Author: Nitish M

What Is Your Post-COVID-19 M&A Strategy | Blog

The International Monetary Fund has recently confirmed what most of us already know – we have entered a recession. Given the evolving COVID-19 situation, in the short-term, organizations are doing their best just to implement business continuity plans and keep the lights on. At this point, they simply don’t have the bandwidth to take a forward-looking view.

However, now – or at least very soon – maybe the best time to be bold – to consider the opportunity to slingshot through and out of the recession with a strong M&A strategy.

Increasing acquisition activity

As part of our technology research over the past few years, we’ve analyzed innovative firms (which we call Trailblazers) to identify high potential start-ups based on their growth stories, innovation, and the impact they have created in the market.

More recently, we’ve seen an uptick in M&A activity across the IT services market as organizations have sought exponential inorganic growth to expand their geographic footprints and/or fill gaps across their services portfolios. (See the exhibit below.)

timeline of acquisitions of high potential start ups presented by everest group 1

How we expect the recession to impact this activity

Although this has been an acquisition-rich industry in recent years, everything is completely different now – the post COVID-19 market is clearly headed straight into recession, or worse. If previous recessions are any indication, M&A activity is likely to take a hit. While we believe M&A activity in the immediate aftermath of the pandemic will be subdued, we also believe there will be some interesting opportunities for those willing to invest some thinking and strategizing.

Is now the right time for you to consider M&As?

As the world adjusts to the next normal following the pandemic, some specific technologies/tools are likely to see a surge in adoption, including cloud, collaboration and CX, network and security, IoT and edge, to name a few. These technologies will play an important role in ensuring business resiliency and serving a distributed and remote workforce.

Within this context, a well-planned acquisition strategy can enable competitive advantage for those organizations willing – and able – to take a bold approach. We believe this segment-specific activity will be further fueled by:

  • Lower valuations: Most start-ups take a relationship-based selling approach, with about 80% of their revenue coming from a few high-value, large clients or markets. As the recession deepens, start-ups that are highly dependent on a few clients and markets will struggle to survive, lowering their valuation and increasing their propensity to be acquired. The lower cost of capital and the impact of the financial stimulus are also going to provide acquirers an impetus to re-examine their M&A playbooks. One such example is Magic Leap, which is looking at opportunities to be acquired as the hardware sector faces threats from the COVID-19 crisis, the impending recession, and the trade war between the US and China. Cash-rich organizations (PE/VC firms, service providers, and BigTech companies) are already looking at leveraging their balance sheets amidst this downturn
  • An opportunity to fill portfolio gaps: As growth across IT services is expected to soften for the foreseeable future, now may be the time – and the price may be right – for organizations to augment their capabilities, expand their addressable market, and increase their top line

We are already seeing interest from acquiring firms focused on cloud services (AWS, Azure, GCP), enterprise platform adoption (capabilities in ServiceNow and Salesforce), network services, and security, to name a few. As we approach the fallout from the pandemic, a range of investors will be eyeing the technology sector for M&A opportunities, and we believe there will be a lot of activity. Picking the right segment bets and timing these initiatives will be crucial.

What is your post-COVID-19 M&A Strategy? Please write to us at [email protected] and [email protected].

COVID-19 Is Truly a Black Swan Event, and We Can’t Rely on History to Predict the Outcome | Blog

The last thing the world needs is another “hot-take” on COVID-19, but the biggest fallacy I see as people think/talk/write about the post-COVID-19 economic scenario is to compare it to previous economic recessions.

Why is this different?

The 2008-09 crisis couldn’t be more different than what we are seeing today, and the post-COVID-19 world is going to be wildly different across dimensions. The genesis of the 2008-09 crisis was badly crafted financial instruments, which impacted developed markets more than others and necessitated select bailouts to resuscitate consumer demand.

COVID-19 is much more broad-based in impact. Not only will it reshape business, but it will reshape intrinsic human behavior and consumer preferences. At this point, I would disregard any economic projections of this pandemic’s impact. We don’t know enough at this stage, nor how long it will take to play out (is the current stimulus enough? when do we recover, if at all? – you get the drift).

What do we know?

So, what we can say with a degree of certainty at this point? This pandemic will have wide-ranging implications:

  • Asset ownership will need a rethink – nobody wants to “own” risks on their balance sheets
  • CX will be paramount and essential for productivity – consumer expectations will never be the same
  • We will see a fundamental transformation of how and where work gets done – there’s a new recognition that a remote and distributed model works, if done right
  • Enterprises will try to conserve cash and look for self-funded transformation – no, it is not an oxymoron
  • Piecemeal digital transformation doesn’t work – go big or go home
  • Sourcing will not be linear and needs a rethink – organizations will truly need to rethink how and where they derive value

We are continually monitoring the situation to help our clients understand how this situation plays out. Our COVID-19 resource center has our latest and evolving thinking. Short-sighted and clickbaity takes do us no favors in this effort to understand the post-COVID-19 world. Please stay safe and curious.

Let the Cloud Wars Begin: Notes from Oracle OpenWorld Europe 2020

Oracle held the European edition of its flagship event, OpenWorld, in London recently. Against the backdrop of cloud wars, leadership changes in the ecosystem (Mark Hurd’s untimely demise and the change of guard at SAP), and blazing growth by hyperscalers (the two boutique firms in Seattle), the market is keenly watching what Oracle has in store.

Here are my take-aways from the event.

1. Cloud FOMO: Oracle is investing heavily in its datacenter footprint and expects to have 36 regions by the end of the year, with a datacenter opening every 23 days. It claims it will have more regions than AWS by the end of 2020.

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This is turning out to be a common trend among hyperscalers and cloud vendors, creating an asset bubble. Capital spending is at an all-time high, as the exhibit below shows. Will this create further price wars and overcapacity in the market? Only time will tell.

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2. Doubling down on data: Oracle announced a slew of initiatives aimed at infusing data and, to a lesser extent, AI across its offering stack:

    • Expanded DataFox’s data pool across AI and managed data. Oracle acquired DataFox in 2018 because of its sizable data assets covering ~2.8 million public and private businesses to enable predictive decision making. Now, DataFox natively integrates across the Oracle SaaS stack, sourcing over a billion data points annually to improve the data quality of Eloqua and Sales Cloud as well as third-party applications.
    • Launched a new Oracle Cloud Data Science Platform to build and deploy AI and ML models.
    • Expanded its Autonomous Database offering to support the integration of algorithms within databases and added new ML capabilities, with support for Python and automated ML.

3. Ecosystem bets in a multi-cloud world are crucial: Oracle is now sharpening its focus on partnerships and the ecosystem to compete in the multi-cloud environment – this is on the back of its Azure and VMware partnerships. With Microsoft Azure, it announced a new interconnect facility based in Amsterdam. Because Amsterdam is a crucial European datacenter location and hub for Oracle, this facility will help companies in the region share cross-application data and move on-premise workloads to the cloud, according to Oracle.

4. Cloud interoperability – are we there yet?: With Google Anthos and Azure Arc, interoperability is back. While the partnership with Azure did highlight some degree of interoperability progress, I didn’t see enough. This is likely a prickly concern for enterprises as cloud vendors start erecting their own walled fortresses, hindering true interoperability. We have opined on cloud interoperability before, and it’s going to be a key issue for the ecosystem to solve over the next 18-24 months, especially as the cloud-native conversations gather momentum.

5. The dawn of the new CEO mindset: One of the highlights of the event was a client showcase. The CEO of Italian coffee major, illycaffè, Massimiliano Pogliani, spoke to Oracle CEO Safra Catz about a critical aspect of modern business – the changing role of the new CEO. He described it as being the activator of collective intelligence across the organization’s human capital. He also described his company’s mission around three themes: good (product obsession), goodness (sustainability), and beauty (the experience.) We are seeing greater recognition by some forward-looking CEOs of their purpose and impact, including Novartis CEO Vas’ focus on the journey to unboss and Salesforce chief Marc Benioff’s call for a new type of capitalism.

 The cloud landscape is becoming very interesting as all segments attack the opportunity: hyperscalers continue to invest in expanding their datacenter footprint; enterprise platform providers are focusing on verticalization (e.g., ServiceNow under Bill, Salesforce acquiring Vlocity); and system integrators are trying to keep up with the massive implementation opportunity while battling a talent shortage. We are going to see share shifts as these changes gather steam.

From an enterprise perspective, the cloud conversation is now veering toward journey-in-the-cloud versus journey-to-the-cloud, aka lift-and-shift. This shift is bringing total cost of ownership (TCO) back into the picture. We are in for interesting times ahead.

What’s your take on today’s cloud wars? Please share your thoughts with me at [email protected].

Digital Experience Platforms: An Idea Whose Time Has Come | Blog

In today’s increasingly competitive environment, enterprises need to package their offerings with superior and memorable experiences to remain relevant. They need to streamline their efforts to deliver a unified and seamless digital experience to stakeholders. While they’ve attempted to achieve this with point solutions such as CRM platforms, campaign management tools, and other experience management solutions, their disjointed and incompatible portfolios have often created more problems than solutions.

Enter the Digital Experience Platform (DXP)

In response to an obvious need, vendors including Adobe, IBM, Oracle, and Salesforce have created a digital experience platform or DXP. We define a DXP as a comprehensive suite of solutions enabling enterprises to deliver a content-rich, stakeholder-driven digital experience (DX), encompassing all digital touchpoints.

Its main function is to digitally enable the three pillars or modules of DX – content management, brand engagement, and digital e-commerce – so enterprises can create business value through a well-structured and unified experience.

The Digital Experience Platform (DXP)

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  • Content management: A DXP offers various services across the content management lifecycle, such as dynamic templates for designers, a library of frequently used content, and widgets and tools for reviewing and publishing content to multiple platforms, which help enterprises effectively and centrally manage the content they publish.
  • Brand engagement: A DXP unlocks numerous aspects of brand engagement across functions including marketing, advertising, sales, and experience management. With capabilities like end-to-end campaign automation and drag-and-drop tools to design customer journey maps, a DXP enables experience-as-a-service for enterprises.
  • Digital e-commerce: A DXP activates different facets of digital e-commerce with solutions like AI-enabled merchandising, visual merchandising, automated management and maintenance of product data, and central dashboards to manage all websites.

In addition, a DXP has tools to help deliver a data-driven experience across the customer experience value chain by enabling functions such as sales, marketing, merchandising, and content publishing via different modules.

Beyond the basics

Most of the DXPs in today’s market provide the same basic services. But the leading DXP providers also provide ancillary, value-add services on top. Some of the most popular are omnichannel services, API-integration, and tools for improved developer experience.

Per our recently released research report, BigTech Battle: Digital Experience Platforms (DXP) Assessment – Rise of the Digital Experience Platform, the leading players are adding more functionality to the DXP to enhance its features and functionality. For instance, they are helping make the development process less technical with the help of services such as What You See Is What You Get (WYSIWIG) interfaces, drag and drop functionality, and templates to create new experiences. This significantly reduces the creative team’s dependency on the technical team and improves the overall efficiency of the experience delivered. The top providers also have tools for end-to-end omnichannel customer journey mapping and enable the use of “win scores” to prioritize sales opportunities and probability metrics to measure the experience delivered.

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These players are also using technology to enhance the functionality of the different solutions they offer, such as AI for content creation, event-based automation (cart abandonment), and advanced analytics solutions.

Simply put, a DXP is a more efficient way for an enterprise to manage its DX. In today’s increasingly competitive market, enterprises need to leverage a platform-based approach to deliver a compelling and sticky experience.

For more insight on the DXP market and a detailed analysis of current vendors, please read our report: BigTech Battle: Digital Experience Platforms (DXP) Assessment – Rise of the Digital Experience Platform.

Please share your experiences with the digital experience platform and the overall experience ecosystem with us at [email protected] and [email protected].

Talent Deficit Takeaways from NTT Data’s “Captaining the Talent” Summit in Lisbon | Blog

Developed economies around the world (with the exception of Spain’s) are facing generational low levels of unemployment. While that’s good news for workers, it’s a serious talent deficit problem for employers. How bad is it?

In 2018, the number of unemployed persons per job opening in the U.S. fell below the benchmark of one. In plain speak, that means there are more job openings out there than the number of relevant available people to fill them.

Unemployment in US

And the Beveridge curve tells essentially the same story in Europe.

Against this backdrop, I was very interested in hearing what solutions and ideas were presented at NTT DATA’s “Captaining the Talent” Summit in Lisbon last month. (Full disclosure – NTT DATA arranged my travel for the event.) The event featured a range of speakers from all walks of life – from the former captain of New Zealand’s national rugby union team to British perfumer Jo Malone to TED Speaker and eminent neuroscientist Mariano Sigman.

The common thread among all the sessions was the question on every senior executive and leader’s mind: how to navigate the choppy waters in a talent-deficit world.

Key Takeaways

  • Actively addressing FOMO is vital to talent acquisition and retention: Today’s millennial and younger employees have constant FOMO, or fear of missing out. They often question whether they’re working on the most exciting project, if their firm is solving for the toughest problems out there, and if they themselves are doing the most they can. To acquire and retain these employees, you need to go beyond workplace “gimmicks” like massages, pet-friendly offices, flex hours, and daily ice cream. Your employees need to be invested your company’s mission, and you need to make a genuine effort to make them feel empowered, not just rewarded.
  • Bridging the physical environment must be seamless: Most enterprises fixate on the consumer experience, but often forget that any digital transformation has to be valuable to their employees as well. Employees face friction in executing daily work tasks as they grapple with legacy systems. As their expectations from work and the workplace change, enterprises need to ensure they embrace consumerization of IT and help employees feel more productive and engaged through internal digitalization – from admin/expense/travel tools to more effective knowledge management, trainings, etc. At Everest Group, we firmly believe that true digital transformation has to essentially move from Customer Experience to Stakeholder Experience, enabling significant improvement for four personas – customers, employees, partners, and society.
  • Unlocking true motivation needs reimagined incentives: Traditional rewards and recognition mechanisms are limited in the impact they create, and a one-size-fits-all approach no longer cuts it. Intriguing science behind motivation and its dynamics suggest that you need to work more creatively to enable channels that allow your employees to tap into their search for meaning, e.g., creating a difference in the world they live in. And you must embrace more intelligence and empathy, enabled by technology, to provide a more personalized experience for your employees, like offering them customized learning avenues and opportunities.
  • Enabling true diversity goes beyond a checklist: More often than not, the diversity and inclusion conversation comes down to virtue signaling…a board seat here, a person of color there. But true diversity has to include diversity of thought as well. Successful organizations democratize idea incubation so that even new/young employees feel empowered to contribute and create impact through avenues such as hackathons and internal crowdsourcing initiatives.

Closing Thoughts

What we face today is a talent deficit of a unique nature. In the mature markets, there isn’t enough talent to go around, while the future of work in a global technology environment brings a significant reskilling/upskilling challenge for traditional offshore/nearshore geographies. The common underpinning theme is the irrevocable shift in the profile of people that work in this environment. Talent is changing across the life cycle – from sourcing to retention to relevance – requiring a rethink of traditional talent management practices. How we respond is going to create an irrevocable difference in the future of work.

Dassault Systèmes Acquires Medidata to Ride the Platform Wave in Life Sciences | Blog

When news first hit in late April 2019 of speculation around Medidata Solutions being acquired by Dassault Systèmes – a France-based software company that develops 3D design, 3D digital mock-up, and product lifecycle management software – Medidata’s stock value went soaring. The deal immediately made sense. The fact that Dassault Systèmes was looking to ramp up its offerings for life sciences companies made Medidata, which we recently recognized as a Leader and Star Performer in our PEAK Matrix™ for Clinical Trials Products 2019, an attractive acquisition prospect.

 

Everest Group Life Sciences Clinical Trials Products PEAK Matrix Assessment 2019

 

Fast forward to June 2019 and the deal is done. The all-cash transaction is valued at US$5.8 billion and represents Dassault Systèmes’ largest acquisition to date. It will finance the deal with a €1 billion loan, a €3 billion bridge-to-loan facility, and available cash. It’s the first time the French company has resorted to external funding, which only accentuates how much it prizes Medidata as an asset.

The strategic intent behind the deal

Dassault Systèmes began focusing on the life sciences market a few years ago with the vision to improve the penetration of digital technologies in the industry. Its last life sciences-focused acquisition was that of Accelrys in 2014, which helped Dassault Systèmes establish BIOVIA, its brand for biological, chemical, and materials modeling and simulation, research, and open collaborative discovery.

With the acquisition of Medidata Solutions, Dassault Systèmes makes a statement that it is serious about achieving this vision. The acquisition will make life sciences Dassault Systèmes’ second largest industry focus, after transportation and mobility. Medidata grew at a CAGR of 17 percent during 2015-2018, driven by its dominance in electronic data capture through its flagship product, Rave.

Dassault Systèmes prides itself on its 3DEXPERIENCE platform, which is meant to enhance digital collaboration in complex sectors like aerospace, infrastructure, and mobility. Dassault Systèmes now looks to extend these benefits to life sciences. By adding Medidata’s clinical and commercial offerings to its own 3D experience expertise, Dassault Systèmes aims to create a platform that offers complete digital continuity to the life sciences industry, addressing complex challenges such as personalized medicine and patient-centric experiences.

Unpacking the companies’ synergies

Synergy area

Dassault Systèmes

Medidata Solutions

Value proposition

 

Design, modeling, and visualization software, with leading capabilities for the aerospace, defense, and consumer goods industries. Dassault Systèmes now aims to bolster its life sciences division

 

Life sciences clinical and commercial software pure-play, with deep domain expertise and strong consulting pedigree

Coverage of the life sciences value chain

 

Drug discovery, manufacturing, and supply chain Clinical and commercial operations

Key technology offerings

Design, modeling, simulation, and virtualization software Data capture, real world evidence, advanced analytics, AI-driven insights, and operations management

Customers

Customers are mostly in the aerospace, defense, and consumer goods industries

Sizable number of European life sciences clients, including medical devices firms such as Medtronic, FEops, Novo Nordisk, and Kavo Dental

1,300 life sciences companies, three quarters of which are in America. This includes most of the Big Pharma and CRO firms

Product coverage across the value chain

Product coverage across the value chain

Key opportunities

Dassault Systèmes is sitting on a lot of cash. This will give Medidata the financial muscle it needs to make the right investments in talent and technology to compete with the big players like Oracle Health Sciences and Accenture.

The integration of capabilities could lead to the creation of a unique end-to-end platform for life sciences across the entire value chain. Medidata has clinical and commercial capabilities, and Dassault Systèmes has offerings for drug discovery, manufacturing, and supply chain.

Potential risks

It’s not clear how the integration of Medidata’s products with the broader 3DEXPERIENCE platform will take place. It could be a challenge linking Medidata’s clinical trials and commercial operations solutions with Dassault Systèmes’ design and visualization offerings.

Dassault Systèmes’ has diversified offerings across several industries. In the long run, this may dilute Medidata’s brand image as a leader and focused player for clinical trials technology.

Closing thoughts

The life sciences industry needs aggressive digitalization to realize efficiency gains and reduce the lengthy timelines between drug conceptualization and drugs reaching the market. We’ve seen technology vendors coming up with integrated solutions for clinical trials to help enhance trial efficiency. While the need for a platform is evident, technical debt and change management issues hinder this platform-centric vision. This is a high growth market, which is likely to attract more interest in the coming 18-24 months. More SaaS companies will need to pivot to the platform conversation to scale and remain relevant. We will be tracking this space closely.

The Amazon Web Services Juggernaut: Observations from the AWS Summit India 2019 | Blog

Amazon Web Services’ (AWS) Summit in Mumbai last week made it clear that its trifecta juggernaut in customer centricity, long-term thinking, and innovation is giving other public cloud vendors a run for their money.

Here are our key takeaways for AWS clients, partners, and the ecosystem.

Solid growth momentum

Sustaining a growth rate in the mid-teens is a herculean task for most multi billion-dollar businesses. But AWS has an annual run rate of US$31 billion, and clocked-in a 41 percent Y/Y growth rate, underpinned by millions of monthly active customers and tens of thousands of AWS Partner Network (APN) partners around the globe.

Deep focus on the ecosystem

Much of this momentum is due to AWS’ heavy focus on developing a global footprint of partners to help enterprises migrate and transform their workloads. Taking a cautious and guided approach to partner segmentation, it not only broke out its Consulting and Technology partners, but also segmented its Consulting Partners into five principal categories: Global SIs and Influencers, National SIs, Born-in-the-Cloud, Distributors, and Hosters. This is helping AWS establish specific innovation and support agendas for its partners to grow.

AWS growth momentum – underpinned by expansive global partner network

This partner ecosystem focus is increasingly enabling enterprises to achieve real business value through the cloud, including top-line/bottom-line growth, additional RoI, lower cost of operations, and higher application developer productivity. And AWS’ dedicated focus on articulating business benefits such as operational agility, operational resilience, and talent productivity, along with the underlying tenets of the cloud economy, has helped it onboard more enterprises.

Cloud convenience will need an accelerated Outposts push

Enterprises are looking for cloud convenience, which often manifests in location-agnostic (on-premise or on cloud) access to AWS cloud services. To bring native AWS services, infrastructure, and operating models to virtually any datacenter, co-location space, or on-premises facility, the company launched AWS Outposts at its 2018 re:Invent conference. Outposts is expected to go live by H2 2019 for Indian customers. Despite this, AWS is trailing in this front, playing catch-up to Microsoft Azure, which launched Azure Stack almost a year ago (and previewed a version in 2015.) At the same time, AWS will have to educate its enterprise clients and ease their apprehensions about vendor lock-in challenges while leveraging integrated hardware and software packages.

Helping clients avoid consumption fatigue

Shifting the focus toward AWS’ innovation agenda, the public cloud vendor launched over 1,800 services and features in 2018. As enterprises grapple with the rising number of tools and technologies at their disposal – which can lead to consumption fatigue – this can manifest in different ways:

  • Large enterprises will often depend on system integrators to help them unlock value out of latest technologies – AWS’ success in furthering the partner ecosystem will be crucial here
  • For SMBs, AWS will build on its touchpoints with the segment, something that Microsoft and Google already enjoy because of their respective enterprise productivity suites.

What’s next on AWS’ innovation front

There seemed to be a lack of development on the quantum or high-performance computing front. Client conversations suggested that they are struggling to figure out the right use cases depending on whether they need more compute and/or data – something AWS can help educate them on.

Gazing into the enterprise cloud future

We do not believe enterprises will move their entire estates to the public cloud. Indeed, as they transition to the cloud, we expect the future to be decidedly hybrid, i.e., a mix of on-premise and public, as this approach will allow every organization to choose where each application should reside based on its unique needs.

To deliver on this hybrid need, product vendors are inking partnerships with virtualization software companies. And the services and product line-ups are piquing enterprises’ curiosity. To help stake its claim in this hybrid space, AWS Outposts does have a VMware Cloud option, which is AWS’ hardware with the same configurations but using VMware’s Software Defined Data Center (SDDC) stack running on EC2 bare-metal. But it will need to educate the marketplace to accelerate adoption.

The bottom line is that although AWS is facing some challenges on the competitor front – with Azure and a reinvigorated Google Cloud under Thomas Kurian – it is well positioned on account of a solid growth platform and ecosystem leverage, which it demonstrated at the 2019 India Summit.

The Rise of BigTech in Healthcare | Blog

A couple of weeks ago, my colleague and partner-in-crime, Abhishek Singh recapped his experience at HIMSS 2019, healthcare IT’s annual jamboree.

Now, I want to expand on one of them – how BigTech firms are homing in on healthcare (got to love almost-alliteration). Here are my key observations on how different BigTech firms are approaching the business of healthcare, based on what I saw and heard at HIMSS.

Google

The focus for the Mountain View-based company has been to develop a secure and compliant cloud platform, which has tools unique to the healthcare industry. It claims that the Google Cloud Healthcare API has significant momentum in the industry to really bring silos of data together. It has enabled FHIR integration as well. The general release of the platform is still sometime away though. On a lighter note, while Google is using AI to solve complex and messy problems in a range of industries, its HIMSS booth had a demo to help address the much dreaded fax plague in healthcare, allowing users to fax medical information to Google Drive, the company’s cloud storage service (as someone on Twitter pointed out), following Eric Schmidt’s observation that healthcare is still in the “stone age.”

Microsoft

The company, reinvigorated under Nadella’s leadership, is taking a smart approach to healthcare across two levers:

  • Utilizing broader technology bets with healthcare-specific use cases. It launched a service to help healthcare firms move large sets of patient data to its cloud (Azure) and connect with other systems. This is one of several attempts to connect patient health records in the cloud. It announced the availability of its healthcare chatbot in the Azure marketplace, as well as the launch of an API for FHIR in Azure
  • Leveraging a partner ecosystem. Microsoft is taking an ecosystem-based approach to accelerate healthcare adoption, using partners such as CitiusTech, DXC Technology, and Philips, to develop more cases on its technology offerings.

Oracle Health Sciences

Oracle is taking a dual approach – doubling down on a focused play in healthcare data and analytics, as well connecting with its life sciences focus – as the ecosystem converges. It announced integration between Quorum’s institutional review board (IRB) and goBalto, its recent acquisition focused on clinical trial site selection and activation. And it introduced Connected Care, a telehealth and remote patient monitoring tool initially aimed at improving stroke outcomes. Its other big focus was on Oracle ERP Cloud as the single stop solution to help unify a health system’s enterprise systems (HR, financial, supply chain) on an integrated platform.

Salesforce

Salesforce has bet big on verticalizing its CRM strengths to help deliver personalized patient experiences (CRM as the gateway to digital transformation.) It already has a bunch of use cases across the care lifecycle. Its focus is now on leveraging a partner network and adding more healthcare-centric functionality to its core set of products. For instance, it launched a feature to add social determinants of health information to patient profiles to improve outcomes. It also announced Fairview Health Services as a client deploying Health Cloud, Marketing Cloud, Heroku, and MuleSoft to centralize and manage patient touchpoints. Building from its progress at HIMSS18, where it collaborated with Cerner, Salesforce also announced new healthcare solutions using Health Cloud, built by consulting partners such as Accenture, Deloitte Consulting LLP’s Deloitte Digital, Huron, IQVIA, Silverline, Simplus and Torrent Consulting.

Uber and Lyft

Both ride sharing companies had a presence on the exhibition floor, and Lyft made a major splash and co-sponsored the opening reception as well. The common use cases they’re both addressing are around social determinants of health. An example is Lyft’s partnership with Allscripts (Lyft Concierge) to help patients get to appointments and lead healthier lives.

Ever since Amazon formally announced its move to shake things up in healthcare, the industry has been abuzz with an equal mix of anticipation and trepidation. While many are fixated on the idea that Amazon will take a Customer Experience (CX) route to healthcare, similar to its ecommerce disruption, I think this belief is misplaced. Why?

As we noted in our earlier analysis, Amazon is best placed to solve more messy problems in healthcare. Not many people realize how Amazon is already playing a role in reshaping healthcare’s supply issues. For instance, more than half of the products available on the Amazon Business platform are medical commodities such as syringes, IV bags, forceps, etc. It is targeting healthcare organization’s tail spend (typically 20 percent), which is focused on purchasing, pricing, suppliers, etc. This plays into its deep strengths in warehousing, distribution, and logistics.

At the end of the day, Amazon is just one of the growing number of technology companies looking to tap into the $3.4 trillion U.S. healthcare market. If HIMSS19 was any indication, BigTech is only going to accelerate its focus on solving key issues, with an ecosystem-driven approach. My bet for HIMSS20 is for someone showcasing curated Netflix content for improving mental health. One can always dream!

SAP Accelerates Experience Pivot with a $8 billion Bet on Qualtrics | Sherpas in Blue Shirts

Just days before 16-year old Qualtrics was due to launch its IPO, SAP announced its acquisition of the customer experience management company in an attempt to bolster its CRM portfolio. Qualtrics, one of the most anticipated tech IPOs of the year, and oversubscribed 13 times due to investor demand, adds to SAP’s arsenal of cloud-based software vendor acquisitions.

Delving into SAP’s Strategic Intent

Seeking transformational opportunities, the acquisition will allow SAP to sit atop the experience economy through the leverage of “X-data” (experience data) and “O-data” (operational data). Moreover, the acquisition will enable SAP to cash in on a rather untapped area that brings together customer, employee, product, and brand feedback to deliver a holistic and seamless customer experience.

SAP had multiple reasons to acquire Qualtrics:

  • First, it combines Qualtrics’ experience data collection system with SAP’s expertise in slicing and dicing operational data
  • Second, it sits conveniently within SAP’s overarching strategy to push C/4 HANA, its cloud-based sales and marketing suite.

SAP’s acquisition history makes it clear it seeks to achieve transformative growth by bolting in capabilities from the companies it acquires. It has garnered a fine reputation when it comes to onboarding acquired companies and realizing increasing gains out of the existing mutual synergies. Its unrelenting focuses on product portfolio/roadmap alignment, cultural integration, and GTM with acquired companies have been commendable.

Here is a look at its past cloud-based software company acquisitions:

SAP blog

SAP has taken a debt to finance the Qualtrics acquisition, making it imperative to show business gains from the move. With Qualtrics on board, it seems SAP’s ambitious cloud growth target (€8.2-8.7 billion by 2020) will receive a shot in the arm. However, the acquisition is expected to close by H1 2019, implying that the investors will have to wait to see returns. Moreover, SAP’s stock price in the past 12 months has dropped by 10.6 percent versus the S&P 500 Index rise of 3.4 percent. While SAP has seen revenue growth, its bottom-line results have been disappointing with a contraction in operating margins (cloud revenues have grown but tend to have a lower margin profile in the beginning.) This is likely to be further exacerbated given the enterprise multiple for this deal.

SAP Blog image 2

Fighting the Age-old Enterprise Challenge

Having said that, SAP sits in a solid location to win the war against the age-old enterprise conundrum of integrating back-, middle-, and front-office operations and recognize the operational linkages between the functions. Qualtrics’ experience management platform, known for its predictive modeling capabilities, generating real-time insights, and decentralizing the decision-making process, will certainly augment SAP’s value proposition and messaging for its C/4 HANA sales and marketing cloud. In fact, the mutual synergies between the two companies might put SAP at an equal footing with Salesforce in the CRM space.

While it may seem that SAP has arrived a bit early to the party, given that customer experience management is still a niche area, the market’s expected growth rate and SAP’s timely acquisition decision may allow it to leap-frog IBM and CA Technologies (now acquired by Broadcom), the current leaders in the space. Indeed, over the last couple of years, Qualtrics has pivoted beyond survey and other banal customer sentiment analysis methods to create a SaaS suite capable of:

  • Analyzing experience data to derive insights about employees, business partners, and end-customers
  • Democratizing and unifying analytics across the back-, middle-, and front-office operations
  • Delivering more proactive and predictive insights to alleviate experience inadequacy.

Cognitive Meets Customer Experience Management – The Road Ahead

SAP’s Intelligent Enterprise strategic tenet, enabled by its intelligent cloud suite (S/4 HANA, Fiori), digital platform (SAP HANA, SAP Data Hub, SAP Cloud Platform), and intelligent systems (SAP Leonardo, SAP Analytics Cloud), has allowed customers to embed cutting edge technologies – conversational AI, ML foundation, and cloud platform for blockchain. SAP is already working towards the combination of machine learning and natural language query (NLQ) technology to augment human intelligence, with a vision to drive business agility. Embedding the experience management suite within next-generation Intelligent Enterprise tenet will play a key role in achieving the exponential growth targets by 2020.

Please share your thoughts on this acquisition with us at: [email protected] and [email protected].

The Future of Life Sciences Clinical Trials: Take-Aways from Medidata NEXT | Sherpas in Blue Shirts

Now in its 12th year, Medidata NEXT brings together several thousand life sciences professionals across seven global events to discuss the future of clinical trials. Here are my take-aways from the New York City edition, which occurred over two days in late October.

  1. Clinical + commercial data is the future: As the life sciences industry moves toward outcome-led business models, companies can unlock significant value by collapsing the silos between clinical and R&D and sales and marketing. Bringing together commercial and clinical / R&D data allows them to generate more meaningful insights into patient behavior and preferences, and spark the discovery process for newer therapies and approaches. A number of life sciences firms have already begun tapping into this powerful data combination. For example, Medidata earlier this year acquired SHYFT Analytics, the maker of a cloud data analytics platform specifically designed for the pharma and biotech industries. And IQVIA started down this path with the OCE platform after the merger of Quintiles and IMS and subsequent company renaming.
  2. Platforms are becoming mainstream: Everybody’s jumping on the platform bandwagon. Examples include the Accenture-AWS-Merck research platform, ZS’s REVO Analytics, and Medidata’s Intelligent Platform for Life Sciences. The hallmarks of these and other platforms in this space are the combination of products and services in a utility-based construct, where customers can plug in and plug out based on need. Customers at Medidata’s NEXT event voiced a pressing need for technology partners to underwrite the risk of innovation by orchestrating the ecosystem (aka guaranteed outcomes).
  3. Moving from real world data to real world evidence: Life sciences enterprises are starting with low hanging fruit such as EHR-to-EDC integration through various sites to unlock value from data. To truly move the needle from data to evidence, and thereby help life sciences firms navigate outcome-based contracts, ecosystem participants – including enterprises, technology vendors, service providers, data providers, intermediaries/brokers, and patient advocacy groups – need to put more skin in the game and focus on end outcomes, such as patient experience, satisfaction, and clinical/health impact.
  4. CROs Are A-Changing: The CRO market is at an interesting inflection point as the traditional model has a limited runway for growth. The IQVIA model of combining clinical and commercial expertise is a sign of things to come, and CROs are doubling down on technology adoption to navigate this change. Another example is Medidata’s announcement of a five-year agreement with Pharm-Olam to unify operational systems to support study executions on the Medidata Cloud, providing a single, unified view of clinical trials to all stakeholders.
  5. Crowdsourcing clinical trials – are we there yet?: The industry is abuzz about the possibilities resulting from developments that aim to advance patient engagement, such as ePRO and advancements through Apple Watch and ResearchKit. While a crowdsourced clinical trial is some time away, several important steps have already been taken to help bring patients to the center of the clinical trial design and process, and assume greater ownership of their health outcomes. One particularly interesting use case is that, following GSK’s and its partners’ Patient Rheumatoid Arthritis Data (PARADE) study, Apple has obtained FDA clearance (not approval) to investigate the feasibility of using a mobile app to recruit and enroll patients in a study and gain insights about rheumatoid arthritis in a real-world setting.
  6. Accelerating cloud adoption: While life sciences firms have been putting an increasing number of enterprise applications and data on the cloud, they have been hesitant to do so with R&D and clinical data. However, the recently announced Accenture-Merck-AWS research platform signaled a changing wave of initiatives. For example, AWS and Google’s and Microsoft’s cloud platforms were prominently present at Medidata NEXT. We expect these lead steers in the market to accelerate the cloud movement in the life sciences industry.
  7. Partnerships are key to unlocking value in the digital ecosystem: Life sciences firms need to forge closer bonds with payers, providers, patient advocacy groups, etc., to truly bring the vision of a converged ecosystem to life. Several prime examples of this shift have emerged in the past year or so. One is the outcome-based contract struck between Amgen and healthcare services company Harvard Pilgrim for the cholesterol drug Repatha. Another is Medidata’s work with the Biden Cancer Initiative (BCI) community to coordinate a consortium of clients to share IoT data in order to analyze determinants such as quality of life and disease progression.
  8. The pivot to patient-centricity hinges on trust orchestration: While life sciences firms have been trying to become more patient-centric, there’s a sizable trust deficit with their core constituents. In fact, as the following exhibit illustrates, the pharmaceutical industry ranks at the bottom of the perception scale among adults in the U.S., second only to the federal government. As life sciences companies collaborate more closely with payers and providers, the ecosystem needs to reaffirm trust with patients and other stakeholders. Trust assurance is going to be key for the future of a converging healthcare ecosystem. In this context, how life sciences firms coordinate care with payers and providers will be crucial in reinstituting trust with patients and enabling care coordination.

The Future of Life Sciences Clinical Trials Take Aways from Medidata NEXT business sector blog image

The life sciences industry stands at the cusp of change. To truly move towards a patient-centric and outcome-based ecosystem, stakeholders need to collapse the traditional stack, break through silos, and embrace collaboration.

Market stakeholders, including Medidata, have made an interesting set of investments, on a platform of growth, in these areas.

Check back here often to see our analysis of how various life sciences stakeholders are collaborating to coordinate care and assure patient outcomes, ultimately to advance the future of life sciences.

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