Ecommerce Proposal

eCommerce Enablement at CareFirst
Revised Approach and Proposal August 6, 1999
Many eCommerce questions are core to CareFirsts business strategy.
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 dont 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?
Andersen Consulting 1999 1 July 30, 1999
Executive Summary eCommerce Overview and Dynamics Context and Project Objectives Proposed Approach and Deliverables Proposed Timeline and Team Potential Benefits and Cost Why Partner with Andersen Consulting?
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Conservatively estimated, CareFirsts potential annual cost savings and revenue enhancements exceed $100MM.
eCommerce Economic Value Tree Value Potential ($MM) Reduce Non-Care Related Costs Reduce Costs Reduce Care Related Costs Potential eCommerce Benefits Attract/Retain More Members Enhance Revenue Expand Share of Each Customer
(9.1)
(90.0)
($ 99.1)
$ 22.0
$ 16.5 $ 38.5
Andersen Consulting 1999
July 30, 1999
CareFirst has significant work to do to move up the curve of eCommerce capabilities. Many health plans are ahead, yet few are personalized.
CareFirst's Current Positiong
Healthcare eCommerce Service Spectrum
ILLUSTRATIVE
High
Personalization
Degree of Buyer Focus In Customer Service

Care First
Commerce
BS CA UHG Cigna
Transaction
Oxford
Aetna
Inquiry
Kaiser
Low
Well point Information
Low
Source: Andersen Consulting research, industry literature Andersen Consulting 1999 4
High
eCommerce Interactivity Level
July 30, 1999
This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible in 1999.
Objectives
Project Objectives
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
July 30, 1999
Andersen Consulting has worked with CareFirst to design a two-phase approach which will deliver capabilities to the marketplace by 4Q99.
Phase 1 Approach
3 Weeks 6 Weeks Approach and Deliverables 3 Weeks
Set eVision Quickly determine the highestvalue opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
Design eArchitecture Design short- and long-term development and run-time environments
Plan Rollout Develop business case and plan rollout timeline and approach
Deliverables
Prioritized set of eCapabilities Market assessment of potential consumer/ provider uptake of eCapabilities in CareFirsts markets Conceptual design for eCommerce environment eCommerce organization chart Executive-level business case
Phase 2
IT strategy and IT Blueprint implications Assumptions, technical risks and political risks documents Summary of competitors and potential alliance partners eVision prototype demonstration = Scope of this proposal
July 30, 1999
The CEOs 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 CareFirsts overall cultural change by becoming more informed about eCommerce and advocating its use where appropriate
July 30, 1999
Andersen Consulting is uniquely qualified to assist with this work. Our price for this work will be $700,000 plus out-ofpocket expenses.
Why Andersen Consulting?

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
July 30, 1999
Our eCommerce offerings cover a broad continuum.

Why Partner with Andersen Consulting?
We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas
REPRESENTATIVE
E-Commerce Strategy Formation
New Business Models

Electronic Marketplaces Intentions Value Networks
Commerce Transformation
Customer Insight Electronic Distribution Virtual 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
Solution Enablement
Technical Architecture Net Centric Architecture Architecture Assessment
Information Mgmt
Program Management
eCommerce Infrastructure Development
Website Creation Planning / Design Construct/ Prototyping Integration / Delivery
July 30, 1999
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Business models are expected to evolve from seller-driven to buyer-driven as the electronic marketplace matures.
eCommerce Overview and Dynamics
Business Model Options Buyer-Driven

Hybrid Product and Market dynamic, defined by buyers 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 Market focused segmentation and differentiation strategies generally characteristic of competitive, near commodity markets Multiple touch points with a bundled product set generally represents todays mainstream market strategy Product-focused market strategies generally characteristic of unique, high margin offerings Physical delivery of sellercontrolled products and services represents a generally traditional approach to market
July 30, 1999
Virtual
Buyer-Driven Model
Access and Delivery Method
CustomerCentric Model
Customer-Centric
Physical
SellerDriven Model
Seller-Driven

Product
Nature of Demand
Intentions
11
As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past.
Strategic Principles in the eEconomy

Strategic Principle 1. Create a business model with several business partners around a single value proposition 2. Generate greater returns on intellectual property and relationship assets eEconomy Assumption Low interaction and collaboration costs drive best of breed specialization and networked-based value delivery Return and valuation are derived independently from asset components, with returns primarily driven by intellectual-property and customer relationship assets Old Assumption High interaction and collaboration costs drove high levels of vertical integration Consequence Fewer economic constraints on size, complexity and scope of enterprises and enterprise networks 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
3. Gain first leader advantage
Increasing returns to scale enables unlimited size of enterprises focused on information components of offerings and channels
Fast followers could leverage learnings of leaders, since diminishing returns to scale limited optimal size of enterprise
Early market share leadership, once achieved, can lead to dominance
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July 30, 1999
As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past (contd).
Strategic Principles in the eEconomy (contd)

Strategic Principle 4. Dont rely on returns based on information asymmetry eEconomy Assumption Fewer opportunities by producers to capture returns based on price differences for similar goods and services Old Assumption Returns by producers could be protected by high search and comparison costs incurred by customers Consequence Margins based on imperfect markets will erode
5. Expand product diversity and broaden value propositions to buyers
Declining information and communication costs enable more granular understanding of buyer preferences
Variety was limited by a segment-level understanding of buyer preferences
Companies, products and business models will cater profitably to smaller customer bases
6. Expand rapidly into markets, in particular, through disintermediation
Virtual presentation of goods and virtual points of sale enable inexpensive and rapid entry into new global markets
Cost and time of entry into markets required creation and coordination of physical assets, means of production and distribution points
New entrants and fastmoving competitors emerge quickly and capture market share without expanding to build distribution channels
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July 30, 1999
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.
Emerging eCommerce Roles

Financial/Risk
e.g., VISA

Payment Clearing and Settlement Risk Management
Access
e.g., US Web
Seller Agency
e.g., Equifax
Market Making
e.g., eBay

Buyer Agency
e.g., Amazon.com

Access
e.g., Netscape
Sellers
Seller Process Support
Information About Customers Customer Service Aggregation Quality Assurance
Integration of Producer and Consumer Needs Market Management
Search and Evaluation Needs Assessment and Product Matching Product Information Dissemination Purchase Influence Aggregation
Buyers
Buyer Process Support
Fulfillment
e.g., FedEx
Product and Service Distribution

Customer Service
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July 30, 1999
The current structure in the healthcare industry presents tremendous opportunity for value creation by moving to an eCommerce-based model.
Large number of entities must exchange information, services and money...
...which has proven difficult to do well
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
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
Information, money, and services must be exchanged across fragmented entities

1 Milliman
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
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
& Robertson, 1998 data
15
A large number of new internet-focused companies are moving quickly to populate the healthcare eCommerce space.
Develop Products and Services
Market and Acquire Customers
Manage Manage Products & Customer Risk Relationships
Manage Provider Network
Manage Care
Deliver Care
Abaton.com
Process Transactions
Manage Internal Operations

Araxsys
BroadVision Calico Technology ChannelPoint InsWeb Corporation Siebel Systems Xyber Net
Healtheon Access Health Avicenna Systems Axolotl Cerner
Advanced Health Caresoft @Outcome Covation Claimsnet Kinetra Healtheon Melophis Quadra Med Proxymed Pointshare Officemed.com
Ariba Technology Network Alchemy Concur Technologies
Neoforma
Envive IndX Software Luminate Software TIBCO Software
Daou Systems iTrust
Enact Health Mgmt. Systems
Health Desk Corp. Patient Infosystems KnowMed Systems
Shared Medical Systems

Status One Health System Web M.D. MEDE America
See Appendix for detailed description of services and offerings for these companies.
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July 30, 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*

InsWeb Now offers extensive advice and comparison capability for life and auto policies and is expected to add healthcare iTrust Offers web-based physician practice management solutions Abaton.com Employs web-based software to automate transactions across all classes of healthcare participants Covation Facilitates exchange of healthcare information over the internet, e.g., patient enrollment, claims, and medical data
Develop Products and Services
Market and Acquire Customers
Manage Manage Products & Customer Risk Relationships
Manage Care
Deliver Care
Caresoft Offers web-based disease management solutions
Shared Medical Systems Offers groupware to streamline workflow across health enterprises
*A comprehensive list of new entrants can be found in the Appendix
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July 30, 1999
A number of healthcare online communities have surfaced to serve a spectrum of audiences, ranging from general information seekers to consumers with specific interests.
Type of Online Community

Portals Do not contain content per se but instead function as targeted search engines for health information Full Service sites Offer a variety of services including chat rooms, recent medical discoveries, health policy information, product offerings, personalized newsletters and health risk assessments
Companies
Healthfinder HealthGate Medical Networks Medisite Accent Health.com A HN.com iVillage On Health.com Intelihealth Mediconsult.com Mylifepath.com Third Age
Physician Advice sites Physician-targeted sites: Contain information of interest to providers, including continuing education courses and journal articles
Americas Doctor Online BestDoctors.com Sapient Health Network
Physician-Targeted Sites Designed to fulfill a specific informational need for a targeted audience American Health Consultants Medical Economics Company Medical Networks Mediconnect
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July 30, 1999
For example, iVillage is an online community for women that provides healthcare information through betterhealth.com as one of its many product offerings.
eCommerce Products 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
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July 30, 1999
Medscape specializes in providing peer-reviewed clinical articles and is an example of an interactive website community for clinicians and consumers.
eCommerce Products
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
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July 30, 1999
Health plans are starting to use these enablers, especially to reduce administrative costs.
Current Health Plan eCommerce Activities - Admin. Cost Reduction

Develop Products and Services Market and Acquire Customers
Provide website self-service health plan rate calculation Provide rate quotes for brokers and consultants Enable electronic annual enrollment
Manage Products & Risk

Use sophisticated data mining/ analysis for pricing and product development
Manage Customer Relationships

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

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
Manage Care
Communicate health info to physicians and members through the Internet
Deliver Care
Enable real-time Install a referrals mgmt. coherent enterprise Expand electronic management claims submission system Provide an Post automated claims employment adjudication system listings on the Enable provider web self-service (e.g., Publish internal referrals, eligibility, policies and claims status) procedures on an Send payments intranet electronically to providers Enable online purchasing of insurance Use automated antifraud solutions to reduce suspect claims and run fraud audits
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July 30, 1999
In addition to administrative cost reduction, health plans are also leveraging eCommerce technology companies to reduce the cost of care.
Current Health Plan eCommerce Activities - Care Cost Reduction

Develop Products and Services Market and Acquire Customers Manage Products & Risk Manage Customer Relationships Manage Provider Network Manage Care Deliver Care Process Transactions Manage Internal Operations
Use triage systems Profile providers List clinical Provide an in conjunction guidelines online online drug with an EMR for formulary Offer an online demand physician management 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
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July 30, 1999
Although revenue enhancement is the major play, there are only a few health plans currently implementing initiatives to achieve this objective.
Current Health Plan eCommerce Activities - Revenue Enhancements

Develop Products and Services Market and Acquire Customers
Offer marketing and enrollment information on websites Engage in data mining to target appropriate customers
Manage Products & Risk
Manage Customer Relationships

Create cross industry destinations and portals (e.g., mylifepath.com)
Manage Care
Provide tailored risk assessments and advice on website to maintain loyalty Provide customized health related web pages for Members
Deliver Care
Offer Internet solutions to sell and distribute health insurance online
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July 30, 1999
Blue Shield of Californias mylifepath.com offers consumers personalized health information.

Features
Personalized health and wellness information on fitness and nutrition, parenting, womens 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 consumerfocused 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
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July 30, 1999
United Healthcare is using eCommerce to streamline administrative processes and manage customer relationships.
eCommerce Activities
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 selfservice 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
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July 30, 1999
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.
Approximate eCommerce Position of Health Plans*

HealthAxis United Aetna WellPoint FHS PacifiCare Cigna Oxford Principal Humana
Conservative Aggressive
* Top
nine by membership 26 July 30, 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
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Several business issues drive the need to accelerate eCommerce capabilities.

Context and Project Objectives
Project Context
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 CareFirsts innovation capabilities and differentiation through eCommerce
The newly-developed business strategy requires eCommerce capabilities to support geographic dominance, consumercentric focus, and to more quickly integrate acquired businesses
There is a desire to productize technology capabilities and link them with marketing messages
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July 30, 1999
This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible.
Detailed Project Objectives
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
30
July 30, 1999
The eCommerce strategy touches many components of the overall IT blueprint.

IT Alignment with Business

Business
eCommerce Strategy
Enables
Information Technology
Drives
Overall IT Strategy
IT Architecture
Business Processes
Processes
IT Management & Delivery

Leadership Sourcing Structure & Governance
Information
Applications IT Infrastructure
Andersen Consulting 1999 31
July 30, 1999
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Winning requires a different strategy from traditional investments.

Proposed Approach and Deliverables
Think Big
1
eCommerce Performance
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 roadmap
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 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
2
1999 2000 Years
2001
2002
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July 30, 1999
New management approaches are also needed to win in the eCommerce space.
Typical Piecemeal efforts by marketing (website) and IT (EDI) Director-level commitment Months planning the best solution Safe bets only Funded from operating budgets for same-year payback Focus on automating current business processes Local market autonomy Existing business units
Winning Cross-functional strategic initiatives Aligned incentives Executive team commitment A portfolio of experiments Mix of quick hits, capability builders and option plays Shareholder value, return on investment Re-invention of administrative processes, care management processes and revenue generation Corporate franchise development Entrepreneurial ventures that can grow rapidly and be owned flexibly
34
July 30, 1999
We propose a two-phase approach which will deliver capabilities to the marketplace by 4Q99.
Phase 1 Approach
eVision Quickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics Pinpoint eCommerce implications from
business strategy 3 Weeks Set 6 Weeks Proposed Approach and Deliverables 3 Weeks
Phase 2
Develop conceptual design of development, execution and operations Identify successful external eCapability environments in the examples to supplement existing eStrategy context of existing Identify potential external content or infrastructure (short-term eCapability alliance partners and long-term) Assess CareFirsts market demographics Identify scalability and constituents potential use of the constraints in the eCapabilities defined execution environment Perform data and call volume analyses to Design high-level security gauge value priorities across providers, architecture for short- and consumers, brokers and purchasers long-term execution environment Adjust existing eStrategy documents based on emerging ideas and business Identify implications to drivers overall IT strategy and IT Blueprint Enhance eVision prototype demonstration to showcase potential eCapabilities
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 Launch Pilots Begin delivering capabilities while laying critical infrastructure Adjust Speed Continuously evaluate progress and adjust speed of investments Scale Fast Assure that infrastructure can support unexpected growth
Develop and use evaluation framework to prioritize eCapabilities based on business value, cost, technology implications, business strategy linkages and potential constituent political implications
= Scope of this document
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July 30, 1999
Deliverables include choosing priority initiatives, developing the conceptual design of the new architecture, and planning the rollout.
Phase 1 Summary Deliverables

3 Weeks 6 Weeks 3 Weeks
Set eVision Quickly determine the highestvalue opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
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 CareFirsts markets by segment or product
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
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
Market scan summary of competitors and potential content or eCapability alliance partners
Enhanced eVision prototype demonstration
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July 30, 1999
Phase IA will identify the highest value opportunities.

Set eVision
Quickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics
Key Activities
Pinpoint eCommerce implications from business strategy Identify successful external eCapability examples to supplement existing eStrategy Identify potential external content or eCapability alliance partners Assess CareFirsts 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 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 CareFirsts markets by segment or product Market scan summary of competitors and potential content or eCapability alliance partners
Enhanced demonstration to showcase eVision capabilities
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July 30, 1999
Phase 1B will create the conceptual design for CareFirsts netcentric architecture.
Key Activities
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 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
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July 30, 1999
Phase 1C will prove the value and lay out the plan.
Key Activities
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 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
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July 30, 1999
The scope and plan for Phase 2 will evolve as eCapabilities are identified; some potential components are shown below.
Launch Pilots Begin experimenting with capabilities while laying critical infrastructure 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
Adjust Speed Continuously evaluate progress and adjust speed of investments
Phase 2
Set specific timelines for project value assessments, as drug companies do in their research projects Stop projects which havent proven out; speed up others that show promise
Scale Fast Assure that infrastructure can support unexpected growth Continue infrastructure investments to enable further automation and interactivity Over-size to stay ahead of market demand
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Continually innovate with new capabilities Continue infrastructure investments to enable further automation and interactivity
July 30, 1999
Opportunities will be identified and evaluated using proven frameworks.

Sample Deliverables Identify Opportunities (Stretch your imagination) Evaluate Opportunities (Balance the assessment) Classify Opportunities (Make tough decisions)
Providers Members Employers/ Groups

I Opportunity 1
Value Potential
Investment
Risk
...
...
Value to Constituent
New Business Models Enhanced Business Models
eC Federal & State Government Brokers & Agents Trading Partners
II Opportunity 2
III
Opportunity 3
IV
Opportunity 4
Current Business Models
Sustainable Differentiation Think in terms of communities rather than value chain activities Assess todays realities and try to envision future possibilities Understand where others inside and outside the industry are heading Alignment with Business Strategy Quantitative criteria (e.g.,. revenue potential, ROI) Qualitative criteria (e.g., competitive threat, customer need, sustainability) Strategic eCommerce Opportunities impact with: Members, Providers and Partners Administrative Staff Consumers Etc.
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July 30, 1999
Our approach will deliver a strategy that is logically integrated with CareFirsts business strategy which we are jointly developing, not just a set of initiatives.
Sample Deliverables
Framework for Prioritizing eCommerce Initiatives
High
Long-Term Contribution to Strategic Direction
Low
. . .. . .. . .. . . . . . . . . .
Low High
Short-Term Business Case
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More Aggressive Strategy
More Conservative Strategy
Initiatives
July 30, 1999
A net-centric technical infrastructure is complex and requires significant new technology; this project will deliver the conceptual design for this architecture.
Sample Deliverables
Presentation
Runtime Services
Language Interpreter
Illustrative Net-Centric Architecture

Environment
System Services
System Security Profile Management Environment Verification Task & Memory Management
Transaction
Application Services
Error Handling/ Logging
Base Services
Application Security
Resource Management TP Monitor Transaction Management Transaction Partitioning
Window System
Virtual Machine
State Management
Codes Table Services
Active Help
File Services
Desktop Manager
Component Framework
Other Common Services
App. Integration Interface
Web Server Services Push/Pull Services
Operating System
Form
Business Logic
User Navigation
Interface Application Logic
File Sharing Fax
Communication
Virtual Resources
Terminal Printing Name Paging Phone Audio/Video
Directory Services
Domain
Batch Services Report Services
Data Abstraction
Web Browser
Information
Report & Print
Database Services Document Services
Versioning Core
File Transfer RPC
Messaging
Specialized email email
Database Access
Communications Security
Encryption Authorization
Workflow Services
Direct Manipulation
Replication/Synchronization Access Security

Msg Oriented Streaming
ORB CTI EDI

Legacy Integration Authentication
Input Device
Indexing Storage
Communication Fabric
Transport Services
Packet Forwarding/ Internetworking Transport Security Network Address Allocation Quality of Service Circuit Switching Massage Transport
Network Media Services
Physical Media
Media Access
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July 30, 1999
CareFirsts security architecture will be developed in the context of Andersen Consultings Security in eCommerce implementation guide.
Sample Deliverables
Applications Components Menu of Choices
Product Mapping
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July 30, 1999
A conceptual technical architecture design identifies the architecture components and technologies required to support a given solution.
Sample Deliverables
Illustrative Technical Architecture Design

Requirements / Assessment
Relevant Systems
Unix Server
1. AIX 2. TransAccess 3. U to A 4. Entera 5. MQ Series 6. CORBA 7. Web Server 8. SNA Server 9. RDBMS
Architecture Assessment:
Technical Architecture
LAN/ WAN/ Internet
LAN/ WAN
IBM ES/9000 Mainframe

1. MVS 2. CICS 3. IMS 4. MQ Series 5. TransAccess 6. Database (DB2,VSAM, IMS)
Windows Workstation
1. Windows 95/NT 2. Entera 3. CORBA 4. MSMQ 5. Browser
NT Gateway Server
1. Windows NT 2. Falcon MQ Bridge 3. Falcon MQ Server 4. MSMQ 5. SNA Server
NT Server
UNISYS A-Series Mainframe

1. MCP 2. COMS 3. A to U 4. U to A 5. A to A 6. NT to A 7. Falcon MQ Client 8. Database (DMSII)
LAN/ WAN/ Internet
1. Windows NT 2. TransAccess 3. NT to A 4. MSMQ 5. CORBA 6. Web Server 7. MQ Series 8. RDBMS
LAN/ WAN
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July 30, 1999
An interface and connectivity diagram presents underlying protocols and interface technologies employed.
Sample Deliverables
Illustrative Interface and Connectivity Diagram

Unix Server
Database
RDBMS TransAccess MQ Series DCOM/ ActiveX U to A Web Server Entera Falcon MQ Bridge IIOP CORBA Falcon MQ Server MSMQ ODBC TransAccess RPC MQ Series U to A RPC DDCS (DB2) Cedar/LU6.2 MQ Series TransAccess RPC 3270/LU2 IMS CICS MQ Series TransAccess
Architecture Assessment:
Interfaces & Connectivity
IBM ES9000 Mainframe
Windows Workstation
DCOM/ ActiveX MSMQ Entera Browser CORBA MSMQ Entera RPC HTTPS IIOP
HTTPS Entera RPC
NT Server
DB2 IMS
VSAM
NT Server
RDBMS ODBC TransAccess RPC MSMQ MS RPC MQ Series
SNA Server

DMSII
ODBC BNA Terminal U to A RPC MS RPC Falcon MQ COMS A to A A to U U to A NT to A Falcon MQ Client
Database
TransAccess MSMQ DCOM/ ActiveX HTTPS IIOP Interface Legend Available Under Construction Future MQ Series MSMQ NT to A Web Server CORBA
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July 30, 1999
A physical environment blueprint communicates the physical topology including computers and network components.
Sample Deliverables
Illustrative Interface and Connectivity Diagram

Conceptual Design
Producers (External)
Producer Desktop
Infrastructure & Application Blueprints:

Physical Environment Blueprint
Company A
Application Data Center Server
Relevant Systems
User Workstation
Fax Machine Internet WAN
Firewall Unix Server
LAN/ WAN/ Intranet
NT Server
LAN
Remote Sites
Scan Station WAN
Application Server (Master)
LAN/ WAN
Gateway Server
LAN
Application Server (Slave)
Integration Framework Server
LAN/ WAN
WAN
Workstation
IBM ES/9000 Mainframe
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A process and information flow diagram shows how data and processes supporting business operations flow through the solution architecture.
Sample Deliverables
Illustrative Process and Information Flow

Broker Internet Framework Integration Framework
Process & Information Flows:

Release 1 Process Flow
Legacy Systems
L1
DB2
Producer Application
J
Employer Application & Member Enrollment Interface Services Interface Engines
Case Installation & Member Enrollment
Scan
Scrub
Medical Underwriting
Install Case
Enrollment
L2 Sales Reporting
DMSII
CP Group Installation Member Enrollment
Manual Processing
Census RFP Fax Process RFP
H
Network Match Engine Scrub

Faxback Proposal
Group Structure
Manual Group Entry
Upload Producer Info
L3
New Producer Processing
Rating Engine
Proposal Generator
New Producer Application
File/Report Database Process
User Input Memory Cache
Same Process
Note: All flows from the Integration Framework have a corresponding confirmation feedback loop toInternet Arch. . These feedback loops are not depicted in the diagram.
Update Rate Tables
Rating Engine
L4
DB2
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The project will take between 11 and 12 weeks to complete, based on level of detail of the architectures developed.
Proposed Timeline and Team
High-Level Project Workplan

Worksteps Phase 1A Pinpoint eCommerce implications from business strategy Research external eCapabilities / partners Assess CareFirsts eMarket demographics Perform data and call volume analyses Week: 1 2 3 4 5 6 7 8 9 10 11 12
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 1
Andersen Consulting 1999 50
3
= Progress Review
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July 30, 1999
At each project checkpoint, there may be separate business and technical reviews with different audiences.
Business Reviews
1
Technical Reviews
1
Set Business Context

Refine project scope, timeline and business resource commitments Review eMarket demographics for CareFirsts markets Brainstorm prioritization criteria
Set Technical Context

Refine project scope, timeline, deliverables and technical resource commitments Identify potential target technical environments to address
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
Refine Technical Architecture

Review design options and determine straw model architecture to design further Refine straw model architecture with input from broader IT team
Confirm Priorities & Business Case

Confirm and set final priorities Review business case
Finalize Architectures
Perform technical review of chosen architectures, tools, etc. Identify initial IT Blueprint implications
Joint 4 Approve Implementation Plans and Next Steps Review and adjust implementation timelines, costs and benefits Review
Approve overall strategy and set business and technical roll out plans in place
The project would be a joint effort between CareFirst and Andersen Consulting.
Project Organization
Project Sponsors & Steering Committee Bill Jews (CareFirst) Dave Astar (CareFirst) Tom Rekart (CareFirst) Jim Hudak (AC)
Project TBD (CareFirst) Executives Michael Palmer (AC)
Expert Advisors
Kedrick Adkins (AC)

Key Content Key Architect (CareFirst) Experts and Jay Phillips (AC) Management Healthcare Manager TBD (AC) Joe Marabito (AC) Brian Johnson (AC) Bill Milleker (AC)
Design, Analysis and Business Case Team Access to CareFirsts customer service, information technology and other business executives IT analyst (CareFirst) Consultants (Andersen Consulting)
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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.
Project Staffing
Role Project Sponsors Project Executives
Make interim and final decisions on capabilities and direction Provide overall project direction Lead strategy development Lead business case design
Staffing
Bill Jews Dave Astar, Tom Rekart, Jim Hudak Michael Palmer - Project Leader 1 CareFirst Project Leader
Time Commitment
1-2 hours/week 3-8 hours/week Four days/week 2-3 days/week
Key Content Experts and Management
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
Jay Phillips (AC) Architect, Lead Manager 1 AC Application Expert, Manager 1 CareFirst Key Architect
Full time
30 days Full time
Design, Analysis and Business Case Team
1 CareFirst IT Applications Analyst 1 CareFirst End-User Analyst 1 AC Tech Consultant 1 AC Business Analyst As needed and available
Full time 2-3 days/week Full time Full time Brainstorming sessions Ad hoc, as needed
Expert Advisors
Lend direction, experience Provide in-depth point expertise Challenge thinking, assumptions
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July 30, 1999
The CEOs 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 CareFirsts overall cultural change by becoming more informed about eCommerce and advocating its use where appropriate
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July 30, 1999
Andersen Consulting is prepared to deliver some of our most experienced and talented individuals to participate in the project*.
Name James B. Hudak
Comments/Areas of Experience Global Managing Partner for Andersen Consultings Health Services Practice Directed engagements for clients to develop overall business strategies, consumerfocused strategies, eCommerce strategies, growth strategies and operational improvement strategies Americas Managing Partner for Andersen Consultings Health Services Line of Business Led several infrastructure consolidation and new age architecture projects Expert in managed care systems and architectures Partner in Andersen Consultings 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 Consultings 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 Manager in Andersen Consultings 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
Kedrick D. Adkins
Brian A. Johnson
Michael E. Palmer
Jay Phillips
* Subject to availability
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The right strategies can yield significant economic benefits along with service improvements.
e Commerce Economic Value Tree
Lower Marketing, Selling & Distribution Costs Lower Enrollment Cost Enable Member SelfService Reduce Non-Care Related Costs Enable Provider Self-Service (Eligibility, Claims, Referrals) Reduce G&A and Purchasing Costs Reduce Network Management Costs Channel Utilization Through Best Providers Provide Electronic Formulary, Pathways, etc. Perform Real-Time Disease/Case Management
Potential Benefits and Cost
ILLUSTRATIVE
12-35% reduction in cost of group processing 3-6% reduction or elimination of commercial commissions 10-25% decrease in enrollment processing costs 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 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
Reduce Costs
Potential eCommerce Benefits
Reduce Care Related Costs
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 $?? Launch an eBusiness to exploit current assets (information, medical knowledge, etc.)
Improve Patient Compliance & Self-Care Participate in Virtual Networks & Tailor Individual Offerings
Improve Sales Success Rate Through Real-Time Quotes Expand Range of Products & Services Expand Value Delivered to Each Stakeholder
Attract/Retain More Members Enhance Revenue Expand Share of Each Customer
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Conservatively estimated, CareFirsts 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.
Potential Benefits and Cost
Total Potential Value > $100MM
Potential Non-Care Related Savings* = $9.1MM

0 -1 -2 -1.3 -1.6 -0.4 -0.8
Potential Care Related Savings* = $90MM

0 -10 -20
Spending ($000)
Potential Revenue Enhancement* = $38.5MM

45
Recredentialing Purchasing Costs Provider Service Calls Member Service Calls Enrollment Commissions Group Processing
-17.8 -4.6 -17.8
-3 -4 -5 -6 -7 -8 -9 -10
-30 -40 -50 -60 -70 -80 -90
-25.6
-3.6
-1.2 -0.2
-24.2
PatientCompliance Disease/Case Mgmt. Proven Pathways Online Formulary Channel Utilization
40
Spending ($000)
Revenue ($000)
35 30 25 20 15 10 5 16.5 0 5.5 16.5
Expanded Products/Services
Real-Time-Quotes
Customized Services
-100
* Detailed estimates and assumptions available upon request.

3 11 29 33 50 57 60
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
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Andersen Consulting is currently ranked #1 among all worldclass internet services firms.
Source: International Data Corporation, December, 1998
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July 30, 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 Consultings 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 Ive run into. - James Brian Quinn, Author of Intelligent Enterprise [Andersen Consulting] cant 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
Andersen Consulting 1999 July 30, 1999
Our eCommerce offerings cover a broad continuum.

We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas
REPRESENTATIVE
E-Commerce Strategy Formation
New Business Models

Electronic Marketplaces Intentions Value Networks
Commerce Transformation
Customer Insight Electronic Distribution Virtual 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
Solution Enablement
Technical Architecture Net Centric Architecture Architecture Assessment
Information Mgmt
Program Management
eCommerce Infrastructure Development
Website Creation Planning / Design Construct/ Prototyping Integration / Delivery
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We have a broad range of experience helping organizations shape and implement eCommerce Strategies.
Our Experience
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
We have worked with leading healthcare organizations to improve efficiency, service and quality of care using eCommerce.
Health Alliance Plan
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 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 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 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 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 Universitys electronic campus initiative.
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National Managed Care Organization
Covation (PhyCor, NationsBank and AC Joint Venture) Internet Marketplace
University of Texas
We have also worked with leading organizations in other industries to develop eCommerce strategies and implement internet-enabled business capabilities.
Toshiba America Electronic Components Leading Internet Software Provider First Union National Bank
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. 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. 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. 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. 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.
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Large Pharmaceutical Company
Toyota
We have a significant number of eCommerce clients across multiple industries.

Pepsi
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July 30, 1999
We are participating directly in the eEconomy through our investment in, and operation of our own eCommerce businesses.
Covation
Covation is a joint venture with Bank of America (formerly NationsBank) to provide an eCommerce infrastructure to support healthcare administrative transaction processing. 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 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. 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. 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.
Qpass
ViaWorld Services
ChannelPoint
iFlourish.com
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To ensure that we bring best practices and thought leadership, we invest in high-impact R&D.
Selected eCommerce R&D Areas

Financial Ideas Exchange Institute for Strategic Change... Internet Centers of Excellence (ICE) 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
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)
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The Ideas Exchange gives our health care clients an interactive forum for plotting change, changing corporate paths, and inventing solutions.
Ideas Exchange
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 tomorrows 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
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The Institute for Strategic Change is a think tank that help clients focus on practical eCommerce issues.
The Institute for Strategic Change

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 Institutes 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 marketplacethe all in one market. All-in-one markets combine multiple ways of transacting businesssuch as auctioning, negotiated contracting, and catalog salesin 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 marketsas 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.
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Our Internet Centers of Excellence (ICE) will assist in envisioning opportunities and supporting architectures.
Internet Centers of Excellence (ICE) Capabilities

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 fullscale electronic commerce projects ICEs 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
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The Center for Strategic Technology Research creates business opportunities from technology innovation.
Center for Strategic Technology Research (CSTaR) Capabilities

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
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The DAVINCI program showcases leadership in using technology to enable innovative business strategies for clients.
One of Andersen Consultings 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
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Ecommerce Proposal

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eCommerce Enablement at CareFirst

Revised Approach and Proposal August 6, 1999

Many eCommerce questions are core to CareFirsts business strategy.

How can we use it to enable my business strategy of growth and consumerism?

What happens if I dont get a stake in the ground soon?

What will the political ramifications be?

Andersen Consulting 1999

July 30, 1999

Healthcare eCommerce Service Spectrum

Degree of Buyer Focus In Customer Service

Well point Information

eCommerce Interactivity Level

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Andersen Consulting 1999

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Andersen Consulting 1999

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Why Andersen Consulting?

We are the largest eCommerce consultant in the business

Andersen Consulting 1999

July 30, 1999

Our eCommerce offerings cover a broad continuum.

New Business Models

Enterprise Process Virtualization

eCommerce Infrastructure Development

Website Creation Planning / Design Construct/ Prototyping Integration / Delivery

Andersen Consulting 1999

July 30, 1999

Business Model Options Buyer-Driven

Access and Delivery Method

Andersen Consulting 1999

Strategic Principles in the eEconomy

3. Gain first leader advantage

Early market share leadership, once achieved, can lead to dominance

Andersen Consulting 1999

July 30, 1999

Strategic Principles in the eEconomy (contd)

5. Expand product diversity and broaden value propositions to buyers

Variety was limited by a segment-level understanding of buyer preferences

6. Expand rapidly into markets, in particular, through disintermediation

Andersen Consulting 1999

July 30, 1999

Emerging eCommerce Roles

Payment Clearing and Settlement Risk Management

Seller Process Support

Information About Customers Customer Service Aggregation Quality Assurance

Integration of Producer and Consumer Needs Market Management

Buyer Process Support

Product and Service Distribution

Andersen Consulting 1999

July 30, 1999

Large number of entities must exchange information, services and money...

...which has proven difficult to do well

Healthcare is fundamentally an information business

Healthcare entities still exchange substantial information on paper

Information, money, and services must be exchanged across fragmented entities

Andersen Consulting 1999

Develop Products and Services

Market and Acquire Customers

Manage Manage Products & Customer Risk Relationships

Manage Provider Network