Healthcare IT Organizations are conservative, understandably so, when it comes to adopting and deploying new architectures, and the journey to the cloud is no exception. We’ve overcome a tremendous amount of inertia and objections — Is my data safe? What about clinical data? Who owns my data if it’s in the cloud? Does the platform meet our HIPAA regulatory and compliance needs? — and now find ourselves as an industry starting to carefully consider the utility and usefulness of the cloud for Healthcare IT.
In order to help further the conversation, I’d like to share a few interesting observations from recent interactions I’ve had with customers and prospects — my goal is to generate a conversation on the basis of these observations. Which ring true for your business? Are there other considerations and criteria that your organization prioritizes when making decisions about the cloud for Healthcare?
Pure Storage recently held two focus groups with executives where cloudification was discussed. In the first session, at Pure’s annual Customer Advisory Board in San Francisco, senior IT executives from across various industries — Healthcare, Banking and Finance, Insurance and SaaS Providers – had a lively debate around Cloud Strategy. The second session was an Executive Focus Group at CHIME 2016 in Scottsdale AZ, where we were joined by senior Healthcare IT Executives from some of the largest Healthcare organizations in the country. In both groups, most attendees had titles like CEO, CIO, CTO, SVP and VP.
Here are some highlights:
- Public? Private? Hybrid? This one was unanimous — an overwhelming majority of the participants across the various cohorts agreed that a Hybrid Cloud strategy was the right approach for them. Databases and latency-sensitive / performance-sensitive / high-bandwidth / and even trade secret-sensitive applications were best suited for on-premise installations, while other applications might be better suited to run in the cloud as an extension of their datacenter.
- Cloud-first strategy. Almost unanimously, executives indicated that their organization had voiced a “Cloud-first strategy”. Selecting SaaS applications / platforms for next-generation applications such as Salesforce, Office365, Workday, and so on, seems to be de rigueur. Furthermore, some folks commented that they are now more likely to rule out vendors who do not have a Cloud offering, regardless of whether or not they decide to deploy these on-premise vs. in the cloud as SaaS.
- Reverse-cloud-migration strategy. This was an novel theme from a few participants with M&A activity; as they bring newly acquired business units, applications, and platforms into the overall organizational umbrella, they often follow a reverse-cloud-migration strategy. They are effectively bringing workloads back from the cloud to instead install and run on-premise. Some of this makes intuitive sense — as part of consolidation, standardization is key. However, part of this drive was a realization that certain workloads and applications were better suited to running on-premise, especially in the consolidated organization.
- Healthcare IT — the new driving force for successful and rapid M&A. As health system consolidation continues, Healthcare IT Executives increasingly play a trusted business partner role as the parent organization grows their overall business, by IT-enabling rapid M&A. It goes something like this: a Healthcare Organization that has a world-class Gastrointestinal capability and has specialized in the latest advances in Fluoroscopy is able to white label the technology for this speciality and provide this as a paid service to regional hospitals and clinics. The acquisition allows the larger organization to establish a firm foothold in regional hospitals and clinics, and paves the way for further expansion into, and subsequent acquisition of, said hospitals and clinics. Of course, the devil is in the details, and the EMR integration, ubiquitous patient / population access, access to images in the regional clinics, and other issues still need ironing out, but this is an interesting way for IT to help bolster the M&A activities for organizations.
- Abandoning the physicality of Healthcare IT. This metaphor resonated with the CHIME 2016 Focus Group. The physicality of Healthcare (clinics, beds, hospitals) has long been a hallmark of patient care, but do we need to perpetuate the past by continuing to build out bigger and badder datacenters to house and run our Healthcare IT workloads? Or can we break the shackles and configure these offerings as services? Are we ready for ITaaS? Can we consume IT infrastructure services in a way that will allow us to move past the “physicality of Healthcare IT”?
- The great CapEx vs. OpEx debate. This topic was a toss-up, with some organizations clearly preferring CapEx, while others wholly in the OpEx-is-best camp. Reasons ranged from “our CFO’s office prefers a more traditional amortization schedule for fixed assets” (i.e., favoring CapEx) to “in order to stay lean and timely, we’re looking to move to a more flexible pay-per-use, utility-based model” (i.e., leaning towards OpEx).
- Embracing the cloud to save costs. Many of the executives we met with were operating under the premise that the cloud can help their organization save costs when measured out over a 7+ year TCO, but that this was not a blanket rule across the board. Instead, I see organizations and teams who are becoming very savvy and sophisticated in terms of validating the right kinds of applications and workloads before making the call on cloud vs. on-premise. The option to convert to OpEx was also a driver here.
- Abandoning the cloud to save costs. As an unlikely corollary to #7, many executives stated they prefer to continue to spend CapEx to build out their on-premise infrastructure rather than incur the apparent (and sometimes unacknowledged) costs of the cloud. The hidden costs of the cloud that were a concern included data migration and access costs ($/GB into the cloud, $/GB out from the cloud), as well as the opportunity costs associated with things like:
- Data access workflow impediments — unpredictable data access times depending on the temperature and nature of data access.
- Application maturity to deal with multi-tiered and deeply (cloud) archived data — for example, not all applications might have an appropriate set of API and framework to deal with slower / older data.
- Inadequate training and expectations — healthcare providers, as we know, are demanding of their data and relentless in increasing productivity.
- Networking infrastructure costs to provide adequate networking interconnects between a Healthcare IT organization’s datacenter and the cloud. These could easily land in the several thousands to tens-of-thousands of dollars in OpEx per month — just for the networking interconnects to the cloud. Compared to already built-out CLEC or ILEC fiber plants, the incremental year-on-year costs can be significant, providing an economic argument against the cloud in some cases.
Which, if any, of these themes resonate with your strategies? What would you add to round out the discussion?
In subsequent posts, I’ll cover adjacent cloud-related topics such as:
- A balanced view of TCO: cloud vs. on-premise
- On-premise deployment: an enabler for M&A and enterprise growth?
- The vertical power of SaaS