Monday, September 29, 2008

The silver lining of financial collapse: my industry looks better

Those of us who work in Health Care IT are often asked why we can't use IT the way the finance sector uses IT.

The implication is that we're ... well ... dumb.

Which may be true.

True or note, it may be a while before anyone uses the financial sector as a good example. John Halamka says it best (emphases mine):
Life as a Healthcare CIO: The Wall Street Crisis

During the decade I've been CIO, IT operating budgets have been 2% of my organization's total budget, which is typical for the healthcare industry.

During the same period, IT budgets for the financial services industry have averaged 10% or higher.

Since 1998, I've often been told that Healthcare IT needs to take a lesson from the financial folks about doing IT right...

... Given the recent challenges of Lehman, Merrill, AIG, Washington Mutual, and others, you wonder just how effective the IT systems of these companies have been.

Of course they had great transactional systems, disaster recovery, infrastructure, and data warehouses.

However, did they have the business intelligence tools and dashboards that could alerted decision makers about the looming collapse of the industry?

Did the financial services industry have controls, risk analysis, or a memory of previous crisis - the Depression, the Japanese banking crisis, Enron/Worldcom? Was it greed, irrational expectations or too much data and not enough information that brought down these great institutions?

I'm sure many books will be written about the causes and those who are to blame.

One thing is for certain, In 2008, no one is going to tell me that healthcare IT should run as well as Lehman Brothers. I've even talked to folks in the industry who are rewriting their websites and resumes to remove historical references to their overwhelming historical successes in financial services IT..
Everyone thinks their professional domain has the greatest IT challenges.

In my case, I know that's true. [1]

[1] The hardest thing about Healthcare IT? It's embedded in a strange fusion of a market economy, soviet style central planning, and the antimatter triangle of provider, consumer and payor.


Anonymous said...

Financial sector IT spending is so high because much of the sector's IT infrastructure is used for automatic trading. IT spending in the financial sector is for things like HPC clusters that run AI-like expert trading systems which look to exploit market distortions and arbitrage opportunities not immediately apparent to human analysts. IT expenditures to support the logistical needs of the financial sector are pretty trivial compared to expenditures on HPC gear for automatic trading.

Anonymous said...

Well, you have a point, but it's only as good as blaming the war on WMDs.

The BFSI ( Banking and Financial Services) adopted technology/outsourcing/global delivery long before healthcare knew what those terms meant. And all those "greek" words brought the world of finance closer and more interconnected. Today the "bankrupt" US entities can borrow money from central banks around the world. A loan can be processed 65% cheaper ( administrative burden of processing) than 10 years back.

Healthcare is a unique animal I must agree.But I have never seen any other system on the planet more riddled with inefficiencies that the US healthcare industry. (More so in the provider space). technology maybe can alleviate some of these inefficiencies.

Technology did a lot for the BFSI space as long as we take a step back and think that Wall Street failed not because of technology, but because of greed.

Is a house a priviledge or a right?? As long as we continue to think it's a right, we'll always have this "living out of means" scenario.

JGF said...

Thanks to "anonymous x 2" for very interesting comments.

In an odd defense of health care IT, I'd like to point out that the very earliest post-WW II AI/expert system apps were trying to do computer-assisted diagnoses.

There's a long history of health care related IT.

It's an unholy hell of a market though. We fight trench warfare, while the fun IT guys fly fighters and space ships.

These days it looks more and more like Microsoft is going to follow the historic example of Oracle, DEC, IBM, Lockheed and dozens of other massive tech companies and try to do health care IT.

I actually hope they become a worthy competitor, but I'm fairly sure they have no idea how ugly things are going to be.