ecommerce proposal

eCommerce Enablement at CareFirst Revised Approach and Proposal August 6, 1999

Many eCommerce questions are core to CareFirst’s 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 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? ©Andersen Consulting 1999

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July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

Conservatively estimated, CareFirst’s potential annual cost savings and revenue enhancements exceed $100MM. eCommerce Economic Value Tree Value Potential ($MM) Reduce Non-Care Related Costs

(9.1)

Reduce Costs Reduce Care Related Costs

(90.0)

($ 99.1)

Potential eCommerce Benefits Attract/Retain More Members

$ 22.0

Expand Share of Each Customer

$ 16.5

Enhance Revenue

$ 38.5 ©Andersen Consulting 1999

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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

Commerce

Degree of Buyer Focus In Customer Service

BS CA UHG Cigna

Transaction Oxford

Aetna Care First

Low

Inquiry Kaiser

Well point Information

Low

High

eCommerce Interactivity Level Source: Andersen Consulting research, industry literature ©Andersen Consulting 1999

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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

©Andersen Consulting 1999

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July 30, 1999

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

Phase 1 Approach 3 Weeks

Set eVision Quickly determine the highestvalue opportunities considering impacts on business value, cost, technology, business strategy and constituent politics

6 Weeks

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

3 Weeks

Plan Rollout Develop business case and plan rollout timeline and approach

Phase 2

Deliverables  Prioritized set of eCapabilities  Market assessment of potential consumer/ provider uptake of eCapabilities in CareFirst‟s markets

 Conceptual design for eCommerce environment

 eCommerce organization chart  Executive-level business case

 IT strategy and IT Blueprint implications  Assumptions, technical risks and political risks documents  Summary of competitors and potential alliance partners  eVision prototype demonstration

©Andersen Consulting 1999

= Scope of this proposal

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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

©Andersen Consulting 1999

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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?

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

©Andersen Consulting 1999

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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 Intentions Value Networks

Electronic Marketplaces

Commerce Transformation Customer Insight

Electronic Distribution

Virtual Corporation

Enterprise Process Virtualization New Product Introduction

Fulfill Demand • eProcurement • Customer Self Service • Internet Ordering

Generate Demand • Selling Effectiveness • Internet Commerce

Plan & Manage • Virtual HR

Solution Enablement Technical Architecture • Net Centric Architecture • Architecture Assessment

©Andersen Consulting 1999

Information Mgmt

Program Management

9

eCommerce Infrastructure Development

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

July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

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 •

Virtual

Buyer-Driven Model

Access and Delivery Method

Physical

•

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

CustomerCentric Model

•

•

SellerDriven Model

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

Intentions Nature of Demand

©Andersen Consulting 1999

•

11

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

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

Strategic Principles in the eEconomy Strategic Principle

Consequence

eEconomy Assumption

Old Assumption

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

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

High interaction and collaboration costs drove high levels of vertical integration

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

2. Generate greater returns on intellectual property and relationship assets

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

Return and valuation were derived from bundles of physical assets, intellectual property and customer relationships, but primarily driven by physical assets

Competition is heightened for capturing information and owning customer relationships

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

©Andersen Consulting 1999

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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 (cont’d). eCommerce Overview and Dynamics

Strategic Principles in the eEconomy (cont’d) Strategic Principle

Consequence

eEconomy Assumption

Old Assumption

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

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

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

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

©Andersen Consulting 1999

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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. eCommerce Overview and Dynamics

Emerging eCommerce Roles Financial/Risk e.g., VISA

Seller Agency

Access e.g., US Web

Sellers



Seller Process Support



Payment Clearing and Settlement



Risk Management

Market Making

Buyer Agency

e.g., eBay

e.g., Amazon.com

e.g., Equifax 

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

Access e.g., Netscape 

Buyers

Buyer Process Support

Fulfillment e.g., FedEx

©Andersen Consulting 1999



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. eCommerce Overview and Dynamics

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

• • • • •

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 • • • • 1 Milliman

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

©Andersen Consulting 1999

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• • •

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

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

Develop Products and Services

Market and Acquire Customers

Manage Manage Products & Customer Risk Relationships

Manage Provider Network

Manage Care

Deliver Care

BroadVision

Process Transactions

Abaton.com

Calico Technology

Access Health

ChannelPoint

Avicenna Systems

InsWeb Corporation

Axolotl

Siebel Systems

Ariba Technology

Caresoft

Covation

Network Alchemy

@Outcome

Claimsnet

Concur Technologies

Kinetra

Neoforma

Healtheon

Envive

Melophis

IndX Software

Quadra Med

Luminate Software

Proxymed

TIBCO Software

Healtheon Daou Systems iTrust

Enact Health Mgmt. Systems

Health Desk Corp. Patient Infosystems

Araxsys Advanced Health

Cerner

Xyber Net

Manage Internal Operations

KnowMed Systems

Pointshare Officemed.com

Shared Medical Systems Status One Health System

MEDE America

Web M.D.

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

©Andersen Consulting 1999

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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. eCommerce Overview and Dynamics

Sample of Enablers’ Offerings* InsWeb Now offers extensive advice and comparison capability for life and auto policies and is expected to add healthcare

Develop Products and Services

Market and Acquire Customers

iTrust Offers web-based physician practice management solutions

Manage Manage Products & Customer Risk Relationships

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

Manage Provider Network

Caresoft Offers web-based disease management solutions

Manage Care

Deliver Care

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

Process Transactions

Manage Internal Operations

Shared Medical Systems Offers groupware to streamline workflow across health enterprises

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

©Andersen Consulting 1999

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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. eCommerce Overview and Dynamics

Type of Online Community

Companies

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

   

Healthfinder HealthGate Medical Networks Medisite

   

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

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

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

   

Intelihealth Mediconsult.com Mylifepath.com Third Age

 Americas Doctor Online  BestDoctors.com  Sapient Health Network

Physician-Targeted Sites  Designed to fulfill a specific informational need for a targeted audience

©Andersen Consulting 1999

 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 Overview and Dynamics

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

©Andersen Consulting 1999

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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 Overview and Dynamics

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

©Andersen Consulting 1999

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July 30, 1999

Health plans are starting to use these enablers, especially to reduce administrative costs. eCommerce Overview and Dynamics

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

©Andersen Consulting 1999

Manage Products & Risk  Use sophisticated data mining/ analysis for pricing and product development

Manage Customer Relationships

Manage Provider Network

 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

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Manage Care  Communicate health info to physicians and members through the Internet

Deliver Care

Process Transactions

Manage Internal Operations

 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

July 30, 1999

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

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

©Andersen Consulting 1999

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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. eCommerce Overview and Dynamics

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

©Andersen Consulting 1999

Manage Products & Risk

Manage Customer Relationships

Manage Provider Network

 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

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Deliver Care

Process Transactions

Manage Internal Operations

 Offer Internet solutions to sell and distribute health insurance online

July 30, 1999

Blue Shield of California’s mylifepath.com offers consumers personalized health information. eCommerce Overview and Dynamics

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 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

©Andersen Consulting 1999

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July 30, 1999

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

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

©Andersen Consulting 1999

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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. eCommerce Overview and Dynamics

Approximate eCommerce Position of Health Plans* HealthAxis United Aetna WellPoint FHS PacifiCare Cigna Oxford Principal Humana Conservative

* Top

Aggressive

nine by membership

©Andersen Consulting 1999

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July 30, 1999

Nonetheless, most healthcare players have not formed a coherent eCommerce strategy. eCommerce Overview and Dynamics

 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 ©Andersen Consulting 1999

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July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

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 CareFirst‟s 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

©Andersen Consulting 1999

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July 30, 1999

This project is designed to begin rolling out eCommerce capabilities to constituents as quickly as possible. Context and Project Objectives

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

©Andersen Consulting 1999

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July 30, 1999

The eCommerce strategy touches many components of the overall IT blueprint. Context and Project Objectives

IT Alignment with Business Business Drives

Enables

eCommerce Strategy

Information Technology

Overall IT Strategy IT Architecture

IT Management & Delivery

Business Processes

Leadership Sourcing

Processes Structure & Governance

Information Applications IT Infrastructure ©Andersen Consulting 1999

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July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

Winning requires a different strategy from traditional investments. Proposed Approach and Deliverables

Think Big eCommerce Performance

1

 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

 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

 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

2001

2002

Years ©Andersen Consulting 1999

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July 30, 1999

New management approaches are also needed to win in the eCommerce space. Proposed Approach and Deliverables

Typical

Winning

 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

 Existing business units

 Entrepreneurial ventures that can grow rapidly and be owned flexibly

©Andersen Consulting 1999

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July 30, 1999

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

Phase 1 Approach 3 Weeks Set

eVision Quickly determine the highest-value opportunities considering impacts on business value, cost, technology, business strategy and constituent politics  Pinpoint eCommerce implications from

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

6 Weeks

3 Weeks

Plan Rollout Develop business case and plan rollout timeline and approach

 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 CareFirst‟s 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

business strategy  









 Develop and use evaluation framework to prioritize eCapabilities based on business value, cost, technology implications, business strategy linkages and potential constituent political implications

©Andersen Consulting 1999

Phase 2

 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

= 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. Proposed Approach and Deliverables

Phase 1 Summary Deliverables 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 CareFirst‟s markets by segment or product

 Market scan summary of competitors and potential content or eCapability alliance partners  Enhanced eVision prototype demonstration

©Andersen Consulting 1999

6 Weeks

3 Weeks

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

 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

36

Plan Rollout Develop business case and plan rollout timeline and approach

 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

July 30, 1999

Phase IA will identify the highest value opportunities. Proposed Approach and Deliverables

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

Key Activities

Key Deliverables

 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

 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

 Develop and use evaluation framework to prioritize eCapabilities based on business value, cost, technology implications, business strategy linkages and potential constituent political implications

©Andersen Consulting 1999

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July 30, 1999

Phase 1B will create the conceptual design for CareFirst’s netcentric architecture. Proposed Approach and Deliverables

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

Key Activities

Key Deliverables

 Develop conceptual design of development, execution and operations environments in the context of existing infrastructure (short-term and long-term)

 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

 Identify scalability constraints in the execution environment  Design high-level security architecture for short- and long-term execution environment

 IT strategy, IT blueprint and business architecture change implications discussion document

 Identify implications to overall IT strategy and IT Blueprint

©Andersen Consulting 1999

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July 30, 1999

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

Plan Rollout Develop business case and plan rollout timeline and approach

Key Activities

Key Deliverables

 Specify organization, skills and sourcing strategy required to launch and sustain both the eArchitecture and selected eCapabilities

 eCommerce organization chart, list of key skills required, and sourcing strategy

 Develop business case for investments (including high-level FTE and capital budget estimates for FY99 and FY00)

 Executive-level business case, including timeline, resource requirements and high-level costs and benefits

 Develop implementation plan and timeline for eCapability rollout

 Assumptions, technical risks and political risks documents

©Andersen Consulting 1999

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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. Proposed Approach and Deliverables

Launch Pilots Begin experimenting with capabilities while laying critical infrastructure

Adjust Speed Continuously evaluate progress and adjust speed of investments

 Develop and launch initial eCapability projects with 60- to 90-day debuts

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

Phase 2

 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

©Andersen Consulting 1999

 Stop projects which haven‟t 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

 Continually innovate with new capabilities  Continue infrastructure investments to enable further automation and interactivity

 Over-size to stay ahead of market demand 40

July 30, 1999

Opportunities will be identified and evaluated using proven frameworks. Proposed Approach and Deliverables

Sample Deliverables Identify Opportunities (“Stretch your imagination”)

Evaluate Opportunities (“Balance the assessment”)

Employers/ Groups

Members

Risk

...

Trading Partners

I Opportunity 1

Brokers & Agents

III

Opportunity 3

IV

Opportunity 4

New Business Models

...

II Opportunity 2

eC Federal & State Government

Investment

Value to Constituent

Value Potential

Providers

Classify Opportunities (“Make tough decisions”)

Enhanced Business Models

Current Business Models

Sustainable Differentiation  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

©Andersen Consulting 1999

 Alignment with Business Strategy  Quantitative criteria (e.g.,. revenue potential, ROI)  Qualitative criteria (e.g., competitive threat, customer need, sustainability)

41

 Strategic eCommerce Opportunities impact with: • Members, Providers and Partners • Administrative Staff • Consumers • Etc.

July 30, 1999

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. Proposed Approach and Deliverables

Sample Deliverables

Framework for Prioritizing eCommerce Initiatives

High Long-Term Contribution to Strategic Direction

Low

. . .. . .. . .. . . . . . . . . . Low

More Aggressive Strategy

More Conservative Strategy

.

Initiatives

High

Short-Term Business Case ©Andersen Consulting 1999

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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. Proposed Approach and Deliverables

Illustrative Net-Centric Architecture

Sample Deliverables Presentation

Environment Runtime Services

System Services

Transaction

Application Security Language Interpreter

Desktop Manager

Error Handling/ Logging

Resource Management

System Security State Management

Codes Table Services

Environment Verification

Active Help

File Services

Task & Memory Management

Other Common Services

App. Integration Interface

Profile Management

Virtual Machine

Component Framework

TP Monitor

Window System

Base Services

Application Services

Transaction Management Transaction Partitioning

Web Server Services

Operating System

Form

Push/Pull Services

Communication

Business Logic

Virtual Resources

Interface

User Navigation

Fax

Application Logic

Information

Printing

Paging

Audio/Video

Document Services

Messaging Core

Specialized email email

File Transfer

Database Access

Replication/Synchronization RPC

Report Services

Communications Security

Workflow Services

Encryption Authorization

ORB

Access

Input Device

Batch Services

Phone

Versioning

Direct Manipulation

File Sharing

Name

Web Browser

Database Services

Directory Services Domain

Data Abstraction

Report & Print

Terminal

Security

Msg Oriented

Indexing

Streaming

CTI

Authentication

EDI Legacy Integration

Storage

Communication Fabric Transport Services Packet Forwarding/ Internetworking

Network Media Services

©Andersen Consulting 1999

Transport Security

Network Address Allocation

Quality of Service

Physical Media

Circuit Switching

Massage Transport

Media Access

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July 30, 1999

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

Sample Deliverables

• Applications • Components • Menu of Choices

• Product Mapping

©Andersen Consulting 1999

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July 30, 1999

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

Sample Deliverables

Illustrative Technical Architecture Design Architecture Assessment:

Requirements / Assessment

Technical Architecture

Relevant Systems

LAN/ WAN/ Internet

Windows Workstation

Unix Server

LAN/ WAN

1. AIX 2. TransAccess 3. U to A 4. Entera 5. MQ Series 6. CORBA 7. Web Server 8. SNA Server 9. RDBMS

1. Windows NT 2. Falcon MQ Bridge 3. Falcon MQ Server 4. MSMQ 5. SNA Server

NT Server

©Andersen Consulting 1999

1. MVS 2. CICS 3. IMS 4. MQ Series 5. TransAccess 6. Database (DB2,VSAM, IMS)

NT Gateway Server

1. Windows 95/NT 2. Entera 3. CORBA 4. MSMQ 5. Browser

LAN/ WAN/ Internet

IBM ES/9000 Mainframe

1. Windows NT 2. TransAccess 3. NT to A 4. MSMQ 5. CORBA 6. Web Server 7. MQ Series 8. RDBMS

LAN/ WAN

45

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)

July 30, 1999

An interface and connectivity diagram presents underlying protocols and interface technologies employed. Proposed Approach and Deliverables

Sample Deliverables

Illustrative Interface and Connectivity Diagram Architecture Assessment:

Requirements / Assessment

Interfaces & Connectivity

Unix Server Database

DCOM/ ActiveX

Windows Workstation DCOM/ ActiveX MSMQ

MSMQ

Entera

Entera RPC

Browser

HTTPS

CORBA

IIOP

IBM ES9000 Mainframe

RDBMS

ODBC

TransAccess

TransAccess RPC

MQ Series

MQ Series

U to A

U to A RPC

HTTPS

Web Server

Entera RPC

Entera

NT Server

DDCS (DB2)

IMS

Cedar/LU6.2

CICS

MQ Series

MQ Series

TransAccess RPC

TransAccess

3270/LU2 Falcon MQ Bridge

IIOP

DB2

Falcon MQ Server

IMS

MSMQ

NT Server

SNA Server

RDBMS

ODBC

TransAccess

TransAccess RPC

MSMQ

MSMQ

MSMQ

DCOM/ ActiveX

NT to A

MS RPC

HTTPS

Web Server

MQ Series

IIOP

CORBA

Database

UNISYS A-Series Mainframe DMSII

©Andersen Consulting 1999

MQ Series

46

COMS

ODBC

A to A

BNA Terminal

A to U

U to A RPC

U to A

MS RPC

NT to A

Falcon MQ

Falcon MQ Client

Interface Legend Available Under Construction Future

VSAM

CORBA

July 30, 1999

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

Sample Deliverables

Illustrative Interface and Connectivity Diagram Infrastructure & Application Blueprints:

Conceptual Design Producers (External)

Physical Environment Blueprint

Company A

Relevant Systems

Application Data Center Server

Producer Desktop

User Workstation

LAN/ WAN/ Intranet

Firewall

Fax Machine Internet

Unix Server

WAN

NT Server LAN

Gateway Server

WAN

Scan Station

LAN

Integration Framework Server

Application Server (Slave)

LAN/ WAN

IBM ES/9000 Mainframe

Workstation

©Andersen Consulting 1999

LAN/ WAN

Application Server (Master)

Remote Sites

47

WAN

UNISYS A-Series Mainframe

July 30, 1999

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

Sample Deliverables

Illustrative Process and Information Flow Process & Information Flows:

Requirements / Assessment Broker

Release 1 Process Flow Integration Framework

Internet Framework

Legacy Systems

L1 DB2

Producer Application

J Employer Application & Member Enrollment

H

Scan

Scrub

Medical Underwriting

Install Case

Interface Services

Case Installation & Member Enrollment

Interface Engines

Enrollment

L2 Sales Reporting

DMSII

CP Group Installation

Member Enrollment

Manual Processing Network Match Engine

Census RFP Fax

Process RFP

H

Scrub

Group Structure

User Input

Database

Memory Cache

Process

©Andersen Consulting 1999

H

Same Process

L3

Upload Producer Info

Rating Engine

Proposal Generator

Faxback Proposal

File/Report

Manual Group Entry

New Producer Application

New Producer Processing

J

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

48

Rating Engine

L4 DB2

July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

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

Week:

1

2

3

4

5

6

7

8

9

10

11

12

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 2

1 ©Andersen Consulting 1999

50

3 = Progress Review

4 July 30, 1999

At each project checkpoint, there may be separate business and technical reviews with different audiences. Business Reviews 1

Technical Reviews

Set Business Context

1

• Refine project scope, timeline and business resource commitments • Review eMarket demographics for CareFirst‟s markets • Brainstorm prioritization criteria 2

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

Review Business Analysis/Partners

2

• Review eMarket research and eCapability options identified to date • Review and set direction on potential eCapabilities and partners • Set preliminary business priorities 3

Set Technical Context

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

3

• 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 ©Andersen Consulting 1999

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July 30, 1999

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

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 CareFirst‟s customer service, information technology and other business executives  IT analyst (CareFirst)  Consultants (Andersen Consulting)

©Andersen Consulting 1999

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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. Proposed Timeline and Team

Project Staffing Role

Staffing

Time Commitment

Project Sponsors

 Make interim and final decisions on capabilities and direction

 Bill Jews  Dave Astar, Tom Rekart, Jim Hudak

 1-2 hours/week  3-8 hours/week

Project Executives

 Provide overall project direction  Lead strategy development  Lead business case design

 Michael Palmer - Project Leader  1 CareFirst Project Leader

 Four 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

 Jay Phillips (AC) Architect, Lead Manager  1 AC Application Expert, Manager  1 CareFirst Key Architect

 Full time

     

 1 CareFirst IT Applications Analyst  1 CareFirst End-User Analyst  1 AC Tech Consultant  1 AC Business Analyst

 Full time

 As needed and available

 Brainstorming sessions  Ad hoc, as needed

Design, Analysis and Business Case Team

Expert Advisors

©Andersen Consulting 1999

Develop detailed designs Conduct interviews Draft written reports Formulate and conduct analysis Research issues and hypotheses Develop business case

 Lend direction, experience  Provide in-depth point expertise  Challenge thinking, assumptions 53

 2-3 days/week

 30 days  Full time

 2-3 days/week  Full time  Full time

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

©Andersen Consulting 1999

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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*. Proposed Timeline and Team

Name

Comments/Areas of Experience

 James B. Hudak

• Global Managing Partner for Andersen Consulting’s Health Services Practice • Directed engagements for clients to develop overall business strategies, consumerfocused strategies, eCommerce strategies, growth strategies and operational improvement strategies

 Kedrick D. Adkins

• 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

 Brian A. Johnson

• Partner in Andersen Consulting’s Financial Services practice • Led engagement to assist very large health plans develop eCommerce strategies and implementation plans

 Michael E. Palmer

• 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

 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

* Subject to availability

©Andersen Consulting 1999

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July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

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

Reduce Costs

Channel Utilization Through “Best” Providers

Reduce Care Related Costs

Potential eCommerce Benefits

Provide Electronic Formulary, Pathways, etc. Perform Real-Time Disease/Case Management

Improve Patient Compliance & Self-Care

Attract/Retain More Members Enhance Revenue Expand Share of Each Customer

©Andersen Consulting 1999

Participate in Virtual Networks & Tailor Individual Offerings

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

• 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

Improve Sales Success Rate Through Real-Time Quotes

• 1-3% increase in commissioned sales

Expand Range of Products & Services

• $3-4 per member per month increase in revenues for 20-30% of membership

Expand Value Delivered to Each Stakeholder

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

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July 30, 1999

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. Potential Benefits and Cost

Total Potential Value > $100MM

-1.3

Recredentialing

-2

-1.6

-3

-0.4 -0.8

Purchasing Costs Provider Service Calls Member Service Calls Enrollment

Spending ($000)

-1

-4 -5 -6

-3.6

-7 -8 -9 -10

-1.2 -0.2

Commissions Group Processing

-10

-17.8

-20

-4.6

-30

-17.8

-40 -50

-25.6

-60 -70 -80

Potential Revenue Enhancement* = $38.5MM 45

0

Spending ($000)

0

Potential Care Related Savings* = $90MM

-24.2

PatientCompliance Disease/Case Mgmt. Proven Pathways Online Formulary Channel Utilization

40

Revenue ($000)

Potential Non-Care Related Savings* = $9.1MM

Expanded Products/Services

35 30

16.5 Real-Time-Quotes

25 20

5.5 Customized Services

15 10

-90

5

-100

0

16.5

* Detailed estimates and assumptions available upon request. ©Andersen Consulting 1999

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July 30, 1999

Executive Summary

3

eCommerce Overview and Dynamics

11

Context and Project Objectives

29

Proposed Approach and Deliverables

33

Proposed Timeline and Team

50

Potential Benefits and Cost

57

Why Partner with Andersen Consulting?

60

Andersen Consulting is uniquely qualified to assist with this work. Why Partner with Andersen Consulting?

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

©Andersen Consulting 1999

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July 30, 1999

Andersen Consulting is currently ranked #1 among all worldclass internet services firms. Why Partner with Andersen Consulting?

Source: International Data Corporation, December, 1998

©Andersen Consulting 1999

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July 30, 1999

The Analysts Agree.... Why Partner with Andersen Consulting?

 “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 ©Andersen Consulting 1999

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 Intentions Value Networks

Electronic Marketplaces

Commerce Transformation Customer Insight

Electronic Distribution

Virtual Corporation

Enterprise Process Virtualization New Product Introduction

Fulfill Demand • eProcurement • Customer Self Service • Internet Ordering

Generate Demand • Selling Effectiveness • Internet Commerce

Plan & Manage • Virtual HR

Solution Enablement Technical Architecture • Net Centric Architecture • Architecture Assessment

©Andersen Consulting 1999

Information Mgmt

Program Management

63

eCommerce Infrastructure Development

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

July 30, 1999

We have a broad range of experience helping organizations shape and implement eCommerce Strategies. Why Partner with Andersen Consulting?

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 ©Andersen Consulting 1999

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July 30, 1999

We have worked with leading healthcare organizations to improve efficiency, service and quality of care using eCommerce. Why Partner with Andersen Consulting?

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

National Managed Care Organization

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

Covation (PhyCor, NationsBank and AC Joint Venture)

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

Internet Marketplace

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

University of Texas

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.

©Andersen Consulting 1999

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July 30, 1999

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

Toshiba America Electronic Components

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.

Leading Internet Software Provider

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.

First Union National Bank

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.

Large Pharmaceutical Company

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.

Toyota

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.

©Andersen Consulting 1999

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July 30, 1999

We have a significant number of eCommerce clients across multiple industries. Why Partner with Andersen Consulting?

Pepsi

©Andersen Consulting 1999

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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. Why Partner with Andersen Consulting?

Covation

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

Qpass

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.

ViaWorld Services

ChannelPoint

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

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.

©Andersen Consulting 1999

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July 30, 1999

To ensure that we bring best practices and thought leadership, we invest in high-impact R&D. Why Partner with Andersen Consulting?

Selected eCommerce R&D Areas Financial Ideas Exchange…

Facility where visitors can see and experience the most exciting new ideas in the financial services industry

Institute for Strategic Change...

“Think tank” and client working center focused on specific and contemporary business change issues

Internet Centers of Excellence (ICE)…

Center for Strategic Technology Research (CSTaR®)…

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

DAVINCI Virtual Corporation…

Workshops to educate industry executives on the strategic applications of advanced technology

Emerging Technologies Lab…

State-of-the-art digital media production facility dedicated to rapid application prototyping and proof of implementation

FinancialWorks…

Development centre focused on creating Internet, multimedia, and component-based solutions

ServiceNet…

Joint venture with BBN to provide Internet-related infrastructure services

(The following pages provide an overview of some of these areas)

©Andersen Consulting 1999

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July 30, 1999

The Ideas Exchange gives our health care clients an interactive forum for plotting change, changing corporate paths, and inventing solutions. Why Partner with Andersen Consulting?

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 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

©Andersen Consulting 1999

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July 30, 1999

The Institute for Strategic Change is a think tank that help clients focus on practical eCommerce issues. Why Partner with Andersen Consulting?

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 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.

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Our Internet Centers of Excellence (ICE) will assist in envisioning opportunities and supporting architectures. Why Partner with Andersen Consulting?

— 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

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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

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ICE specializes in designing and developing both Internet and Intranet architectures and creating dynamic and custom content

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ICE knowledge capital includes reusable assets, tools and established processes that can be applied to common situations across different applications.

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ICE partners with leading providers to reduce the complexity of implementing and deploying fullscale electronic commerce projects

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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

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The Center for Strategic Technology Research creates business opportunities from technology innovation. Why Partner with Andersen Consulting?

— 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: • • • • •

©Andersen Consulting 1999

BargainFinder LifestyleFinder ContactFinder PRAIRIE Magic Medicine Cabinet

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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. Why Partner with Andersen Consulting?

 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

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