AbhishekSingh, Author At Everest Group

Trump’s Visa Reforms: The Bitter Pill IT Needed | Sherpas in Blue Shirts

February 2, 2017

The Trump administration’s move to table H1-B visa bill in the house has led to a bloodbath for IT services stocks. While there appears to be near unanimity on the “absurdness” of the move, there is a silver lining most experts seem to have missed. I’ll explain this through two acts that have played out.

Act #1: Old Wine in New Bottle
In a November 2015 blog (“My Digital is Bigger Than Yours” and The Technology Pulp Fiction), I explained the rationale behind my cynicism for buzzwords that were driving the discourse on IT services. The story being told was that IT services was undergoing a paradigm shift in innovation. However, instead of witnessing a real shift in strategy, talent model, and offerings, what we have seen is a largely marketing driven illusion of change. Digital, cloud, automation, and cognitive are terms that are being thrown around without caution, giving an impression of disruption in services delivery. In reality, it’s just the natural course of progression in IT services getting embellished by these buzzwords. Analysts know it, service providers know it and – no prizes for guessing – buyers know it too.

As our January 2017 enterprise pulse report on buyer (Dis)satisfaction highlighted:

Buyers are unhappy
They aren’t enamored by these buzzwords
While they consider their existing IT services mediocre, they are still hanging on to it.

Point 3 above is the reason why, as much as I would like to take service providers to task on this pretense of transformation, I believe that enterprise IT must take its fair share of the blame. They have been running mediocre, unimaginative, and long past use-by-date procurement practices. There are two primary reasons behind this inertia:

There aren’t any better services options at comparable current prices. Sure, they would love to get something like IBM Watson for infrastructure automation, but their annual IT budgets won’t allow for it. Pretty much a thought process like, “Why buy a Ferrari to run a NYC yellow cab?”
The opportunity cost of letting go of something that has been working fine for a decade and a half is huge. Enormous bureaucracies have been created around services procurement, and they are almost impossible to dismantle.

Net-net, labor arbitrage, offshoring, and time & materials still continue to drive the lion’s share of IT services. In the current scenario, despite all the “digital” and “cognitive” washing, there is no way this reality can be swept under the rug. Does this mean that services transformation is a lost cause?

Act #2: And then Trump happened….
All this is getting Trumped now. Visa regulations mean less access to the same cheap labor. Now, instead of paying lip service to service delivery automation, enterprise IT and providers will actually have to think about hyper-automation to keep the lights on and manage margin improvement expectations. Things will have to move faster towards autonomics and/or cognitive for service providers to stay afloat and enterprise IT to stay relevant for CFOs.

My message to the ecosystem to which I belong? – It’s time to put your money where your mouth is!

MACRA Nails it as the Next Big Bang of Reforms in Healthcare | Sherpas in Blue Shirts

October 18, 2016

On Friday, October 14, the Centers for Medicare & Medicaid Services (CMS) in the United States released a humongous, 2398-page rule to implement new value-based payment programs under the Medicare Access and CHIP Reauthorization Act (MACRA).

This release is a significant step forward in streamlining Medicare payments, and establishing what “value” will mean in the much debated Value-Based Reimbursement (VBR) programs.

Here’s our initial take on this release, in order of what I liked most about the rules.

CMS is making the right noises: As the CMS acting administrator, Andy Slavitt, put it, “…..changes to the rule were to help physicians focus on delivering care and seeing patients instead of performing administrative tasks.” The term in bold represented the point of conflict between a right thinking, efficiency-focused regulator and unnecessarily overburdened physicians.

How is some of this getting addressed?

Reduces confusion over quality improvement: The new set of rules consolidates three existing quality reporting programs — Physician Quality Reporting System, Value-based Payment Modifier, and Meaningful Use (MU))– and a new performance category into a single system through Merit-based Incentive Payment System (MIPS.) The definition of “merit” or value was never clearer. Here is a snapshot of the scoring model that defines the four performance categories and their weights:

Pick Your Pace (PYP): In order to make the above operational, CMS is allowing providers to pick their own pace, (see Andy Slavitt’s blog for more details), and choose from three data submission options or join an advanced Alternative Payment Model (APM):

Test the program
Submit 90 days of data
Submit a full year of data

Enabling consortiums: CMS now allows MIPS reporting as a group, enabling smaller providers to get a better deal. What this means is that a group of clinicians sharing a common Tax Identification Number (irrespective of specialty or practice site) can group together to receive payments based on the group’s performance. This will foster necessary consolidation in the ambulatory space.

Relaxes exclusion norms through APMs: Providers not eligible for MIPS can still receive a bonus payment for meeting performance criteria through qualifying APMs. The inclusion criteria are clearer than before, and the nervousness caused by stringent exclusion norms is largely addressed.

Last, but not least, provides a further fillip to IT: While use of certified EHR technology will continue to give providers brownie points for performance, the following five required measures that CMS has mandated for providers will further boost technology adoption:

Security risk analysis
E-prescribing
Provide patient access
Sending summary of care
Request/accept summary of care

Net-net, this new rules release is a great move forward toward settling the debate on “value,” and will energize the healthcare industry to spend more on technology. As you wade through the 2398 pages, watch this space for more of our explanations and perspectives on this topic.

#AHIPInstitute 2016: The Hype, The Reality, and The Hope in the #Healthcare IT market | Sherpas in Blue Shirts

June 14, 2016

With just one day to go before the America’s Health Insurance Plan’s (AHIP’s) flagship #AHIP Institute 2016 conference in Las Vegas, and energy building among participants, I thought it appropriate to share some market reflections based on Everest Group’s research over the past five years.

The Hype

Here is a snapshot of what you’ve heard from the analyst community:

As a data and process intensive sector, healthcare has the potential to mature into an all-digital, technology native industry
Political debate and regulations will drive healthcare technology spend, to the same extent that they drove banking technology spend in late 1990s-2000s
Data and insurance exchanges will transform how insurance products are created and sold
Payer provider convergence will drive accountability and efficiency of care financing and delivery
Growing payer consolidation will create efficient behemoths, driving technology spend and bringing down healthcare costs

The Reality

“The best laid plans of mice and men oft go astray.” Such has been the sobering reality of the healthcare industry initiatives in the past five years.

Growing consolidation has created more concerns than solutions:
- The Blues are currently fighting an antitrust multi-district litigation in which the plaintiffs have alleged that customers were cheated of low costs due to growing cartelization and reduced competition between The Blues
- The Anthem-Cigna and Aetna-Humana initiatives haven’t done anything to address the cost issues and the technology investments that will drive operational efficiencies
Analytics initiatives are stuck in a limbo:
- Data security issues have made the case for interoperability even weaker. Per, a PwC survey, more than half of consumers trust neither payers nor providers with their data
- Privacy issues have stifled access to data and build decision support systems
- Net-net, what we see being touted as next-gen analytics is just an incremental version of business intelligence
There is a lot of “digital washing” going around:
- Every technology initiative (mobile app, cloud migration, social media initiative) is being anointed as “digital,” not because of the tenets themselves but because of the seeming association with the word itself
- What is passing as “digital” are just IT initiatives with a smattering of SMAC (social media, mobility, analytics, and cloud)
- A good number of service providers and enterprises consider it enough to be associated with the term “digital,” whatever that means.
Care delivery in a capitalist construct is a living contradiction:
- The healthcare industry is a mix of government, non-profits, and for-profit entities. For various ethical and political reasons, cost is the only metric the industry feels comfortable talking about openly
- Meaningful use and quality improvement have become complex/esoteric goals, often conflicting with organizational financial goals
- To assimilate learnings from banking, the industry needs to have transparent financial metrics
- The Republican-Democrat divide on Obamacare has brought this contradiction to the fore. The biggest worry is that there does not seem to be a right way forward, except that most of us will agree with the tenets of low cost, universal coverage, and doing away with exclusion of pre-existing conditions.

The Hope

However, there are aspects that serve as silver linings to the increasingly depressing discourse on the conflicts impeding healthcare technology spending.

Per the PwC survey, mobile health adoption has jumped 100 percent, giving a solid boost to the technology evangelists within healthcare organizations
Consumers have become more costs conscious, relying less on the government to take care of them. There is growing evidence that most consumers will engage healthcare spend advisors the same way they do retirement or investment advisors
Telehealth adoption is growing by leaps and bounds. Today, most of the top 20 hospital systems offer a variety of remote or community care options for diagnostics and therapy, driven by technology. The incentive for keeping in-person visits and hospital readmissions down is real in financial and social terms
Last, but not least, despite the beating the healthcare exchanges have taken in terms of underwhelming enrollment numbers, the exchanges as a marketplace for insurance products are here to stay. This has worked in the traditional insurance setting, and there is no reason it will not succeed now, given the shift to defined contribution likely to create a US$350 billion premium market by 2020 (Everest Group estimate.)

This year’s #AHIP Institute has a robust agenda. Topics range from the usual (cost and efficiency of care) to the more adventurous (new products, analytics, and technology collaboration). The imminent presidential elections also provide an interesting backdrop. The debate on reforms is back with full force, even though people seem reticent to take a clear stand.

With a tip of the hat to the recently passed Muhammad Ali, I hope the speakers at the event will pull no punches when expressing themselves on the following topics:

The digital agenda and IT investment roadmap for payers
The bubble surrounding payer consolidation
The future of exchanges
The future of reforms

I’ll be at the conference from June 15-17. If you’d like to chat with me on any of the above topics, or any others, feel free to reach out to me at [email protected] and follow me on Twitter: @abhishekxsingh.

A Fully Government-owned Standard EHR: Killing Oligopoly for Interoperability | Sherpas in Blue Shirts

February 3, 2016

Epic Systems, Cerner, AllScripts, McKesson, and AthenaHealth…if you have heard these names, you likely know what EHR stands for. I don’t mean the non-acronym form, Electronic Health Records, but what it actually stands for – oligopoly, sunk billion dollar investments, platforms that don’t speak to each other, and that look on physicians’ faces when their shift “ends” and coding starts.

When President Obama famously daydreamed the US$80 billion a year savings from the EHR nudge, many were cynical that it would ever come to fruition. Six years later, while EHR in the U.S. is an over US$5 billion-a-year industry, the savings are nowhere in sight, and the cynics are sniggering, “we told you so.” Sadly, while the doomsday predictors are having a field day gloating over the sorry state of affairs, the folks on the technology and policy sides are ruing a great opportunity lost.

The issue was never with the business case for EHR – a standard system of record aiding providers and physicians in medical decision support. What could possibly be wrong with that vision? Billions of dollars of sunken investments and a multiplicity of protected standards later, sitting on the books of large providers are bloated monsters who scare away any attempt at efficiency, data intuitiveness, and interoperability.

Frankly, the current debate on interoperability is as farcical as it can get – the same bunch of folks who created the virus are now trying to invent a vaccine for it. Who paid for the virus? Subsidy did. Who will pay for the vaccine? Irrelevant. If the debate continues the way it is going, what you think will be a vaccine will actually be an upgraded, non-resistant version of the virus. With the federal committee on interoperability largely staffed by big EHR vendors, we have a situation akin to employing a cat to guard the milk.

My suggestion? Let’s not fight the cats here. The cacophony will be way too unbearable. Instead, here is a solution (and warning… radical suggestion alert!)

Interoperability
- Government should create its own EHR system
- It should create a separate fund and an agency (akin to CMS)
- The new-EHR should be cloud-based
- An EHR subsidy should be given only for those providers that move to this government EHR
- Eliminate Health Information Exchanges (HIEs) and Healthcare.gov. Hoping HIEs would solve for data portability and interoperability was always a futile attempt at putting lipstick on pigs.
Technology and build
- Have an open bid managed by a consortium comprised of practitioners, providers, and top tech innovators from Silicon Valley and the healthcare industry
- Selection of the technology platform should rest only with tech representatives
- Design thinking should be led by practitioners and physician representatives
- Development and implementation can be outsourced to EHR vendors.
Solving for costs sunk by providers in EHRs: With billions already invested, what is the incentive for providers to even consider a new EHR, unless they are forced to do so?
- Government should subsidize (yes, another subsidy) all migration costs to the new EHR
- Since the new EHR will be cloud-based, storage costs will be significantly reduced. However, providers will have to pay a fixed fee each year to stay licensed
- Personnel training costs will be hugely reduced over the years as this new government EHR can simply be part of curricula at all medical and nursing schools.

Reality check here…what I have just suggested will kill an industry and open the government to multiple litigations by the large EHR vendors. I never suggested this would be easy. But, could it be done by force of political will and legislation? The answer is a resounding, “Yes.”

Everest Group’s New IT Service Provider of the Year Awards 2016 | Sherpas in Blue Shirts

January 26, 2016

Everest Group is proud to release the first edition of its annual PEAK Matrix Service Provider of the Year™ awards for IT Services 2016.

Before you turn a blind eye to another set of service provider awards in a market already flooded with matrices, quadrants, and other such convoluted shapes…these are special recognitions of a small handful of providers that are unique stand-outs.

2015 was a seminal year for our IT services PEAK Matrix™ evaluation program. Under the aegis of four key ITS practices – Banking, Financial Services & Insurance (BFSI), Healthcare & Life Sciences (HLS), Application & Digital Services (ADS), and Cloud & Infrastructure Services (CIS) – we published a whopping 26 PEAK Matrix evaluations, featuring double click views on capabilities and market success across practice sub-segments.

While we appropriately recognized performance in individual segments, what started to unravel was a picture of consistency by a few service providers that was hard for us to ignore. Hence, while there indeed are Leaders and Star Performers for each of the segments we evaluated, the composite picture clearly shows that some deliver consistent leadership and top performance across many different categories.

As today’s enterprises navigate the complex landscape of next-generation and legacy technology, a global business footprint, and a complex vendor portfolio, the PEAK Matrix Service Provider of the Year awards will help them to identify the best of the best – service providers with strong broad-based capabilities and successful service strategies that align well with the evolving enterprise IT demand.

The award categories are:

ITS Top 20: We arrived at this list using a consolidated score reflecting points received on individual evaluations based on tiered scores for Star Performer, Leader, Major Contender, and Aspirant positions.
Individual awards categories: These awards are based on the count of Leader or Star Performer positions across the category evaluated
- Leader Of The Year
  - IT Services (Overall)
  - HLS
  - BFSI
  - ADS
  - CIS
- Star Performer Of The Year
  - IT Services (Overall)
  - HLS
  - BFSI

Here’s a PEAK peek at the top five on the ITS Top 20 leader board.

See the complete list of winners.

Have you had experience with one or more of these providers? Our readers would love to hear your views about them!

“My Digital is Bigger Than Yours” and the Technology Pulp Fiction | Sherpas in Blue Shirts

November 4, 2015

It’s the middle of the week and despite all the caffeine-induced stimulation I am in a cynically contemplative mood.

Reason? The past 6 weeks have been spent attending analyst events and conferences, listening and debating with business leaders and thought leaders on what will make the global services industry click. There has been a flood of “paradigm-changing” buzzwords, new solutions on the horizon, and yes, the predictions that claim to change the world in the next 24-36 months. I’ll not go into the details but if you have managed to find your way to this blog, you probably have already heard these terms – Innovation, Robotics, Automation, Digital, and Internet of Things! (And are probably thinking – “here goes another blog on digital transformation. Yawn!”)

That “yawn” is a symptom of the problems facing the technology industry. Gone are the days when you would look at a new product or an interface and say – “Wow!” I think the last time I exclaimed wow was more than a decade ago when I first saw a GPS map and the smooth voiceover guiding me to my destination. Since then there indeed have been some “Aha” moments but nothing that made me fall off my chair. The reason probably is this – most of our attention has been on innovation rather than invention.

Innovation is putting together working concepts and turning them into industrialized mass adoption successes
Invention is creating a new concept altogether and make it work

Frankly, all the innovation that we talk about today is a mishmash of just three inventions – computing, internet, and devices. Robotics – check. Automation – check. Digital – check. Internet of things – check! True, we are working on miniaturizing, increasing processing speed, writing hugely complex analytics code, and building beautiful interfaces. Reality check – we are still just exploring the “art of the possible” with the Legos.

What is wrong with that? Absolutely nothing. Incremental invention (or innovation) is a great thing. My issue is with paradigms that are dime a dozen these days. Here is the problem – We are in the age of the “moolah.” Theoretical or conceptual innovation has lesser weight since anything that is not investor-funded and cannot be in hands 18 months down the line, is meh. And that is why the less than smart pursuit to reset and invent terminologies instead of true touch and feel invention. Due to lack of true innovation, buzzwords and bubbles are what keep investors excited and money mobile. And these buzzwords are finally leading to madness.

Each industry event I went to saw analysts and leaders beating each other up with their own definitions of what “Digital” meant – for some it was “business transformation using digital,” for some it was “SMAC,” for some it was “driving growth and efficiency using digital,” while some lazy ones were resigned to “anything that is not analog”! Frankly, this debate made me cringe. It is only when industries lack true innovation that they resort to chest thumping using buzzwords. Global automotive industry is a case in point. Till Elon Musk came along, it was all about lines and curves, three-year warranties, and miles per gallon.

Hence, while I take another sip of my café Americano, I hope a maverick comes along and says, it’s time for telepathic computing, time travel, and an invisibility cloak. Gulp!

HCL vs. Wipro Soccer Matchup & the Digital Services Hullabaloo | Sherpas in Blue Shirts

September 11, 2015

In the last 10 days, analysts tracking digital services across the world woke up to highly savvy India-heritage service providers lapping up marquee digital deals in the world of sports. These new partnerships include HCL and Manchester United (soccer), Wipro and Chelsea (also soccer), and Infosys and the ATP World Tour (this one in tennis.)

These deals are prized because of the impact they create.

Strong digital services pedigree for these service providers: Because of their brand association with offshoring, labor arbitrage, and pure-play services focus, the India-heritage providers have traditionally been frowned upon when they entered the discourse on digital and technology products and platforms. Such deals will go a long way in changing this pedigree and association
Brand recall and stakeholder connect: Digital services are a different ball game. As you are not necessarily selling to the CIO, you need to reach stakeholders unreachable through the traditional sales route. These deals are excellent in that regard. For instance, Manchester United has 659 million followers across the world, second only to Facebook. Imagine the kind of global reach and exposure the deal creates for the HCL brand!

Sponsorship deals under the garb of services?

As an industry analyst, I am used to analyzing deals for their profitability and total contract value, i.e., the impact they create on the books in upcoming quarters. Looking at the above deals through this lens, I immediately saw that these are not traditional services deals. In fact, something tells me they will not figure similarly on the accounts as other services deals do. Indeed, Infosys candidly called out that it will be a “Global Technology Services Partner and Platinum Sponsor” of the ATP World Tour. Hence, it does not take a Sherlock Holmes to deduce that these three deals are essentially sponsorship arrangements (with an inbuilt services component) that the service providers have entered into under the garb of a services construct. A very easy way to decipher this is to compare the positioning of HCL’s and Wipro’s logos on the Manchester United and Chelsea websites, respectively. It makes it very clear which provider “spent” more on their “sponsorship.”

Take a look at the Manchester United website and you’ll see HCL’s logo is at the top of the page, right on top of ManU’s.

But when you check Chelsea’s website, you have to scroll all the way down to discover Wipro’s logo sitting in a corner sulking with Singha Beer for company.

So what?

Am I contemptuous of this sponsorship-deals-under-the-garb-of-services construct? Not at all! In fact, I am pleasantly surprised by the gumption shown by HCL, Infosys, and Wipro in taking this leap of faith to build a strong brand connect and pedigree. It shows they are willing to challenge the traditional constructs and meet the digital market head on. In a highly consumer-oriented world, new business will not come by just being efficient nerds. India-heritage companies are up against the likes of VC-funded start-ups, reforming technology majors (Google, IBM, Microsoft) and niche enterprise software firms (NetSuite, Workday, etc.,) all of which have stronger credentials in digital constructs. Given the buzz these deals have created, there is enough market validation for the tactical approach taken by these service providers. What is even better is that these are not typical paid sponsorship deals – these service providers will actually be providing services that will be touch and feel for millions of fans of these sporting giants. If they successfully manage it, this will create an exponentially stronger brand recall compared to what they have achieved in decades – being efficient service providers to enterprises, working in black boxes.

Hence, do not be surprised if TCS, which sponsors the New York Marathon (and many other races), turns around tomorrow and says that it is sponsoring managing all IoT (health sensors, speed sensors), platforms, and analytics of the race.

Keep watching this space for more on these developments!

Photo credit: Flickr

Cerner, Accenture, and Leidos Won the DoD’s US$9 Billion EHR Deal: Do You Know Who Lost It? | Sherpas in Blue Shirts

August 4, 2015

While the healthcare industry is reeling over the massive size of the Department of Defense’s (DoD) US$9 billion EHR contract just awarded to Cerner, Leidos, and Accenture, less attention is being paid to the fact that this team won the deal over the hot favourite joint bid of Epic Systems and IBM. Those who know the EHR landscape know there is scant anything that Epic loses (of course, the same used to be said about IBM, and that is where irony can probably find solace). Hence, the focus of this blog is on the fact that the invincible Epic Systems lost the mother of all deals in the EHR space.

Why are we hung up on Epic Systems? For the uninitiated, here is some context:

Predominant market leader: With over 40 percent market share, Epic has precipitated a large ecosystem of providers that are on its EHR platform. Epic has intelligently used its dominant market position to work with its customers in defining the roadmap for the evolution of EMR systems, and to make its competitors react to the steps it is taking to innovate across various care practices. Epic has focused primarily on large hospital systems, with minimal attention on the mid- to low-sized segment of the market. With its hold on the market, one is led to believe that Epic chooses its clients, rather than the other way around
Highly relationship-driven: Clients have traditionally loved Epic for being proactive in evolving its products, responding to suggestions, and quickly fixing issues. This is what set it apart from the biggies, such as Allscripts and Cerner, in its initial days. Epic has strong consultative sales teams that work closely with administrators, CMOs, and physicians. For large pursuits, it deploys dedicated product customization teams that can deliver POCs, manage change, and implement Epic in record time with partners. And most of Epic’s key product people, who can actually understand and address issues, are just a phone call away.

What could be going wrong with Epic Systems?

The “Epic” standard EMR? In an era where healthcare is actively pursuing consumer-focused and highly flexible technological innovation, Epic is facing flak – outside of its existing customer base – because of its highly standardized and rigid architecture. Key areas of question include lack of interoperability, lack of efficient APIs for consumer/end-user application development, and foreseen inability to innovate in a digital world due to its MUMPS-based legacy platform. This is what came out starkly when you read between the lines of Frank Kendall, Under Secretary, Department of Defense’s statement: “Market share was not a consideration, we wanted minimum modifications.”
High upfront capital investment: The upfront cost of Epic adoption is increasingly being mentioned as one of the hindrances. Cost is a major factor, and EMR implementations are hospitals’ biggest IT spend and budget areas. More importantly, some of the highly cited large EHR implementations (such as the US$700 million Duke University and Boston Partners deal) create an impression of a highly rigid commercials image for Epic. The case on cost versus benefit of having EHR has not been settled yet. Epic’s high premium positioning put it in a tight corner, despite the US$35 billion subsidies riding the EMR industry, and the general customer preference for Epic. The irony here is that the US$9 billion size of the deal is the reason Epic was such a natural choice for this DoD deal, but it probably lost it because the government needed a more flexible arrangement
Declining quality of services: Epic is facing the classical quality versus quantity challenge when it comes to managing its growing list of clients. The increasing shortfall in expert support staff is impacting its ability to maintain and support its products across many new and old clients. In the last 18-24 months, an increasing number of client executives have raised flags about outstanding and unresolved issues
Training has become a major area of concern, as more and more hospital systems are complaining of lost revenues due to their staffs’ below par or behind the curve Epic readiness. Epic’s inability to provide efficient training modules, and its tendency to keep things close to its chest, is driving wariness among new clients
Vendor-neutral storage: Given dependency concerns, customers are increasingly demanding vendors be aligned to some sort of vendor-neutral storage or archiving architecture. This is likely to lead to more thought leadership on vendor-neutral technologies, which will be directed at Epic’s predominant control regime.

There may be other commercial reasons for this massive DoD EHR deal not going Epic’s way. However, organizations already had a strong sense of circumspection while evaluating Epic’s EHR in terms of interoperability, next generation technology, digital enablement, and control. While before these reasons were less salient because of Epic’s trailblazing success, this lost deal will spur prospects to question them with a far more discerning eye.

Many More PEAKs to Conquer in Healthcare and Life Sciences! | Sherpas in Blue Shirts

July 24, 2015

The Healthcare and Life Sciences (HLS) ITO market has been buzzing with activity in 2015. At just seven months into the year, Everest Group’s projected market size for the HLS ITO market size is US$39 billion.

Here are some of the standout messages from our 2015 research to date that address some of the contributors to this enormous market size.

Life Sciences ITO market: Services integration (applications, infrastructure, and BPO) and IT-as-a-Service (ITaaS) to drive a growing chunk of next-generation IT opportunities (see our upcoming Life Sciences ITO Annual Report – “Integrated Services Strategy in the age of digital”)
Payer-provider market: Growing convergence in the market will drive significant vendor consolidation and rationalization initiatives
Life Sciences ITO PEAK Matrix – This report in part discusses the intensifying neck to neck competition between the India-heritage service providers (such as Cognizant, TCS, and HCL) and the global majors (such as Accenture and IBM) – Download a preview

Europe Life Sciences ITO PEAK Matrix – This research brings out how Europe-based life sciences enterprises are opening up to outsourcing as a strategic component of their sourcing strategy and cost containment efforts – Download a preview

While robust in their coverage, these already published 2015 research reports paint only a portion of the picture enterprises need to view to address cost-cutting imperatives and deliver metrics-driven business outcomes through alignment of their technology strategy with their lines of business.

For example, an increasing number of life sciences clients, especially large pharmaceutical firms, have been reaching out to Everest Group for assistance in evaluating technology partners not only to drive digitization of their critical operational components, but also higher R&D productivity through next-generation analytics and high-tech systems. Similarly, while payer and provider organizations are starting to view technology from an entirely new prism, they are uncertain how to leverage technological solutions and platform to address concerns and initiatives including growing consumerization (patient engagement), population health initiatives, and care-risk convergence.

To inform the marketplace on issues and exciting opportunities in ITO for the HLS industry, Everest Group is significantly expanding its portfolio of published PEAK Matrix evaluations in 2015. New reports we’ll be publishing through the end of the year are:

Life sciences industry PEAK Matrix
- Digital services
- Big data and analytics
- Clinical and R&D IT services
Healthcare (payer and provider) PEAK Matrix
- IT services (payer)
- Digital services (payer)
- Big data and analytics (payer)
- Care management and patient engagement (payer)
- IT services (provider)

Everest Group’s goal is to help ensure enterprises and service providers achieve maximum success from their sourcing initiatives. Thus, we encourage you to reach out to us directly with your queries.

Abhishek Singh, Practice Director, [email protected]

Nitish Mittal, Senior Analyst, [email protected]

Mayank Maria, Analyst, [email protected]

Yet Another Healthcare Blog on Cognizant and Trizetto. Not! | Sherpas in Blue Shirts

June 23, 2015

As much has already been written about Cognizant and its Trizetto acquisition – including Everest Group’s take: The New “Big Blue” of Healthcare IT? – it is time for us to do a post-facto check on Cognizant’s healthcare IT services business, and ruminate on the state of the healthcare IT market.

What’s up with Cognizant’s healthcare business?

Healthcare@Cognizant officially crossed the 30 percent revenue share mark (just behind BFSI at 39.9 percent) in the first quarter of this calendar year
Cognizant is the only WITCH (Wipro, Infosys, TCS, Cognizant, and HCL) company with healthcare among its top three industry verticals by revenue
In fact, after its Trizetto acquisition, Cognizant’s annual healthcare revenue (in the range of US$3.2 billion) will be more or less equivalent to the sum of the healthcare revenues of WITH combined
Per Healthcare Informatics’ Top 100 Healthcare IT providers: Cognizant’s 2013 healthcare revenues, if added to Trizetto’s (a sum of US$2.94 billion) make it the second largest healthcare IT vendor on the list. It is behind only McKesson, and ahead of technology and services behemoths such as Cerner, Dell, Optum, Epic, and Allscripts
For the quarter ending March 2015, Cognizant’s healthcare topline grew 42.7 percent year on year, obviously driven by Trizetto’s numbers. Given the growth outlook company has shared with the market, Healthcare@Cognizant is headed toward becoming a US$4 billion unit in the next 18 months – which is huge.

Is healthcare IT a great market to be in?

Let’s put Cognizant’s numbers into perspective with our growth estimates for the overall healthcare IT industry. With the healthcare industry set to grow at a CAGR of 12 percent through 2020, and given what we have seen since we published the following in 2013, the market size projections for healthcare appear well on track to humble the pessimists among analysts.

Healthcare – why so serious?

While services spending growth has been steady, especially for the payer and provider markets, the innovation side of healthcare IT has been sulking for a while. Yes, “sulky” is the word that comes to mind when you sit listening to a panel discussion on digital innovation at #AHIPInstitute2015 and not one panelist cites an example of innovation from the healthcare space. They either talk Uber or Airbnb. This is unfortunate.

Despite the huge numbers up for the taking, a big spike in the booming healthcare IT market will not come by unless there is a dawn of new and nimble technology start-ups that change the game of healthcare enterprises looking to move away from bespoke solutions to as-a-service models that reduce their time-to-value exponentially. For good or bad, the healthcare industry in the U.S. has always had an umbilical cord connection closer to Washington D.C. than to Silicon Valley. That is probably what curbs innovation in this industry from breaking out of its shackles to produce its own Ubers and Airbnbs. In my opinion, except for a few fitness/therapeutic/diagnostic wearable-focused investments, little causes titillation in the healthcare technology start-up space. Despite all the brouhaha on the B2C shift, consumer-focused investments are coming more from the enterprise IT side than from third-party innovation. Frankly, do we want to be in a world where Ford not only makes the cars but also drives the cabs? Hence, the question is – in a world dominated by technology vendors (Epic, GE, McKesson, and Philips) are we ready to declutch third-party innovation and let it bloom?

Is this a blog on Cognizant?

There was a reason we titled our blog about Cognizant’s acquisition of Trizetto, “The New Big Blue of Healthcare IT?” The simile was not to herald the dawn of a new behemoth, but to provoke the sort of nimbleness and courage in healthcare IT industry that IBM (the original Big Blue) has shown over the last many decades to stay relevant in the overall technology industry. In an industry with a muffled voice of innovation (few exciting start-ups), a few big bullies (large technology vendors, EMRs, etc.), and well-meaning presiding deities (government and legislatures), the push for change will have to come from outside.

Will it be the venture funds and geeks sitting in Silicon Valley who will do the trick?
Will it be the EMRs who open up their platforms for an integrated and interoperable healthcare world?
Will it be IBM’s Watson that will change the game?
Will a recently gone private Dell up the ante toward innovation?
Will Cognizant take up the mantle of being an angel integrator for healthcare innovators?
Will it be Infosys’ Vishal Sikka, whose US$500 million investment fund will drive traction?
Will Google or Microsoft provide the platforms that will gamify technology innovation?

Why did I harp on Cognizant while writing this blog? It was a rank outsider in the healthcare technology industry (well, almost, given its offshoring, pure play service legacy). Even if it becomes a US$4 billion healthcare enterprise, it will still be a fraction of the market. Via its investments, growth, and outlook, what it has given the industry is a peek into the kind of bravado that can make this market rock. We require more of this bravado. But, if it is going to be just once in a blue (pun unintended) moon, it will be rank boring. So, as the Joker would have said, let’s put a smile on that face!

This is the first in a series of blogs Everest Group is publishing on exciting opportunities and implications to watch out for in the healthcare IT services market.

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Author: AbhishekSingh