This is the topic of a really interesting LinkedIn discussion: Will EHR Vendors Become Service and Consulting Companies?
I think this is a really great question and one that’s worthy of serious consideration. I think we’ve seen this happen time and time again in the IT industry. Some of the best examples are IBM, HP, and Dell. As their IT hardware and software becomes a “commodity” then they leverage their relationships and domain expertise to change into a service and consulting company. Usually this also involves them spending their extra cash to acquire the leading consulting company (or companies) in the industry as well.
In some ways we’re already seeing this happen. Epic announced a consulting division of their company in order to retain their senior staff. Cerner’s always made a good chunk of their money from consulting services.
Of course, thanks to meaningful use incentive money and some still massive upgrade costs, EHR vendors haven’t needed to shift their business model to a service and consulting model yet. There’s still plenty of money to be made just selling the software, training, etc.
What will also be interesting to watch is whether the large service and consulting companies like Accenture, IBM, HP, Dell, etc. will eat up the market share so that the EHR companies don’t have as much of an opportunity to grow a service and consulting business. No doubt it will be a big dog fight. Not to mention many of the current EHR consulting companies (although, you could see many of these getting acquired by the EHR vendors).
I guess my short answer to this question is: In the short term, we’re not likely to see a massive shift towards services and consulting, but long term it’s very likely to happen. What are your thoughts?
I agree that we will not see a shift to consulting by vendors in the short term. These vendors would have to spend money to onboard the experts needed for customizing workflow and meeting stakeholder needs. Fortunately, there are some excellent consulting firms out there – it’s just up to the organizations to recognize that these services are imperative for EHR success.
And go-live isn’t the goal, it’s the starting line. Support and ongoing training are key.
I agree that in the long term there will be a shift of EHR vendors becoming the services and consulting companies. even today we can see small scale EHR vendors providing consultancy to their existing as well as new customers.
If one looks at other industries that employ large applications and the software vendors that provide the apps, this is the typical next step. It is hard for the companies to ignore the potential revenue. On the other hand the financial markets dislike this or get confused: are you a software products company or are you a services provider? If the services revenue is attractive, expect less expensive, more nimble competitors (probably composed of people like EPIC is trying to retain) will enter the marketplace, eventually eroding the software providers revenue and they will switch back to a pure software play. Then, after awhile, the software product companies will begin entering the consulting and services …
and so on.
I believe this is a possibility in the long run when EHR usability is at its peak. Right now, companies and users are more focused on to understanding and achieving the desired results of an EHR; however, once the market will reach at a saturation level, EHR vendors will have to switch to consultation approach for better business.