1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Managing Information Technology In ts - The Ap
Dynamic Systems Approach.
Phillip Wing & Mark Maloney
Emst & Young
GPO Box 2646
Sydney NSW 2001, Australia
Tel: 61 2 248 4380
Abstract
Understanding. quantifying and realising the net benefits derived from Information Technology
investments is becoming a complex and difficult management process.
A th ical ‘k for i ion Technology ii has been developed by
the authors and applied to a process innovation initiative in the health sector in Australia. As part of
this study, a dynamic systems approach was used as the underlying conceptual and analytical
approach to support this framework.
This paper details the background to the process innovation project, how a dynamic system approach
was applied and the results of the case study
The preliminary results confirm the conceptual robustness of the IT investment management
framework and validates the practical use and application of a dynamic system approach within this
framework.
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1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Managing Information Technology Investments -
The Application of a Dynamic Systems Approach.
As investments in IT continue to i ing levels of an effecti to
ensuring business benefits are derived from IT i investment is now crucial. An i imperative to develop a
k for more effective IT i in the Health Industry has emerged as a
result of the major economic and organisational changes occurring in this sector.
A proposition has been developed ne 1994) that no coherent process for IT investment
is to hes based on financial cost benefit
analysis were never particularly aan for technology investments and are now providing
limited utility in the face of:
. a diminishing portfolio of labour replacement IT investments,
. process views of business activities,
. new and evolving organisation structures, and
. complex inter-enterprise relationships.
A ical for ing IT i has been developed and a systems thinking and
dynamic systems approach selected as the ptual inning for this fr k. The
framework and systems thinking approach was applied to a process innovation initiative in the
Australian Health sector. This paper explores;
. why a dynamic system approach was adopted,
. how it was applied, and
. the lessons learnt from the case study.
The nature of the process innovation initiative, Asthma M: required a isation of
the issues from a holistic, cross and cross organi: In addition, the
relationships between processes within these enterprises needed to be. understood in order to
determine the leverage points for process innovation.
With the overall framework developed, a i for making it operati was required.
After examining a number of hes it was proposed that a dynamic systems
approach satisfied the attributes and characteristics required for the initiative. In summary it was
proposed that a dynamics systems approach would;
. facilitate a process view of an organisation,
. support the entire IT investment management process from need identification, process re-
design and implementation,
. deal effectively with complexity and second order (or feedback) impacts,
. embody a set of techniques and tools which provide effective communication to executive
management,
. identify leverage points to focus investment and implementation in order to realise the
benefits, and
. quantify the net benefits of both i and application based IT i
The remainder of this paper presents the findings of the case study and discusses the appropriateness
and effectiveness of a dy ics systems approach to support the management of IT investments.
Information Systems, page 90
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Asthma Management Case Study
Background
The asthma care process was targeted for process innovation asa pilot project within the Australian
Health Communication Network (HCN) i i 1 was used to enable
quantum improvements in the process.
The HCN. an in ication and i ion inf to achieve
significant benefits within the Australian Health System at several levels. These levels include
improvement in information exchange and access, reduction of waste by breaking down barriers
between health and the provision of more effective health service delivery and outcomes.
(HCN, 1993)
The process innovation required the development of a conceptual solution and the deployment of that
solution into a live patient care environment within a selected geographic region in south west
Sydney (New South Wales - Australia).
Problem Definition
Asthma, and childhood asthma in particular, is a major health problem in Australia. Approximately,
1in 5 children and | in 10 adults in Australia exhibit asthma symptoms.
The cost of asthma in Australia is approximately $1 billion per year or 3% of the national health
budget.
Asthma is a chronic condition that requires treatment from a number of health care providers. A
long-term, severe asthmatic can expect to receive care from:
. primary carers or general practitioners (GPs);
. specialists physicians;
. hospital accident & emergency staff; and
. in severe cases, hospital in-patient staff.
The health ‘sector in Australia is characterised by isations with diverse who are often
driven by different incentives. As a result, the current asthma care process is characterised by:
. disparate approaches to care delivery, resulting in patients receiving inconsistent messages
about their condition;
. poor access to patient information, which is fragmented across care providers;
. uncoordinated care management; and
. reliance on treating sickness rather than managing wellness.
In general, the system does not support sustainable improvements in the quality of life for asthma
patients.
Information Systems, page 91
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Objectives
The objectives of re-engit ing the asthma system were to simultaneously achieve;
reduced morbidity,
reduced hospital resources in testing acute asthma episodes,
proportionately miore primary and preventative care and,
dg and patient sati ion through information exchange.
A major investment in IT was iano to enable the achievement of these objectives. The IT
d by the authors was applied in this initiative.
Analytical Approach
The i ‘k required a
techniques which could;
ipp analytical app and set of
conceptualise and describe the re-engineered asthma management process,
provide a quantified investment justification business case,
accommodate cross sector delivery of care,
manage the complexity and breadth of health care processes without disregarding the human
element,
. identify leverage points in the process, and
. make the links between IT infrastructure investment and the benefits of improved health
outcomes explicit.
A systems thinking approach was adopted in order to understand the “whole” of the asthma
management process, and to identify the subtle actions and changes in structure that can lead to
significant, sustainable improvements (Forrester 1975). An important part of the change management
process was to bring to the surface the underlying assumptions of people involved in Asthma
Management. Dynamic modelling techniques proved to be a successful vehicle for this process.
Since very little historical data was available, an approach and a tool was also needed to construct a
(or ic) eval k that could map the existing and the re-engineered
processes, and produce a set of process metrics. As new information became available through
implementation, the actual results could be i ly pared to the expected results. The use
of dynamic simulation models provided the solution to this need.
Technologies & Tools
It was found that the re-engineered process needed to be viewed and understood from at least three
perspectives.
(a) A Logical Model of data and processes to ensure effective system integration, where the
right information is delivered to the right people at the right time.
(b) A Physical "Discrete Event" Activity Model to understand activity dependencies and how
the process could be implemented. This model describes what happens to an individual
patient.
(c) A Dynamic Model to develop a continuous view of the process and to understand the
impacts on the patient population over time. This included second-order effects and
Information Systems, page 92
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
emerging behaviour that results from the process being performed continuously according to
a defined process structure.
Visual presentation of the process was an imp icatii ideration and a weak of
most tools surveyed.
After a series of evaluations it was concluded that the three perspectives of the process could not be
represented by one tool.
A Computer Assisted System Engineering (CASE) tool following Information Engineering principles
was used to develop the logical model. "I think" from High | Performance Systems was used to
develop the system dynamics model and DEC Model, developed by Digital Equi Corp
was used to produce a process model at the discrete event level.
Model Description
A dynamics model of the asthma care process was developed as a learning and continuous evaluation
tool. The main feedback loops portrayed by the model are shown below.
delay
Degree of So Quality of
Collaboration GP-Patient
© and Coordination Interaction
s
G s
Need for pi '
Coordinated Sait Novag oa nt
Lack of Action elf Manageme:
Time and
Resources
Attack °
‘ Recurrence
fo. Rate
Acute
Health
Care SS. Frequency
of Attacks
"Shifting the Burden" Feedback Structure in Asthma Management
The diagram above shows the main feedback loops involved in the asthma system dynamics model.
Arrows indicate cause-effect relationships. The sign of the arrow ("s" for same or "o" for opposite)
indicates whether the cause-effect relationship is directly or inversely proportional. The small curved
arrow surrounding a plus or minus sign indicates whether a feedback loop is balancing/negative (-) or
reinforcing/positive (+). The arrow represents the direction of feedback. Finally, two small vertical
lines indicate a significant delay in a relationship; where the effect is lagged.
Information Systems, page 93
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
The structure of the asthma model, in its generic form, has been identified as a "Shifting the Burden"
System Archetype. System archetypes are a relatively small number of generic structures that are
common to a very large variety of management situations (Senge 1992).
The recurring nature of asthma, and the tendency for attacks to occur at night, creates a pattern where
aclass of asthma patients continually cycle through the hospital system.
As the recurrence rate of asthma attacks rises, so to does the frequency of attacks. The symptomatic
solution" is to improve acute health care services to cope with the increasing number of attacks.
The intuitive solution is to reduce treatment cycle time within hospitals. This approach will initially
result in patients spending less time waiting for treatment in hospital. However, in the long-term,
nee asthma is a chronic condition, patients will cycle through hospitals more quickly and in
increased numbers, thereby increasing costs, and placing pressure on the hospitals such that waiting
times will mount again.
In addition. a focus on acute health care will divert time and away from p
initiatives and hence reinforce the recurrence rate of asthma attacks. With the loop closed, a “viscous
cycle" persists, which, in the long-term, results in the falling quality of life of asthma patients and
escalating costs of care. This counter intuitive result was disclosed by the dynamic model.
The fundamental solution, as disclosed by the dynamic model, is to raise the proportion of the
hmatic population that self-manages by establishing a c i and perative envi
in which the quality of the relationship and information exchange between the GP and patient can be
significantly improved.
One of the key enablers for a d GP-patient relationship is a d d self
plan which allows patients to regularly monitor their dition and adjust pt i
usage. It will also provide patients with the information and support to make lifestyle changes that
will minimise the risk of attack. Overall, this dynamic should lower attack severity, and strengthen
the role of primary care. The key dynamic. is that as the level of self-management rises, the attack
recurrence rate will be lowered.
Simulated Outcomes
The asthmatic population was classified into three types: Mild, Moderate, and Severe. (A patient in
an asymptomatic state is classified as Mild.)
A Markov process was used to represent this spread, with individual patients continually moving
between classifications as they experience an attack, but with the population within each
classification remaining in a steady state. The intensity of attacks experienced by an individual
patient will change over their life, and will be impacted by the patient's age, location and climates,
changes in air pollution levels, viral epidemics, etc.
A sustainable improvement in the process structure would activate a shift in the state for the overall
population.
The flow down the chain (from Severe to Mod to Mild) is i d by the ision and timing
of appropriate treatment. This can be enhanced by improving the quality of interaction between the
patient and their GP.
Information Systems, page 94
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
The leakage flow back up the chain, Mild through to Severe, can be minimised through promoting
and supporting effective patient self-management, that is, ensuring that the attack does not recur once
treated.
The disease expression profile initially displays steady-state behaviour with 5% of the asthmatic
population experiencing severe symptoms, 25% moderate symptoms, and 70% with mild symptoms.
Using sensitivity analysis, it was identified that the variable that achieved the most impact was the
percentage of patients using self management techniques, that is, halting the leakage flow through
pi and individual patient plans,
By improving the mean quality of GP-patient interaction, and increasing the proportion of patients
that self-manage. a new profile is attained with less severe cases. These dynamic relationships are
shown in Figure |
Figure 1: | Summary of Dynamics Relationships
Percentage of asthmatic population in each state of disease expression over time
1: Severe 2: Moderate 3: Mild 4: % Self Management 5: GP-Patient Interaction
1 1
2]
3}
4 ——
———3
5: 100.00 ——4
a an
3 [
|
1 5
2
3 0.50 +
4 4
5: 50.00
fr
t>—2—— = 4d
=.
1 Se 2
J 4 an
3 L
4 0.00 [1+ 1 1 i
5: 0.
1.00 457.25 913.50 1369.75, 1826.
Days
In addition to the positive impact on the health status and the simul i d
process resulted in a change in resource consumption through less hospital usage and greater
emphasis on primary care. Since hospital treatment is inherently more costly from primary care, a
reduction in hospital usage. even though primary care costs rise, will result in an overall reduction in
the cost structures for managing asthma.
Information Systems, page 95
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
The simulated financial impact is summarised in figure 2.
Figure 2:. Summary of Financial Inspect of Process Redesign
Health care costs for asthma by health care sector over 5 years, before and after the Asthma
Management System implemented by the HCN
Shifts in Health Care Costs for Asthma - Pilot Area, Campbelltown
5000000
4500000
4000000
3500000
3
5 3000000 Existing Process
w
2500000 a
$ 2000000 innovated Process
& 1500000
1000000
500000
: Bo
oe 2 2 7) zB
@ = 2 .€ 8
&B 88 8
a oO
Health Care Sector
Initial Evaluation Results
The evaluation of the process innovation project and the investment management approach has been
in progress for six months. There was a shift in the disease expression profile to a less severe state as
predicted by the dynamic simulation model. However, there was not the anticipated shift in cost
structures resulting from less hospital usage and greater primary care.
An early hypothesis for this is that there 1s a mismatch between a consumerist demand for health
services and clinical relevance. In other words, there is a "fix me quick" mentality which education
and awareness programmes can help address.
There are also a number of “perverse incentives” in operation which were not captured in the
dynamic models. For example. some relief medication such as bronchodilators are without
prescription, whereas preventative medication is more expensive and must be obtained with
medication.
Another factor was that the system was d in a lower soci ic area relative to the
rest of the city (Sydney). This can impact the amount of support to the child from the home and the
ability to fund the more expensive medication
Investigation of these factors has forced the scope of the model to be even further extended.
However, we now have better information about where to look and how to actively and
purposefully redirect the process re-engineering effort.
Information Svstems. page 96
1994 INTERNATIONAL SYSTEM DYNAMICS CONFERENCE
Another major insight from the initial evaluation is the importance of change management and
understanding the factors that shape the perceptions of people involved in the process. This aspect
was initially understated or ignored because it was perceived to be too complex or unable to be
quantified.
The enhanced system dynamics model now being developed is attempting to unearth and
communicate these human elements to identify their impact on the ultimate behaviour of the system.
Conclusion
Based on project analysis, a survey questionnaire and detailed interviews, the need for a cohesive,
process oriented i has been blished. The use of a dynamic
system approach and its related techniques and tools have allowed the following shifts in the thinking
and analytical process to be achieved.
Traditional Approach Dynamic Systems Approach
Mind Set Modify current paradigm Develop new paradigm
Perspective Optimising Modify dynamics
Process Focus Discrete activities Interdependent relationships
Resources Profile resource consumption _Identify drivers of resource
consumption
Benefits Once-off Sustainable
Broad based impact Focus on leverage points
The result of the research provides sufficient evidence to encourage investigation into a broader
application of systems thinking and dynamic system modelling as the underlying philosophy and
ly pp to support the of ii in information technology.
References
Forrester, J. W: 1975 Collected Papers of J. W. Forrester
Health Communication
Network: 1993 Business Case presented to Australian
Health Minister - 3 August, 1993.
Senge, P. M: 1990 The Fifth Discipline- The Art & Practice
of the Learning Organisation. Double
Day
Wing, P. J: 1994 Unpublished draft Doctor of Philosophy
Dissertation.
Information Systems, page 97
