Technology and Health: Why is the business model shifting from project-based services to product-based models?
As the digital transformation of the healthcare sector deepens, managing the development of clients and markets project-based technology service propositions is increasingly difficult.
The risk of requiring a dedicated team for each client and building a highly tailored solution began to operate, significantly increasing the complexity of operations with an unscalable and small-scale business model.
At a time when the market started demanding more standardized and scalable solutions with shorter implementation times.
In other words, the project-based service model quickly lost its validity, and was less viable and effective in responding to the needs of organizations.
This led technology companies to focus on the healthcare sector, turning to product-based service propositions with significantly shorter implementation periods and the possibility of continuous innovation.
Transition to a new technological paradigm
To move towards a product-based services business model for the healthcare industry, several fronts need to be considered:
- Limiting sites, attending to various management areas of the health care provider,
- According to the regulations of each country where a technology company operates and deploys its products,
- Coordinating with major health centers in each country to meet the needs of insurers,
- Providing solutions as a service under one practiceSauce (Software as a Service)
- Cultivate a proactive organizational mindset where customers always propose an efficient way to improve the management of each of their critical areas.
As a result, highly efficient, robust, scalable and agile solutions can be achieved with ease of maintenance.
The key is to offer dynamic products that allow customers a product roadmap that is constantly updated and complemented with new features and regulatory requirements.
Getting that roadmap means boarding a train that is constantly running, going from one station to another, every six months at a new station, adding new updates, and so on.
These updates make it possible to consider new technologies such as artificial intelligence components or other innovative functions developed by each technology company’s R&D departments.
This implies that customers can intervene in the process without making a decision but influencing it to consult on the changes being studied to make in the product.
How to implement a product-based service model in the healthcare industry?
In the healthcare sector, the key to these dynamic models should continue to be:
- Assessing the situation of the sector and its challenges,
- Determining needs and pain points,
- Analyzing which priority processes interfere with technical support,
- Applying the practical improvements gained,
- Observing where results are derived from replicating successful models,
- Identifying new technologies that have application to the proposed solution.
In this way, the positive evaluation of the customers increases significantly, the NPS (Net Promoter Score) satisfaction level exceeds 80-85%.
Of course, the integration of a new model implies changes in the professional structure of organizations, in which the following must be done:
- Integrating or consolidating profiles such as Product Manager and Product Owner
- Train customer service teams to adapt to a new strategy
- Ensure support for the model from the entire management team
Why incorporate a product-based business model?
There are many reasons why healthcare providers are shifting from project-based services to product-based business models.
Some of the reasons behind the trend include:
1. Performance and Optimization: By focusing on products, production and distribution processes can be optimized and standardized. This results in greater operational efficiency and lower costs in the long run. Sustainable products tend to integrate market best practices, allowing one industry to incorporate best practices developed in another.
2. Measurement: Product-based business models tend to be more scalable than project-based ones. Once a successful product is created, it can be replicated and distributed on a large scale without requiring the same amount of resources and effort as a custom project.
3. A more standardized and consistent customer experience. This will result in greater satisfaction by having a clear expectation of what they will receive and benefiting from continuous updates and improvements made to the product.
4. Competitiveness: In an increasingly competitive, globalized and interconnected world, product-based business models enable companies to differentiate themselves and reach a wider market. Products are easily scalable internationally and can reach customers in different geographic locations.
5. Constant Update: In the face of technological evolution occurring over time, it is essential that new functions are incorporated and new technologies such as artificial intelligence are integrated.
6. Generating recurring income: Products are usually sold with subscription or licensing models, which allow you to generate recurring income over time. In contrast, project-based services have a more limited life cycle and generate revenue intermittently.
Although not all sectors are suitable or ready for this business model change; The health department is not only in a position to consider it, but should incorporate it soon. Especially in the context of exponentially increasing digitization and automation of its processes.
*Written by Luis Navas, CEO of Conexia
