Friday, 24 July 2009

Misys ‘shows and tells’

(By Anthony Miller – Friday 24th July 2009 9:30am). The Misys FY09 results analyst briefing yesterday (see Misys sticks to growth targets) turned into a bit of a ‘show and tell’, as Banking division head, Guy Warren, strutted his stuff with a demonstration of the Misys BankFusion development platform. And jolly impressive it was, too. Backed by a chorus from IBM CTO and ‘Distinguished Engineer’, Rashik Parmar, Warren showed how a bank could quickly reconfigure its lending qualification process to refer potentially ‘dodgy deals’ up the line. Misys CEO Mike Lawrie repeated the phrase ‘game changing’ several times for the benefit of the hard of hearing, though apparently these were the very words used by a top exec at one of Misys’ clients. Actually, as I said, it did look neat.

Lawrie admitted that Misys had been losing legacy BankMaster customers to Swiss rival, Temenos, though I got the impression he felt that the rot had pretty much stopped. However, BankFusion is apparently garnering interest from Misys’ Equation customers as a tool to add function rather than as a replacement. Indeed, a key part of Misys’ BankFusion strategy is to ‘surround’ existing legacy (and competitive!) products, as well as to sell its BankFusion-based Universal Banking application as a complete system to new banks. Universal Banking is already live at one client and they have a second implementation in progress. Lawrie is not expecting BankFusion/Universal Banking to generate much revenue this year though hopes that a growing order backlog will drive this business in FY11.

Allscripts-Misys CEO, Glen Tullman, was somewhat upstaged by Warren’s song and dance act, but in many ways the story he had to tell about the Healthcare division was just as captivating. You recall that Misys’ healthcare division was reformed by a sort of reverse-merger into US-listed Allscripts last year. Just last month, Misys’ sales and services chief, Eileen McPartland switched sides to become Allscripts’ COO (see Misys sales and services chief defects to partner). The focus of Tullman’s pitch was the $19b US Federal Stimulus package which promises up to a $44k hand-out to physicians who implement an electronic health record (EHR) system and can demonstrate ‘meaningful use’ (the latter term to be defined by the end of the year).

Now, regular readers will know I have been somewhat sceptical about whether a cash incentive is alone sufficient to drive mass migration to EHR (see The myth behind electronic medical records). My ‘issue’, if you want to call it that, is not that EHR is a bad thing – quite on the contrary. It’s that I suspect that implementing the IT side of EHR – which Tullman estimates will cost some $15-18k per physician – is just the tip of the iceberg. It’s the conversion of the legacy ‘paper mountain’ of medical records that will be the real challenge. The way the US stimulus package is structured leaves less money on the table for each year that passes, so physicians have a clear incentive to move sooner rather than later. Part of Allscripts’ own challenge is to get this message across to the 150k or so one-to-three man physician practices that do not have an EHR system (about 90% of that population), and then to provide the necessary implementation services to make it happen. They completely understand the mountain they have to climb and are trying to gear up for it. But matching the ramp-up in sales and implementation resources with the anticipated market demand will take both a crystal ball and inch-perfect planning.

One other observation strikes me. Isn’t it interesting that the US government’s approach to implement EHR nationwide is to fund physician’s choice. Our’s was to impose a one-size-fits-all (OK, may be ‘two sizes fit some’) solution. Which will be more successful – mandate the system or ‘empower’ the industry? I suspect I know the answer!

Oh, by the way, the numbers were quite good too, but you’ll have to read them for yourself as there’s lots of them.

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