Cloud computing has become an integral part of every digital transformation strategy in organizations across all different industries, sizes and geographies. According to Gartner, investments in cloud transitioning and cloud transformation are expected to account for more than half of IT spending in 2025, as compared to 41% in 2022.

However, the Healthcare industry has been falling behind when it comes to cloud adoption, and in many cases to digital transformation. In its "2022 CIO Agenda: A Healthcare Provider's Perspective" survey, Gartner reveals that even though the past two years have led health providers to rethink their current approach, they are still facing challenges particularly around culture and mindset change, putting them 11% behind other highly composable industries. In fact, the survey shows that CIOs in the healthcare industry are still quite reluctant about introducing cloud computing in the organizations and prefer a conservative approach instead.

Innovation is less about technology and more about HOW products and solutions are delivered
I've been working in the Healthcare industry for around seven years, four of which have been related to development and delivery for and in the cloud, and I couldn't agree more. I am convinced that innovation is less about technology, and more about the constant improvement of the way products and solutions are developed and delivered and about how processes are continuously adapted to keep up with the changing market. The advantages of cloud computing cannot be denied and are changing organizations across all industries already. By reducing infrastructure and operations costs, introducing Artificial Intelligence or Big Data, end-to-end integrated business applications, like ERP or CRM, and interoperability with other systems and devices – just to name a few. So, the question is: What is holding the healthcare industry back? In this article I am going to deep dive into the 3 main challenges this industry is still facing and how we at Avanade help our clients to shape their digital transformation.

1. Regulatory & compliance: The regulatory clearance plan must be an integral part of the entire development process
Obviously, regulations in the healthcare industry are much stricter compared to others. At the end of the day, human lives are at stake. Which means products and solutions need to go through comprehensive validation and verification processes before being released. On top of classic regulatory requirements each organization has its own ‘Standard Operating Procedures’ (SOP’s) defined, which have to be considered in the development process. In most cases, these procedures have not been changed for years and cannot be altered overnight. In addition, the regional regulatory requirements, such as the Food and Drug Administration (FDA) in USA, the European Medicines Agency in Europe or the National Medical Products Administration (NMPA) in China, are each adding another dimension of requirements. And finally, the software safety classification (IEC 62304) or a level of concern (FDA) that determines how harmful a medical device or software product can be, adding another layer of requirements a product has to meet.

I have seen projects ready to be released and then getting delayed or even stopped because some of those requirements were not met. Often because they were simply not considered during the development process. We usually address these topics by assessing all non-/functional requirements in conjunction with the SOP’s defined within the organization, considering all markets in which the product will be released. The outcome is a regulatory clearance plan which defines the minimum activities and documentation needed to submit and clear the product in the target markets from the very beginning. Now, having a clearance plan is great, but what is important is that it becomes an integral part of the backlog. Meaning, after each iteration of the product we ensure the deliverables meet all requirements by evaluating them against the clearance plan to enable a smooth sign-off during the final release of the product.

2. Data privacy: Consider all regional conditions including those affecting your software architecture
Adopting cloud computing has an impact on how you protect and secure Personally Identifiable Information (PII) and Personal Health Information (PHI) in compliance with data privacy laws. In addition to general healthcare data privacy regulations (e.g., HIPAA, HITRUST) which need to be met as you operate in the healthcare industry, many countries impose additional individual data privacy laws which need to be considered (currently 137 out of 194 countries). Based on my experience many organizations fail to consider the local conditions as they do not properly define this as part of the non-functional requirements and hence built an architectural design unable to cover the basics. The result? Huge delays in the release of the product as the architecture needs to be changed or the product cannot be released in certain countries at all.

But there is another dimension to data privacy regulations which I often see is not taken into consideration. Not only must the cloud architecture meet local data security standards – the cloud services used to design the architecture must be available in each of the regions in which your product / solution will be released. An exhaustive assessment involving the legal department at the very beginning is necessary to consider all defined target markets and their individual policies. During the design process, it is a good practice to design using cloud services already globally available (GA) and to ensure this applies to the APIs (versions) and features used for the cloud services as well, as these might differ in different regions.

As I am writing this article, Microsoft Azure is available in 75 regions with data centers all over the world complying with more than 90 certifications including healthcare. Moreover, organizations can opt for national or sovereign clouds that are designed to ensure data residency, sovereignty, and compliance requirements are honored within geographical boundaries.

3. People and mindset: Make cultural change a paramount for digital transformation
If you plan on getting the most out of your digital transformation you need to address the dimension of cultural change within your organization. As I consider the healthcare industry to still be shaped by traditional patterns, such as internal bureaucracy, traditional hierarchical structures, and a certain reluctance to change, driving the necessary mindset shift is long overdue. And one thing is clear: We cannot “greenfield” the culture of an organization that has been working with the same processes for years, the same way we do it with software. Having said that, this is a huge investment which should not be underestimated and will cause serious setbacks at some point, if not considered from the very beginning.

I’ve been part of multiple digital transformation projects and I’ve seen successful organizations applying different approaches. Some of them go for a bottom-up approach, starting with small team-units building pilot projects in which not only a new product is delivered but also processes, workflows and team dynamics are changed. The goal? Getting the attention and sponsorship from the leadership towards prioritizing the way we work just as much as introducing new technology.

Others go with a top-down approach in which business transformation is done through strong leadership buy-in and clear executive sponsorship, communicating vision and goals across the whole organization.

Some organizations even create sub-divisions such as digital campuses to outsource ownership of digital transformation. All digitization programs are coordinated and aligned to this new unit, in an effort to drive change within the entire organization. To me this approach has proven to be the least successful and some final attempt after previous approaches have failed.

Regardless of the approach – an organizational and cultural mindset change must be paramount for a digital transformation and can be best achieved by one common and clear vision across the organization, actively driven and communicated by executive leadership.

Final thoughts
While cloud technologies hold promises to help the health industry facilitating their digital transformation, the biggest challenges cannot be solved with technology only. It seems as if the hype of cloud technologies has been diverting the focus from the real issue. Organizations need to pay attention to true cultural change instead, enabling their people to embrace a culture of continuous learning to be able to improve their processes and adapt them to the current market needs.

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