The economics of the Cloud: A different perspective

By Lorne Lavine, DMD

As anyone who uses computers is well aware, adoption of web-based applications is growing. According to a 2011 survey by Edge Strategies of more than 1,100 businesses with 2 to 10 employees, 37% indicated they would be using a web-based application to help them manage their business within the next three years. According to a poll conducted by CDT, 30% of their health-care customers indicated they already use the cloud to help them manage their business. So, to say that web-based applications are the future is probably not correct — it’s already here!

In speaking with many dental clients, a number are attracted to the web for the advantages it has over traditional client-server software. Implementation of the software is considerably easier, as is the ongoing maintenance. There aren’t the hassles of constant upgrades. Data backup and disaster recovery, the bane of most dental practices, is completely handled. A practice is also able to stay up and running in the face of any problem.

As it is with any practice management software, the numbers determine the ROI of this type of software. Many doctors are taking a pencil to the ROI of a web-based application as more doctors make the switch to the cloud for their practice management software. The challenge for most, though, is that when comparing a web-based application to a client-server application, it’s easy to make mistakes when trying to compare apples to apples. The ROI of a web-based application can’t be calculated the same way the ROI of a traditional client-server application would be calculated:

1. Web-based applications are paid for monthly with a subscription rather than a large, upfront license fee with annual monthly support costs.
2. Pricing may make sense for the same reasons you lease a car rather than purchase a car. Maintenance is part of the lease; you’re always using the latest technology the manufacturer has to offer. With a car, when your lease is done you can continue the lease and you’re given a brand new car. With a web-based application, the software is continually upgraded behind the scenes; you never install software or upgrades. Another bonus for software — with some web-based apps, such as Curve Dental, you can end the lease at any time without penalty. Try that with a car!
3. Don’t assume that the product and services received from a traditional client-server application are equivalent to the product and services received from a web-based application. The monthly subscription fee typically includes many services that are not included in most traditional software quotes. Many offices find that the additional services required with a traditional client-server application end up costing as much or more than the total monthly subscription fee of a web-based application.
4. When comparing costs, keep in mind that the software licensing fees for traditional software typically represent a small fraction of the total cost implementing the software. According to a survey by the Gartner Group, software licensing fees represent only 9% of the total cost to implement software, implementation represents 43%, and the time, database conversion, costs to actually install the software and get it to work properly, hardware, IT Services, and maintenance represent another 47%.
5. The monthly cost of a web-based application can be as little as $300 per month. The price per day for a given typical 16 workday month is $18.75. That’s a bargain considering you’re getting everything you need to manage your practice successfully — scheduling, billing, charting, reporting, and insurance management. Some practices pay just as much per month for patient communication services!

As dentists evaluate their software choices, it’s critical to look at the ROI of those options. In many cases, they need to look at the dollars and cents to choose their best option. In other words, what costs cents often makes sense!

Lorne Lavine, DMD, practiced periodontics and implant dentistry for more than 10 years. He is an A+ certified computer technician, as well as Network+ certified. He is the president of Dental Technology Consultants, a company that assists dentists in all phases of technology integration in the dental practice. He can be reached at [email protected] or by phone at (866) 204-3398. Visit his website at www.thedigitaldentist.com.