Tag: digital

21 Months to Brexit and the Case for Digital | Sherpas in Blue Shirts

The United Kingdom (UK) and the European Union (EU) officials have finally agreed on a Brexit transition deal. While some aspects of the agreement still need further work, the principles for the period are clear:

  1. The transition period will run to the end of December 2020. This means that the UK will have to abide by EU rules until then, but it will be able to negotiate new trade deals during that period
  2. The UK must treat EU citizens coming to the country during the transition period the same as those who already are residing there
  3. There will be no border between Northern Ireland (NI) and the Republic of Ireland with the back stop of NI remaining in the EU customs union even after Brexit, if no other solution can be found to a borderless relationship between the two

The Road to Brexit is Digital

Following this announcement, organizations now have a clear timetable to prepare for Brexit, allowing them to plan and define an internal roadmap. One of the key factors when planning is to build with agility in mind. If you’re an executive creating the plan, you’ll want to make sure that the business remains flexible to allow for adjustments to the remaining unknowns.

Digital is a big enabler of agility, and in the run up to Brexit, it is more important than ever that organizations invest in it. Boosting spending on digital solutions and automation will help them adapt and adopt to new market pressures, changing regulatory frameworks, and an uncertain labour pool because of the likelihood of many EU workers deciding to return to their home countries after Brexit.

The ways that digital and automation technologies help organizations in times of uncertainty include:

  • Reduce costs and increase process efficiency while maintaining service quality
  • Decrease hiring and training needs while increasing flexibility to handle fluctuating demand
  • Increase speed to market while decreasing the cost of launching new products and services
  • Empower staff to do more and maintain productivity during a time of change
  • Eliminate capital investment in infrastructure by migrating to the cloud
  • Satisfy new trade requirements and custom checks at EU borders or with new trade partners

Digital Skills will be High in Demand

 

Digital Skills will be High in Demand

 

Digital Skills will be High in Demand

Brexit will increase the demand for digital skills as companies prepare for handling new trade and customs requirements. The same goes for the public sector in both the UK and EU member states. For example, they will need a fair bit of digitalization on their borders to deal with the new paradigm of tracking immigration and trade, and handling customs requirements electronically using technology, such as RFID, IoT, and automation, to achieve the goals set out by political agreements while at the same time not creating hard borders.

Meeting Demand for Digital Skills and Services

Investing and tapping into digital skills is a must. This can take the form of internal training and development, recruitment, and contracting outside the organization. In turn, this likely will drive demand for digital consulting and implementation services.

On the supply-side, there are opportunities for service providers and consultancies to provide Brexit-specific services, such as Brexit Competency Centres (BCC) and products. We may well see Brexit specific packaged offerings emerge as well as Brexit specific robots from RPA and AI automation vendors. I expect these will be provided in extended robot libraries or bot-stores.

Northern Ireland – the New UK Gateway to EU

While the approach is unclear, there is certainty that NI will continue to have borderless access to the EU. This would make NI the ideal location for UK-based companies to place new production sites or delivery centres while still maintaining the bulk of business operations in the UK.

The road to Brexit has become clearer this week – but this is only the beginning. Businesses and governments must start detailed planning and preparation for Brexit. In this regard, digital solutions are a key enabler of both business continuity and change and must be on every C-level executive’s agenda.

The Digital Health Unicorns Are Proving Their Value | Sherpas in Blue Shirts

In August 2016, Everest Group published an analysis of hot digital health startups that were disrupting the status quo of the industry landscape. It ended becoming a unicorn-spotting analysis…cut to February 2018, and by healthcare and life sciences organizations have acquired three — Flatiron Health, NantHealth, Practice Fusion — and among the top 25 players. While we speak, there are multiple conversations around the others as investor interest peaks.

HC startups Blog

What are the key business reasons behind these three acquisitions?

  • Flatiron Health by Roche: Flatiron Health has an end-to-end cloud-based EHR platform (OncoEMR) exclusive for oncology that curates the evidence-based drug development process. As oncology is one of Roche’s major focus areas, this is extremely valuable for the company while devising cancer drugs. No wonder Roche agreed to a US$1.9 billion acquisition price, in addition to its existing stake in the company. Flatiron Health also has a OncoAnalytics module that leverages big data analytics for better diagnosis and treatment.
  • NantHealth by Allscripts: NantHealth is a cloud-based healthcare firm that aims to improve patient outcomes and personalized treatment. Its proprietary learning system, CLINICS, utilizes machine learning and cognitive computing to provide information for better care delivery, tools and insights for efficient care financing, and wellness management programs for enhanced patient engagement. NantHealth fits well within Allscripts’ ambitious plan to build a healthcare company that drives innovation in patient care and improves evidence-based research in R&D processes.
  • Practice Fusion by Allscripts: Practice Fusion is a web-based cloud EHR platform that also provides patient engagement and practice management assistance. Unlike traditional EHR platforms, Practice Fusion provides a simple and intuitive user interface. Beyond these capabilities, this acquisition also adds ~30,000 ambulatory sites to Allscripts’ client base in the hard-to-crack independent physician practices segment.

What’s working with these healthcare startup acquisitions

Here’s what is common among these recent acquisitions:

  1. Data is the new oil: The real asset is access to critical healthcare data. Companies that convert the data into actionable insights, resulting in better patient care, emerge as clear winners.
  2. Uberization of everything: Healthcare enterprises have struggled with huge fixed investments in EHR platforms, on-premise infrastructure, etc. This has created a deep dent in their profitability numbers. Because Flatiron Health, NantHealth, and PracticeFusion and are cloud-based companies, there are no more fixed costs, everything is demand-based. Clearly, the as-a-service model has become the choice for healthcare firms.
  3. Care – of, by, and for the people: Accelerated R&D cycles, augmented physician capabilities, and improved precision in diagnosis and treatment all ultimately result in improved patient care, enhanced clinical outcomes, and boosted patient engagement. All three of these acquired companies focus on improving at least one of those factors. And they all allow the acquiring companies’ patients to take center stage.

Digital moves from pilot to program

At a broader industry level, these acquisitions mirror the change in sentiment around digital initiatives. Our research shows signs that enterprises are moving beyond proof of concept to proof of value. While digital, as a market, lends itself to smaller deals with focuses on design thinking, first principles problem solving, and business model redesign, we see these initiatives now scaling up.

Digital HC blog
As the digital marketplace matures, investment activity is only going to intensify. While early adopters are reaping rich rewards, valuations and competition for viable targets are likely to skyrocket. It’s clear that healthcare enterprises see significant business value, and are willing to put their money where their mouth is. Stay tuned to this space for more analysis of what’s happening in the healthcare and digital spaces.

Dig-It-All Enterprise: Dressing up Legacy Technology for Digital Won’t Work Anymore | Sherpas in Blue Shirts

I have long been a proponent of valuing the legacy environment, and I am still a great believer in legacy technologies. But despite the huge investments enterprises have made in their legacy environment, even though they’re desperately trying to use bolt-ons and lift and shift to avoid going the last mile, and regardless of their belief that their core business functions shouldn’t be disrupted, time is running out for piecemeal digital transformation where old systems are dressed up to support new initiatives. It simply won’t work any more. Why?

Digital enterprises need different operating models

Enterprises are finally realizing that there’s dissonance between the execution rhythm of a digital business and its legacy technology. Although they can spend millions to make the legacy technology run the treadmill to keep up with digital transformation, the enabling processes and people skills will never catch up. For this, enterprises will have to invest in fundamentally different operating models in the way technology is created and consumed, the way in which people are hired and reskilled, and the way in which organizational culture is evolving towards speed and agility.

Legacy technology is breeding legacy people

Our research suggests that 80 percent of modernization initiatives are simply lift and shift to newer infrastructure. In those that impact applications, less than 30 percent of the code is upgraded. Therefore, most technology shops within enterprises take comfort in the fact that their business can never move out of specific legacy technologies. They believe the applications and processes are so intertwined and complex that the business will never have the courage, or the budget, to transform it. This makes them lethargic, resulting in a large mass of people without incentive to innovate. Such established blind rules need to be challenged. Enterprises need to set examples that everything is on the table and a candidate for transformation. The transformation may be phased, but it will be done for sure. This will keep people on their toes, and incentivize them to upskill themselves and drive better outcomes for the business.

Legacy technology is simply not up to the challenge

Enterprises are realizing that there is a limit to which they can patch their technologies to beautify them for the digital world. Our research suggests that every one to two years enterprises realize their mistakes as the refurbished legacy technology becomes legacy again. They are now believing they will either have to take the hard route of going the last mile in transforming, or shut out their legacy technology and start from a blank slate. This is a difficult conundrum, as 60 percent of enterprises lack a strong digital vision and, therefore, are confused about their legacy technology future.

Organizations that continue to believe they can put band-aids on their legacy technology and call it digital have lessons to learn from Digital Pinnacle Enterprises. Our research suggests that these businesses, which are deriving meaningful benefits of their digital initiatives, are 36 percent more mature in adopting digital technologies than their peers. These enterprises understand the limitation legacy technologies put on their business. Though they realize they cannot get rid of the legacy technology overnight, they also understand they have to move fast or get outdone in the market.

The courageous enterprises that understand that legacy technology is hard to change, is built on monolithic architectures, requires humongous investment to run, and doesn’t allow the business the flexibility to adapt to market demand, and are willing to “Dig-It-All” for digital, will succeed in the long run.

What has your experience been with legacy technologies in digital transformation initiatives? It would be great to hear your views, whether good, bad, or ugly. Please do share with me at [email protected].

IT modernization: Fool’s Gold for Transformation and Gainshare | Sherpas in Blue Shirts

Contracting exemplars for digital transformation are not to be found in IT modernization deals

If your enterprise is expecting digital transformation from a service provider and the incentive in the contract is based on cost savings, you’re likely barking up the wrong deal tree. Why? Because it likely signals that the provider will be approaching it as a legacy IT system modernization engagement, rather than a true digital transformation.

And there’s a big difference between the two, as Everest Group’s Founder and CEO, Peter Bendor-Samuel, talked about in a recent Forbes blog post. He explained that while big IT deals may contain transformational elements such as moving legacy infrastructure to the cloud or DevOps adoption, they are IT modernization programs, not digital transformation, unless they are motivated by fundamental business model change.

Don’t get me wrong: although IT modernization programs are important and big, they are not transformational. And in a competitive environment where experience and reputation count, enterprises need to be able to spot the differences between reference projects driven by the need to modernize or integrate infrastructure and those that genuinely transform their business models.

Here’s some food for thought

At an analyst briefing a few days ago, a senior executive from a global service provider described its firm’s recently completed multi-year transformation project for a major European banking client. I asked him afterwards about the delivery incentives for contract that was inked back in 2014. Had he, the service provider, been incentivized on business model transformation, or just cost take-out? Was there any element of shared risk or outcome-based incentive?

He was delightfully candid: to his knowledge, there isn’t a single major ITO contract in Europe or North America in which a service provider has accepted a gainshare incentive, and his case was no different. Programs of this sort that are being completed now are all about modernization. They are cost reduction exercises, albeit on a huge scale, but they are not business transformation.

Indeed, exemplars of shared risk incentives are few and far between. Even those in the public domain, including IBM’s 10-year, $700 million contract with Etihad in 2015, and ACS/Atos’s 10-year $500 million contract with Allscripts Healthcare in 2011—which had significant transformation scope such as data center consolidation or private cloud implementation—may have shined with the fool’s gold of transformation, as they were likely driven and funded by cost reduction, not business model transformation.

There is one public domain deal that is a genuine transformation exemplar: IBM’s 10-year $1 billion deal with Banorte in Mexico, which started in 2013. It is a top-down, long-term vision, driven by a strategy to deliver value through a customer-centric focus, rather than a requirement to upgrade creaking technology and save cost. The original press release hints at shared risk, and a joint venture-like governance model, in the way it was to oversee the project and measure progress.

But Banorte is an exception. In Everest Group’s own experience of analyzing dozens of ITO contracts over the past three years, gainshare constructs are exceedingly rare in the digital transformation space. And the evidence base of completed digital business transformations, as opposed to completed IT modernizations, is pretty much non-existent.

To gain deeper insights into digital transformation contracting incentives, we will be conducting extensive research among enterprises over the next few months to investigate the mix of output versus outcome-based pricing metrics. Keep your eyes on this space to read more about how the best enterprises are evolving their outsourcing models in this new digital frontier.

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