Priorities for Adopting an Exponential IT Mindset in the Healthcare Industry

Adopting Exponential IT is critical for driving innovation, efficiency, and value for patient care.

Analyst perspective

Enable value creation through Exponential IT.

The healthcare industry has witnessed significant technological changes, from digitizing operations to reimagining service models and adopting exponential technologies. However, compared to other industries, healthcare’s digital transformation lags. The healthcare industry continues to face challenges such as low financial margins, staffing shortages, and increasing cybersecurity risks, which impact IT innovation. The chasm between the healthcare industry’s desire to harness technology and ability to deliver is continuing to widen.

The healthcare industry needs to urgently adopt Exponential IT to counter industry disruptions. Understanding four key priorities of Exponential IT transformation will be crucial for adopting an exponential IT mindset. This involves understanding foundational capabilities and leveraging them for effective transformation. By doing so, organizations can unlock value, improve operational efficiencies, manage costs, enhance patient outcomes and experiences, and navigate the evolving landscape successfully.

Sharon Auma-Ebanyat

Research Director, Healthcare Industry
Info-Tech Research Group

Executive summary

Info-Tech Insight

Healthcare organizations are facing challenges such as low financial margins, staffing shortages, and increasing cybersecurity risks. The chasm between organizations’ desire to harness technology and their ability to deliver is continuing to widen. IT leaders must no longer be spectators of rapid disruptions but strategic business partners supporting the organization’s success. Exponential IT will drive operational efficiencies and improve patient outcomes.

Info-Tech Research Group: EXPONENTIAL IT

What is Exponential IT?

Exponential IT is a framework defined by Info-Tech Research Group.

The technology curve has recently bent exponentially.

Generative AI has been the catalyst for this sudden shift, but there are more and more new technologies emerging (e.g. quantum computing, 5G), putting significant pressure on all organizations.

Efficient service delivery is now imperative. Demand for fast and convenient services requires IT to adopt new technologies to meet the needs of patients, healthcare providers, and business leaders.

Our framework instructs all IT leaders on how to transform their organization and elevate their value-creation capabilities, to close the gap between the exponential progression of technological change and the linear progression of IT’s ability to successfully manage that change.

This research provides IT leaders with industry-specific priorities for Exponential IT and how to begin an effective Exponential IT transformation, resulting in value creation.

Your Exponential IT Journey

To keep pace with the exponential technology curve, adopt an Exponential IT mindset and practices. Assess your organization’s readiness and embark on a transformation journey. This report will provide greater insights to help you build your Exponential IT Roadmap.

To access all Exponential IT research, visit the Exponential IT Research Center

Go to this link

Adopt an Exponential IT Mindset

The focus of this report

Info-Tech resources:
Exponential IT Research Center , Research Center Overview , and Keynote

Explore the Art of the Possible

Info-Tech resources:
Exponential IT research blueprints for nine IT domains

Gauge Your Organizational Readiness

Repeat Annually

Info-Tech resource:
Exponential IT Readiness Diagnostic

Build an Exponential IT Roadmap

Repeat Annually

Info-Tech resource:
Develop an Exponential IT Roadmap blueprint

Embark on Your Exponential IT Journey

Info-Tech resources:
Ongoing and tactical domain-level research and insights

The pace of technological change will continue to increase exponentially in healthcare

IT must solve the problem of rapidly and exponentially increasing expectations.

Organizations are adopting exponential technologies at an accelerated rate due to the rapidly changing landscape. Traditional linear IT is no longer viable to sustain IT’s place as the leading technology provider for their organization.

Failure to launch will leave you far behind. The chasm between the organization’s desire to harness technology and IT’s ability to deliver it will continue to widen.

The challenges with traditional linear IT:

• Slow to adapt to more modern service delivery models
• Processes and decision-making that can’t accelerate to meet demand
• Transactional arms-length relationships with organization units and vendors
• Insufficient funding and focus on technology innovation
• Locked into a siloed and hierarchical operating model

The Case for Exponential IT

IT needs to fundamentally transform the way it is operating in the following ways:

• Build an Adaptive Delivery Model: Enable flexible and efficient delivery of products and services.
• Optimize & Autonomize Operations: Maximize efficiency while mitigating risks through intelligent automation and data-driven decision-making.
• Broker Strategic Relationships: Strengthen and build both external and internal relationships to better align IT capabilities to organizational goals.
• Embrace Digital Innovation: Evaluate and adopt solutions that drive consumer value, enterprise growth, and innovation.
• Cultivate Workforce Flexibility: Dismantle traditional jobs and hierarchies, normalize new collaborative ways of working, and adopt a federated and hybrid IT operating model.

The healthcare industry has significant challenges in adopting Exponential IT

Technical debt

• Technical debt can hinder the effective integration and use of exponential technologies; however, emerging technologies are shaping the future of healthcare.
• The continued use of outdated legacy software applications makes it difficult to integrate with new technologies, slowing down the adoption process.
• Long-term debt increases long-term costs due to delayed maintenance and replacement of IT systems that result in inefficiencies and operational issues.

Cybersecurity challenges

• Exponential technologies like AI and machine learning present a new frontier for cyber attacks. Hackers are leveraging the same exponential technology for more effective phishing attacks, compromising patient data and increasing threats to patient safety.
• Cybersecurity budgets are increasing at a slow pace. A global study by Splunk found that while 93% of CISOs and CSOs expect a budget increase in the next year, many projects have been delayed or eliminated due to the lack of funding – only 35% indicated that their boards have allocated sufficient cybersecurity funding (Splunk, 2023).

IT operations and business strategy misalignment

• The traditional view of IT as a utility rather than a strategic partner creates a gap between operational and strategic leadership perspectives and initiatives.
• Historical underinvestment in technology is making it challenging to align IT and business strategies when it comes to system modernizations.
• Workforce shortages in IT are affecting service delivery and increasing burnout of highly skilled healthcare professionals. This makes it challenging to keep up with technological advancements and alignment of IT and business strategies.

30%

of CIOs revealed that 20% of their technical budget dedicated to new products is diverted to addressing technical debt.

Source: McKinsey & Company, 2022

78%

of healthcare cybersecurity and IT professionals experienced a breach in their organizations in the last year.

Source: Claroty, 2023

38%

of healthcare IT leaders stated that their organization and IT operating strategies are strongly aligned.

Source: Statista, 2021

Imperatives for exponential IT adoption in the healthcare industry and how to navigate disruption

Market Disruptions and Obstacles

1. Increasing rates of mergers and acquisitions

   • The integration of IT in mergers and acquisitions is inefficient and highly complex due to organizations having different platforms. Aligning organizations with similar technologies provides an opportunity for easy adoption of exponential IT technologies and reduced technical debt in the long run.

2. Expansion of retail companies into healthcare service delivery

   • Patients are demanding lower costs and convenient care delivery. Retailers such as CVS, Amazon, and Walgreens are meeting this demand. Partnerships with retailers are an opportunity to provide services to home care patients, such as meal and prescription deliveries.
   • Clinical care and patient experience can improve through an increase in connected technologies for patients. Retailers can share data with healthcare organizations and leverage exponential technologies for insights.

3. A dynamic vendor landscape that is impacting long-term investment in healthcare technology

   • Integration challenges can increase complexity and investment costs within a changing AI vendor landscape.
   • New AI vendors may not be compliant with changes in AI regulations due to the ongoing development of AI policies. Healthcare providers are cautious in their approach to investing.

4. Compliance requirements for value-based care reimbursement

   • Gaps in IT/digital and analytical capabilities have affected clinical and financial performance of value-based care programs.
   • Value-based care incentives are changing the medical culture through the addition of cost saving and pay-for-performance incentives in provider contracts.

Info-Tech Insight

The healthcare industry is experiencing disruptions such as increasing financial pressures, regulatory compliance requirements, and patient expectations. This requires a set of foundational capabilities to properly execute and drive IT innovation, which is necessary for adopting an exponential IT mindset.

Business opportunities are developed from industry disruptions

If IT leaders cannot lead this upcoming transformation, then the organization will move forward without them

Only 2% of CXOs report that their IT department can transform the organization. Most IT departments (77%) still struggle to adequately support the organization.

33% of CXOs believe that their IT department must reach the highest level of Info-Tech’s IT maturity ladder to best serve the organization in the future. 42% of CIOs agree.

Info-Tech CXO-CIO diagnostic benchmark data, 2023, n=229 CXOs

Source: Info-Tech CXO-CIO diagnostic benchmark data, 2023, n=229

Info-Tech Insight

As organizations strive to succeed in the next phase of technology-driven transformation, CIOs have an opportunity to demonstrate their organizational leadership. To do so, they will have to start delivering organizational capabilities instead of services while owning organizational targets.

Determine IT’s innovation maturity to assess Exponential IT readiness

Complete the CIO Business Vision Diagnostic to understand business needs and satisfaction with IT.

IT must score above 70 to be properly supported by the business and prepared for an Exponential IT shift.

Evaluate IT’s capability effectiveness and importance in executing Exponential IT

Complete the Management & Governance Diagnostic to assess core IT processes for improvement.

To properly execute Exponential IT, the organization must understand IT’s strengths and weaknesses for effectively managing and improving the department for innovation.

Collect the data the organization needs to start the process improvement journey and enable Exponential IT. The organization will get a customized report highlighting your organization’s most pressing IT process needs based on the following color coding.

Any processes that require improvement or evaluation should be prioritized for advancement before starting the Exponential IT journey. These core processes are required to effectively execute standard IT processes before innovating to Exponential IT processes.

Leverage Info-Tech’s Exponential IT diagnostic to gauge readiness

Complete the Exponential IT Diagnostic to determine organizational and IT readiness for exponential technologies

Info-Tech’s Exponential IT Readiness Diagnostic is designed to assess the readiness of your organization to embrace and extract value from exponential technologies. It measures executive stakeholder perceptions of organizational readiness for transformation and IT leader perceptions of IT readiness for transformation.

This readiness assessment is a crucial initial step in the Exponential IT journey to help you understand the needs, opportunities, and priorities of stakeholders across the organization.

Organizational readiness

Organizational readiness refers to perceived readiness to adopt exponential technologies and willingness to change into a more adaptable, forward-looking organization.

Without strong organizational readiness for transformation, IT will need to take extra steps to drive technology adoption, break down silos, and gain support for its own transformation efforts.

IT readiness

IT readiness includes current maturity across all IT domains, willingness and support for transformation, and foundational elements required for Exponential IT.

Without a high IT readiness for Exponential IT, the transformation roadmap may need to include additional foundational change efforts in its first year.

Key Exponential IT roadmap concepts