Health-IT vendors must consider Open Source

I got some good comments on my recent article where I suggested that QuadraMed open source their solution in order to help them gain more sales. There were a number of folks who asked for more information about why vendors should consider open sourcing their products so I put together this article, which was also published in today’s Health IT World newsletter. Update: the Health IT World website has now published the article, too. Lets hope some vendors give it some serious thought.

The open-source software (OSS) movement is formally about 15 years old and informally much older than that. Most people know that OSS provides them free software (at least without a license cost) with source code and much has been written about it from a user’s perspective. However, I’d like to encourage that healthcare IT vendors, especially those just getting into the market or those that are struggling to make sales in a tough customer climate (jaded by failures), seriously consider open-sourcing their solutions.

Why should a vendor forgo license revenue and give out their source code for free? While I know of dozens of good reasons, here are just a few great reasons:

Gain visibility for your product, eliminate long sales cycles, improve customer relationships, and build your market quicker because people will be able to download your products and begin to use them immediately. If they like it, word will spread. You can put together software and release more quickly and with greater frequency, since you’re not beholden to a sales cycle. By eliminating cost from the sales side, you can focus all your efforts on development and building a maintenance, customization, and services arm that tends to make more money for most vendors, anyway. You can also foster a community of developers around your product to help develop enhancements for free. This will reduce your overall development costs, help increase the value of the product, and make customers happier. And with a happy development community, your product will be able to get into more customers faster than ever before. All without a large sales force.

If you’re in a field with an entrenched competitor, open-sourcing your solution may be the best way to break the vendor lock-in that customers feel. Because your product will be freely available without license costs, a different group of people (the ones not beholden to the incumbent vendor) can make decisions about bringing your product in-house. Then, once in-house, you will have the ability to customize, enhance, and service your product by connecting it to the competitor already in the customer’s environment and help them “wean” themselves off the legacy vendor. Another benefit of this approach is that you will be seen as a “risk reducer” for the customer, not a “risk increaser.” By getting in there for free, you come in risk-free. By reducing lock-in to the existing vendors, you lower the customer’s risk of being handcuffed. Both are great ways to win and keep customers.

As an open-source vendor, you can be seen as the innovation and thought leader in your category. Because you don’t count on license revenue, your products have to win and be installed on their merits because they can be thrown out as easily as they were brought in (people don’t throw out million-dollar systems regardless of how bad they are, but since yours will be free, they can). Customers are more likely to share their honest thoughts and opinions, give ideas, foster innovation, and help you grow because they feel you are there for them, not for your license revenues. Overall, the “community” feel will simply improve your ability to get your product into the customer’s environment, which is, of course, the whole point.

So, should you open-source? If you’re looking to get into a competitive and entrenched field with big vendors and want to help reduce long sales cycles to get your customers to try your products, the answer is a simple “yes.”

Open source isn’t best for every vendor, but I do believe that health-IT customers are begging for the benefits that OSS can provide them.

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9 thoughts on “Health-IT vendors must consider Open Source

  1. Pingback: Musings From Alfheim » Open Source HIT, Part 2

  2. I think the real money making part is when an Open source distribution reaches the point like apache where people rarely add anything to the product. Instead it is so good that they just use it as is. However, they need someone to be able to implement it for them and why not go to the original creators to help with that. Not to mention training and support for the product(sounds like RedHat no?).

  3. Techguy — apache was created for (and by) hosting providers so plenty of people are making money around apache (just not the non-profit Apache Foundation directly). And, apache is a horiontal industry package which works well as an across the board application without much customization.

    However, in healthcare very few vertical apps will work well without implementation, customization, or maintenance assistance. This is why you are correct that people will and should turn to the original creators for mentoring, training, and support.

    There is still room in healthcare OSS for a RedHat-like vendor.

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  5. What makes open source more viable for healthcare is the trend towards open standards. In the past, customers were forced into single vendor solutions due proprietary standards. If an open source solution conforms to the same standards as a high cost vendor solution, customers will feel more comfortable with choosing the open source version. Also, web services technology allows an open source solutions to offer the same high level functionality as the high cost solutions. If, for example, both the open source and the “high cost” product use the same decision support web service, then what is the difference between the two?

  6. Marks, assuming that the web service is delivered as SaaS (software as a service) there is a big difference: SaaS requires outside connectivity, SLAs, and external security audits/checks because the software, data, rules, etc belongs to another company. With OSS, you have the source, the data, everything inside your own company.

    If a stable company is doing the SaaS this is not a problem. However, if you have a small company or unstable one it can affect performance of your own software without a reliable service.

    With that said, I am a huge believer in both OSS and SaaS and believe that small hospitals and provider groups can benefit greatly from SaaS if they wish to give up some level of control and influence and go with OSS when they want a high level of control and influence.

  7. I’m still on the fence about the topic. While I love and use opensource daily, I wonder if a market behind the IT times (healthcare) can wait for the slower moving innovation associated with the current state of open source communities. Lets face it, open source projects tend to be much more stable because of the community support. Working on issues at the local level is quick. Off the top of my head, I can’t think of any opensource project that has wow’ed an industry. Firefox is great and innovative, but the affects of their development reach every internet user. Hence the huge development community. In my experience, the wow factor comes from the desire to sell what is in development. Often times, software vendor contracts contain the innovation forward looking clients are wanting. I’m not saying the status quo is working…It’s simply too early to tell for me.

    I can say that the enterprise big boys are scared about medsphere’s injection into the market and are working on ways to squash it. It will be interesting to see how their up coming go live goes. I believe the vista EHR project will flounder while the medshere version will take off.

  8. Pingback: Doctors’ Gadgets » Shahid N. Shah on Open Source EMR

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