When CVS acquired Caremark Pharmacy Benefit Management back in 2007, the company noticed right away that something needed to be changed. Caremark, a combination of five smaller companies, had problems integrating the data systems and information technologies between each of the separate firms. This led to confusion with filling prescriptions, which then resulted in millions of dollars in lost sales and a crowd of very unhappy customers. It was up to CTO Peter Balnaves to integrate these systems and force the change to new technologies. Although this cost nearly 110 million dollars spread over 3 short years and affected thousands of employees having to change their normal work tools, CVS is now working their way toward a successful system with the Caremark Pharmacy.
I think that this change was worth it, considering the amount of prescriptions and patients that are now utilizing the pharmacy and finding it to be helpful and efficient. Unlike when CVS first acquired Caremark Pharmacy Benefit Manager, it now uses the integrated system of technology to benefit its customers rather than hinder them and try to deal with it later. This slowly implemented technology helped CVS to achieve customer loyalty in the end, which is an important factor to any company.
Another facet of this system that helped CVS reach success was changing over how individual employees needed to work. Although some were forced to make the change from programs they’ve been working with for decades, the management took on the challenge of converting their systems throughout all this employee resistance. Many were frustrated with the new technologies in place, but training made it easier for everyone to work with their clients in the end. The money spent on this sector of the transformation might seem like a lot for simple employee training. However, the assistance in 3 different locations from over 300 trainers ended up aiding the final product of renovating the IT used in pharmacies. The systems of e-mail, desktop support, database management, networking, and others helped employees adapt to newer technology without just throwing them in head first. This structure would make employees' lives easier, being that it helped with prescriptions and other areas of work where human error could be avoided.
Most important, I believe, is how much the company ended up saving as a result of this switch to higher technology. Although some companies switch to IT and suffer because of the expensive installation costs, CVS Caremark Pharmacy Benefit Management did just the opposite. The less complicated database management systems save the company 45 to nearly 70% in costs. This is purely attributed to the careful adjustments CVS made to integrate the new IT system and the cautious moves made toward its “unique mix of existing technologies.” The new technologies involved in the pharmacy of the new and improved CVS systems make their services easier to complete and provide room for new customer loyalty to form. I think this program provides a great model for other companies to see just how unhurried integration and investment in a new set of programs could turn around a company’s sales. It’s important to invest smartly and take care of problems efficiently instead of dealing with them later on.
Source:
Gruman, Galen. "CVS creates order, and savings, by integrating a chaotic acquisition." Computer World. 1 June 2009. Web. 2 Nov. 2009.
I personally know someone who currently works in the pharmacy at CVS and he has explained to me the fast transition CVS has undergone to switch to the new Caremark system. All of the CVS pharamacy employees were required to go to training classes on how to operate the new software, however, once the training was over the adjustment was very seamless. The new system is more organized and allowed Pharmacists and tech's to access patient information and quickly contact their insurance provider for verification on prescriptions. What used to take an hour to fill a prescription now can be completed in 10 minutes, provided the CVS is not experiencing and influx of customers. I agree that CVS is a good example that shows sometimes it is worth taking a risk and heavily investing in new up to date Information System technologies to improve a companies overall success. Now, CVS is one the nation's number 1 providers of prescription medicine because they use an efficient system that eliminates mistakes and increases customer satisfaction.
ReplyDeleteThis is a great example of how IT can successfully play out for a company. Clearly this led to competitive strengths and an advantage over companies similar to CVS as they were able to lower their costs but also please the customer. This new system includes several developments of their value chain: technology development, marketing and sales, and service. I myself have noticed that CVS has been quicker and more efficient with their prescription over the past couple of years and am pleased to see that it is is due to new information technologies.
ReplyDeletei think I believe this article to be a testament to how technology has truly helped the ever changing business world. I believe this system to be a great investment for CVS. Judging by how the article stated how they were losing millions, along with creating unhappy customers, spending 100 million seems like a very intelligent fix for a multi-billion dollar corporation such as CVS. I believe that the future hold many information systems like this that will be implemented in all organizations of all different sizes. The great thing about information technology is that it can be used by corporations and companies of all sizes, and with the right implementation always has positive results.
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ReplyDeleteI think that although the upfront cost of having an intricate information system is a lot, it was definitely important for CVS to make this change. For some companies this might not have been cost effective, but since CVS is such a large chain of drug stores, this was a smart decision that will save the company a lot of money in the long run. I have heard stories of people getting their prescriptions mixed up, and it is a scary idea to think about. I think that by doing this consumer confidence will go up. Even if this change wasn't highly advertised, people will stop telling horror stories about getting the wrong prescription, and people will realize that it was an error due to out of date technology. This should cause CVS to save a lot of money in the long run and make their employees jobs easier.
ReplyDeleteThe new system was crucial for the development of the pharmacy. If the previous system was having difficulties with filling prescriptions and other things then this is unacceptable. They want to have happy customers in the end, so their pharmacy experience should run as smoothly as possible. It is always difficult switching from one system to another, but in the end everything will be better off. CVS is a huge pharmacy in the United States and they should have top of the line technology running their stores.
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