Pharmacy benefits manager AWPRx succeeds with a small team in the complicated world of workers' compensation insurance. CEO Jay Roy explains how cloud plays a big role.
10 Tools To Prevent Cloud Vendor Lock-in
(click image for larger view and for slideshow)
AWPRx manages pharmacy benefits and claims for workers compensation insurers, large self-insured employers, and similar organizations. Many of the firm's IT challenges boil down to the inherent problems that arise when people get sick or hurt on the job.
"Everything's a pain in the butt with a [workers compensation] marketplace. It's a very reactive model," said AWPRx CEO Jay Roy in an interview. "Our pain points are [related to] constantly trying stay on top of the data that's coming in from the pharmacies and our clients." Roy later added that the human element, particularly in an industry that creates natural conflicts -- and is also a target for fraud and abuse -- adds an extra layer of complexity. "Our primary pain point is just getting human beings to act properly," he said.
In layman's terms, AWPRx connects the various parties involved in a job-related prescription claim: injured or sick workers, their insurance companies and employers, and the pharmacies that fill the doctors' prescriptions. The small business handles several hundred thousand such prescriptions every year with just 27 employees, an accomplishment CEO Jay Roy chalks up to the company's increasing reliance on the cloud. "There's no way 27 people could touch everything going on, obviously," Roy said. "For us, it's [all about] automating the transaction."
That automation centers around custom software that AWPRx built on Salesforce's Force.com platform. The system rapidly determines whether a medication is "compensable," in industry lingo. If not, it's sent in near-real-time to a traditional claims adjuster for further review. Data is almost constantly moving in and out of AWPRx's systems. The state of Arkansas, one of its clients, sends new information on injured workers every hour, for example.
"We're always receiving new injuries throughout the day, we're always processing meds [via the pharmacies] nonstop, and all of that information is going to our clients," Roy said. "We're moving data in and out of the platform all of the time."
The Salesforce.com deployment and Force.com app replaced AWPRx's legacy Oracle and Java-based application that it built and hosted on-premises. The company relied on that system for more than 10 years, Roy said, but "as the company grew and scaled, we simply couldn't keep up with everything."
Roy doesn't dismiss the Oracle/Java approach altogether. "It's actually far easier to do it in Oracle and Java, but to do it with consistency and scalability was our problem as a small company," Roy said. "A lot of times, the application wouldn't scale because of the way the code was written." Even though 80% of its Salesforce deployment is custom code, Roy said it's much easier for AWPRx to maintain and update, particularly as the firm grows. Even the CEO is able to deploy updates once they're ready.
"It's actually much more difficult to develop on the Salesforce platform -- much more demanding, by far," Roy said. "But when you build it, it doesn't break. That was the thing with Oracle -- a guy could whip out code in maybe an hour [for something] that would take two days now in Salesforce, but once we deploy it in Salesforce we don't worry about it breaking."
As far as total cost of ownership and return on investment go, Roy noted a key consideration when his company began looking at alternatives to its Oracle/Java system. The legacy app had a fixed-cost model, whereas Salesforce expenditures would increase as the company added users, customers and so forth. On paper, Salesforce was considerably more expensive than Oracle in AWPRx's cost comparison, largely because the infrastructure was already bought and paid for. Yet by Roy's math, his annualized cost with Salesforce -- including labor, licensing, servers, and such -- is actually less than half (47%) of what it was previously. A big chunk of that savings comes from reduced headcount -- his IT team went from eight people to five after the switch. Roy noted that three people -- expensive ones, at that -- is a "big deal" in a company of his size.
Integration of disparate cloud applications is often a hot button for companies that rely heavily on cloud platforms. For AWPRx, it's an operational must, particularly given that the transactions it processes move between so many different hands, some of which aren't exactly known for their agility or efficiency -- pharmacies, doctors, patients, and insurance companies. The sensitivity of the data involved heightens the stakes, too. AWPRx uses Jitterbit to integrate its own systems with those of its customers and partners, such as the 70,000 pharmacies it contracts with.
Of course, all of this data has to live somewhere in its various states, but you won't find a server closet in AWPRx's offices, nor a corporate data center located elsewhere. It relies on Amazon Web Services for many of its server-related needs, especially its Jitterbit deployment.
It's also using Chatter for collaboration, often as an integrated alternative to email. Its call-center employees use it, for example, to troubleshoot problems with prescription claims and transactions as they arise. Chatter is more efficient than email because Salesforce is now so entrenched in AWPRx's operations, said Roy. "With the number of records we're touching every day -- it's hundreds if not thousands of touches every day -- even if you save a second, it adds up," he said. "We're saving thousands and thousands of seconds a week."
Aside from some client-side Windows licenses, the firm maintains very little in the way of on-premises IT. The company uses Gmail and Google Docs for email and productivity. Even its PBX call center is now hosted via a Salesforce partner, Five9.
"We don't have a single physical server," Roy said. "We don't have any of that [stuff] to deal with anymore."
The Enterprise Connect conference program covers the full range of platforms, services and applications that comprise modern communications and collaboration systems. Hear case studies from senior enterprise executives, as well as from the leaders of major industry players like Cisco, Microsoft, Avaya, Google and more. Register for Enterprise Connect 2013 today with code IWKPREM to save $200 off a conference pass or get a free Expo Pass. It happens March 18-21 in Orlando, Fla.
IT Service Management Must EvolveThe idea of technology being delivered as a service appeals to the 409 IT pros responding to our Service-Oriented IT Survey. But cloud providers are competing for that work, and CIOs are being selective.
Join InformationWeek’s Lorna Garey and Mike Healey, president of Yeoman Technology Group, an engineering and research firm focused on maximizing technology investments, to discuss the right way to go digital.