I had not followed the Enterprise Resource Planning (ERP) software market closely, but I remember everyone declaring victory for the all-in-one megasuite products not so long ago. It became obvious that the best-of-breed approach had failed, mostly due to the difficulty and cost of integrating disparate systems. The integrated, single-vendor systems emerged as the best practice approach, despite the obvious risks of putting all your eggs in one basket.
So I was surprised to find a new term - "Postmodern ERP", coined by Gartner Group recently. In their research paper "Postmodern ERP Is a Vital Foundation for Digital Business”, Gartner clearly states:
"Traditional monolithic ERP solutions using a closed business architecture were designed to support the process improvement needs of the past (such as transactional efficiency and data integrity). They cannot enable the open and agile needs of business to succeed in a digital economy that demands new products and services and the ability to respond to new business moments."
The paper explains that fully integrated systems and a coherent architecture are a thing of the past and that relevance, innovation, ease of use and agility are more important going forward.
Gartner is right. We can already see it in the ERP market as new players, mostly cloud-based or hybrid offerings, make inroads against the established megasuite vendors by delivering functional innovation through frequent upgrades at substantially lower cost. The newcomers spent years serving the low-end of the market and their products don’t yet offer all the bells and whistles of the megasuites. But they offer enough to be a very attractive alternative. And they are rapidly getting better, moving along the disruptive trajectories defined by prof. Clayton Christensen from Harvard Business School in his work on “Disruptive Innovation”.
Along the same lines, I can remember another disruption as incumbents Wordperfect, Lotus 1-2-3 and Notes as well as dBase were replaced by a suite named Microsoft Office. Today, it is still the reigning product but we can see clear signs of newcomers providing better, simpler and cheaper, mostly cloud based options such as GMail, Google Docs, Prezi and many others.
It seems the pattern is clear. From best of breed to integrated (mega)suite to a new world of innovative, agile, mostly cloud based and multivendor solutions. This is what Gartner calls “Postmodern”.
According to Christensen, disruption like this becomes possible when the established players start exceeding the requirements and expectations of their customers, providing only sustaining innovation - i.e. adding more and more features to their products. This is what was happening in the personal productivity space with the Office products. Similarly, the ERP market today has well defined requirements and this allows the newcomers to disrupt, meeting the base expectations and adding innovation and agility while lowering costs.
The logical question when we look at the EHR market is: When is this going to happen? When will we start seeing the “Postmodern EHR”?
In fact, we can already see the signs. Cloud based solutions like Practice Fusion and dr. Chrono are eating a lot of the low end, small practice provider market. While progress in larger providers and hospitals has been slower, many of them worldwide are currently desperately seeking solutions that can meet their requirements, are easier to deploy and maintain and are within budget.
The high end of the market can still afford to buy the megasuites. But it is indicative that even for providers with a fully executed implementation, the megasuite typically does not represent more that half of their application portfolio. This other half could be legacy systems, but increasingly it is innovative solutions for research, patient engagement, population health management, analytics or a particular departmental system. Because, as one CIO of such a provider told me, even the largest megasuite vendors cannot deliver all the functionality his users need. And even if they did, a major upgrade of such a system is usually a multiyear project.
Historically, we know that the EHR market trails the ERP market in its maturity. Given the recent advances in adoption particularly due to MU funding in the US, my personal estimate is that the difference is now approximately 5 years. What is clear to me is that the EHR will follow the ERP market dynamics into the Postmodern era.
My next blog piece will talk about the diverse, multi-vendor environment (a Postmodern EHR), and what is required to ensure success where best of breed approaches have previously failed. Stay tuned.