Customer Solution Case Study
/ Healthcare ISV Passes Volume Licensing Savings on to Customers
Overview
Country or Region:United States
Industry:Information technology—Healthcare
Customer Profile
Allscripts provides healthcare information technology solutions for physicians, hospitals, and other healthcare facilities. Based in Chicago, Illinois, it employs approximately 2,500 people.
Business Situation
The company wanted to reduce costs for its customers by providing unified solutions that include Microsoft product licenses and preconfigured Microsoft software.
Solution
Allscripts enrolled in the Microsoft ISV Royalty Licensing Program and gained the right to license Microsoft products as part of unified solutions to be distributed to customers.
Benefits
- Simplified licensing and deployment
- Up to 50 percent savings on Microsoft licenses
- Enhanced support
- Reduced administration time
Steven P. Schwartz, Senior Vice President, Corporate Business Development, Allscripts
Allscripts-Misys Healthcare Solutions (Allscripts) offers one of the broadest choices of innovative healthcare software from a single company. Its solutions, ranging from electronic health records to homecare automation, run on the Windows operating system and interoperate with other Microsoft programs. To reduce the cost and complexity of deploying and maintaining its offerings, Allscripts wanted to provide unified solutions preconfigured with the underlying Microsoft software. After joining the Microsoft Independent Software Vendor (ISV) Royalty Licensing Program, Allscripts now provides customers with complete solutions that include Microsoft software licenses and embedded maintenance. Allscripts benefits from reduced licensing costs and simplified deployment and administration, which makes it possible to deliver optimized solutions to customers at a more competitive price.
Situation
Allscripts Healthcare Solutions began in 1986 as a provider of prepackaged medications that physicians could dispense to patients at the point of care. In the 1990s Allscripts began transforming its business with information technology solutions to improve the medication management process. It became a leading provider of electronic prescribing solutions and eventually expanded into Electronic Health Records and Practice Management Solutions.
In 2008, Allscripts Healthcare Solutions merged with Misys Healthcare Systems, a fully owned division of London-based Misys, to form Allscripts-Misys Healthcare Solutions. At the end of that year, Allscripts CEO Glen Tullman earned a 66 percent vote among Healthcare IT News readers as the vendor leader who advanced the cause of healthcare IT furthest in 2008.
Today Allscripts-Misys (branded as Allscripts) is recognized as a leading provider of innovative health information technology with award winning solutions used by more than 160,000 physicians, 800 hospitals, and nearly 8,000 post-acute and homecare organizations throughout the United States. Using Allscripts solutions, these organizations are able to automate and connect their clinical and business operations to enhance patient safety and clinical outcomes, while remaining cost competitive. As an independent software vendor (ISV), Allscripts offers the broadest spectrum of solutions from a single provider including electronic health records (EHR), electronic prescribing, revenue cycle management, practice management, document management, hospital care management, discharge management, emergency department information systems, and homecare automation solutions. “There are a lot of niche players and that number is growing rapidly, so we have dozens of competitors in different areas; but there are few if any that can match our breadth of products,” says Elisa Way, Technical Product Manager at Allscripts.
To stay competitive, the company needs to provide innovative, yet easy-to-use solutions that meet ever-evolving governmental regulations and are cost effective to deploy and maintain. “We need to be able to offer our customers low cost, interoperable, highly available systems to enable them to operate with agility,” says Steve Schwartz, Senior Vice President, Corporate Business Development at Allscripts. “We also want to focus 100 percent of our development effort on the healthcare-specific needs of our customers, rather than on re-creating the horizontal components that can be purchased off the shelf and are common to just about any business.”
Inherent in those challenges is the need to provide complete solutions that incorporate third-party technologies and the related licenses. Allscripts chooses those third-party technologies very carefully. “We choose third-party software that can be easily embedded in our solutions and that meets our performance standards, but we also look at pricing, vendor stability, and support, and how easy they are to do business with,” says Tim Fetner, Senior Technical Buyer for Allscripts. “It’s not all about price, but price is a big component because we’re constantly looking to reduce the cost to the end user while still maintaining our margins.”
Most Allscripts solutions run on the Windows and Windows Server operating systems and interoperate with various Microsoft software applications. “We run our applications with Microsoft technology because of its performance, stability in the market, and strong support, but also because most of our customers are already using these Microsoft products within their organizations,” says Way.
Initially Allscripts had been sourcing licenses for Microsoft software at a slight discount compared to the full retail price, but it could take a couple of days to get the licenses. “We would place an order and it could be 48 to 72 hours before we got the product codes for the ordered products,” says Way. “That meant that if I had server computers sitting in my warehouse ready to build, I couldn’t deploy the software until I had those product codes.”
This process also required considerable administrative time, because Allscripts had to open and track a separate purchase order for each customer—sometimes as many as 20 purchase orders a day. In addition, when Allscripts built complete turnkey systems for customers, it had to go to a Web site to get individual product codes for each server computer.
Allscripts wanted to provide its customers with unified solutions that included preconfigured Microsoft software and licenses along with its own software applications. By so doing, it expected to help reduce software licensing costs for its customers, expedite acquisition of licenses, and reduce license administration time for its own organization.
Solution
As part of its internal initiative to reduce the cost of its products to the end user, Allscripts enrolled in the Microsoft ISV Royalty Licensing Program. Enrolling in this program authorizes an ISV to license Microsoft products as part of its unified solution for a three-year program agreement term. This enables an ISV to distribute a complete software solution to end users.
Under its specific ISV Royalty Licensing and Distribution Agreement, Allscripts can preconfigure its installation with Microsoft-licensed products. In this case the agreement covers licenses for Microsoft SQL Server 2005 and SQL Server 2008 data management software and Terminal Services. In addition, if customers do not already have licenses for Microsoft Office products, they can get standard licenses for Microsoft Word to run with Allscripts EHR applications.
Allscripts acquires two types of licenses within the ISV Royalty Licensing and Distribution Agreement:
- ISV Licenses (for Microsoft Office programs and Terminal Services Client Access Licenses) – Under these licenses, Allscripts customers can use the underlying Microsoft software that is licensed with the Allscripts solution separately within their organization.
- ISV Run-Time Licenses (for SQL Server) – Under run-time licenses, Allscripts customers can use the licensed Microsoft products only with the Allscripts unified solution with which they were acquired.
Although customers can choose either type of license for SQL Server, most opt for the run-time license because it can save up to 50 percent off the standard license cost. ISV licenses save end users approximately 10 percent off the standard license cost.
In addition to cost savings on the initial licenses packaged with its solutions, customers can also sign up for embedded maintenance. With embedded maintenance, end users pay an annual fee that covers support and upgrades to future versions of the unified Allscripts solutions—including Microsoft licensed products—throughout the duration of the agreement term at no extra cost.
“A vast majority of our customers acquire embedded maintenance, which gives us the flexibility to move them up to the latest version of Microsoft software on our product schedule without having to worry about additional cost,” says Fetner. “The embedded maintenance fee also covers our customer support for Microsoft products, so they get a complete package.”
The ISV Royalty Licensing Program also simplifies distribution of software media for Allscripts. “As a Microsoft Gold Certified Partner, we get a master copy of the software directly from Microsoft, which we can duplicate to provide with our software, or install directly on customers’ systems that we build,” says Way. “This means we only have to deal with one product code for all deployments of each product, which saves time.”
Allscripts submits a monthly royalty report indicating how many licenses it has distributed. Microsoft uses this information to bill the ISV for the number of units reported.
Benefits
By enrolling in the Microsoft ISV Royalty Licensing Program, Allscripts is able to offer a unified solution to its customers that simplifies licensing and deployment and helps reduce acquisition costs and administration time. These benefits, plus enhanced support, help raise customers' satisfaction and lower their cost of ownership.
Simplified Licensing and Deployment
The ability to embed Microsoft licenses and programs within Allscripts solutions helps to increase customer satisfaction by simplifying and expediting implementation and helping to reduce costs. “Through the Microsoft ISV Royalty Licensing Program, we can offer a solution that’s ready to go and that doesn’t require several other components from other vendors,” says Fetner. “This can help save our customers time, money, and frustration, and helps to ensure a higher degree of satisfaction with our products.”
Also, if customers need to add licenses, they simply notify Allscripts. “If somebody needs additional licenses for SQL Server or Terminal Services, we can immediately get the licenses and get them up and running, rather than have to wait up to 48 hours to get a license product code as we did before,” says Fetner.
Up to 50 Percent Savings on
Microsoft Licenses
“The pricing advantage gained through the ISV Royalty Licensing Program enables us to provide highly advanced Microsoft technologies with our solutions at a price point that keeps us cost competitive,” says Schwartz.
In particular, including the run-time license for SQL Server in its unified solutions has significantly reduced the cost for customers. "The ability to offer the SQL Server run-time license has brought down the cost of that component by about 50 percent, which definitely helps us bring down the cost of our solutions for our customers,” says Way.
Enhanced Support
Allscripts not only can deliver a preconfigured, comprehensive solution by licensing Microsoft products through the ISV Royalty Licensing Program, but also support the entire solution more efficiently through embedded maintenance. If customers have a software issue—whether it relates to Allscripts applications or an embedded Microsoft program—they only need to call Allscripts, which saves them time and gets problems resolved quicker.
Reduced Administration Time
The ability to report on all Microsoft product orders just once a month saves Allscripts considerable administration time. “The reporting aspect of ISV Royalty Licensing was a big factor in our deciding to adopt the program,” says Fetner. “Before, we might have generated 5 to 10 purchase orders a day. Each one took time to set up and track. With the ISV Royalty program, we report once a month; we get an invoice back from Microsoft, and then we pay through a purchase order.”
The ISV Royalty Licensing Program also cuts down the administrative work related to setting up hardware systems for customers. “Under the ISV Royalty Licensing Agreement, our system builders can load Microsoft software using just one product code for each product. With SQL Server, for example, they save 20 to 30 minutes on every single server because they use the same product code and they don’t have to go to a Web site, get the product code, and go through the product activation procedure,” says Way. “The ISV Royalty Licensing Program has really improved our ability to source the Microsoft product licenses at the best price and get the quickest turn around. This definitely improves our ability to do business more efficiently.”
Microsoft ISV Royalty Licensing Program
The Microsoft ISV Royalty Licensing Program offers independent software vendors (ISVs) a convenient way to integrate Microsoft products into their software business applications, replicate their solutions, and distribute fully licensed solutions to their customers. This program is not a reseller program but one that grants the ISVs the right to license Microsoft products as part of their solutions.
For more information about the Microsoft ISV Royalty Licensing Program, go to: