Verticalisation of IT services

Verticalisation of IT services is not a new phenomenon. IT services companies have tried to do this since 2001 or even earlier. Now there is a urgent need to do verticalisation because of market pressure. Companies called it verticalisation when they put a thin paint of domain knowledge on top of 'fungible' horizontal technical services. Fungibility was the key to use the staff in various verticals and minimize the staff that was too deep in domain knowledge and not very fungible. This approach worked in some industry verticals whereas it bombed in others like Healthcare where deep domain knowledge was the key. Healthcare customers need service partners that can advise them about the issues at hand and find solutions for them.

The second issue has been leadership of the vertical. Again fungibility in leadership has been encouraged rather than deep domain knowledge. The selection of the leader has been based on employee number indicating loyalty to the company. It is said that the Water always flows from the top. There has to be a crystal clear reservoir at the top for the rivers downstream to have water all the time. Healthcare knowledge cant be gained in a 'crash course', it takes years of education and experience to be able to guide others.

The third issue has been the '5 monkey principle'. The culture of the organisation prevents the organisation to accept anything different. Therefore radical change can't come from within. Healthcare vertical of a services company has to mimic their customers. One success story I know in Healthcare product space - a market leader in HIS/EMR calls themselves a Healthcare company rather than a software product company. They employ hundreds of doctors and nurses that work in their respective hospitals/clinics but also lead product lines.

The fourth issue has been the struggle between the verticals, geographies and horizontals for the same piece of pie. Its like 3 horses pulling the cart in 3 different directions. Atleast for Healthcare the verticalisation has to be done globally so that the skills can be cross utilized in various geographies. Human biology, Diseases and treatment protocols do not know geo-political boundaries!

Hopefully the verticalisation 2.0 will address these issues head-on. To be successful in Healthcare - the IT services companies have to build a new organisation that is completely detached from the past and is radically different from the previous.

Globally the Government funds being thrown into Healthcare have made it very hard for anyone to ignore. Everyone big-and-small, shape-and-color is clamoring to jump on the band wagon. I am watching the fun!