The Vender Viewpoint

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The Vender Viewpoint

• Sidney A Goldblatt, MD
• Co-Founder Former CEO Sunquest Information
  Systems, Inc.

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Agenda

• What is the Essence of the LIS Business?
• What are the priorities of the vender?
• How can the client influence the vender?
• SWOTs Analysis of the LIS marketplace
• The future of the LIS

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The Essence of the LIS Business

• For a supermarket, it is this much shelf space.
• Essense of the LIS business is solutions for the
  laboratorys large problems
• Understanding the problems
• Problems sized by economic importance
• Solutions prioritized by adoption curve dynamics

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The Essence of the LIS Business

• Big Ticket Item
• Long Sales Cycle
• Lengthy Installation Intensive Training
• Annual Maintenance Enhancements
• Large armory of unused functionality that
  creating a market for post-installation training
  and consultation
• Instrument and IT product interfaces

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The Essence of the LIS Business

• Is it razors and razor blades?
• High cost of switching

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To succeed in influencing the Vender.

• You should know what venders want from you

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Vender PrioritiesWhat Venders Want

• Robust market
• Winning Products
• Loyal Clients
• Dedicated Employees
• Sustainable Profit from Operations
• Strong Balance Sheet
• Visionary Management

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Robust Market

• Building a new product takes much time and
  treasure
• A robust market is a market of mainstream buyers
• An old saying at IBM
• You can sell 20 of any product
• Remember the Adoption Curve

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The Adoption Curve
Becoming standard of care patient guidelines
established and applied. Reimbursement
established with major players
Devices available FDA approved reimbursement
not wide spread. Trials focused on patient mgmt
Beta and early production models available not
FDA approved
Accepted Standard
The Vender Viewpoint
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The Adoption Curve
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The Adoption Curve
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Aberrations in Adoption
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But Sometimes there is a Chasm

• Between Early Adopters and Pragmatists

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Crossing the Chasm
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Crossing the Chasm
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Strategies for Crossing the Chasm
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Crossing the Chasm
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Winning Products

• Participant in a strong market
• Consensus Adopters (Inside the Tornado)
• 1 or 2 in market share
• Competitive Edge (Wide Moat)
• High Value-Proposition Products
• Low Defect Rates
• Well Designed Maintainable Products

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OvercomingEngineering Constraints

• Historic Constraints in the Development Platform
• Migration Hazards
• Case Studies MedLab, CHC
• The Multi-Hospital Challenge
• Y2K
• Character cell to GUI
• Web enablement
• Few technical constraints remain for mainstream
  LIS functionality

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Loyal Clients

• Satisfied Clients
• Interactive Clients
• Thought-Leader Clients
• Innovative Clients
• Successful Clients
• Product Champions
• Credit-Worthy Financially Strong

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Dedicated Employees

• Skilled participants in a Learning Organization
• Well paid and satisfied
• Team Workers
• Proud of their Work Product
• Continuing Improvement
• Embracing Lean Six Sigma
• Embrace the Larger Mission

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Sustainable Profit from Operations

• Profitable on the original sale
• Profitable in the maintenance phase
• Pricing Power
• Alternative sources for all dependencies
• Alternatives for purchased services
• Alternatives for necessary materials
• Sole-source suppliers must be super stable
  (probably a myth)

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Financial SecurityStrong Balance Sheet

• Low Debt
• Plenty of Cash on Hand
• Insured against Liabilities
• Well controlled contractual obligations
• Sufficiently insured against errors omissions
• Contingency Plans for all Hazards
• Regulatory Risk Management (FDA, CLIA)
• Monitor Business Cycle Payer Upheavals
• Anticipate Disruptive Technologies

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But in an Imperfect World

• Compromise is sometimes necessary
• And that is a problem for Client Vender alike.
• Managing Compromise is the essence of Management
• Effective compromise defines the client / vender
  relationship

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Negotiating the Software Contract

• Minding your Ts Cs
• Discounting sales and service
• Delivery (Live Date) penalties
• Guaranteed performance (response time)
• Growth Capacity
• Special functionality
• Limitation of liability consequential damages
• Source code escrow
• Effective compromise requires effective
  leadership.on both sides

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Visionary Management

• Leadership for Dedicated Employees
• Leadership for Winning Products
• Leadership for Contract Discipline
• Leadership for Risk Management
• Leadership for Fiscal Discipline
• Leadership to Compromise Wisely

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How can the client influence the vender?
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Be a knowledgeable User

• Strive to understand important functionality
• Know operational functionality as well as the
  venders trainer
• Identify ways to improve operational work-flow
• Document system failure in detail
• Perform all user maintenance faithfully

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Be a Demanding Client

• Be Intolerant of poor service
• Escalate the complaint
• Defer site visits
• Delay payment for major unresolved problems
• Catalogue complaints to KLAS other surveys
• Careful about tantrums and scolding
• You may be labeled the client from Hell

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Be an Innovative Client

• Enlist your entire staff to catalogue ideas for
  improvement, both large and small
• Actively participate in the User Group and
  Special Interest Group activities
• Consider new business models that require new
  functionality and communicate them to the vender
  CEO.
• You now become the Ideal Client

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The Ideal Client deserves the Ideal Vender
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SWOTs Analysis of the LIS Marketplace
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SWOTs Analysis of the LIS Marketplace

• Strengths
• Mature functionality engineering platforms
• Generally satisfied clients
• Stable systems
• High cost of switching venders
• Weaknesses
• Old Engineering Platforms
• Complex maintenance in complex laboratory
  business environments
• High cost of switching venders

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SWOTs Analysis of the LIS Marketplace

• Threats
• Merger and Acquisition in the LIS marketplace
• Change in the laboratory business model
• Explosive demand for physician office EMR
  interfaces
• Opportunities
• All the threats become another venders
  opportunity
• More powerful systems on modern platforms which
  are easier and less costly to maintain

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The Future of the LIS
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Future LIS

• It will be driven by changes in the medical
  business model
• Some emerging technologies may be the catalyst
• Movement from Text to Data
• Virtual Microscopy
• Computer aided diagnosis
• The next iteration of total laboratory automation
• The maturation of molecular diagnosis

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Whatever it is, it must Cross the Chasm