IBM chose a regular meeting of its Data Governance Council to launch a series of now-renamed Information Governance services and products and announce a definitive agreement to acquire Initiate Systems. A privately held software vendor based in Chicago, Illinois, Initiate stands as IBM’s 30th acquisition in the information and analytics sector. Initiate’s data integrity software for information sharing is designed to help health care clients work more intelligently and efficiently by supporting timely access to patient and clinical data. It also enables governments to share client information across multiple agencies to better serve citizens.
This post was co-authored by Merv Adrian and Charles King of PUND-IT. It’s a little more narrative than my usual posts (and longer), and is reproduced here in the form it appeared in the PUND-IT newsletter.
According to IBM, the Initiate purchase highlights the increasing focus of health care organizations and governments on improving health and safety services while simultaneously increasing efficiency and cost-effectiveness. In the company’s view, safety is an underlying requirement for all of these efforts, which rely upon secure access to, as well as both management and delivery of trusted, accurate information.
IBM believes Initiate’s software and industry expertise will play a critical role in offering health care, government and clients in other vertical industries comprehensive solutions for gathering, managing and making use of their information in a timely and efficient manner. In addition, with the number of transformational information management projects accelerating around the globe, IBM considers Initiate a critical component in its pursuit of and success in these market opportunities
This all looks good on paper and sounded even better in person but is IBM’s assessment of Initiate’s current and potential value really on the mark? To determine that, it helps to know a bit more about just what Initiate is up to and how its customers leverage the company’s technologies. Initiate generally refers to its solutions as a comprehensive master data management (MDM) platform and offers products designed to address the specific needs of systems administrators and data governance professionals (or “stewards” in Initiate’s parlance).
The company has also focused a great deal of effort in developing health care information exchange (HIE) and enterprise master patient exchange (EMPI) solutions, which can scale across millions of individual patients and providers and billions of records in large, complex health care integrated delivery networks (HIDNs), health care maintenance organizations (HMOs), health care provider and payer systems and large-scale retail pharmacies. In addition, Initiate’s recent acquisition of Accenx, which developed a hosted EMPI service, was pursued in order to help the company to scale its offerings down for small clinics and even individual physicians.
In essence, Initiate’s platform can be used to build comprehensive indexes or registries of client (including patients and providers) information which identifies what the data is and where it resides. It also supports best practice solutions for information access and management designed to respect client privacy and comply with numerous regulatory requirements. In addition, since its solutions can be deployed across existing, often disparate information environments without greatly disturbing them, Initiate offers viable, cost-effective alternatives to the “rip and replace” solutions promoted by some vendors.
Initiate’s solutions work well in real-world situations, according to its customers, including some extremely heavy hitters in health care. Its EMPI solutions support the U.S. Department of Veterans’ Affairs and the Pan-Canadian National Health Records – Canada’s national health care system. Initiate HIDN customers include the University of Pittsburgh Medical Center and Baylor Health Care System, and it supports health care payers and providers, such as Humana, Wellpoint, Children’s’ Hospital and Sutter Health. Retail pharmacies leveraging Initiate include CVS, Kroger, Walgreen’s and WalMart.
Initiate has also successfully used its MDM platform in adjacent industries, including insurance, larger retailers, banking and finance and the public sector. The acquisition will offer IBM numerous opportunities to strategically leverage these technologies. From the outset, the company’s notable global reach will amplify Initiate’s ability to reach nations outside its English-speaking base, and almost immediately, beyond the substantially North American focus it currently has.
Changing the MDM Game — From Platform to Solution
The deal also addresses a highly practical if often unstated issue: with global economies still recovering or on the ropes, most enterprises continue to be extremely conservative in their outlooks and spending habits. As a result, MDM solutions, despite their success in the past few years, have often struggled to find an audience with the budget to invest in a horizontal solution which appeals far more to architects than business executives. In the Data Governance Council event that preceded the Initiate announcement, long-standing customers of IBM’s technologies in this area discussed and debated the challenges of MDM related to business justification, documenting value and demonstrating ROI.
The Council, an IBM-sponsored initiative, which has delivered models and best practices based on the experience of the dozens of stewardship-focused customers, is dominated by very large companies whose IT organizations enjoy substantial executive support for architectural initiatives. At this year’s meeting, the Council agreed to refresh its four-year-old Data Governance Maturity model and rename it to address the shift in focus from data to information.
But even these relatively successful stewards candidly acknowledged the challenges within their own organizations of getting the buy-in and cultural transformation required. The MDM market is certainly healthy; it has grown in recent years, and more and more firms are targeting MDM as a tactical solution to perceived problems. But as one Council member noted, given the scope and complexity of the problem, sometimes the solution is temporary, and as little as 18 months later, the data is as bad as it was before the fix was applied, and the money seems wasted.
IBM’s solution: identify a specific target market that is critically dependent on information, struggles with its quality and desperately needs an effective, standards-based exchange outside individual institutional walls. Then deliver a comprehensive, architected solution that tackles information quality across all the stakeholders and processes. Health care admirably fits the bill and will be the focus, IBM asserts, of literally hundreds of billions of dollars in global government-mandated spending in the next decade. Initiate’s CEO Bill Conroy noted that his company simply “did not have the scale to pursue all these opportunities.”
IBM has shifted the focus here from assembling a horizontal technology infrastructure platform to delivering a business-focused solution designed to address the specific challenges of a particular vertical market. In this, IBM’s strategy also mirrors its parallel efforts in business analytics, where increasingly, the assembly of services-led solutions that combine software and hardware componentry with industry models and business process automation are allowing the company to promise measurable time to value in conversations with conservative business buyers.
As an example of the Initiate model’s potential, IBM pointed to an existing joint customer, the University of Pittsburgh Medical Center, where the integration and rationalization of 100 systems, and 4950 interfaces led to $124M savings over 3 years. IBM claimed that “hunting and gathering” for information had been reduced by 82%. Perhaps most important, it led to a 50% reduction in patients not ready for the operating room when it was time to take action.
Rounding Out the Platform Components
IBM is not ignoring the horizontal technology portfolio, however. Gaps still remain, and a key one has been the ability to effectively apply a systems management perspective to what the company is now calling the Information Supply Chain. The work of IBM and the Board has led to the creation of a maturity model that informs continuing build-out of the instrumentation of that chain. IBM already had another announcement ready for the event before the Initiate deal, which may have been accelerated by Informatica’s acquisition of MDM player Siperian the prior week.
The new InfoSphere Business Information Monitor, in what IBM called a Q1 “Preview,” tackles the problem of monitoring the Information Supply Chain end-to-end. With the aid of a server-based architecture, it instruments the various pieces of the chain, from information feeds to databases to extraction programs across business processes and reporting and analysis constructs. It tracks critical stages and identifies when one fails — such as an extract job that doesn’t deliver information which is time-dependent, calling into question the accuracy of downstream reports. Software agents, some of which are already in early tests, communicate with the server to collect and process this information and support remediation.
There is much to do, and IBM acknowledges that these are early days — the Infosphere Business Information Monitor itself will need substantial development over the next few years. Nonetheless, a key threshold has been crossed here in recognizing that information is a corporate asset to be managed with tools that operate in a style similar to those used to track system, network and storage health, and, one hopes, will ultimately be converged with those offerings.
Both the Initiate deal and the other events and announcements at the Data Governance Council event demonstrate that IBM’s journey of software portfolio consolidation and integration continues; it is a formidable undertaking and much progress has been made. It is to IBM’s credit that it successfully continues to up the ante, tackling ever-higher levels of abstraction to better define current and upcoming customer solutions even as it grinds through the hard challenges of integrating its ever-growing list of acquisitions.
Disclosures: IBM is a client of IT Market Strategy.
For a very solid analysis of the Initiate acquisition, see Ray Wang’s blog post here.