexpected growth
July 30, 1999
Proposed Approach and Deliverables
42©Andersen Consulting 1999
Identify Opportunities(“Stretch your imagination”)
Employers/Employers/GroupsGroupsMembersMembers
ProvidersProviders
TradingTradingPartnersPartners
Federal &Federal &StateState
GovernmentGovernmentBrokers &Brokers &
AgentsAgents
Evaluate Opportunities(“Balance the assessment”)
Alignment with Business Strategy Quantitative criteria (e.g.,. revenue
potential, ROI) Qualitative criteria (e.g., competitive
threat, customer need, sustainability)
Classify Opportunities(“Make tough decisions”)
Sustainable Differentiation
Valu
e to
Con
stitu
ent
Think in terms of communities rather than value chain activities
Assess today’s realities and try to envision future possibilities
Understand where others inside and outside the industry are heading
Strategic eCommerce Opportunities impact with:
• Members, Providers and Partners• Administrative Staff• Consumers• Etc.
Current Business Models
EnhancedBusiness Models
New Business Models
Value Potential Investment Risk . . .
Opportunity 1
Opportunity 2
Opportunity 4
Opportunity 3
I
II
III
IV
. . .
eC
Opportunities will be identified and evaluated using proven frameworks.Sample Deliverables
July 30, 1999
Proposed Approach and Deliverables
43©Andersen Consulting 1999
Low
Low High
High
Long-Term Contributionto Strategic Direction
Short-Term Business Case
.
Framework for Prioritizing eCommerce Initiatives
. ..
.
.
..
. ...
.
..
..
..
Our approach will deliver a strategy that is logically integrated with CareFirst’s business strategy which we are jointly developing, not just a set of initiatives.
MoreAggressiveStrategy
MoreConservativeStrategy
. Initiatives
Sample Deliverables
July 30, 1999
Proposed Approach and Deliverables
44©Andersen Consulting 1999
Communication Fabric
Transport Services
Massage TransportTransport SecurityPacket Forwarding/ Internetworking Circuit SwitchingNetwork AddressAllocation Quality of Service
Network Media Services Media AccessPhysical Media
CommunicationsSecurity
EnvironmentRuntime Services
LanguageInterpreter
VirtualMachine
System Services
SystemSecurity
ProfileManagement
EnvironmentVerification
Task & MemoryManagement
Application ServicesApplication
SecurityError Handling/
Logging
StateManagement
Active Help
Other CommonServices
ComponentFramework
Operating System
Codes Table Services
File Services
App. IntegrationInterface
Base Services
Web Server Services
Batch Services
Workflow Services
Push/Pull Services
Report Services
Presentation
Window System
Desktop Manager
Form
User Navigation
Web Browser
Report & Print
Direct Manipulation
Input Device
Business LogicInterface
Application Logic
Data Abstraction
Information
Database ServicesDocumentServices
Replication/Synchronization
Versioning
Access
Security
Indexing
Storage
Messaging
Encryption
email Core Specialized
Virtual ResourcesFax Terminal
File Sharing Printing
Paging Audio/Video
Phone
Authorization
AuthenticationORB
CTI
EDILegacy
Integration
DirectoryServices
Domain
Name
Communication
Transaction
Resource Management
TransactionManagement
TransactionPartitioning
TP Mon
itor
FileTransfer
RPC
MsgOriented
Streaming
DatabaseAccess
Illustrative Net-Centric Architecture
A net-centric technical infrastructure is complex and requires significant new technology; this project will deliver the conceptual design for this architecture.Sample Deliverables
July 30, 1999
Proposed Approach and Deliverables
45©Andersen Consulting 1999
CareFirst’s security architecture will be developed in the context of Andersen Consulting’s Security in eCommerce™ implementation guide.
• Applications
• Components
• Menu of Choices
• Product Mapping
Sample Deliverables
July 30, 1999
Proposed Approach and Deliverables
46©Andersen Consulting 1999
A conceptual technical architecture design identifies the architecture components and technologies required to support a given solution.
Requirements / Assessment Architecture Assessment:Technical Architecture
LAN/WAN/
InternetLAN/WAN
UnixServer
1. AIX2. TransAccess3. U to A4. Entera5. MQ Series6. CORBA
7. Web Server8. SNA Server9. RDBMS
IBM ES/9000Mainframe
1. MVS2. CICS3. IMS4. MQ Series5. TransAccess6. Database (DB2,VSAM, IMS)
NT Server
1. Windows NT2. TransAccess3. NT to A4. MSMQ5. CORBA
6. Web Server7. MQ Series8. RDBMS
Relevant Systems
UNISYSA-SeriesMainframe
1. MCP2. COMS3. A to U4. U to A5. A to A6. NT to A7. Falcon MQ Client8. Database (DMSII)
WindowsWorkstation
1. Windows 95/NT2. Entera3. CORBA4. MSMQ5. Browser
NT GatewayServer
1. Windows NT2. Falcon MQ Bridge3. Falcon MQ Server4. MSMQ5. SNA Server
LAN/WAN
LAN/WAN/
Internet
Illustrative Technical Architecture DesignSample Deliverables
July 30, 1999
Proposed Approach and Deliverables
47©Andersen Consulting 1999
An interface and connectivity diagram presents underlying protocols and interface technologies employed.
Requirements / Assessment Architecture Assessment:Interfaces & Connectivity
NT to A
MSMQ
NT Server
TransAccess
CORBA
Web Server
A to U
Falcon MQClient
U to A
UNISYS A-Series Mainframe
COMSDMSIIDatabase
RDBMS
Interface Legend
AvailableUnder ConstructionFuture
MSMQ
Windows Workstation
Entera
CORBA
Browser
Entera RPC
MSMQ
DCOM/ActiveX
IIOP
HTTPS
MSMQ
DCOM/ActiveX
IIOP
HTTPS
BNA Terminal
U to A
Entera
MQ Series
Unix Server
TransAccess
Database
CORBA
Web Server
RDBMS
Entera RPC
DCOM/ActiveX
IIOP
HTTPS
U to A RPC
ODBC
MQ Series
TransAccess RPC
A to A
NT to A
TransAccess
MQ Series
IBM ES9000Mainframe
CICS
DB2 VSAM
IMSDDCS (DB2)
Cedar/LU6.2
MQ Series
TransAccess RPC
3270/LU2
IMS
NT Server
Falcon MQServer
SNA Server
MSMQ
Falcon MQBridge
MS RPC
ODBC
MSMQ
TransAccess RPC
MS RPC
ODBC
U to A RPC
Falcon MQMQ Series
MQ Series
Illustrative Interface and Connectivity DiagramSample Deliverables
July 30, 1999
Proposed Approach and Deliverables
48©Andersen Consulting 1999
A physical environment blueprint communicates the physical topology including computers and network components.
Workstation
Scan Station
Producer Desktop
GatewayServer
IBM ES/9000Mainframe
UnixServer
NT Server
UNISYS A-SeriesMainframe
User Workstation
LAN/WAN/
Intranet
LAN
Integration FrameworkServer
Conceptual Design Infrastructure & Application Blueprints:Physical Environment Blueprint
Application DataCenter Server
Relevant SystemsProducers (External)
Remote Sites
Company A
WAN
ApplicationServer (Master)
WAN
Firewall
Internet
LAN
Fax Machine
WAN
LAN/WAN
ApplicationServer (Slave)
LAN/WAN
Illustrative Interface and Connectivity DiagramSample Deliverables
July 30, 1999
Proposed Approach and Deliverables
49©Andersen Consulting 1999
A process and information flow diagram shows how data and processes supporting business operations flow through the solution architecture.
Process & Information Flows:Release 1 Process FlowRequirements / Assessment
Legacy SystemsBroker
Scan
CP
EmployerApplication
&Member
Enrollment
L2
L1
CaseInstallation &
MemberEnrollment
GroupInstallation
SalesReporting
Scrub MedicalUnderwriting
InstallCase
ProducerApplication
MemberEnrollment
DB2
DMSII
File/Report
Database
Process
UserInput
MemoryCache
L3
NewProducer
Processing
Census
DB2RatingEngine
L4
InterfaceServices
InterfaceEngines
RatingEngine
Faxback Proposal
ProposalGenerator
ProcessRFP
IntegrationFrameworkInternet Framework
New Producer Application
Update Rate Tables
Manual ProcessingNetworkMatchEngine
Scrub
Group Structure Manual Group Entry
H
H
H
Same Process
RFPFax
Enrollment
Upload Producer Info
Note: All flows from theIntegration Framework have acorresponding confirmationfeedback loop to Internet Arch..These feedback loops are notdepicted in the diagram.
J
J
Illustrative Process and Information FlowSample Deliverables
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
Proposed Timeline and Team
51©Andersen Consulting 1999
The project will take between 11 and 12 weeks to complete, based on level of detail of the architectures developed.
High-Level Project Workplan
1 2 3 4 5 6 7 8 9 10 11 12Week:Worksteps
2 3 4
Phase 1A• Pinpoint eCommerce implications from
business strategy• Research external eCapabilities / partners• Assess CareFirst’s eMarket demographics• Perform data and call volume analyses • Enhance eVision prototype • Prioritize eCapabilities
Phase 1B• Design high-level architecture• Design high-level security architecture• Identify IT Blueprint implications
Phase 1C• Specify organization, skills and sourcing
strategy• Develop business case & implications• Develop implementation plans & next steps
= Progress Review
1
July 30, 1999
52©Andersen Consulting 1999
At each project checkpoint, there may be separate business and technical reviews with different audiences.
2
3
4
1 Set Business Context• Refine project scope, timeline and
business resource commitments• Review eMarket demographics for
CareFirst’s markets• Brainstorm prioritization criteria
Review Business Analysis/Partners• Review eMarket research and
eCapability options identified to date• Review and set direction on potential
eCapabilities and partners• Set preliminary business priorities
Confirm Priorities & Business Case• Confirm and set final priorities• Review business case
Business Reviews
Set Technical Context• Refine project scope, timeline, deliverables
and technical resource commitments• Identify potential target technical
environments to address
Refine Technical Architecture• Review design options and determine straw
model architecture to design further• Refine straw model architecture with input
from broader IT team
Finalize Architectures• Perform technical review of chosen
architectures, tools, etc.• Identify initial IT Blueprint implications
Technical Reviews
2
3
1
Approve Implementation Plans and Next Steps• Review and adjust implementation timelines, costs and benefits• Approve overall strategy and set business and technical roll out plans in place
Joint Review
July 30, 1999
Proposed Timeline and Team
53©Andersen Consulting 1999
Project Organization
Project Executives
TBD (CareFirst) Michael Palmer (AC)
Key Content Experts and
Management
Key Architect (CareFirst) Jay Phillips (AC) Healthcare Manager TBD (AC)
Design, Analysis and Business Case Team
Access to CareFirst’s customer service, information technology and other business executives
IT analyst (CareFirst) Consultants (Andersen Consulting)
Project Sponsors &
Steering Committee
Bill Jews (CareFirst) Dave Astar (CareFirst) Tom Rekart (CareFirst) Jim Hudak (AC)
Expert Advisors
Kedrick Adkins (AC) Joe Marabito (AC) Brian Johnson (AC) Bill Milleker (AC)
The project would be a joint effort between CareFirst and Andersen Consulting.
July 30, 1999
Proposed Timeline and Team
54©Andersen Consulting 1999
We would drive the results of the project through a small staff who would be responsible for all architecture development, research and business case development.
Key Content Experts and Management
Design, Analysis and Business Case Team
Expert Advisors
Design future conceptual architecture
Conduct interviews Ensure delivery of analysis Provide direction and input Manage issue identification and
resolution
Develop detailed designs Conduct interviews Draft written reports Formulate and conduct analysis Research issues and hypotheses Develop business case
Role
Lend direction, experience Provide in-depth point expertise Challenge thinking, assumptions
Full time
30 days
Full time
Full time
2-3 days/week
Full time Full time
Time Commitment
Brainstorming sessions Ad hoc, as needed
Jay Phillips (AC) - Architect, Lead Manager
1 AC Application Expert, Manager
1 CareFirst Key Architect
1 CareFirst IT Applications Analyst
1 CareFirst End-User Analyst
1 AC Tech Consultant 1 AC Business Analyst
Staffing
As needed and available
Project Staffing
ProjectExecutives
Provide overall project direction Lead strategy development Lead business case design
Four days/week
2-3 days/week
Michael Palmer - Project Leader
1 CareFirst Project Leader
ProjectSponsors
Make interim and final decisions on capabilities and direction
1-2 hours/week 3-8 hours/week
Bill Jews Dave Astar, Tom Rekart,
Jim Hudak
July 30, 1999
55©Andersen Consulting 1999
The CEO’s role is critical to selecting the right eCapabilities and partnerships to pursue, addressing any board or constituent concerns, and setting the tone for cultural change.
During the project, Bill Jews should play a critical role in several areas, dedicating a recommended one to two hours per week. Suggested areas for participation include:
Participate in steering committee meetings Provide input on prioritization criteria and lead the selection of
eCapabilities Provide guidance on political considerations regarding CareFirst
constituents (providers, members, legislators, brokers, purchasers) and work with these constituents as necessary to set direction
Choose and approve any recommended partnerships for either eCapabilities or content
Make resource decisions regarding CareFirst team member priorities Set tone for CareFirst’s overall cultural change by becoming more
informed about eCommerce and advocating its use where appropriate
July 30, 1999
Proposed Timeline and Team
56©Andersen Consulting 1999
James B. Hudak
Name Comments/Areas of Experience
Kedrick D. Adkins
Brian A. Johnson
Michael E. Palmer
• Global Managing Partner for Andersen Consulting’s Health Services Practice• Directed engagements for clients to develop overall business strategies, consumer-
focused strategies, eCommerce strategies, growth strategies and operational improvement strategies
• Americas Managing Partner for Andersen Consulting’s Health Services Line of Business• Led several infrastructure consolidation and new age architecture projects• Expert in managed care systems and architectures
• Partner in Andersen Consulting’s Financial Services practice• Led engagement to assist very large health plans develop eCommerce strategies and
implementation plans
• Associate Partner and East Coast Leader of Andersen Consulting’s Healthcare Strategic IT Effectiveness Line of Business
• Led several engagements in developing eCommerce strategies and architectures for several major health plans and provider organizations
• Expert in IT management and delivery in traditional and net-centric environments
* Subject to availability
Andersen Consulting is prepared to deliver some of our most experienced and talented individuals to participate in the project*.
Jay Phillips • Manager in Andersen Consulting’s Financial Services Solution Center• Led several architecture development initiatives within healthcare, banking and
insurance• Expert in net-centric architectures (CORBA, CJB, etc.) including integrating mainframe
back-end systems
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
Potential Benefits and Cost
58©Andersen Consulting 1999
The right strategies can yield significant economic benefits along with service improvements.
ILLUSTRATIVE
• 0.5-1.0% savings in medical costs through profiling and channeling
• 1-2% reduction in drug spend through using online formulary• 0.5-1.5% savings in medical costs through use of proven pathways
• 10-20% savings on high-dollar cases with early detection/ intervention
• 10-15% improved outcomes with patient therapy compliance(on base of 17% of hospital costs)
• 3-6% decrease in voluntary disenrollment through customized service
• 1-3% increase in commissioned sales
• $3-4 per member per month increase in revenues for 20-30% of membership
Enhance Revenue
Reduce Costs
Reduce Non-Care Related Costs
Reduce Care Related Costs
Reduce G&A and Purchasing Costs
Reduce Network Management Costs
Potential eCommerce
Benefits
Attract/Retain More Members
Channel Utilization Through “Best” Providers
Provide Electronic Formulary, Pathways, etc.
Perform Real-Time Disease/Case Management
Improve Patient Compliance & Self-Care
Expand Share of Each Customer
Participate in Virtual Networks & Tailor Individual Offerings
Improve Sales Success Rate Through Real-Time Quotes
Enable Member Self-Service
Enable Provider Self-Service (Eligibility, Claims, Referrals)
Expand Range of Products & Services
Expand Value Delivered to Each Stakeholder
Lower Marketing, Selling & Distribution Costs
Lower Enrollment Cost
e Commerce Economic Value Tree
• $?? Launch an eBusiness to exploit current assets (information, medical knowledge, etc.)
• 12-35% reduction in cost of group processing• 3-6% reduction or elimination of commercial commissions
• 10-15% fewer employer/member service phone calls
• 30-40% increase in professional electronic claims; little investment• 50% reduction in referral processing cost; improved service• 30-40% fewer provider service phone calls• 3-15% savings in supply spending through eProcurement• 2-3% claims cost savings for using common claims infrastructure
• 30-40% savings of recredentialing costs
• 10-25% decrease in enrollment processing costs
July 30, 1999
Potential Benefits and Cost
59©Andersen Consulting 1999
Conservatively estimated, CareFirst’s potential annual cost savings and revenue enhancements through investments in eCommerce could total over $100MM*. Our price for Phase 1 will be $700,000 plus out-of-pocket expenses.
16.5
5.5
16.5
0
5
10
15
20
25
30
35
40
45
Reve
nue
($00
0)
ExpandedProducts/Services
Real-Time-Quotes
CustomizedServices
Potential Revenue Enhancement* = $38.5MM
-17.8
-17.8
-24.2
-4.6
-25.6
-100-90-80-70-60-50-40-30-20-10
0Sp
endi
ng ($
000)
Patient-ComplianceDisease/CaseMgmt.ProvenPathwaysOnlineFormularyChannelUtilization
Potential Care Related Savings* = $90MM
-1.3
-3.6
-1.2
-0.2
-1.6
-0.4-0.8
-10-9-8-7-6-5-4-3-2-10
Spen
ding
($00
0)
Recredentialing
PurchasingCostsProvider ServiceCallsMember ServiceCallsEnrollment
Commissions
GroupProcessing
Potential Non-Care Related Savings* = $9.1MM
Total Potential Value > $100MM
* Detailed estimates and assumptions available upon request.
eCommerce Overview and Dynamics 11
Proposed Timeline and Team 50
Potential Benefits and Cost 57
Context and Project Objectives 29
Proposed Approach and Deliverables 33
Why Partner with Andersen Consulting? 60
Executive Summary 3
July 30, 1999
Why Partner with Andersen Consulting?
61©Andersen Consulting 1999
Andersen Consulting is uniquely qualified to assist with this work.
Alignment• We understand your business strategy intimately from its genesis
• We quantified the benefits CareFirst can achieve with eCommerce
Commitment• We worked with your team to scope and structure the work
• We developed a vision prototype aligned to your strategy
Capability• We have invested significantly in developing our eCommerce assets
• We are the largest eCommerce consultant in the business
• We have worked with 8 out of 10 of the largest health plans
Why Andersen Consulting?
July 30, 1999
Why Partner with Andersen Consulting?
62©Andersen Consulting 1999
Source: International Data Corporation, December, 1998
Andersen Consulting is currently ranked #1 among all world-class internet services firms.
July 30, 1999
Why Partner with Andersen Consulting?
©Andersen Consulting 1999
The Analysts Agree....
“Andersen Consulting is now the undisputed world leader in consulting on systems integration.” - Fortune Magazine
“Andersen Consulting towers above the rest of the field and has distanced itself further from its rivals.” - Management Consultancy
Andersen Consulting’s emphasis on integrating strategy, technology, process and change management skills is helping clients overcome the chaos caused by shifting markets and rapidly changing technology” - Client Server Computing
“[Andersen is] exemplary of the global, decentralized, knowledge-sharing organization. They are among the best I’ve run into.” - James Brian Quinn, Author of Intelligent Enterprise
“[Andersen Consulting] can’t seem to do anything wrong...[it] experiences significant growth worldwide, retains its clients and always retools a step ahead without missing a beat.” - Datamation
“Andersen Consulting remains lean and hungry and is not resting on any of the laurels it has won.” - INPUT
“[Andersen Consulting is] one of the few firms that all other competitors in the market, large and small, aspire to beat for client engagements” - Gartner Group
July 30, 1999
Why Partner with Andersen Consulting?
64©Andersen Consulting 1999
E-CommerceStrategy
Formation
Electronic Marketplaces
Customer Insight
IntentionsValue Networks
New Business Models
Commerce TransformationElectronic
DistributionVirtual
Corporation
Enterprise Process Virtualization
New Product Introduction
Generate Demand• Selling Effectiveness• Internet Commerce
Fulfill Demand• eProcurement• Customer Self Service• Internet Ordering
Plan & Manage• Virtual HR
Technical Architecture• Net Centric Architecture• Architecture Assessment
Information Mgmt Program Management
Solution Enablement
eCommerce InfrastructureDevelopment
Website Creation• Planning / Design • Construct/ Prototyping• Integration / Delivery
REPRESENTATIVE
We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas…
Our eCommerce offerings cover a broad continuum.
July 30, 1999
Why Partner with Andersen Consulting?
65©Andersen Consulting 1999
Our Experience
We have a broad range of experience helping organizations shape and implement eCommerce Strategies.
We have worked with leading healthcare organizations including traditional health insurance and managed care organizations and new entrants
We have also worked with leaders in other industries including financial services, pharmaceuticals, automotive, high technology and consumer electronics
We are participating directly in the eEconomy through our investment in, and operation of our own eCommerce businesses
We continue to invest in our own capabilities to help our clients succeed in their eCommerce initiatives
July 30, 1999
Why Partner with Andersen Consulting?
66©Andersen Consulting 1999
For this regional managed care organization, we created a web-enabled referral process that links the health plan with its network of primary care physicians and specialists. Referral processing time was reduced from days to minutes, with corresponding improvements in efficiency and provider relationships
Health Alliance Plan
For a national managed care organization, we are implementing a web-based solution to assist marketing to individuals and small groups. The solution assists both brokers, employers and individuals in requesting quotes, delivering proposals and signing business quickly and more efficiently
National Managed Care Organization
For this provider of eCommerce infrastructure and services, we developed a web-enabled solution to support eligibility, enrollment, referrals, claims and payments. We also worked with Covation to implement technical and physical security and fault tolerance features for all of their IT utility based services
Covation (PhyCor, NationsBank and AC Joint Venture)
For this electronic insurance market maker, we developed a health insurance entry strategy. We examined and prioritized potential products for individual, small group and senior markets. We identified appropriate carriers to provide products, developed pricing strategies and created implementation plans
Internet Marketplace
For this state university system, we identified opportunities for the health and academic components to use internet and multi-media technology to support telemedicine, clinical research and health education. We defined new governance structures for the components to cooperatively invest in technology to support the University’s electronic campus initiative.
University of Texas
We have worked with leading healthcare organizations to improve efficiency, service and quality of care using eCommerce.
July 30, 1999
Why Partner with Andersen Consulting?
67©Andersen Consulting 1999
For Toyota, we developed the vision and internet presence strategy, focusing on sales and customer satisfaction. The site will allow customers to view nationwide inventory, conduct the vehicle purchase (using the dealer as needed), and manage ownership of the vehicle in a customized way. Benefits will be increased sales close rates and more efficient use of dealerships.
Toyota
This internet software provider chose us as a development partner to build their web-based software sales and distribution retailing storefront. The site allows customers to download and “test drive” software products and make purchases.
Leading Internet Software Provider
For First Union, we developed an internet solution to provide electronic banking services to customers. The solution provides real time access to legacy system data and supports customer service functions previously provided by telephone. First Union will use these capabilities to differentiate itself as a technology leader and to reduce service costs.
First Union National Bank
We developed the internet strategy for this pharmaceutical company, focusing on corporate identity, patient education, on-line product information, and corporate intranet applications. The benefits include marketing, training and information delivery costs, and improved communications with stakeholders.
Large Pharmaceutical Company
For Toshiba, we developed and implemented an internet strategy to reduce costs, increase sales and improve customer service. Benefits include reduced publishing and distribution costs by 70-80%, reduced phone support costs, and increased sales through reduced time to get product information to customers.
Toshiba America Electronic Components
We have also worked with leading organizations in other industries to develop eCommerce strategies and implement internet-enabled business capabilities.
July 30, 1999
Why Partner with Andersen Consulting?
68©Andersen Consulting 1999
We have a significant number of eCommerce clients across multiple industries.
Wallace
Abbott
Pepsi
July 30, 1999
Why Partner with Andersen Consulting?
69©Andersen Consulting 1999
Covation is a joint venture with Bank of America (formerly NationsBank) to provide an eCommerce infrastructure to support healthcare administrative transaction processing.
Covation
Qpass is an internet service enabler that provides a payment solution for web-based retailing, specifically to facilitate small ticket sales of digital content. We developed the business model and products and are a part owner of this venture
Qpass
ViaWorld is an internal service organization that provides internet access to Andersen Consulting travelers to book and modify airline reservations. ViaWorld includes direct web and voice access and has reduced our cost for agency commissions and computer reservation system usage.
ViaWorld Services
We are an investor and business partner for this provider of internet-based distribution solutions for healthcare insurance. As part of our partnership, we assist ChannelPoint clients with business process design, systems integration and implementation.
ChannelPoint
iFlourish.com is a pure play internet portal we are in the process of launching. This company will offer an intentions-based package of goods and services targeted at active consumers aged 45 and over.
iFlourish.com
We are participating directly in the eEconomy through our investment in, and operation of our own eCommerce businesses.
July 30, 1999
Why Partner with Andersen Consulting?
70©Andersen Consulting 1999
Selected eCommerce R&D Areas
Facility where visitors can see and experience the most exciting new ideas in the financial services industry
“Think tank” and client working center focused on specific and contemporary business change issues
Center that focuses on delivering Internet solutions including strategy, prototyping and development capabilities
Center focused on identifying, evaluating, and integrating technologies to drive business opportunities
Workshops to educate industry executives on the strategic applications of advanced technology
State-of-the-art digital media production facility dedicated to rapid application prototyping and proof of implementation
Development centre focused on creating Internet, multimedia, and component-based solutions
Joint venture with BBN to provide Internet-related infrastructure services
Financial Ideas Exchange…
Institute for Strategic Change...
Internet Centers of Excellence (ICE)…
Center for Strategic Technology Research (CSTaR®)…
DAVINCI Virtual Corporation…
Emerging Technologies Lab…
FinancialWorks…
ServiceNet…
(The following pages provide an overview of some of these areas)
To ensure that we bring best practices and thought leadership, we invest in high-impact R&D.
July 30, 1999
Why Partner with Andersen Consulting?
71©Andersen Consulting 1999
The Ideas Exchange, which opened in autumn 1995 in New York, is a financial and health services industry research and development center
The Exchange provides a setting for exploring trends and solutions for tomorrow’s business environment and discussing how to transform their organizations supported by the most up-to-date research, presentation technology, and benchmarking information
At the Exchange, senior executives can explore new ideas and approaches to keep pace with the changing health and financial services marketplaces. A showcase of innovation in serving customers, the Exchange tangibly brings to life ‘what will soon be possible and what financial/health services and market leaders must currently plan for.’ Drawing on its worldwide base of knowledge capital, industry expertise and proven solutions, Andersen Consulting uses the Exchange to demonstrate how to successfully implement innovative responses to market opportunities
The main area of focus in recent years has been to provide innovative internet solutions drawing on the wealth of knowledge within the firm
Exchange workshops are led by Andersen Consulting specialists and industry experts, who draw on a worldwide base of knowledge capital, interactive exhibits, proven approaches, and best practices to guide visitors toward aligning their people, processes, and technology with strategy
The Ideas Exchange gives our health care clients an interactive forum for plotting change, changing corporate paths, and inventing solutions.
Ideas Exchange
July 30, 1999
Why Partner with Andersen Consulting?
72©Andersen Consulting 1999
The Andersen Consulting Institute for Strategic Change, under the direction of management thought leader Thomas Davenport, is an applied research group focused on issues of concern to senior management. It is both a “think tank” and a center of action; executives visit its Boston-area facility in order to be actively engaged in what the Institute’s latest findings may mean for their business. Current research falls into several major areas: electronic commerce, thinking and acting globally, transforming data into knowledge, and managing attention. The Institute draws on a broad network of business executives, educators, and observers, and publishes its findings for both internal and external audiences.
Original Research in Electronic Commerce: Specifically in the area of Electronic Commerce, the Institute is studying new business models and the shifting of marketplace power. Two current projects are described below.
The Emergence of “All in One” Markets: Electronic commerce is enabling a new form of electronic marketplace—the “all in one” market. All-in-one markets combine multiple ways of transacting business—such as auctioning, negotiated contracting, and catalog sales—in one place, so that buyers and sellers can easily and dynamically choose the most advantageous approach for a given transaction. Institute researchers predict a rapid proliferation of all-in-one markets—as opposed to the overwhelming “brokerage” or “integration” effects other eCommerce researchers have predicted.
Electronic Channels: Living in the Middle Kingdom: In the early days of electronic commerce, new opportunities to establish direct and cost-effective channels through the Internet led many to predict that soon goods and services would travel directly from suppliers to customers without intermediary involvement. Indeed, the way buyers and sellers interact has been transformed. However, electronic commerce has not abolished middlemen. Rather, it has redistributed intermediary activities. Rather than forming linear chains, supplier/customer relations are becoming networked systems. Rather than integrating vertically within an industry segment, participants are learning to integrate horizontally across industries.
The Institute for Strategic Change
The Institute for Strategic Change is a think tank that help clients focus on practical eCommerce issues.
July 30, 1999
Why Partner with Andersen Consulting?
73©Andersen Consulting 1999
— Internet Centers of Excellence (ICE) Capabilities —
Our Internet Centers of Excellence (ICE) will assist in envisioning opportunities and supporting architectures.
ICE focuses on delivering solutions that range from helping clients envision their Internet presence through strategy workshops and rapid prototyping to complete implementation, testing and deployment of Internet infrastructures and applications
The centers located in Palo Alto, Seattle, Chicago and Boston are highly skilled in leading Web development languages and development tools such as HTML, Active Server Pages, Java, Javascript, VBScript, CGI, Perl, C/C++, DBI/DBD, LiveWire, VRML and Cookies. The centers also have Multimedia Designers skilled in leading edge graphics, animation, video and audio creation tools as well as usability and user testing
ICE specializes in designing and developing both Internet and Intranet architectures and creating dynamic and custom content
ICE knowledge capital includes reusable assets, tools and established processes that can be applied to common situations across different applications.
ICE partners with leading providers to reduce the complexity of implementing and deploying full-scale electronic commerce projects
ICE’s proven delivery capability is represented by the key roles played in the successful deployment of Internet projects for a long list of clients that includes Toshiba, Compaq, Crum & Forster, PJM Interconnection Retail Choice, New York Times, Autodesk, Robert Half International, Bay Networks, Sun Microsystems and Microsoft
July 30, 1999
Why Partner with Andersen Consulting?
74©Andersen Consulting 1999
The emergence of eCommerce demands the virtualization of products and services to meet the needs of consumers, businesses, and knowledge workers. This challenge drives CSTaR projects in data mining, public access systems, virtual enterprise, human-centered design, and agents
CSTaR applies advanced engineering principles to software design and development, focusing on the tools and techniques for building business solutions. Technology projects include software reuse, agent-based computing, component- and knowledge-based software engineering, and computer-assisted collaboration in a distributed environment
CSTaR is currently developing eCommerce applications:• BargainFinder• LifestyleFinder• ContactFinder• PRAIRIE• Magic Medicine Cabinet
• Interactive World• Internet Music World• Backseat Browser• Avalanche
The Center for Strategic Technology Research creates business opportunities from technology innovation.
— Center for Strategic Technology Research (CSTaR®) Capabilities —
July 30, 1999
Why Partner with Andersen Consulting?
75©Andersen Consulting 1999
The DAVINCI program showcases leadership in using technology to enable innovative business strategies for clients.
One of Andersen Consulting’s most ambitious technology adaptation efforts to date is the DAVINCI Virtual Corporation which attempts to depict a virtual corporation: a group of companies allied to pursue a strategic opportunity, using innovative business strategies enabled by state-of-the-art technology. DAVINCI gives executives a chance to see the technological state-of-the-possible by experiencing a virtual enterprise
Businesses that strive to understand the fundamental technology changes taking place and partner with the right organizations to complement their key skills, can transform themselves for survival and growth
More than 3,000 executives from global Fortune 2000 companies attended workshops in the U.S. and Europe