E Commerce Proposal

eCommerce Enablementat CareFirst

Revised Approach and ProposalAugust 6, 1999

July 30, 1999

2©Andersen Consulting 1999

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 don’t 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?

Many eCommerce questions are core to CareFirst’s business strategy.

eCommerce Overview and Dynamics 11

Proposed Timeline and Team 50

Potential Benefits and Cost 57

Context and Project Objectives 29

Proposed Approach and Deliverables 33

Why Partner with Andersen Consulting? 60

Executive Summary 3

July 30, 1999


Conservatively estimated, CareFirst’s potential annual cost savings and revenue enhancements exceed $100MM.

Enhance Revenue

Reduce Costs

Reduce Non-Care Related Costs

Reduce Care Related Costs

Potential eCommerce

Benefits

Attract/Retain More Members

Expand Share of Each Customer

eCommerce Economic Value Tree

(9.1)

Value Potential ($MM)

(90.0)

$ 22.0

$ 16.5

($ 99.1)

$ 38.5

July 30, 1999

CareFirst's Current Positiong


CareFirst has significant work to do to move up the curve of eCommerce capabilities. Many health plans are ahead, yet few are personalized.

Source: Andersen Consulting research, industry literature

Healthcare eCommerce Service Spectrum

Information

Commerce

Personalization

Inquiry

Transaction

ILLUSTRATIVE

Oxford

BS CA

AetnaCigna

KaiserWellpoint

UHG

CareFirst

High

Low High

Low

Degree of Buyer Focus In CustomerService

eCommerce Interactivity Level

July 30, 1999

Objectives


This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible in 1999.

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

Project Objectives

July 30, 1999

Approach and Deliverables


Andersen Consulting has worked with CareFirst to design a two-phase approach which will deliver capabilities to the marketplace by 4Q99.

Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics

Phase 1 Approach

= Scope of this proposal

3 Weeks

Design eArchitectureDesign short- and long-term development and run-time environments

6 Weeks

Plan RolloutDevelop business case and plan rollout timeline and approach

3 Weeks

Phase 2 Prioritized set of

eCapabilities Market assessment of

potential consumer/ provider uptake of eCapabilities in CareFirst’s markets

Summary of competitors and potential alliance partners

eVision prototype demonstration

Conceptual design for eCommerce environment

IT strategy and IT Blueprint implications

eCommerce organization chart

Executive-level business case

Assumptions, technical risks and political risks documents

Deliverables

July 30, 1999


The CEO’s 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 CareFirst’s overall cultural change by becoming more

informed about eCommerce and advocating its use where appropriate

July 30, 1999

Why Andersen Consulting?


Andersen Consulting is uniquely qualified to assist with this work. Our price for this work will be $700,000 plus out-of-pocket expenses.

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

Why Partner with Andersen Consulting?


E-CommerceStrategy

Formation

Electronic Marketplaces

Customer Insight

IntentionsValue Networks

New Business Models

Commerce TransformationElectronic

DistributionVirtual

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

Technical Architecture• Net Centric Architecture• Architecture Assessment

Information Mgmt Program Management

Solution Enablement

eCommerce InfrastructureDevelopment

Website Creation• Planning / Design • Construct/ Prototyping• Integration / Delivery

REPRESENTATIVE

We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas…

Our eCommerce offerings cover a broad continuum.







Executive Summary 3

July 30, 1999

eCommerce Overview and Dynamics


Nature of DemandProduct Intentions

Virtual

Accessand Delivery

Method

PhysicalSeller-Driven Model

Customer-Centric Model

Buyer-Driven Model

Business models are expected to evolve from seller-driven to buyer-driven as the electronic marketplace matures.

Buyer-Driven • Hybrid Product and Market dynamic, defined by

buyer’s 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

Customer-Centric• Market focused segmentation and differentiation

strategies generally characteristic of competitive, near commodity markets

• Multiple touch points with a bundled product set generally represents today’s mainstream market strategy

Seller-Driven • Product-focused market strategies generally

characteristic of unique, high margin offerings • Physical delivery of seller-controlled products and

services represents a generally traditional approach to market

Business Model Options

July 30, 1999



Old AssumptionStrategic Principle

1. Create a business model with several business partners around a single value proposition

eEconomy Assumption

Fewer economic constraints on size, complexity and scope of enterprises and enterprise networks

Consequence

High interaction and collaboration costs drove high levels of vertical integration

Low interaction and collaboration costs drive “best of breed” specialization and networked-based value delivery

3. Gain first leader advantage

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

Fast followers could leverage learnings of leaders, since diminishing returns to scale limited optimal size of enterprise

Increasing returns to scale enables unlimited size of enterprises focused on information components of offerings and channels

2. Generate greater returns on intellectual property and relationship assets

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

Return and valuation are derived independently from asset components, with returns primarily driven by intellectual-property and customer relationship assets

Strategic Principles in the eEconomy

As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past.

July 30, 1999



Old AssumptionStrategic Principle

4. Don’t rely on returns based on information asymmetry

eEconomy Assumption

Margins based on imperfect markets will erode

Consequence

Returns by producers could be protected by high search and comparison costs incurred by customers

Fewer opportunities by producers to capture returns based on price differences for similar goods and services

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

New entrants and fast-moving competitors emerge quickly and capture market share without expanding to build distribution channels

Cost and time of entry into markets required creation and coordination of physical assets, means of production and distribution points

Virtual presentation of goods and virtual points of sale enable inexpensive and rapid entry into new global markets

5. Expand product diversity and broaden value propositions to buyers

Companies, products and business models will cater profitably to smaller customer bases

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

Declining information and communication costs enable more granular understanding of buyer preferences

Strategic Principles in the eEconomy (cont’d)

As a consequence, new strategic principles are emerging, changing the old economic assumptions that we have relied upon in the past (cont’d).

July 30, 1999



Emerging eCommerce Roles

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.

Access e.g., Netscape

Buyer Agencye.g., Amazon.com

Search and Evaluation Needs Assessment and

Product Matching Product Information

Dissemination Purchase Influence Aggregation

BuyersSellers

Financial/Risk e.g., VISA

Fulfillmente.g., FedEx

Seller Agencye.g., Equifax

Market Makinge.g., eBayAccess

e.g., US Web Integration of Producer and Consumer Needs

Market Management

Information About Customers

Customer Service Aggregation Quality Assurance

Product and Service Distribution

Customer Service

Payment Clearing and Settlement

Risk Management

Seller Process Support

Buyer Process Support

July 30, 1999



The current structure in the healthcare industry presents tremendous opportunity for value creation by moving to an eCommerce-based model.

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

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

• 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

1 Milliman & Robertson, 1998 data

Large number of entities must exchange information, services and money... ...which has proven difficult to do well

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

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



Abaton.com

Access Health

Avicenna Systems

Axolotl

Healtheon

Daou Systems

iTrust

Health Desk Corp.

Patient Infosystems

Shared Medical Systems

Status One Health System

Web M.D.

ManageInternal

Operations

ProcessTransactions

DeliverCare

ManageCare

ManageProviderNetwork

ManageCustomer

Relationships

ManageProducts &

Risk

Market andAcquire

Customers

Develop Products and

Services

Advanced Health

Covation

Claimsnet

Kinetra

Healtheon

Melophis

Quadra Med

Proxymed

PointshareOfficemed.com

MEDE America

Araxsys

Ariba Technology

Concur Technologies

Envive

IndX Software

Luminate Software

BroadVision

Calico Technology

ChannelPoint

InsWeb Corporation

Siebel Systems

Xyber Net

@Outcome

Caresoft

Enact Health Mgmt. Systems

KnowMed Systems

See Appendix for detailed description of services and offerings for these companies.

Cerner

Network Alchemy

Neoforma

TIBCO Software

A large number of new internet-focused companies are moving quickly to populate the healthcare eCommerce space.

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*

*A comprehensive list of new entrants can be found in the Appendix

InsWebNow offers extensive advice and comparison capability for life and auto policies and is expected to add healthcare

CovationFacilitates exchange of healthcare information over the internet, e.g., patient enrollment, claims, and medical data

CaresoftOffers web-based disease management solutions

Shared Medical SystemsOffers groupware to streamline workflow across health enterprises

iTrustOffers web-based physician practice management solutions

Abaton.comEmploys web-based software to automate transactions across all classes of healthcare participants

ManageInternal

Operations

ProcessTransactions

DeliverCare

ManageCare


ManageCustomer

Relationships

ManageProducts &

Risk

Market andAcquire

Customers

Develop Products and

Services

July 30, 1999



Portals

Full Service sites

Physician Advice sites

Physician-Targeted Sites

Type of Online Community Companies

Healthfinder HealthGate Medical Networks Medisite

Accent Health.com A HN.com iVillage On Health.com

Americas Doctor Online BestDoctors.com Sapient Health Network

American Health Consultants Medical Economics Company Medical Networks Mediconnect

Intelihealth Mediconsult.com Mylifepath.com Third Age

Do not contain content per se but instead function as targeted search engines for health information

Offer a variety of services including chat rooms, recent medical discoveries, health policy information, product offerings, personalized newsletters and health risk assessments

Physician-targeted sites: Contain information of interest to providers, including continuing education courses and journal articles

Designed to fulfill a specific informational need for a targeted audience

A number of healthcare online communities have surfaced to serve a spectrum of audiences, ranging from general information seekers to consumers with specific interests.

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.

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

eCommerce Products

July 30, 1999



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

eCommerce Products

Medscape specializes in providing peer-reviewed clinical articles and is an example of an interactive website community for clinicians and consumers.

July 30, 1999



Current Health Plan eCommerce Activities - Admin. Cost Reduction

ManageInternal

Operations

ProcessTransactions

DeliverCare

ManageCare


ManageCustomer

Relationships

ManageProducts &

Risk

Market andAcquire

Customers

Provide website self-service health plan rate calculation

Provide rate quotes for brokers and consultants

Enable electronic annual enrollment

Use sophisticated data mining/ analysis for pricing and product development

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

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

Communicate health info to physicians and members through the Internet

Enable real-time referrals mgmt.

Expand electronic claims submission

Provide an automated claims adjudication system

Enable provider self-service (e.g., referrals, eligibility, claims status)

Send payments electronically to providers

Enable online purchasing of insurance

Use automated antifraud solutions to reduce suspect claims and run fraud audits

Install a coherent enterprise management system

Post employment listings on the web

Publish internal policies and procedures on an intranet

Develop Products and Services

Health plans are starting to use these enablers, especially to reduce administrative costs.

July 30, 1999



Current Health Plan eCommerce Activities - Care Cost Reduction

Profile providers Use triage systems in conjunction with an EMR for demand management

List clinical guidelines online

Offer an online physician 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

Provide an online drug formulary

ManageInternal

Operations

ProcessTransactions

DeliverCare

ManageCare


ManageCustomer

Relationships

ManageProducts &

Risk

Market andAcquire

Customers


In addition to administrative cost reduction, health plans are also leveraging eCommerce technology companies to reduce the cost of care.

July 30, 1999



Current Health Plan eCommerce Activities - Revenue Enhancements

Offer marketing and enrollment information on websites

Engage in data mining to target appropriate customers

Provide tailored risk assessments and advice on website to maintain loyalty

Provide customized health related web pages for Members

Offer Internet solutions to sell and distribute health insurance online

Create cross industry destinations and portals (e.g., mylifepath.com)

ManageInternal

Operations

ProcessTransactions

DeliverCare

ManageCare


ManageCustomer

Relationships

ManageProducts &

Risk

Market andAcquire

Customers


Although revenue enhancement is the major play, there are only a few health plans currently implementing initiatives to achieve this objective.

July 30, 1999



Features Personalized health and wellness information

on fitness and nutrition, parenting, women’s 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 consumer-

focused 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

Blue Shield of California’s mylifepath.com offers consumers personalized health information.

July 30, 1999



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 self-service 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

eCommerce Activities

United Healthcare is using eCommerce to streamline administrative processes and manage customer relationships.

July 30, 1999



Approximate eCommerce Position of Health Plans*

* Top nine by membership

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.

Humana

Principal

Oxford

Cigna

PacifiCare

FHS

WellPoint

Aetna

United

HealthAxis

Conservative Aggressive

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







Executive Summary 3

July 30, 1999

Context and Project Objectives


Several business issues drive the need to accelerate eCommerce capabilities.

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 CareFirst’s innovation capabilities and differentiation through eCommerce

The newly-developed business strategy requires eCommerce capabilities to support geographic dominance, consumer-centric focus, and to more quickly integrate acquired businesses

There is a desire to “productize” technology capabilities and link them with marketing messages

Project Context

July 30, 1999



This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible.

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

Detailed Project Objectives

July 30, 1999



Business Processes

Information

Applications

IT Infrastructure

IT Architecture

Business

Enables

Drives

InformationTechnology

IT Alignment with Business

The eCommerce strategy touches many components of the overall IT blueprint.

Overall ITStrategy

eCommerceStrategy

IT Management & Delivery

Leadership

SourcingStructure & Governance

Processes







Executive Summary 3

July 30, 1999

Proposed Approach and Deliverables


Winning requires a different strategy from traditional investments.

1999 2000 2001 2002

eCom

mer

ce P

erfo

rman

ce

2

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

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

3

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 roadmap1

Years

Think Big

July 30, 1999



Piecemeal efforts by marketing (website) and IT (EDI)

Director-level commitment

Cross-functional strategic initiatives Aligned incentives Executive team commitment

Months planning the “best” solution Safe bets only Funded from operating budgets for

same-year payback

A portfolio of experiments Mix of quick hits, capability builders and

option plays Shareholder value, return on investment

Focus on automating current business processes

Local market autonomy

Re-invention of administrative processes, care management processes and revenue generation

Corporate franchise development

Typical Winning

Existing business units Entrepreneurial ventures that can grow rapidly and be owned flexibly

New management approaches are also needed to win in the eCommerce space.

July 30, 1999




We propose a two-phase approach which will deliver capabilities to the marketplace by 4Q99.


Pinpoint eCommerce implications from business strategy

Identify successful external eCapability examples to supplement existing eStrategy

Identify potential external content or eCapability alliance partners

Assess CareFirst’s 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

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

Phase 1 ApproachPhase 1 Approach

= Scope of this document


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

3 Weeks 6 Weeks 3 Weeks

Phase 2Phase 2

Launch PilotsBegin delivering capabilities while laying critical infrastructure

Adjust SpeedContinuously evaluate progress and adjust speed of investments

Scale FastAssure that infrastructure can support unexpected growth

July 30, 1999





Deliverables include choosing priority initiatives, developing the conceptual design of the new architecture, and planning the rollout.

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 CareFirst’s markets by segment or product

Market scan summary of competitors and potential content or eCapability alliance partners

Enhanced eVision prototype demonstration

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

Phase 1 Summary DeliverablesPhase 1 Summary 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


3 Weeks 6 Weeks 3 Weeks

July 30, 1999



Pinpoint eCommerce implications from business strategy Identify successful external eCapability examples to supplement

existing eStrategy Identify potential external content or eCapability alliance partners Assess CareFirst’s 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 Activities 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 CareFirst’s markets by segment or product

Market scan summary of competitors and potential content or eCapability alliance partners

Enhanced demonstration to showcase eVision capabilities

Phase IA will identify the highest value opportunities.Set eVisionQuickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics

July 30, 1999




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 Activities 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

Phase 1B will create the conceptual design for CareFirst’s net-centric architecture.

July 30, 1999




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 Activities 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


Phase 1C will prove the value and lay out the plan.

July 30, 1999



Phase 2Phase 2

The scope and plan for Phase 2 will evolve as eCapabilities are identified; some potential components are shown below.

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

Set specific timelines for project value assessments, as drug companies do in their research projects

Stop projects which haven’t proven out; speed up others that show promise

Continually innovate with new capabilities

Continue infrastructure investments to enable further automation and interactivity

Launch PilotsBegin experimenting with capabilities while laying critical infrastructure

Adjust SpeedContinuously evaluate progress and adjust speed of investments

Continue infrastructure investments to enable further automation and interactivity

Over-size to stay ahead of market demand

Scale FastAssure that infrastructure can support unexpected growth

July 30, 1999



Identify Opportunities(“Stretch your imagination”)

Employers/Employers/GroupsGroupsMembersMembers

ProvidersProviders

TradingTradingPartnersPartners

Federal &Federal &StateState

GovernmentGovernmentBrokers &Brokers &

AgentsAgents

Evaluate Opportunities(“Balance the assessment”)

Alignment with Business Strategy Quantitative criteria (e.g.,. revenue

potential, ROI) Qualitative criteria (e.g., competitive

threat, customer need, sustainability)

Classify Opportunities(“Make tough decisions”)

Sustainable Differentiation

Valu

e to

Con

stitu

ent

Think in terms of communities rather than value chain activities

Assess today’s realities and try to envision future possibilities

Understand where others inside and outside the industry are heading

Strategic eCommerce Opportunities impact with:

• Members, Providers and Partners• Administrative Staff• Consumers• Etc.

Current Business Models

EnhancedBusiness Models

New Business Models

Value Potential Investment Risk . . .

Opportunity 1

Opportunity 2

Opportunity 4

Opportunity 3

I

II

III

IV

. . .

eC

Opportunities will be identified and evaluated using proven frameworks.Sample Deliverables

July 30, 1999



Low

Low High

High

Long-Term Contributionto Strategic Direction

Short-Term Business Case

.

Framework for Prioritizing eCommerce Initiatives

. ..

.

.

..

. ...

.

..

..

..

Our approach will deliver a strategy that is logically integrated with CareFirst’s business strategy which we are jointly developing, not just a set of initiatives.

MoreAggressiveStrategy

MoreConservativeStrategy

. Initiatives

Sample Deliverables

July 30, 1999



Communication Fabric

Transport Services

Massage TransportTransport SecurityPacket Forwarding/ Internetworking Circuit SwitchingNetwork AddressAllocation Quality of Service

Network Media Services Media AccessPhysical Media

CommunicationsSecurity

EnvironmentRuntime Services

LanguageInterpreter

VirtualMachine

System Services

SystemSecurity

ProfileManagement

EnvironmentVerification

Task & MemoryManagement

Application ServicesApplication

SecurityError Handling/

Logging

StateManagement

Active Help

Other CommonServices

ComponentFramework

Operating System

Codes Table Services

File Services

App. IntegrationInterface

Base Services

Web Server Services

Batch Services

Workflow Services

Push/Pull Services

Report Services

Presentation

Window System

Desktop Manager

Form

User Navigation

Web Browser

Report & Print

Direct Manipulation

Input Device

Business LogicInterface

Application Logic

Data Abstraction

Information

Database ServicesDocumentServices

Replication/Synchronization

Versioning

Access

Security

Indexing

Storage

Messaging

Encryption

email Core Specialized

Virtual ResourcesFax Terminal

File Sharing Printing

Paging Audio/Video

Phone

Authorization

AuthenticationORB

CTI

EDILegacy

Integration

DirectoryServices

Domain

Name

Communication

Transaction

Resource Management

TransactionManagement

TransactionPartitioning

TP Mon

itor

FileTransfer

RPC

MsgOriented

Streaming

email

DatabaseAccess

Illustrative Net-Centric Architecture

A net-centric technical infrastructure is complex and requires significant new technology; this project will deliver the conceptual design for this architecture.Sample Deliverables

July 30, 1999



CareFirst’s security architecture will be developed in the context of Andersen Consulting’s Security in eCommerce™ implementation guide.

• Applications

• Components

• Menu of Choices

• Product Mapping

Sample Deliverables

July 30, 1999



A conceptual technical architecture design identifies the architecture components and technologies required to support a given solution.

Requirements / Assessment Architecture Assessment:Technical Architecture

LAN/WAN/

InternetLAN/WAN

UnixServer

1. AIX2. TransAccess3. U to A4. Entera5. MQ Series6. CORBA

7. Web Server8. SNA Server9. RDBMS

IBM ES/9000Mainframe

1. MVS2. CICS3. IMS4. MQ Series5. TransAccess6. Database (DB2,VSAM, IMS)

NT Server

1. Windows NT2. TransAccess3. NT to A4. MSMQ5. CORBA

6. Web Server7. MQ Series8. RDBMS

Relevant Systems

UNISYSA-SeriesMainframe

1. MCP2. COMS3. A to U4. U to A5. A to A6. NT to A7. Falcon MQ Client8. Database (DMSII)

WindowsWorkstation

1. Windows 95/NT2. Entera3. CORBA4. MSMQ5. Browser

NT GatewayServer

1. Windows NT2. Falcon MQ Bridge3. Falcon MQ Server4. MSMQ5. SNA Server

LAN/WAN

LAN/WAN/

Internet

Illustrative Technical Architecture DesignSample Deliverables

July 30, 1999



An interface and connectivity diagram presents underlying protocols and interface technologies employed.

Requirements / Assessment Architecture Assessment:Interfaces & Connectivity

NT to A

MSMQ

NT Server

TransAccess

CORBA

Web Server

A to U

Falcon MQClient

U to A

UNISYS A-Series Mainframe

COMSDMSIIDatabase

RDBMS

Interface Legend

AvailableUnder ConstructionFuture

MSMQ

Windows Workstation

Entera

CORBA

Browser

Entera RPC

MSMQ

DCOM/ActiveX

IIOP

HTTPS

MSMQ

DCOM/ActiveX

IIOP

HTTPS

BNA Terminal

U to A

Entera

MQ Series

Unix Server

TransAccess

Database

CORBA

Web Server

RDBMS

Entera RPC

DCOM/ActiveX

IIOP

HTTPS

U to A RPC

ODBC

MQ Series

TransAccess RPC

A to A

NT to A

TransAccess

MQ Series

IBM ES9000Mainframe

CICS

DB2 VSAM

IMSDDCS (DB2)

Cedar/LU6.2

MQ Series

TransAccess RPC

3270/LU2

IMS

NT Server

Falcon MQServer

SNA Server

MSMQ

Falcon MQBridge

MS RPC

ODBC

MSMQ

TransAccess RPC

MS RPC

ODBC

U to A RPC

Falcon MQMQ Series

MQ Series

Illustrative Interface and Connectivity DiagramSample Deliverables

July 30, 1999



A physical environment blueprint communicates the physical topology including computers and network components.

Workstation

Scan Station

Producer Desktop

GatewayServer

IBM ES/9000Mainframe

UnixServer

NT Server

UNISYS A-SeriesMainframe

User Workstation

LAN/WAN/

Intranet

LAN

Integration FrameworkServer

Conceptual Design Infrastructure & Application Blueprints:Physical Environment Blueprint

Application DataCenter Server

Relevant SystemsProducers (External)

Remote Sites

Company A

WAN

ApplicationServer (Master)

WAN

Firewall

Internet

LAN

Fax Machine

WAN

LAN/WAN

ApplicationServer (Slave)

LAN/WAN

Illustrative Interface and Connectivity DiagramSample Deliverables

July 30, 1999



A process and information flow diagram shows how data and processes supporting business operations flow through the solution architecture.

Process & Information Flows:Release 1 Process FlowRequirements / Assessment

Legacy SystemsBroker

Scan

CP

EmployerApplication

&Member

Enrollment

L2

L1

CaseInstallation &

MemberEnrollment

GroupInstallation

SalesReporting

Scrub MedicalUnderwriting

InstallCase

ProducerApplication

MemberEnrollment

DB2

DMSII

File/Report

Database

Process

UserInput

MemoryCache

L3

NewProducer

Processing

Census

DB2RatingEngine

L4

InterfaceServices

InterfaceEngines

RatingEngine

Faxback Proposal

ProposalGenerator

ProcessRFP

IntegrationFrameworkInternet Framework

New Producer Application

Update Rate Tables

Manual ProcessingNetworkMatchEngine

Scrub

Group Structure Manual Group Entry

H

H

H

Same Process

RFPFax

Enrollment

Upload Producer Info

Note: All flows from theIntegration Framework have acorresponding confirmationfeedback loop to Internet Arch..These feedback loops are notdepicted in the diagram.

J

J

Illustrative Process and Information FlowSample Deliverables







Executive Summary 3

July 30, 1999

Proposed Timeline and Team


The project will take between 11 and 12 weeks to complete, based on level of detail of the architectures developed.

High-Level Project Workplan

1 2 3 4 5 6 7 8 9 10 11 12Week:Worksteps

2 3 4

Phase 1A• Pinpoint eCommerce implications from

business strategy• Research external eCapabilities / partners• Assess CareFirst’s eMarket demographics• Perform data and call volume analyses • 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

= Progress Review

1

July 30, 1999


At each project checkpoint, there may be separate business and technical reviews with different audiences.

2

3

4

1 Set Business Context• Refine project scope, timeline and

business resource commitments• Review eMarket demographics for

CareFirst’s markets• Brainstorm prioritization criteria

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

Confirm Priorities & Business Case• Confirm and set final priorities• Review business case

Business Reviews

Set Technical Context• Refine project scope, timeline, deliverables

and technical resource commitments• Identify potential target technical

environments to address

Refine Technical Architecture• Review design options and determine straw

model architecture to design further• Refine straw model architecture with input

from broader IT team

Finalize Architectures• Perform technical review of chosen

architectures, tools, etc.• Identify initial IT Blueprint implications

Technical Reviews

2

3

1

Approve Implementation Plans and Next Steps• Review and adjust implementation timelines, costs and benefits• Approve overall strategy and set business and technical roll out plans in place

Joint Review

July 30, 1999



Project Organization

Project Executives

TBD (CareFirst) Michael Palmer (AC)

Key Content Experts and

Management

Key Architect (CareFirst) Jay Phillips (AC) Healthcare Manager TBD (AC)

Design, Analysis and Business Case Team

Access to CareFirst’s customer service, information technology and other business executives

IT analyst (CareFirst) Consultants (Andersen Consulting)

Project Sponsors &

Steering Committee

Bill Jews (CareFirst) Dave Astar (CareFirst) Tom Rekart (CareFirst) Jim Hudak (AC)

Expert Advisors

Kedrick Adkins (AC) Joe Marabito (AC) Brian Johnson (AC) Bill Milleker (AC)

The project would be a joint effort between CareFirst and Andersen Consulting.

July 30, 1999



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.

Key Content Experts and Management

Design, Analysis and Business Case Team

Expert Advisors

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

Role

Lend direction, experience Provide in-depth point expertise Challenge thinking, assumptions

Full time

30 days

Full time

Full time

2-3 days/week

Full time Full time

Time Commitment

Brainstorming sessions Ad hoc, as needed

Jay Phillips (AC) - Architect, Lead Manager

1 AC Application Expert, Manager

1 CareFirst Key Architect

1 CareFirst IT Applications Analyst

1 CareFirst End-User Analyst

1 AC Tech Consultant 1 AC Business Analyst

Staffing

As needed and available

Project Staffing

ProjectExecutives

Provide overall project direction Lead strategy development Lead business case design

Four days/week

2-3 days/week

Michael Palmer - Project Leader

1 CareFirst Project Leader

ProjectSponsors

Make interim and final decisions on capabilities and direction

1-2 hours/week 3-8 hours/week

Bill Jews Dave Astar, Tom Rekart,

Jim Hudak

July 30, 1999


The CEO’s 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 CareFirst’s overall cultural change by becoming more

informed about eCommerce and advocating its use where appropriate

July 30, 1999



James B. Hudak

Name Comments/Areas of Experience

Kedrick D. Adkins

Brian A. Johnson

Michael E. Palmer

• Global Managing Partner for Andersen Consulting’s Health Services Practice• Directed engagements for clients to develop overall business strategies, consumer-

focused strategies, eCommerce strategies, growth strategies and operational improvement strategies

• Americas Managing Partner for Andersen Consulting’s Health Services Line of Business• Led several infrastructure consolidation and new age architecture projects• Expert in managed care systems and architectures

• Partner in Andersen Consulting’s 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 Consulting’s 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

* Subject to availability

Andersen Consulting is prepared to deliver some of our most experienced and talented individuals to participate in the project*.

Jay Phillips • Manager in Andersen Consulting’s 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







Executive Summary 3

July 30, 1999

Potential Benefits and Cost


The right strategies can yield significant economic benefits along with service improvements.

ILLUSTRATIVE

• 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

• 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

Enhance Revenue

Reduce Costs

Reduce Non-Care Related Costs

Reduce Care Related Costs

Reduce G&A and Purchasing Costs

Reduce Network Management Costs

Potential eCommerce

Benefits

Attract/Retain More Members

Channel Utilization Through “Best” Providers

Provide Electronic Formulary, Pathways, etc.

Perform Real-Time Disease/Case Management

Improve Patient Compliance & Self-Care

Expand Share of Each Customer

Participate in Virtual Networks & Tailor Individual Offerings

Improve Sales Success Rate Through Real-Time Quotes

Enable Member Self-Service

Enable Provider Self-Service (Eligibility, Claims, Referrals)

Expand Range of Products & Services

Expand Value Delivered to Each Stakeholder

Lower Marketing, Selling & Distribution Costs

Lower Enrollment Cost

e Commerce Economic Value Tree

• $?? Launch an eBusiness to exploit current assets (information, medical knowledge, etc.)

• 12-35% reduction in cost of group processing• 3-6% reduction or elimination of commercial commissions

• 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

• 10-25% decrease in enrollment processing costs

July 30, 1999

Potential Benefits and Cost


Conservatively estimated, CareFirst’s 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.

16.5

5.5

16.5

0

5

10

15

20

25

30

35

40

45

Reve

nue

($00

0)

ExpandedProducts/Services

Real-Time-Quotes

CustomizedServices

Potential Revenue Enhancement* = $38.5MM

-17.8

-17.8

-24.2

-4.6

-25.6

-100-90-80-70-60-50-40-30-20-10

0Sp

endi

ng ($

000)

Patient-ComplianceDisease/CaseMgmt.ProvenPathwaysOnlineFormularyChannelUtilization

Potential Care Related Savings* = $90MM

-1.3

-3.6

-1.2

-0.2

-1.6

-0.4-0.8

-10-9-8-7-6-5-4-3-2-10

Spen

ding

($00

0)

Recredentialing

PurchasingCostsProvider ServiceCallsMember ServiceCallsEnrollment

Commissions

GroupProcessing

Potential Non-Care Related Savings* = $9.1MM

Total Potential Value > $100MM

* Detailed estimates and assumptions available upon request.







Executive Summary 3

July 30, 1999



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


July 30, 1999



Source: International Data Corporation, December, 1998

Andersen Consulting is currently ranked #1 among all world-class internet services firms.

July 30, 1999


©Andersen Consulting 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 Consulting’s 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 I’ve run into.” - James Brian Quinn, Author of Intelligent Enterprise

“[Andersen Consulting] can’t 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

July 30, 1999



E-CommerceStrategy

Formation

Electronic Marketplaces

Customer Insight

IntentionsValue Networks

New Business Models

Commerce TransformationElectronic

DistributionVirtual

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

Technical Architecture• Net Centric Architecture• Architecture Assessment

Information Mgmt Program Management

Solution Enablement

eCommerce InfrastructureDevelopment

Website Creation• Planning / Design • Construct/ Prototyping• Integration / Delivery

REPRESENTATIVE

We place a strong emphasis upon developing leveragable assets to support our clients with advanced thinking in several key areas…

Our eCommerce offerings cover a broad continuum.

July 30, 1999



Our Experience

We have a broad range of experience helping organizations shape and implement eCommerce Strategies.

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

July 30, 1999



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

Health Alliance Plan

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

National Managed Care Organization

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

Covation (PhyCor, NationsBank and AC Joint Venture)

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

Internet Marketplace

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 University’s electronic campus initiative.

University of Texas

We have worked with leading healthcare organizations to improve efficiency, service and quality of care using eCommerce.

July 30, 1999



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.

Toyota

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.

Leading Internet Software Provider

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.

First Union National Bank

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.

Large Pharmaceutical Company

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.

Toshiba America Electronic Components

We have also worked with leading organizations in other industries to develop eCommerce strategies and implement internet-enabled business capabilities.

July 30, 1999



We have a significant number of eCommerce clients across multiple industries.

Wallace

Abbott

Pepsi

July 30, 1999



Covation is a joint venture with Bank of America (formerly NationsBank) to provide an eCommerce infrastructure to support healthcare administrative transaction processing.

Covation

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

Qpass

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.

ViaWorld Services

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.

ChannelPoint

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.

iFlourish.com

We are participating directly in the eEconomy through our investment in, and operation of our own eCommerce businesses.

July 30, 1999



Selected eCommerce R&D Areas

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

Financial Ideas Exchange…

Institute for Strategic Change...

Internet Centers of Excellence (ICE)…

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)

To ensure that we bring best practices and thought leadership, we invest in high-impact R&D.

July 30, 1999



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 tomorrow’s 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

The Ideas Exchange gives our health care clients an interactive forum for plotting change, changing corporate paths, and inventing solutions.

Ideas Exchange

July 30, 1999



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 Institute’s 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 marketplace—the “all in one” market. All-in-one markets combine multiple ways of transacting business—such as auctioning, negotiated contracting, and catalog sales—in 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 markets—as 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.

The Institute for Strategic Change

The Institute for Strategic Change is a think tank that help clients focus on practical eCommerce issues.

July 30, 1999



— Internet Centers of Excellence (ICE) Capabilities —

Our Internet Centers of Excellence (ICE) will assist in envisioning opportunities and supporting architectures.

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 full-scale electronic commerce projects

ICE’s 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

July 30, 1999



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

The Center for Strategic Technology Research creates business opportunities from technology innovation.

— Center for Strategic Technology Research (CSTaR®) Capabilities —

July 30, 1999



The DAVINCI program showcases leadership in using technology to enable innovative business strategies for clients.

One of Andersen Consulting’s 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

E Commerce Proposal

Health & Medicine

Transcript of E Commerce Proposal