Digital transformation has evolved well beyond the hype and has become a strategic priority for the vast majority of European organisations. Efforts to transform the way employees think, what they produce and how they operate are increasing across all industries. However, IDC’s research shows that 71 per cent of European organisations that embark on a digital transformation journey get stuck. This digital deadlock is even more prominent in the European healthcare industry, as 79 per cent of healthcare organisations in Europe are stuck in the very early stages of digital maturity.
Q: Where do you think your organisation is best positioned across the following five stages of digital maturity?
Why are healthcare organisations stuck?
The main cause for the digital deadlock is the lack of integration of digital projects. IDC’s recent Global DX Leaders Survey shows that unified digital strategies are uncommon in the healthcare industry. Sixty-one per cent of healthcare organisations are not integrating digital strategy with the enterprise strategy. This means that the approach to digital transformation is tactical and siloed; even when there is a strategy, it often focuses on short-term outcomes.
Unified digital strategies are uncommon in the healthcare industry
It is not surprising to see the vast majority of healthcare organisations are stuck, as it is difficult to accomplish a major digital transformation when efforts are divided across several silos. Therefore, the first step towards generating an enterprise-wide digital transformation is to define an integrated long-term strategy that has digital embedded, to provide alignment across all stakeholders involved in the process and drive integration across all digital initiatives in the organisation. To deliver the level of granularity needed for a successful execution, the strategy should be broken into horizons, which are composed of specific use cases.
Generating alignment with digital road maps
The best way to generate the level of alignment needed for the creation of a digital road map is for an organisation to imagine its future by focusing first on Horizon 3, and then reverse engineering it to understand what must be done in the midterm and the short term to become the organisation it wants to be. Take, for example, a large global healthcare manufacturer that would like to transform its business to deliver medical instruments as a service in Horizon 3. This will enable the organisation to provide its customers — operating room managers in hospitals — with every single instrument that surgeons need for operations on a pay-per-use basis, allowing these healthcare professionals to access innovation without a massive upfront investment.
To execute on the medical instruments-as-a-service vision, in Horizon 2 this healthcare manufacturer will have to add intelligence to its operations to enable increased speed to market and allow the rotation required in its Horizon 3, because its traditional logistics processes are not fit for the purpose. In Horizon 1, its main goal is to gain end-to-end visibility into its operations and generate a single view of the customer — that would be the foundation on which to build the capabilities to satisfy its needs in real time.
Horizon 1: Incremental innovation
Currently, this healthcare manufacturer struggles under a myriad of data silos in each of the steps of the design-to-deliver process. Thus, the focus in Horizon 1 is on integrating all systems, business applications and digital apps that underpin the different steps of the process, so as to have a single version of the truth. This will empower the manufacturer’s people with end-to-end visibility into operations and customer needs to drive cross-functional collaboration, agility and fact-based decision-making.
In this healthcare value chain, data is incredibly sensitive and, understandably, operating room managers take a very conservative approach to avoid losing a patient due to a lack of materials during surgery. This leads to very large safety stocks, which generates high inventory costs that are absorbed by patients. Consequently, generating a single version of the truth on the utilisation of the instruments will drive efficiency in the operating room and ultimately make healthcare more accessible to patients.
Horizon 2: Disruptive Innovation
After integrating the different elements of the design-to-deliver process, this medical instrument manufacturer needs to drive a higher speed to market, leveraging the power of advanced technologies. In Horizon 2, it will need to train and deploy machine learning algorithms that recommend changes in the design based on customer data and detect anomalies to improve quality control, leading to a higher level of success in surgical procedures. The supply chain will be infused with automation to accelerate the production process. Finally, connected products enable track and trace throughout the delivery and feed the core systems with real-time data on the post-delivery process. This will drive opportunities for higher levels of revenue from after-sales service and parts. Therefore, in Horizon 2, the value proposition of this digital transformation project transitions from cost reduction to the generation of new revenue streams.
Horizon 3: Business model transformation
Instruments as a service
In Horizon 3, the value chain becomes an adaptive digital workflow where different elements of the ecosystem connect to satisfy the immediate needs of the patients. The instruments-as-a-service business model leverages digital technologies to enable a seamless, real-time data flow across the manufacturer, suppliers of raw materials, sterilisation companies and hospitals to drive higher levels of success in the operating room.
This is just one example of the digital journey for a surgical instrument manufacturer, but it is important to bear in mind that various strategic priorities have emerged on the agendas of healthcare organisations as they seek to transform their business models.
Source: IDC’s Global Digital Transformation (DX) Leaders Survey. June 2018 (n = 32 European healthcare providers)
Each healthcare provider should develop a digital road map that is aligned with its strategic priorities, where Horizon 1 focuses on incremental innovation, Horizon 2 delivers disruptive innovation and Horizon 3 is a change in the business model.