IT and Market Dynamics The (R)Evolution of Technology

1. IT and Market Dynamics The (R)Evolution of Technology Class 6: ISM

2. The Imaging Healthcare Problem • 450 million imaging studies a year X $35 life time cost per study = $15 billion cost • 50% of imaging studies not available to physicians when needed • 15% of imaging studies permanently lost • 4% expected annual increase of imaging studies Class 6: ISM

3. Hospital IS (Billing, Patient data) Hospital IS (Billing, Patient data) Radiology X-Ray Referring Physician Radiologist 50% not online 15% lost Patient Radiology X-Ray Referring Physician Radiologist Integration & Storage Patient Information Flows: The “Enterprise” Problem Pre Post Class 6: ISM

4. Information Products: New Economies of Scale and Scope • Ease of versioning: different people can receive it in different forms – new economies of scope • Ease of large scale distribution: low cost of production and logistics – new economies of scale Class 6: ISM

5. The Failure of PACS • High cost (only radiologists in large hospitals could afford it) • Many IT integration issues with existing IT • Lots of new IT infrastructure needed, such as information storage systems • New technology risk (e.g. for small hospitals) Class 6: ISM

6. Why would MI say ”no” • Focus on current market, radiologists in large hospitals. • A small market (physicians in small hospitals) is too small for a large company • Focus on improving current PACS technology • Focus on increasing services to current market (more services = more $) • Fear of cannibalizing their current market Class 6: ISM

7. What “Wise” People Said… • “I think there is a world market for maybe five computers” Thomas Watson, chairman of IBM, 1943 • “There is no reason anyone would want a computer in their home” Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977 • “The horse is here to stay. The automobile is only a novelty, a fad” The President of Michigan Savings Bank telling Ford’s lawyer not to invest in the Ford Company, 1903 Class 6: ISM

8. Stakeholders Class 6: ISM

9. Stentor’s Market Entry Approach • “Attack from below” • Serve the less demanding physicians (“enterprise market”) in small hospitals • Avoid competition – it’s a virgin space • Low-cost/Low-risk proposition • ASP model: pay per use, rent not buy • Installed at zero cost over the internet • 30 days free trial option • Hardware, if needed, provided at cost • Minimize IT integration problems • Use existing IT with minimal changes • Consider moving in the more demanding market of radiologists later, using revenues from the entry market Class 6: ISM

10. Entering the high-end market: Key Challenges • Technology: • Can iSyntax technology move up-market? • Service: • Stentor ranks lowest in market (implementation, support, monitoring, etc) • People: • Many engineers, poor product understanding by operations and sales people • Vision, Mission, and Culture: • A focus on Product and Technology Class 6: ISM

11. Challenge #1: Technology Improve key technologyfeatures Possible once you have the money from the initial market (physicians) to support technology improvements for the high-end market (radiologists) • Increase functionality • Achieve high technology reliability • Increase resolution performance Class 6: ISM

12. Challenges # 2+3: Service and People • Recruitment of a COO (ex-EDS manager) • Build a new services organization • Develop large IT implementation capabilities (training, testing, etc) • Provide excellent 24/7 IT monitoring, support, and maintenance • Manage technology upgrades Class 6: ISM

13. Stentor’s Organisation 2001 CEO CEO Engineering Tech Support Engineering CTO QE* Operations CTO Sales/Mktg Quality Eng Operations Class 6: ISM

14. Stentor’s Organization 2002 *QO=Quality Operations **QE=Quality Engineering ***TS = Technical Support ****SA = Strategic Alliances Class 6: ISM

15. A Clear Implementation Procedure Class 6: ISM

16. A Technology Monitoring System Class 6: ISM

17. Challenges #4: From Product to Service Centered Stentor’s Mission 2001: To deliver customer- focused, high performance, medical information solutions Stentor’s Mission 2002: To Improve Patient Care Class 6: ISM

18. Key Lessons • Technology’s evolution is shaped by the dynamics of : • The different (types of) stakeholders/users/markets • The differences in the needs and technology risk profiles of the different stakeholders • The difficulties of integrating the new technology within the current technological infrastructure • An entry strategy of new technologies: • Enter a (often new) less demanding market: “attack from below” • Provide a low cost and low risk proposition • Minimize integration issues with existing IT infrastructure • The “natural” evolution of new IT • Improve key functionality features • Move from product to service • … and (as always) the power of IT to transform healthcare through digitization: dramatic cost reduction, improved service Class 6: ISM

19. Internet, Technology, Society Adopting IT at the societal level Assessing the social IT readiness Next Class Class 6: ISM