Disparate health software bunch now brothers in arms

By PETER GRIFFIN technology writer

The frustration of trying to compete with the marketing muscle of larger companies has prompted a handful of innovative health software companies to band together for overseas success. The group, a mix of IT vendors, academics, business groups and Government departments, hope to build the growing reputation of locally developed software overseas.

A recent survey by TradeNZ found Health IT vendors generated $60 million in revenue last year.

This figure is expected to grow to $88 million this year.

The frustration comes from knowing that, while there are individual examples of success, the members of the group accounted for only 8 per cent of total New Zealand exports in the "computer services and "software sales" categories - worth more than $360 million combined last year, according to Statistics NZ.

For companies such as Delphic Medical Systems, Software of Excellence, Orion Systems and Plato CIS, the frustrations were laid out in a recent Herald column by Ian McCrae, the chief executive of clinical software exporter Orion Systems.

"Essentially, our high-tech firms have great ideas and products but few clues as to how to cross the 'ocean' to global success. Investing in more research is, therefore, a waste of money," he wrote.

"We don't know how to sell our products, many of which are equal to or better than those of overseas competitors."

So this week Mr McCrae gathered a range of software vendors and health sector professionals at the Mt Eden headquarters of Orion Systems to test support for the creation of a health IT cluster - a group of like-minded companies "collaborating to compete."

Paul Ryan, who recently quit as chief executive of Walker Wireless to work fulltime for clinical software company Plato CIS, was among those at the meeting who agreed to join a working group which will develop ideas for the cluster.

Mr Ryan is no stranger to working with his competitors to achieve a common goal.

"I'm stunned none of the parties in the health IT area are working together to build a better mousetrap," he says.

Howard Frederick, the director of Unitec's centre for innovation and entrepreneurship, will advise on the development of the cluster, and says the companies involved can learn a lot from existing ones.

He pointed to Waitakere's groupings in the film, wine and marine technology industries, a cluster of seafood companies set up in Nelson in 1992 and clusters in Wellington, which include a group of 32 earthquake engineering companies who have exported their technology.

Setting up the cluster does not have to cost much, says Dr Frederick.

In 1999, dozens of call centre companies came together with the help of TradeNZ to create a national call centre cluster aiming to promote New Zealand as a good location at which to base international call centre operations.

Each company paid $750 initially to finance the group's creation.

Dr Frederick says the planned cluster could traverse the country.

"Apparently, 70 per cent of the health IT cluster is in Auckland. But in a country the size of Florida there's no reason why there couldn't be a national health IT cluster."



Orion's marketing manager, Jonathon Gunson, says the aim of the cluster is to create a situation where New Zealand is to health software "what Germany is to quality cars or Switzerland is to watches.

"It's focused on creating an international brand for New Zealand's health software industry so in the overseas market we can specialise as a collective group.

"It's not about creating an international brand for the individual companies."

Already the catch phrase "The World's Healthiest Software" has been attached to the developing cluster, which has the backing of TradeNZ, Competitive Auckland, district health boards and the Ministry of Health.

Mr Gunson says it is no mistake that branding for the cluster is being based around New Zealand's clean-green image, usually the subject of tourism industry advertising.

"We're working in the health sector. We're claiming we have the healthiest software meaning it is bug and virus free and New Zealand is a healthy place to live and work. Put those three things together and we have something very strong."

While the cluster will aim to boost exports for the country's health software companies, it will also pursue greater opportunities to work with the local health sector.

Plans to develop a comprehensive health web portal have caught the interest of vendors and are the subject of a study by the Health Information Management and Technology review team, which has released draft recommendations proposing the creation of a secure health portal, including pharmacists and GPs, Government departments and health agencies.

David Moore, programme director of the review team, says hospitals have eaten into their IT budgets developing mainly human relations and administration software systems, at the expense of clinical software.

"We've missed the boat on this. It's clever stuff and should be high value. We've got a national health index but nobody uses it.

"We need a national provider index.

"We need health [IT] standards and security of networking."

A web portal would create a single-point of access for patient records, he says.

Mr McCrae says the collective strength of a health IT cluster will provide stronger bargaining power for local companies pursuing health sector software development contracts.

"As this cluster gets stronger, ACC and other organisations will be more inclined to buy local rather than buy big expensive American systems. I think local stuff might work a little bit better as well."

THE TEAM

Some of those pledging support to a health IT cluster are:

* Competitive Auckland: formed to promote the city as an international business location.

* Trade NZ: has helped form other industry clusters.

* Plato CIS: patient management software firm achieving success in Britain.

* Houston Medical: creates practice management software for GPs through to specialists.

* Jade: develops software used by Australasian health groups.

* Peter Hunter: a bio-engineering science professor at Auckland University.

* Howard Frederick: Director of Unitec's centre for innovation and entrepreneurship.

* Orion: exports software worldwide.

* Delphic: one of the largest health software companies.

* SCL: creating software for health, welfare, education.

* Counties-Manukau District Health Board chief executive David Clarke.

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