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On-Premises versus Cloud based 340B Solutions

When you're in the market for a new 340B Software,  the first choice to consider is where you want your 340B database located: your organization's data center or in the cloud and provided as a software as a service (SaaS). Traditional onpremises 340B solution is a mature, well-established technology designed well before cloud became a viable platform.  With the rapid adoption of cloud, there's a need for data warehouse solutions that can take full advantage of what the cloud offers.

In this blog,  we present the key considerations for cloud 340B solutions as we compare it to traditional, on-premises systems.

Slashing 340B storage and compute costs
Taking advantage of dynamic scaling
Outsourcing Administration and Security.

Data Management Expert, 2017

Evaluating Time to Value

Deploying a conventional 340B Solution can take at least a year and extend to a multi year project before you extract insight from your data.  The agility of 340B business today means key stakeholders who support the project, and key business and technical enablers responsible for the project's success, may leave the team or the company before going live.  Such a long cycle exposes the project to economic downturns, company revenue shortfalls, and the risk of never implementing the project due to scope screep.

In addition, on-premises solutions aren't geared to handle today's semi-structured data.  That requires adding an open-source which adds additional layer of complexity.  This added burden lengthens the implementation phase of a new 340B Solutions.

Done right,  a cloud 340B solution can be up and running in less than six months, or even in the months.  Therefore, most of the time required to get up and running should be extracting data from your pharmacy software such as QS1 , CPR plus etc.,  and configuring a front-end, analytics tool to extract insight from the 340B solution. 

Accounting for Storage and Computing Costs

On-premises 340B solutions are expensive in terms of hardware, software, and administration:

Hardware: ​When estimating hardware costs, consider the costs of servers, additional storage devices, data center space to house the hardware, a high speed network to access the data, and the power and redundant power supplies needed to keep the system up and running.  If your 340B solution is mission critical, add the costs to configure a disaster recovery site.

Software: ​Covered Entities frequently pay hundreds of thousands of dollars in software licensing fees for 340B software and add-on packages.  Additional end users, including customers and suppliers, who are given access to the 340B software, can significantly increase those costs.  Then add the ongoing costs for annual support contracts, which often comprise 20 percent of the original license cost.

Administration: ​An on-premises 340B Solution needs specialized IT personnel to deploy and maintain the system.  This creates a potential bottleneck when issues arise and keeps responsibility for the system with customer, not the vendor.

A cloud based 340B Software replaces the upfront and ongoing cost of an on-premises system, with simple usage-based pricing. You pay a monthly fee based on how much storage and computing resources you use.  Conservatively speaking,  the annualized cost for a cloud based 340B solution can be one-tenth of a similar, on-premises system.

Sizing, Balancing and Tuning

For optimum performance, an on-premises 340B solution must be sized, balanced, and tuned, which requires a significant upfront investment along with ongoing monitoring and administration costs. Such a configuration often includes:

  1. Number and clock speed of the CPUs
  2. Amount of RAM
  3. Number and size of disks for required storage capacity.
  4. Input Output Operation per second(IOPS)

​With an on-premises, 340B solution, covered entities and/or contract pharmacies often size their system for peak usage, which may represent only a small period of the year.  for example,  a covered entity may need the full power of 340B solution only at the end of each financial quarter or year.  But they must pay for the peak capacity 24 hours a day because the system can't easily scale up or down. 

However the dynamic cloud based 340B solution delivers two key advantages:

The Complexities and cost of capacity planning and administration - sizing, balancing and tuning the 340B system - should be built into the system, automated, and covered by the cost of the subscription.

The same goes for dynamically provisioning storage and compute resources on the fly to meet the demands of your changing workloads in peak and steady usage period.

Considering Data Preparation and its Costs

​An on-premises 340B solution must extract data from all of your data sources.  Then it must transform that data to adhere to the often rigid data structure inside the system before loading it into the 340B database. A key challenge includes adhering to a finite and expensive amount of processing capacity and storage. As a result,  data transformation must happen outside normal business hours to avoid competing with other data processing jobs. This is expensive. In addition, semi structured data doesn't arrive in neatly organized and consistent rows and columns inherent to traditional data structures.  The data is also high volume, high velocity data.

The best cloud based 340B solutions can load semi-structured data directly without transforming it. These solutions can provide access to fresh data upto fifty times faster than a traditional 340B solution.  In addition, the lower cost of unlimited, cloud storage provides dat analysts access to all of the data instead of being limited to periodic aggregates of that data.

Adding the Cost of Specialized Business Analytic Tools

As I mentioned in my earlier blog named "The Criteria for Selecting a 340B Automation Software", traditional, on-premises 340B solution aren't geared to handle the volume, variety and velocity of today's 340B data elements.  As a result either a contract pharmacy or covered entity operate two data platforms. Unfortunately the newer systems require specialized tools and expertise, which don't compare to the prevalence of tools and expertise.  

However, the modern cloud based 340B solution delivers the best of both worlds - the flexibility to integrate relational and non-relational data along with support for the readily available tools and skills for querying that data.

Deliberating Over Delays and Downtime

​Many Contract Pharmacies or Covered Entities with on-premises solutions have two main complaints.  They must wait hours or a day before the data collected the previous day is in the 340B database for reporting and analytics.  They must wait the same time for a complex query to run on a large data set.  In some cases,  multiple, concurrent processes can freeze or crash the 340B system, extending the delays and downtime.

With virtually unlimited storage and compute resources, cloud based 340B solution, architected as dynamically elastic, are better equipped to scale up, and down, to meet increased demands in the organization.  As you evaluate your options,  look for solutions that address all these types of performance issues.  How quickly you can access your 340B data for reporting and data analytics. can significantly impact your operations and your ability to maintain a competitive edge.

Considering the Costs of Security and Potential Security Breaches

A single breach can quickly turn into a public relations nightmare and result in lost business, and steep fines from regulatory agencies.  Although the cloud attracts the fear of security risks,  it can be more secure than your own data center.

If you opt for an on-premises 340B solution, you are completely responsible for securing sensitive data, which involves careful and constant attention to the following details. They are

  • Firewall Protection
  • Security Protocols
  • 340B Data Encryption, at rest and in transit
  • User Authorization and Authentication Settings
  • Monitoring and adapting to emerging security threats

Effective data security is complex and costly to implement, especially in terms of human resources, Poorly implement 340B security standards expose you to even more costs if breached.

Because Cloud based 340B solution providers serve a number of customers,  they can afford the expertise and resources to provide industrial strenght, end-to-end 340B data security. Look for a provider that ensures 340B industry standard, end-to-end encryption to secure data both at rest and in transit

Paying a Premium for 340B Data Protection and Recovery

On-Premises 340B database are vulnerable to data loss from equipment failure, power outages or surges, theft or vandalism,  and disasters (fire, flood, earthquake, and so on).  To protect your 340B data, you must back it up regularly and store backups at a remote location. A backup power supply is also necessary to prevent data loss and ensure that your 340B database is always available (high availability) to process incoming data and requests.  If disaster data strike, you will need skilled personnel in place to recover data using the most recent backups.  If your 340B database is mission critical, you may also need a geographically separated disaster recovery site (an additional data center) along with the software, licenses and process to insure automatic failover so there is no gap in service.

The cloud based 340B solution provides an ideal solution for the data protection and recovery.  By its nature,  it stores data off premises.   Some, but certainly not all, cloud based solutions automatically backup data to two or more separated physical locations.  If the data centers are geographically isolated, then they also provide built-in disaster recovery.  Cloud based 340B data providers can deliver these protections at a much lower cost than you by distributing the cost over thousands of clients.

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