To respond to changing technologies and markets, the company has had to take a fresh look at its business, he explained to me in a recent telephone interview.
Instead of looking at products, we started looking at journeys.
For example, he explained, Philips markets professional healthcare equipment as well as various consumer products that are often used in the course of a pregnancy and early life of a newborn child. By connecting up the data from those various devices, the new business has an opportunity to provide better outcomes, for example by identifying or treating potential problems earlier, or by avoiding unnecessary procedures. But it has not historically gathered and analyzed that data. Doing so successfully requires a radical rethink of how it brings together data and relationships, said Tas.
In order to enable that journey — help pregnant women with their pregnancy and raise a healthy child — we needed to start connecting results.
When you start peeling the onion, you very quickly come to the conclusion that, in order to truly make these products connected, you need to:
- enable the data flow,
- deal with identities, and
- enable a very different model of engagement.
You can apply that to every journey and you see that it's not a seamless journey today, its largely disconnected.
So the new business unit — with several thousand employees worldwide and an established software business at its heart — has been formed to discover and enable those journeys. Tas believes a digitally connected proposition that treats patients as individuals will offer people better outcomes in a time of transformation for the healthcare industry.
To me it's one of the last industries that hasn't consumerized. That's happening now very rapidly.
If you look at clinical data and processes, there will be forces that will prompt the industry to be changed and will prompt new players to come up with new business models that may disintermediate some of the existing players.
Philips aims to get ahead of that innovation curve rather than be left behind by it, he added.
If you have an industry that's fragmented and there's no transparency in cost and outcomes, someone who [provides transparency] will find themselves as a big challenger.
You can resist it or you can jump right in and be an agent of change. We opted for the latter.
We hope we can create a healthier environment at way lower cost than we do it today.
Although much of the healthcare market is organized around acute care — that is, responding when things go badly wrong — Philips realized that 70 percent of the costs of healthcare are spent on long-term, chronic conditions such as heart failure, cancer or dementia. Instead of waiting for those chronic conditions to give rise to some acute crisis, the company figures it makes more sense to monitor individuals to forestall any acute episodes. As Tas explains:
If we start monitoring people from home, can we reduce stays in hospital, visits to the emergency room, and create better outcomes? Studies have found that hospital readmissions and acute admissions significantly reduce if you monitor at home.
Digital healthcare platform
To make that vision a reality, care providers have to be able to look at the full clinical context of the individual — not just the current monitoring data but also their health records and genomic data. So the company is building the Philips HealthSuite digital platform as a data repository for all that information.
In an example from cancer treatment, analysis of a biopsy combined with genomic data might suggest various treatment options, each with a different set of side effects. It then becomes possible to engage with the individual patient to evaluate the options, says Tas.
What you can see here is that we're starting to connect these dots which were never connected ... It only works if you combine that data and make it actionable.
We want to make sure that everybody in that journey understands what the ultimate outcomes have to be and how you can guide every participant to understand how we can optimize to get a better result for the patient.
That's why we created this digital platform — this will be the core infrastructure for every product that we bring to market going forward.
But it means a big culture change for healthcare practitioners, many of whose revenues derive from carrying out acute care procedures. Focusing care on reducing the number of acute incidents requires a complete change in their business model. Tas concedes that only a few pioneers have yet embraced this shift.
Our experience so far is it's a real big change. At the moment you get reimbursed the more procedures you do. It becomes completely different when you say, 'Let's look at the thousand patients you have with chronic heart failure, let's see how we can optimise the care — we pay you for the population.' That's a huge change.
Joining up the Internet of Things
Before Philips can shake up the healthcare industry, it has to complete its own digital transformation. The first step towards packaging up patient-specific propositions from different parts of Philips — especially to cater for adding in loyalty discounts or linking up to other members of a patient's family — has meant putting in place a rock-solid, shared platform for identity management and master data consistency. This is a prequisite for everything from making sure products and invoices get delivered to the right address, through to ensuring privacy rules relating to patient data are respected.
This is a fundamental first step to get right for any consumer-focused strategy based on wiring up Internet-of-Things connections to previously isolated devices, says Tas.
It'll never work unless you have consistency in connections.
Most organizations have islands of automation. If they then start connecting their devices, they then create a new stack — only to find they have too many stacks and there's no way to bring these together.
The data not only has to be internally consistent, it also has to link reliably into third-party systems, he noted:
It even gets more complex if from our system we monitor someone from home — but if something happens, we alert the care provider and they send an ambulance.
The way you used to run your company and your IT are no longer applicable.
Taking charge of digital
For CIOs wondering about the future of their role, the example set by Tas illustrates how to seize control of a destiny that's far from certain. He believes CIOs have to be more than merely a source of expertise on digital technologies and their implementation — the entire business has to realize how much is at stake.
If you're not aware of digital and how to manage and control your digital destiny, you may find yourself surprised in a couple of years.
You can't just be a guide to the business. I think every business needs to be, not just digital savvy, but digital needs to be a core part of their strategy and their core capabilities. To get things started you may need a cheerleader but ultimately if a business doesn't embrace this I think they've got to start again.
You have to know how many software people you have, and who is your software leader, If you cannot name names then apparently you don't have the leadership capabilities.
Tas, who has been a frequent customer participant in Salesforce keynotes over the past couple of years, recommends using cloud resources to speed up the pace of progress.
There's no way you can run all your technology yourself. We're using Salesforce for what they're good at, which is allowing people to collaborate. We're running our own complex data workflow [but] we're not running it in our own datacentre. We're not even using our own devices everywhere. We've got to craft a solution that makes a huge difference in outcomes and we'll pull in the relevant technology to do that.
We could opt to do it ourselves but it would take another five years to get there. Speed is really important to create the right business outcomes.
Some fascinating pointers here on how to seize the potential of digital transformation:
- Business leaders must have the imagination to see the potential impact of digital processes and software automation on their industry.
- Digital transformation is not something to be handed off to the CIO or a 'digital champion' — it must be led from the top of the business.
- Don't take the status quo for granted; assess the market as it is and be prepared to imagine new business models that can serve it better.
- Cut across product divisions to explore new ways of joining up and enriching the customer experience.
- Be ready to share data throughout the business.
- Smart devices yield little information of use unless you know who's using them.
- If you want to correlate personal data across multiple products and devices, you're going to need a robust central identity management system to match the data to the right people.
- Delivering joined-up services means being able to integrate third-party providers into your customer engagement processes.
- Time is of the essence; doing it now in the cloud trumps waiting until you've assembled all the resources and skills to do it yourself.
Text updated 26th November to amend specific business metrics.