Cloud-Based HIS Systems Are the Future: A Strategic Shift in Healthcare IT

We often like to draw an analogy between ERP systems and hospital management software. Indeed, there are differences between the two: one is applied to enterprise production, sales, financial management, and other aspects; the other is applied to highly specialized fields such as hospitals. Therefore, in essence, we believe that hospital management software represents a verticalized ERP industry.

In an era where large-scale ERP enterprises are gradually declining, we are also witnessing large hospital information system (HIS) vendors following in their footsteps. The reasons behind this trend have been a subject of my reflection in recent years, leading me to the following two conclusions: 1. The era of high profit margins in the software industry has come to an end, leaving asset-heavy business models struggling to cope. 2. As informatization becomes increasingly standard across the industry, large, all-encompassing systems are being eroded by cloud-based, specialized, and streamlined solutions.The Era of High Profits in the Software Industry Has Ended, and Asset-Heavy Models Will Struggle to CopeAs HIS vendors have saturated the market of small and medium-sized hospitals, the industry’s boom has entered its final stage. Forward-thinking companies began seeking transformation three to five years ago. The era of high profits for HIS providers—characterized by deploying thousands of staff to serve hundreds of hospitals—has come to an end. Consequently, in recent years, we have witnessed smaller regional HIS companies being continuously acquired by larger HIS enterprises, while the financial health of these major players has continued to deteriorate.

Ultimately, the asset-heavy model (manifested in the software industry as throwing engineers at problems) is increasingly being shunned by the industry. As digitalization has become ubiquitous across hospitals, it is now a standard offering, prompting the sector to seek new directions. Solutions such as “Cloud Hospitals,” “Regional Informatics Platforms,” and specialized hospital systems have been continuously evolving in recent years. Large, all-encompassing systems are finding it increasingly difficult to deliver high value-added returns and suffer from poor reputations, driving the industry to pursue new breakthroughs. Cloud-based, streamlined, and refined systems are gaining greater traction within the industry, particularly attracting significant attention from capital markets.

What Dilemmas Do Traditional Hospital Management Software Companies Face in Their Cloud-Based, Niche Transformation? The Author Identifies Three Major Hurdles: 1. Transitioning from Project-Based to Productized Solutions; 2. Adapting from Centralized to Flat Management Structures; 3. Shifting from a Software-Sales Business Model to a Service-Oriented OneLarge, all-encompassing systems will be eroded by cloud-based solutions and small, elegant systems.Cloud-based, compact, and elegant systems offer two major advantages: reduced costs and enhanced reputation. These benefits enable enterprises to unlock industry value at minimal expense. An improved reputation helps strengthen a company’s sustained market influence, educating and shaping the market in directions favorable to its own interests.

Productization has been a buzzword in our industry for years. It is now an industry consensus that large, all-encompassing products are not conducive to productization. Small, refined products represent the first step toward true productization. As a result, we have seen small companies continuously emerge on the path of productization, while large HIS (Hospital Information System) enterprises hesitate, unwilling to make painful cuts to ensure survival.

Similarly, a company’s management model must adapt to an uncertain competitive environment. As cloud migration broadens product boundaries, we have abruptly shifted from operating with a well-defined product to navigating an uncertain market landscape. Consequently, centralized management has become increasingly inadequate. Drawing on the flat organizational structures prevalent in internet companies, direct engagement between senior leadership and customers emerges as the key to success.

Furthermore, the business model of selling software must be abandoned, which is also the most challenging aspect. For Hospital Information System (HIS) vendors lacking strong industry control, it is exceedingly difficult to forgo the profits from software sales. Nevertheless, I believe that outstanding enterprises will ultimately break through this barrier.

Hospital management software companies are transitioning to the cloud, despite encountering numerous uncertainties. These include debatable profitability models, hospitals’ resistance to sharing clinical data, and even uncertainty regarding corporate development directions. Nevertheless, the benefits are evident: asset-light, value-driven companies are increasingly gaining respect from the industry and society, as well as receiving greater favor from capital markets. Pioneers always grow amidst skepticism, while giants often fall in the midst of euphoria.

(Author: Jingyunsu. Contact: QQ 377076933. Founded in 2012, Jingyunsu currently has a research and development team of nearly 50 members, with its products serving approximately 300 hospitals across all provinces in China. Jingyunsu positions its products as internet healthcare solutions based on medical technology platforms. By integrating industry patient and physician resources through these platforms, it aims to achieve the goal of creating platform-based internet healthcare products.)