IBM's Strategic Blueprint and Product Portfolio in Internet Healthcare

The rapid rise of internet healthcare in 2014 attracted attention from all sectors. Giants such as BAT, Apple, and Google have successively laid out their strategies in this field, garnering significant public attention and visibility. However, beyond this circle, there are many other star enterprises worth learning from and referencing, such as the century-old powerhouse IBM mentioned in this article. Starting with hardware and now primarily operating in services and software, this industry veteran actually has a longer-standing ambition in healthcare. This article will chronologically examine its self-developed projects, investment and acquisition activities, and collaborative strategic initiatives in the medical field.

# Major Events of the Century
When IBM comes to mind, the words that most readily spring to thought are undoubtedly “software,” “business,” and “Watson,” creating the impression that its core business has little to do with healthcare. However, a review of IBM’s major milestones by VCBeat reveals that this seemingly unrelated primary business line has, in fact, naturally steered the development of its healthcare sector.

Medical Practices in the 20th Century Were Relatively Traditional
Following the main thread, VCBeat discovered that IBM’s foray into healthcare actually began in the 1940s, with its earliest medical initiative being the development of remotely controlled typewriter keyboards for individuals with disabilities.

Looking back at IBM’s healthcare strategy in the 20th century, its investments were relatively traditional, with most initiatives focused on the in-house development of medical hardware and software. Examples include extracorporeal circulation devices (heart-lung machines), data acquisition systems, and signal processing for hearing impairment. This approach stemmed from IBM’s near-total focus on its overarching strategy centered around computer information technology development.

Bold and swift moves into the new era
As the Internet wave surges forward, IBM, a leader in the information technology sector, is steadily expanding its footprint.

Since the beginning of this century, it has gradually diversified its development by collaborating with iCapture Research to develop genetic bioinformatics systems; partnering with the Mayo Clinic to create clinical trial participant identification systems; working with the University of Pittsburgh Medical Center (UPMC) in the United States to improve patient management; and joining forces with the University of Edinburgh in the United Kingdom to address challenges in protein folding, among other initiatives.

In 2004, IBM identified the healthcare industry as a key focus for future development during its internal innovation conference. Consequently, in February 2004, IBM announced the launch of a global initiative to advance the healthcare industry. This initiative aims to help healthcare providers and payers reduce costs, minimize medical errors, and deliver better care to patients. Under this plan, IBM will invest approximately $250 million in its healthcare business over the next three years to hire senior medical experts, develop healthcare industry solutions, implement multiple research and development projects, and collaborate with IBM’s business partners.

In the ongoing journey of medical exploration, a significant milestone has been the proposal of the “Smarter Planet” concept.

In November 2008, IBM proposed the concept of “Smarter Planet.” Concurrently, it introduced 21 thematic pillars supporting this concept, including healthcare, which aims to optimize the allocation of medical resources, ensure universal access to healthcare services and timely health guidance, and significantly improve people’s health indices.

Since proposing the concept of Smarter Planet, IBM has devoted significant resources to the healthcare industry, implementing a series of major initiatives to accelerate collaboration in medical academia and solutions.

In February 2009, IBM and Google Health jointly developed a “Health” software application. This software was designed to transmit data from remote personal medical devices to Google Health and other Personal Health Records (PHRs) platforms, enabling patients to engage in real-time exchange of health information with physicians and other healthcare providers through these services and IBM’s software.

In December 2009, the “SMS for Life” alliance, launched by Novartis, Vodafone, and IBM, leveraged mobile phone and electronic mapping technologies to manage pharmaceutical supplies in 135 villages in Tanzania. The partners stated that their sales monitoring significantly improved access to antimalarial drugs.

In February 2011, the supercomputer Watson rose to prominence by defeating human contestants on the renowned American quiz show *Jeopardy!*. The launch of Watson arguably laid the groundwork for IBM’s subsequent strategic initiatives in healthcare. To date, Watson has incorporated data from 42 medical journals in the field of oncology, over 600,000 pieces of clinical evidence from clinical trials, and two million pages of textual materials. Watson assists nurses in rapidly retrieving complex medical records, reviews treatment requests submitted by healthcare providers, aids in diagnosis and medication planning for cancer patients, and offers oncologists additional considerations for disease management.

With the help of Watson-driven solutions, IBM has established partnerships with numerous healthcare institutions, transforming the way medicine is practiced, reimbursed, and taught. These collaborations include those with Memorial Sloan Kettering Cancer Center, WellPoint, the University of Texas MD Anderson Cancer Center, Ontario Tech University, Brigham and Women’s Hospital of Harvard Medical School, and the Cleveland Clinic Lerner College of Medicine of Case Western Reserve University.

In April 2011, IBM collaborated with Singapore’s Institute of Bioengineering and Nanotechnology to develop a system composed of chips and servers that generates polymers capable of identifying and killing antibiotic-resistant bacteria and infectious diseases, such as Staphylococcus aureus infections.

In March 2012, IBM launched a smart healthcare strategy underpinned by Internet of Things (IoT) technology. Addressing diverse focal points in hospital informatization, IBM, together with its healthcare business partners, introduced a series of solutions—including Hospital Patient Relationship Management (PRM), Hospital Information Resource Management (HIM), Hospital Informatization Data Management (HDM), and IoT-based Hospital Asset Management (EAM)—to help hospital customers comprehensively advance their informatization initiatives.

In March of the same year, IBM, in collaboration with YiHui Technology Group, specially launched an IoT-based operational management platform solution for hospital assets (such as medical equipment, various medical supplies, and mobile handheld terminals). This solution helps establish a comprehensive management and operational system aligned with Enterprise Asset Management (EAM) processes, covering standardized coding, location identification, operation and maintenance, and service workflows for various hospital asset categories, thereby enhancing the hospital’s asset management capabilities.

In November 2013, IBM partnered with OhioHealth to implement RFID technology for monitoring hand hygiene compliance among healthcare workers, a method 100 times faster than previous supervisory approaches. Healthcare personnel wore badges embedded with RFID chips, which were read by sensors installed throughout the facility. If an individual exited a patient room without performing hand hygiene, the sensors would detect this lapse and report it to a central server.

Throughout this process, impacted by internet disruption and amid the widespread clamor for “internet thinking,” IBM underwent transformation and layoffs. These moves triggered continuous external suspicion and controversy, making the question of whether IBM had become obsolete a hot topic in the IT industry. Moreover, since March 2013, IBM’s stock price has been on a downward trend, with its hardware business in emerging markets collapsing. For IBM, or for its new CEO Ginni Rometty, 2014 would be a year full of challenges.

2014: A Year of Disruption and Innovation
In early January, IBM announced a $1.2 billion investment to build new cloud data centers worldwide, while emphasizing the establishment of the IBM Watson Group as a new business unit. Watson will support the development and commercialization of “cloud-delivered cognitive computing” and big data innovation, and will run on SoftLayer.

In August of the same year, Watson was applied to scientific research. Leveraging Watson’s “Discovery Advisor” program, the process of testing scientific hypotheses and theories could be completed more rapidly.

Subsequently, IBM significantly accelerated its investment in Watson cognitive computing, establishing a Watson-based research laboratory in Africa. The company plans to spend $100 million over the next decade to develop Watson-powered cognitive computing solutions on the continent.

In March 2014, IBM announced three major transformation strategies: first, leveraging data to facilitate industry and professional transformation and open up new markets; second, reshaping enterprise infrastructure for cloud computing; and third, building an interactive engagement system through mobile social technologies.

After determining its strategic direction, IBM began to make frequent moves, partnering with institutions such as the Mayo Clinic, the University of Texas MD Anderson Cancer Center, Memorial Sloan Kettering Cancer Center, and the New York Genome Center.

At the same time, it has not forgotten to collaborate with multiple competitors. For instance, its partnership with Apple is nothing short of a theatrical urban drama.

During Steve Jobs’ tenure at Apple, he repeatedly disparaged IBM and refused to collaborate with the company. However, after Tim Cook took the helm, Apple embarked on a partnership with IBM, a move poised to deliver substantial market value for both parties. Apple can sell more end-user devices to the enterprise market, while IBM can unlock greater value in the mobile sector.

On July 16, 2014, IBM and Apple embarked on a series of major collaborations, joining forces to enter the enterprise market through iPhone, iPad, and specialized business applications. In the two weeks following the announcement of their partnership with Apple, IBM’s stock price reached $196, nearly its highest level in 20 months. Within ten months of the collaboration, the two companies launched four healthcare applications—Hospital RN, Hospital Lead, Hospital Tech, and Home RN—releasing them on a quarterly basis, with each release comprising no more than ten apps (including those in other sectors). Having found their rhythm, IBM and Apple are now accelerating their efforts. Under the cooperation agreement, the two parties plan to launch 100 applications by the end of 2015.

In addition, both parties will launch a series of strategic collaborations based on cloud computing, promoting the sustainable development of the local ecological environment through the rational and efficient application of IT infrastructure under government leadership.

The most recent collaboration took place in late April 2015, when IBM partnered with Apple and Japan Post to launch a project providing iPads to millions of elderly individuals, aiming to improve their quality of life and health outcomes. The initiative involved distributing iPads equipped with IBM-developed applications and natural language processing technologies. These devices enabled users to directly access services such as medication, exercise, and weight-loss reminders, as well as community activities, grocery shopping assistance, and employment support.

This pilot service will be rolled out in phases, with the ultimate goal of increasing the number of elderly customers to 4–5 million by 2020.

The Leap Forward in 2015
Entering 2015, and building on its healthcare strategic layout from 2014—in addition to the partnership with Apple—IBM announced a major development in late January: a $500 million service contract with Anthem, a leading cloud-based healthcare company. Under the agreement, IBM will establish a hybrid cloud environment for Anthem to transform the company’s IT infrastructure. IBM has recently formed its IBM Cloud Business Unit, integrating service teams, software, development, and research solutions to further strengthen IBM’s market momentum and accelerate time-to-market for innovations.

In April 2015, IBM partnered with Medtronic to improve diabetes disease management. By leveraging Medtronic’s devices, care management products, therapies, and coaching, along with IBM’s Watson Health Cloud platform, the collaboration aims to optimize patient outcomes and health economics. Furthermore, the two companies plan to develop real-time, dynamic, personalized diabetes treatment and management solutions. These solutions will provide decision support for physicians and patients, thereby enhancing the efficiency of diabetes treatment and management and improving clinical outcomes.

In the same month, IBM announced two acquisitions of startups: Explorys, an analytics company with access to 50 million U.S. patient records, and Phytel, which provides cloud-based software that processes various types of health data to deliver analytical insights to physicians. Phytel also sells its software to help healthcare professionals manage patient information. These acquisitions aim to strengthen IBM’s capabilities in health data analytics. The IBM team stated that these two acquisitions would facilitate the application of advanced analytics and cognitive computing technologies within primary care providers, large hospital systems, and physician networks, thereby improving the quality of healthcare and treatment outcomes.

In May, IBM made two strategic moves. First, in early May, it announced that its Watson computer system would be deployed at 14 cancer centers across the United States and Canada to select appropriate treatment plans based on patients’ tumor genetics. Second, more recently, IBM successfully partnered with Talkspace, an online psychotherapy startup. Leveraging therapist-matching data generated by Talkspace’s human professionals, IBM Watson will employ machine learning, natural language processing, and user personality analysis to assist users in decision-making and help physicians devise optimal treatment plans.

IBM previously projected that the global cancer incidence rate would increase by 75% by 2030. IBM also predicted that within five years, physicians would help restore patients’ health by correlating their DNA with treatment outcomes. Computers will assist doctors in understanding the impact of tumors on patients at the DNA level, identifying the most effective medications for combating cancer, and providing personalized treatment plans.

Entering the Smart Healthcare Sector

Over the past five years, IBM’s healthcare initiatives have increasingly shifted toward big data, cloud computing, health management, and digital applications. Strategic partnerships with industry giants such as Apple and Johnson & Johnson underscore its commitment to advancing “smart healthcare.”

IBM’s China Healthcare Dream
Let’s take a closer look at IBM’s healthcare footprint in China, a relationship that actually dates back to 1934.

In that year, IBM installed its first commercial processor at Peking Union Medical College Hospital. It was not until 1979, after more than 40 years of severed ties, that IBM returned to China alongside the country’s reform and opening-up policy. Over the following two decades, IBM spanned multiple industries and became China’s most reliable information technology resource.

IBM’s renewed foray into China’s healthcare sector dates back to 2004. At that time, Zhou Weikun, then Chairman and Chief Executive Officer of IBM Greater China, announced a series of new initiatives in China, stating that these moves were also part of IBM’s global transformation.

In April of the same year, IBM held its inaugural Healthcare Industry Partner Conference in Shanghai, sounding the clarion call for its comprehensive entry into the healthcare and medical sector;

In May 2005, IBM held its 2005 Healthcare Industry Partner Conference in Chengdu, announcing its withdrawal from the healthcare and life sciences sectors.
Major initiatives by Township Head Liu, and around this development area, joined hands with partners to develop comprehensive solutions and services.

In December 2005, IBM released the white paper “Facing 2010: Outlook for China’s Healthcare Industry” in Beijing. This was the first white paper focused on the healthcare industry published by the IBM Institute for Business Value since its establishment in 2005.

Liu Huanshi, Deputy General Manager of IBM China’s Government and Public Sector Division, stated that in the past, the healthcare industry primarily focused on accounting systems and front-end patient registration platforms, without penetrating into the core clinical care systems. He predicted that this sector in China would experience rapid development, with applications shifting from front-office operations to core business processes.

In May 2009, IBM supported Chongqing Jinshan Science & Technology’s capsule endoscopy project. IBM provided Jinshan Science & Technology with an IT platform based on the DB2 database. By leveraging IBM’s information technology and equipment, imaging data was transmitted via the internet to an image data center. There, professional medical image screeners reviewed the images, and the final diagnostic results were returned to physicians.

In June 2010, IBM, in response to the needs of the Chinese market, collaborated with SAP, a global leader in enterprise application software and solutions provider, to advance the digitalization of management and operations, Hospital Resource Planning (HRP), and clinical processes in large-scale hospitals. Specifically, IBM assisted hospitals in streamlining complex management workflows and conducting business process reengineering based on IBM’s planning and consulting expertise. Furthermore, for large-scale software projects, IBM partnered with vendors such as SAP during implementation, leveraging their solutions in areas including hospital financial management, medical equipment, and pharmaceuticals.

In July 2010, IBM and Peking University People's Hospital jointly established the first evidence-based personal health management system focused on chronic disease management. The system conducts a comprehensive review of patient health information alongside best practices derived from prior diagnoses, treatments, and research, thereby providing clinicians with clinical decision support solutions.

In the same month, following China’s decision to allocate billions of dollars to upgrade its healthcare system, IBM announced a $100 million investment over the next three years to support China’s healthcare reform initiatives. This investment will leverage IBM’s expertise in systems integration, services research, and cloud computing, enabling healthcare professionals to focus on patient care.

In September 2010, IBM China announced that it would work with its seven-year partner, Tianjian Technology Group, to advance the development of regional healthcare informatization in China, applying IBM’s cloud computing architecture to regional healthcare IT solutions. Tianjian stated that adopting a cloud computing architecture could enable hospitals and public health systems to reduce their informatization investments by approximately 30%.

In March 2014, IBM and Yilianzhong jointly announced the establishment of China’s first Health Cloud Innovation Center dedicated to diabetes health management, accelerating the effective implementation of smart healthcare in China. Unlike traditional project-based collaborations, this partnership between Yilianzhong and IBM is oriented toward future models of medical services. The two parties will integrate their advantageous resources in R&D, marketing, and distribution channels, make joint investments, and leverage cloud computing technologies tailored to the characteristics of diabetes care. They will engage in in-depth cooperation in three key areas: development of Health Cloud solutions, pilot programs and market promotion of Health Cloud services, and recruitment of third-party applications for the Health Cloud platform, thereby jointly driving innovation.

On July 11, 2014, researchers from the Bio-X Institute at Shanghai Jiao Tong University, in collaboration with leading institutions in pharmaceutical big data—including IBM Watson Research Center, Harvard University, and the University of California, Berkeley—jointly developed a drug-drug interaction search engine based on pharmaceutical big data, thereby achieving significant progress in personalized medication research.

In this study, researchers leveraged the massive dataset of the Chemical-Protein Interactome (CPI) to simulate drug interactions on a supercomputer. The process began by simulating the known interaction fingerprints of FDA-approved drugs. By employing an improved big data mining algorithm to compare the fingerprints of user-submitted molecules, the system predicts potential drug-drug interactions, thereby enabling timely assessment of medication risks. Compared with similar predictive tools, this engine demonstrated leading computational accuracy, providing critical information for avoiding adverse drug reactions caused by drug interactions and thus facilitating personalized medicine.

In addition to the aforementioned healthcare initiatives, IBM has partnered with multiple Chinese medical institutions to drive development across strategic and developmental, operational and procedural, and information technology application dimensions within the healthcare sector by providing comprehensive hardware architectures, system software and middleware, as well as specific industry solutions.