Is a hosted application right for your organization?

2006 07 26 14 38 18 706 Hosted applications have become so commonplace that millions of people use them daily without even realizing it. Checking a Hotmail or Yahoo Mail account, sharing photos over the Web via Kodak Gallery or Snapfish, paying bills through your bank's Web site, and filing income taxes online with Intuit's TurboTax are all examples of widely used hosted applications. In each of these cases, both the application and data are managed by a third party and accessed over the Internet.

In the radiology world, this application delivery model is becoming more and more prevalent as almost every type of system is available through a hosted model. Everything from RIS, PACS, and practice management systems to firewalls, spam filters, and sales force automation solutions can be accessed over the Internet.

In fact, you can run an entire imaging center without a server or database on the premises. There are definitive pros and cons with the hosted-software delivery model, so any organization that is considering an initiative must clearly understand what it's getting, weigh its options, and negotiate the right agreement.

Understanding what you're getting

There is no industry standard for defining or describing a hosted solution. The terms "application service provider (ASP)," "managed service," "subscription," and "Web-based" are all used interchangeably by various vendors. The grocery store makes it easy for us with grade AA jumbo eggs and prime, choice, and select cuts of beef. If only the U.S. Department of Agriculture would regulate the software we buy!

HL7 is as much of a standard as you'll find in healthcare information technology (IT), but often it's not easy to hook up two supposedly HL7-compatible systems. While we'll attempt to define a few of the key terms here, you will be better served by ignoring the terms in the marketing literature in favor of proper due diligence.

With any solution you're considering, pay special attention to what you're actually getting, how it works, and what technology will be used to deliver the application to your network.

  • Hosted application: A software application that is accessed from a remote location over a wide-area network (WAN).
  • ASP: A third party that distributes software across a network from a data center (not to be confused with Active Server Pages, which is a programming language used to build Web applications).
  • Subscription: A procurement model in which software usage is paid for on a utilization basis instead of purchasing a license.
  • Web-based: Uses Web technology such as a browser, Web server, or hypertext transfer protocol (HTTP).

Pros and cons

Unfortunately, there are no magic solutions on the market, although they would certainly make life easier, and put many vendors out of business. Every vendor has to make trade-offs and focus its solution to some extent if it wants to stay in business. It is impossible to maximize usability, functionality, flexibility, scalability, performance, and quality while minimizing costs and time to market. There are undoubtedly trade-offs with the hosted-delivery model that leaves buyers with the task of matching up their most critical needs with the strengths and weaknesses of the available solutions.

The key advantage of using a hosted solution is it lets you focus on running your business while someone else focuses on managing your technology. Server administration, database administration, patches, upgrades, backups, security management, and other operational activities are outsourced to a third party. This is critical because many of these tasks require specialized resources and expensive infrastructure equipment that an outpatient facility may not be able to afford.

Minimizing capital expenditure is another significant factor. Hosted solutions are generally paid for on a transactional or monthly basis out of operational funds without the traditional up-front capital outlay for hardware and software. You also may gain access to a more sophisticated and feature-rich system than you could otherwise afford to purchase. Scalable subscription-based pricing models can also provide advantages over traditional software license pricing models by allowing you to implement a solution while paying for it on a "per drink" basis, as opposed to paying for it up front.

Fault tolerance, disaster recovery, and business continuance deserve special consideration because they are critical in nature, complex to establish, and, most importantly, time-consuming and expensive to test and maintain. Building a fault-tolerant infrastructure on your own can be very costly as it involves duplicating every layer (such as networking equipment, servers, and databases). This duplication increases procurement costs, complexity, and management costs, and may require specialized software to handle clustering and failover.

Disaster recovery procedures may be relatively easy to document, but they are notoriously difficult to test. A true disaster recovery test will involve restoring every critical business system from backup media onto brand-new hardware. It is by no means impossible, but it requires a great deal of time, money, and specialized technology expertise that is not a core competency for most imaging centers.

We generally associate disasters with the catastrophic events that dominate the news. While hurricanes, earthquakes, and floods have destroyed their fair share of IT infrastructure in recent months, the most common types of disasters are fires, theft, and human error that can happen anytime, anywhere. A power surge, faulty hard drive, spilled cup of coffee, or even an accidental tap of the delete key can bring a business to a grinding halt. When disaster strikes, the value of having immediate access to both your data and the application from any Internet-enabled PC should not be underestimated.

The main disadvantage with hosted solutions is a perceived loss of control, which should not be discounted. It can be frustrating when your mission-critical systems are in the hands of a third party. When an issue arises, it may feel better to retain the ability to wake up your own technical team to ensure they are on the job.

The capability to customize the system may be another limitation due to the fact that some hosted applications have constraints in this area. While extensibility is as much an attribute of the system itself as opposed to the delivery model, some hosted applications that run multiple organizations on shared application servers may have limitations.

Network performance is a third factor that is application-dependent. Systems that need to move extremely large datasets across the Internet (such as a 64-slice CT) may not meet performance requirements, depending on how soon the data needs to be made available to the end user. In addition, hosted applications are dependent on a WAN, which oftentimes involve dedicated leased lines or a connection to the Internet.

Negotiating the right agreement

Once you've determined if a hosted model fits your needs, the next step in the process is to properly assess the vendor's capabilities, competencies, and commitment to this model and negotiate the right agreement.

Is your vendor financially stable? Financial stability is important with self-hosted systems, but the effects are magnified and appear more quickly if its resources aren't sufficient to keep the system running. Does it have substantial hosting experience? Hosting, maintaining, and operating sophisticated software systems is not a simple task, and business process expertise can only be improved over time.

Is the infrastructure world-class? Sharing infrastructure with other organizations should offer economies of scale and give you access to a tier 1 data center as opposed to a server sitting on the floor of an office building. Also make sure the infrastructure is HIPAA-compliant and certified with an audit.

With regard to the contract, the first thing to have a clear understanding of is the pricing. Which exact product modules and services are included in the quoted price? Is the price locked in for a set period of time? What kind of add-on products and services are available?

The other essential contract element is the service level agreement (SLA), which is often used to define uptime guarantees. What kind of support is included (such as phone, e-mail, or 24/7 access)? Is the system routinely brought down for maintenance? Last but not least, do you have access to your data? If the vendor can't give you periodic or on-demand snapshots of your critical business data with the corresponding data layouts, you should think twice. Even though there may be an extra charge, it is advisable to verify the availability of this service.

When it comes to deployment, customers are generally responsible for the PCs and WAN connection required to access the application. Make sure you've estimated the bandwidth required to operate the system according to your required performance criteria. For mission-critical systems, make sure you have redundant network access. Depending on the requirements, a DSL line or even dial-up may be adequate. Finally, make sure there isn't any specialized hardware, software, or networking equipment required.

The right vendor coupled with the right solution has the potential to offload many of the IT infrastructure headaches that may be keeping you from focusing on running and growing your business. As long as you know exactly what you're getting, carefully weigh the pros and cons, and negotiate a solid contract, you will be on the right track to making the right decision for your facility.

By Joel Mezistrano contributing writer
December 20, 2006

This article originally appeared in the Radiology Business Management Association's Bulletin and is provided for members through the permission of the RBMA. For further information about the association, the RBMA may be contacted at 888-224-7262 or via its Web site.

Mezistrano is vice president of radiology for Birmingham, AL-based healthcare informatics developer Source Medical Solutions.

Related Reading

Taking the mystery out of grassroots lobbying, October 10, 2006

Improve what? Finding a process to improve, July 27, 2006

Prenuptial planning eases pain of PACS divorce, June 5, 2005

ASP-powered PACS can slash costs, December 17, 2004

How to avoid PACS buyer's remorse, September 21, 2001

Copyright © 2006 RBMA

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