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Entera eCube Case Study
Using an Executive Assessment and ARM to Extend Life and Improve ROI of Pharmacy Benefits’ Legacy Investment
Service: |
Tools: |
Applications: 10 core business applications |
Legacy Platform: |
Target Platform: JAVA, IBM CTG |
Client: Pharmacy Benefits Management Company |
OVERVIEW
- A large Pharmacy Benefits Management (PBM) company provides billing, reimbursement, and mail fulfillment of prescription drugs to patients. PBM serves health plans, pharmacies and consumers.
- eCube lowered PBM’s cost of operation by upgrading the hardware, operating systems and middleware that were used to run the company’s essential business operations. In the process, eCube improved PBM’s business performance and reduced information technology (IT) operations and outsourcing costs.
COMPANY BACKGROUND
PBM was established when the government issued a regulation prohibiting drug companies and HMOs from owning Pharmacy Benefits Management companies. Much of the technical support remained with the parent company, leaving PBM with little technical expertise to maintain its outdated but essential custom technology and to build new business applications.
SITUATION
Individual pharmacies routinely access PBM’s mainframe to determine patients’ eligibility and co-pay for prescribed drugs. With all the rule sets stored on the system, it calculates the patient’s cost based on the individual’s HMO Plan, drugs chosen (generic/branded), co-pay policy, etc. The aging legacy system typically processed over 1.5 million transactions per hour.
Because PBM’s mission critical solutions were running on old legacy systems – hardware, operating systems, and databases that no longer were supported by their original manufactures – PBM was concerned about the reliability of the systems, how they’d handle increased demand and meet escalating service level agreements.
In addition, PBM had a second concern: they outsourced maintenance of the system. Because of its age and use of unsupported platforms, they were forced to pay a premium of more than $120,000 a month to service its outdated technology.
The good news was the current applications’ functionality met the company’s needs. The bad news was the company was spending in excess of $1.44 million per year to support a system that was seen to have high operational risk.
SOLUTION
The PBM had three basic choices:
- Implement a commercially available system
- Build a new system from scratch
- Modernize the existing system
Using an a analysis process delivered by eCube, called a Executive Assessment, the PBM was able to get an overview of its situation relative to its business needs. The analysis of their need led to the realization that installing a commercial-off-the-shelf package was impractical. Commercial off-the-shelf applications did not meet their business requirements and would require large amounts of custom development. Building a replacement system in-house was a viable choice, but it would be costly, estimated to be in excess of $3 million. Additionally, it was determined that both of these options would be extremely disruptive to the company’s business.
A third option was the approach recommended by the Executive Assessment: remediate and modernize the existing proven business solutions with new hardware and software, while achieving cost savings from lower cost of operation. This approach would extend the life of the present system, reduced risk, preserved ROI, and allowed them to spend scarce IT dollars on other business requirements. Management chose the modernization approach because it minimized disruption to its daily business operations, was the most cost effective, and gave management the time to determine a longer range solution.
PROCESS
Using ARM (Assess, Remediate, Modernize) – eCube’s Enterprise Evolution methodology – PBM was able to determine the most cost effective and functional approach. ARM evaluates a company’s existing technology assets, determines which assets can be upgraded, and identifies the best contemporary platforms and application enhancements to meet a company’s business objectives.
From assessment to implementation, it took eCube only two months to complete the transformation. Here’s how they accomplished the task:
Assessment : over a two week period, eCube determined the system was slow but functional. The most alarming finding was the discovery of a high risk security flaw that made the company vulnerable to a hostile attacker. Tampering with the company’s business operations would cost the company millions of dollars and would jeopardize the security of patient information.
Remediation : To improve the system’s responsiveness, eCube made important changes to the systems’ architecture, providing faster data access and eliminating redundant code. The security flaw was fixed immediately, preventing an attacker from gaining access to the system.
Modernization : This phase was the most complex and provided the greatest benefits in increasing performance and reducing cost. The eCube team:
- Ported the hardware to new p680 computers with the AIX 5.2 operating system
- Updated the existing middleware with NXTera, eCube’s “light weight” legacy Component Server
- Migrated application utilities and scripts to NXTera where they were more easily modified and maintained
- Eliminated any need for custom coding by using NXTera’s emulation technology to recompile and re-host core applications
- Removed all legacy dependencies on DCE by implementing eCube’s NXTware Evolution Server
- Designed direct access to the Mainframe via IBM CTG Gateway using JAVA and NXTware
- Provided XML integration to and from the application at the business function level
ROI
The PBM reaped benefits in improved system performance and better business operations.
Performance:
- increased system performance by a factor of 3; CPU usage on the legacy hardware ranged between 95 and 99%; new CPU usage was only 2% so the system had significant capacity to support the company’s projected growth
- minimized unnecessary system and architectural overhead
Business operations:
- reduced operational risk by eliminating a security flaw
- minimized unnecessary operational and maintenance overhead
- reduced annual outsourced operational maintenance costs by over $750 thousand
- increased employee productivity; number of transactions for call center staff grew by est. 4%
- improved turn around of business information due to more agile and responsive system
TECHNOLOGY
|
Middleware |
IBM CICS Transaction Gateway, NXTera/RPC |
Application Platforms |
NXTware Evolution Platform |
Operating System |
IBM AIX |
Database |
Oracle |
Development Language |
C, C++ |
Number of Applications |
10 |
IMPLEMENTATION
Services Provided |
Executive Assessment |
Other options evaluated |
Re-building existing application (Est. at $3 Mil) |
Actual Costs |
Hardware, software and consulting 4 -10% cost of |
Team size |
2 |
Development time |
2 months |
