Once again, a new year, and as a sales leader trying to skate to where the puck will be, here are some predictions on where healthcare IT for providers is headed – based on trends, recent news and consensus from thought leaders: (of course, the normal caveats of a Presidential election year apply)
- Providers will get out of managing data centers: At least, the rate of data centers changing hands will increase. With the infrastructure being commoditized by major cloud vendors like Amazon, value-added services around migration, security and support of legacy applications through the cloud will be the diffrentiators. There will be new entrants in this area – for example, the recent acquisition and lease back of Mayo Clinic’s data center by Epic. I would not be surprised to see venture funds and pure play financing companies partnering with IT Outsourcing (ITO) companies to accelerate this play.
- Rise of consumerism leads to technology investments: The connected consumer is making their presence felt in healthcare as well – both increasing the amount of data being generated, as well as expectations of access to the data by the patient. Increased inter-device connectivity because of stabilization of IoT standards and widespread usage of personal health devices/apps will generate data which has to be acquired, managed and analyzed securely – which following #1 above, provides more opportunities to technology vendors.
- Population Health Management (PHM) becomes mainstream – despite several flavors of population health being promoted for the last several years, a recent study cited only 25% of the providers using a vendor-provided PHM solution. The new focus of Personalized Medicine will be towards automated PHM solutions, leading to use of genomics data for preventative treatments.
- Changing payment methods create new needs for revenue recognition and distribution: As the movement towards Value Based Payments accelerates, payment per episode will needs new financial modeling and analysis by providers (for example the Bundled Payments for Care Improvements by CMS has four different methods of calculating payments). A renewed spotlight on Fraud, Waste and Abuse (FWA) in the payments process will yield new savings – leading to more investments in predictive analytics.
- Apps and APIs will create paradigm shifts: Automated apps to tap into the trasactional data in EHRs are already evolving, but the more exciting focus will be on Open APIs in healthcare. One of the requirements of Meaningful Use (MU) is that by 2018, patients should be able to access their health information through an API using an application of their choice. This will force the EHR vendors to be more interoperable and lead to a new set of application developers offering these services to the consumers securely.
For more of my thoughts, please follow me at @RajBhandariDFW
Yes, you read it right – reduced IT spend…
In case you missed it, there were a couple of conflicting reports released by the IT forecasting gurus Gartner and Forrester a few weeks ago.
According to Gartner, “Worldwide IT spending is on pace to total $3.5 trillion in 2015, a 5.5 percent decline from 2014. Analysts attribute the decline to the rising U.S. dollar. In constant-currency terms, the market is projected to grow 2.5 percent. In Gartner’s previous forecast in April, it had forecast IT spending to decline 1.3 percent in U.S. dollars and grow 3.1 percent in constant currency.”
They further add that the Enterprise Software category will see a decline of 1.2% year to year.
Forrester released their report around the same time, but had a differing view: “…spending on software, tech consulting and systems integration services, and tech staff will grow more rapidly in 2015 and 2016 than spending on tech outsourcing, telecom services, and especially computer and communications equipment. This mixture of strong and weak tech sectors, combined with a hot-and-cold US economy, will lead to moderate growth of 5% to 6% increases in tech budgets in 2015 and 2016. For CIOs, these trends will mean much more work with business partners in shaping and guiding the purchases of BT-related software and less scope devoted to the spending on IT where the CIO traditionally had sole or dominant domain…”
One other interesting trend has been the proliferation of Innovation Centers setup by corporations to understand the impact of emerging technologies on their business models. One recent article talks about 4 in 10 global corporations setting these up to “gain exposure to the latest technologies, vs. striving for a deeper understanding of customers’ needs”.
So what does all this mean for Independent Software Vendors (ISVs), who have been supplying indispensable enterprise software for decades to global corporations? How can they keep their status as paid trusted advisers to their clients?
Here are some ideas which our ISV customers are using successfully to stay meaningful for their customers:
- Research your customers: Yes, some of your customers may be clamoring for a cloud-native version of your application, but first, you need to look at how your customers are using the application across the board, and think of offering a migration path based on your most critical customers. You may find some of your customers are perfectly happy with a maintained, supported current version vs. an abrupt change – which in turn can help them with a reduced Total Cost of Ownership (TCO).
- Research your customers’ data needs: Yes, IoT is here to stay and is supposed to be a $1.7 trillion market by 2020. But are your customers planning to add IoT sensors and data collection devices (or similar disruptive technologies) over the next five years? Does your application support the potential influx of this massive amount of data? As you can see from the graphic above, IoT is of interest to most global corporations – not for IT cost reduction, but for increased information about their customers, which factored with advanced analytics can provide better solutions for their customers. This potential bump in top line revenue can be used to offset the costs incurred for the additional IT spend.
- Embrace open source, cautiously: Yes, your application was written over fifteen years ago, and you want to have cloud-native APIs with the latest NoSQL database, but will your customers pay for the additional cost of refactoring your application? Potentially – if positioned right. One of the biggest benefits of refactoring a legacy application is the potential boost in performance. For example, if you create the new version of the application in layers, taking advantage of virtual operating system layer, a distributed data and storage layer, and cloud-native services such as provisioning, your customers could see a potential boost in performance, which can help them pay for the upgrade.
Adding to all this is the obvious – staying in touch with the advances in technology and offering solutions geared towards the changing IT landscape, while not discounting key areas like security, governance and disaster recovery – which can keep the ISVs still relevant.