Healthcare IT Spending on Cloud to Surpass $1 Billion

The healthcare and social services vertical marketplace is extensive. It includes companies that provide medical care and social assistance for individuals -- which includes ambulatory healthcare services, hospitals, nursing and residential care facilities, and social assistance services.

Healthcare has been a growth vertical in U.S. business markets.

According to the latest market study by In-Stat, research supports a forecast of continued growth, with healthcare spending $518 million on Infrastructure as a Service (IaaS) in 2015.

Overall telecom spending by the healthcare and social services vertical was just under $16 billion in 2010.

Wireless communications is the largest of the product categories, comprising about 40 percent of telecom spending in the healthcare and social services vertical. Cloud computing and managed services is the fasting growing component.

Wireline data and wireline voice comprise the remainder of the telecom spend.

Increased Demand for Managed Cloud Offerings

"The healthcare vertical segment, across all sizes of business, and across nearly all product groups, is fast becoming the most robust business vertical segment in U.S. business markets," says Greg Potter, Analyst at In-Stat.

Demand for cloud computing services in particular has exploded and In-Stat believes there's nothing that would indicate the trend won’t continue -- at least through 2015.

Additional insights from the In-Stat study include:

• Small businesses with 20 to 99 employees will be the fastest growing size segment in healthcare, growing over 35 percent from 2010 to 2015.
• Enterprise wireless spending in healthcare will increase roughly 12 percent from 2010 to 2011.
• Healthcare public cloud computing spending will surpass $1 billion in 2013.

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The Top Five Vertical Markets for IaaS Offerings

The cloud computing phenomenon now includes a set of services and technologies that enable the delivery of on-demand computing services over the Internet in real-time, allowing end-users instant access to data and applications from any device with online access.

Although still in its infancy, gaining traction has not been a problem. According to the latest market study by In-Stat, Infrastructure as a Service (IaaS) is set to grow to roughly $4 billion by 2015.

"Growth is expected in all public cloud service segments," says Greg Potter, Analyst at In-Stat.

Many Software-as-a-Service (SaaS) applications have been around for a long time, but now with the advent of entire platforms for these applications they're gaining the necessary visibility among businesses to reach renewed momentum in the marketplace.

Infrastructure-as-a-Service (SaaS) is also gaining increased traction, especially in the small business market.

In-Stat's latest market study includes the following insights:

• SaaS (software as a service) is poised to grow 142 percent between 2010 and 2015.
• Overall public cloud computing (IaaS, SaaS, and PaaS) is set to grow 153 percent from 2010 to 2015.
• Small business (5 to 99 employees) is the fastest growing size segment growing from $2.5 billion by 2010 to $6.6 billion by 2015.
• Small business account for over half of the market in SaaS and IaaS.

According to the In-Stat assessment, the top five vertical markets for IaaS offerings, in terms of 2011 market revenue, will be hospitality and food, healthcare and social services, and retail trade. The bottom 5 verticals will be mining, forestry, fishing, and agricultural services and utilities.

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Cloud and Managed Services Spending Forecast

Gartner recently shared their top technology predictions. They said that increased transparency -- and the need to drive business value -- are bringing disruptive change to IT organizations in 2011 and beyond. One of their key findings: cloud computing will enable many organizations to exploit internal capabilities to establish new business service revenue streams.

Other informed industry analysts share a similar point of view.

Businesses are increasingly moving their computing and collaboration applications to the cloud, and their shift in IT spending reflects that change in behavior. A recent market study by In-Stat forecasts cloud computing and managed hosting spending by U.S. businesses will surpass $13 billion in 2014, up from less than 3 billion today.

“Although spending across all sectors and size of business is projected to grow, there are some segments where growth will be staggering,” says Greg Potter, Research Analyst at In-Stat.

Apparently, based on In-Stat’s assessment, the professional services and healthcare verticals will see the largest growth in spending on cloud computing services -- increasing at a rate of over 124 percent between 2010 and 2014.

In-Stat’s market study findings include the following:

• Software-as-a-Service (SaaS) spending will increase 112 percent between 2010 and 2014.
• Infrastructure-as-a-Service (IaaS) spending will approach $4 billion in 2014.
• Platform-as-a-Service (PaaS) spending will increase 113 percent to roughly $460 million in 2014.
• Small office/home office (SOHO) businesses are leading in the adoption of cloud computing services.

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A Managed Service Antidote to Organic IT

The accelerating Organic IT phenomenon is being driven by executive frustration that today's business technology demands are not being fully met by their internal support organization. Some IT teams, however, have taken decisive action to free-up time to become more responsive to their savvy user's requests for new capabilities.

Perhaps that's a key leading indicator why remote managed services have emerged as a rare growth area within this tough economic environment. Clearly, proactively increasing business process agility and cutting operational costs has never been more popular.

As a result, annual spending on remote managed IT services by the North American Small and Medium Business (SMB) sector is expected to increase 3.3 times in the next five years. That represents a compounded annual growth rate of 28 percent, according to the latest market study by AMI-Partners.

Extracting Value from Business Technology
"While SMBs have been steadily increasing their reliance on IT over the last several years, they have always been challenged in managing their growing IT infrastructures. The severe economic conditions of the last one year have forced SMBs to look for more cost effective ways to manage their IT. Remote managed services offered by 3rd parties provide 24/7 availability of critical IT infrastructure -- without increasing the need for internal IT staff," according to Anil Miglani, SVP of IT Infrastructure and Managed Services at AMI.

Apparently, SMBs increasingly use remote IT services to selectively out-task critical areas like security and storage, while others are now extending the use of remote services to manage PCs, servers, networks, communications equipment and various other business technology devices.

Yet, many more businesses could benefit from a managed service solution. "Of the total installed base of 60 million PCs and 8 million servers in North America, only a tiny fraction is currently managed remotely," says Miglani.

Enabled by Cloud-Based Infrastructure
Managed service providers are increasingly offering remote managed services to better serve their customers with fewer resources. While some deliver remote services from their own infrastructures, others have started relying on cloud-based infrastructure solutions.

"By using automated software to remotely monitor and manage their customer's infrastructures, solution providers have increased their productivity while also improving their service levels," according to Melissa Chong, Senior Research Analyst at AMI and chief architect of the study.

The potential growth of this market is also attracting several new types of providers like telecom companies, IT vendors, distributors, retailers and online resellers in the SMB IT services market -- currently dominated by local channel partners.

Given the diverse nature of the SMB market, AMI believes that vendor channel partners will continue to play a critical role, as more IT organizations willingly embrace the out-tasked managed service delivery model now -- rather than react after Shadow IT has taken hold.

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Managed Services: The Ultimate Small Business Contingency Plan

Today could have been a really bad day for my one-year-old company, Nine Lives Media Inc. My New York office suffered a broadband outage.

If our Web sites, network, email, phone and application systems were all centralized in that office we would have been dark all day. But our small business didn't skip a beat. Why's that? The three-word answer: Redundant managed services.

Our New York office has a redundant managed broadband connection. Plus, we depend on a range of decentralized managed services and SaaS (software as a service) solutions to keep our business growing. Here's a look at the services we're leveraging today -- and a few that we hope to leverage in the next six months.

Managed and SaaS services we're currently leveraging:

• Hosted Email: I don't know why any small business would consider an on-premise system these days. Hosted email is cheap (it's a commodity, in fact), reliable, fast and accessible from anywhere in the world. It's so cheap I can't remember the annual price.
  
• Hosted Web Sites: At my first start-up, all of our web servers were located in our own data center. Our network administrators wanted to "touch" the servers and work on them right in our own offices. These days, the smarter option for many small businesses is to pay a low monthly fee for a shared or dedicated server managed by a data center provider. We started our business using a shared server (about $89 per month) but recently moved to a dedicated server (about $250 a month) because our traffic has been growing fast.
• Phone service: We depend on hosted voice-over-IP and we don't own our phone equipment. Our service provider does. Over time, I expect our service provider to introduce new unified communications services, which will ease my life from the road. (Scroll down for our future plans for unified communications).
• Software as a Service: This list is getting pretty long. We're depending on a range of SaaS solutions to build our customer database and drive viral marketing. Inexpensive, reliable options include SurveyMonkey (free for basic service, about $200 annually for unlimited service), a great way to survey existing and target customers; WordPress (free open source content management, which you can customize); WebEx and FreeConference (online collaboration and teleconferencing; MyPodcast.com (hosted podcasts).
  
• Mobile Broadband: If you drink coffee and travel a lot, sign up for Starbuck's WiFi service. It's a life saver when you're on the road and your hotel or conference center has lousy Internet service. For about $30 per month, you'll be able to find a strong WiFi signal in virtually any Starbucks location.

Future Managed and SaaS Services: We're evaluating the following managed and SaaS services for 2009.

• Public TelePresence: For about two years, I've been predicting that TelePresence (next-generation video conferencing) would find its way into hotels and conference centers. Our small business can't afford to build out a complete TelePresence location. But we can -- and will -- use Public TelePresence centers. Cisco is introducing such centers right now, and signing up to use one sounds easy. As more public locations launch, I suspect we'll use managed TelePresence to communicate with clients across North America, Europe, India and Australia.
• Mobile Unified Communications: I fell for the iPhone the day Apple started selling it. I love the iPhone App Store. And I generally like the iPhone user interface. But I want better integration between the device and a range of services (hosted email, hosted VoIP, remote application access). Slowly but steady, those services are coming. Azaleos and other managed service providers are introducing Microsoft Exchange-to-iPhone integration. And the iPhone also supports Cisco's VPN technology. So I'm seeing progress. But I want to see more and more corporate services, managed services and "follow me" unified communication services touching the iPhone.
• Hosted Customer Relationship Management: We're looking at a range of options here. Salesforce.com is the best-known option. But Zoho (which often competes with Google Apps) has an interesting on-demand CRM strategy.

I suspect we're using a dozen additional managed services and SaaS applications to keep our small business humming along. Sometimes I forget just how many managed services we leverage. And that's a good thing. While we're focused on our business, somebody else is focused on managing and maintaining all the back-end technoology.

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Four High-Tech Steps SMBs Should Consider Now

The fiscal fourth quarter has just started. But now is the time for small businesses owners and mid-size business managers to start looking ahead to 2009.

"Cost cutting" is a popular topic during today's uncertain economic times. You can hide in fear and close your wallet. Or you can take these four steps to gain more predictable operating costs -- while driving your business forward.

1. Move to a managed services contract: If you're using an IT consulting firm or solutions provider to maintain your network and PC infrastructure, ask them about so-called "managed services." Many consulting firms now offer flat monthly fees to maintain, protect and optimize business desktops, servers, network infrastructure and applications.

This flat-rate approach will eliminate those "surprise" emergency IT repairs that can throw off your company's monthly budget or hinder cash flow.

If you're not familiar with the managed services, here are some key questions you should ask as you seek information about the industry.

2. Rethink business travel: Notice I'm not suggesting that you eliminate business travel. Face-to-face engagements are still important when meeting new clientele or pitching new business.

But for established business relationships, consider transitioning your face-to-face meetings to the virtual world -- especially if you need to communicate on a global scale. Convene online meetings using WebEx, unified communications and other tools that drive rich discussions. Make sure your business's web site includes a simple instruction page to help all of your employees -- and your customers -- get started with these collaboration tools.

And lead by example: Your top executives should be hosting the collaborative gatherings from time to time.

3. Find Your TelePresence: Conventional wisdom says TelePresence -- a rich, comprehensive video conferencing technology -- is too expensive for small businesses. But that's a misnomer.

For about the price of a one-week business trip, it's now possible to deploy a personal TelePresence system in a central office or a branch office. (In fact, the concept of Personal TelePresence dates back to at least 1994.) Each time a TelePresence system eliminates a business trip, you're essentially pay your company a dividend or freeing up cash for marketing, sales, research and development -- or other revenue-lifting activities.

4. Head for Home: If you still offer company cars to some employees, it might be wiser to invest those corporate dollars in your employees' home offices. Your company will spend less dollars on rising energy costs; employees will eliminate commute times and related expenses; and at home TelePresence and collaboration tools will make staff members far more productive.

I'm not suggesting that you eliminate company cars for your road warriors, top revenue producers and field service experts. But take a look at the numbers -- and ask your employees -- to see if they'd prefer to reduce their travel expenses in return for at-home TelePresence.

Some pundits think that at-home TelePresence won't gain momentum until 2010 or so. I disagree. I think leading-edge users are already making the move. I'll be looking for an in-home TelePresence system myself in the first half of 2009.

You have nearly 10 months of operating expenses to review from 2008. Take a close look to determine how your company is spending its travel dollars. Then, shift a portion of those dollars to collaborative tools.

Your company will gain improved productivity -- while earning a financial dividend -- every month in 2009.

You have read this article Business Travel / managed services / Online Collaboration / SMB IT / TelePresence / Telework / web conferencing / WebEx with the title SMB IT. You can bookmark this page URL https://apfurtado.blogspot.com/2008/10/four-high-tech-steps-smbs-should.html. Thanks!