Free Software is a pricing innovation
I am fifty years behind the rest of the world, but I have finally discovered the joys of Peter Drucker’s books. The first book I read is “Innovation and Entrepreneurship”, from which I have been mulling on this insight from page 247 about Xerox and its invention of the photocopier:
One reason why patents on a copying machine ended up at a small, obscure company in Rochester, New York, then known as the Haloyd Company, rather than one of the big printing-machine manufacturers, was that none of the large established manufacturers saw any possibility of selling a copying machine. Their calculations showed that such a machine would have to sell for at least $4000. Nobody was going to pay such a sum for a copying machine when carbon paper cost practically nothing. Also, of course, to spend $4000 on a machine meant a capital-appropriations request, which had to go all the way up to the board of directors, accompanied by a calculation showing the return on investment, both of which seemed unimaginable for a gadget designed to help the secretary. The Haloid Company — the present Xerox — did a good deal of technical work to design the final machine. But its major contribution was in pricing. It did not sell the machine; it sold what the machine produced, copies. At five or ten cents a copy, there is no need for a capital-appropriations request. This is “petty-cash”, which the secretary can disburse without going upstairs. Pricing the Xerox machine at five cents a copy was the tru innovation.
It is wonderful to have something you have always felt be so beautifully expressed. The reason I liked handheld computers, and the reason I like open source software even more, is that these technologies are cheap enough at the start not to need a decision from upper management. While working as a doctor setting up a handheld computer project was easy – I just had to convince my clinical colleagues to buy their own machines, and we would work together. They were quick to agree because the cost of a device was low, and the benefit obvious. Rightly or wrongly, as doctors we were the equivalent of the secretaries, and saving their labours with handheld computers was not something management had interest nor ability to consider.
Open source software pushes the bar even lower. With any team that I work, I suggest that open source software may be useful, the direct beneficieries agree to give their time for the experiment, and we just get started. No appropriations request, no management deliberations, we just start. If things go well, we let management know of the early success and ask for institutional support. If not, we move on to the next experiment.
It is because of this decision-making process that proprietary software companies are caught off-guard by companies with open source software at the centre of their business model. Before they could concentrate their marketing efforts on convincing upper management that the expenditure is useful – the software did not have to be useful to the employees who ended up using it every day, but it had to have the right buzzwords that management would think it was a good solution. With open source software the end users are making the decision – and theirs is a much more intelligent and accountable process – and the marketing departments’ ovetures to upper management become expensive overheads rather than powerful assets.
We all benefit from this change is decision-making.
Britain’s new Victorian age?
As I travelled to London last week I was delighted by this headline:
Accenture’s NHS losses grow as NPfIT delays mount: Accenture, the leading management and technology consulting firm, announced a provision for a further $450 million of losses against its contract to deploy IT systems on behalf of the English NHS. The provision led to a sharp drop in quarterly profits.
Not (necessarily) that I take pleasure in Accenture losing money, more that it the possibility of losing money or gaining profit does wonderful things to the running of projects. I am reminded of an excellent lecture “Fraud, bankruptcy, suicide and transportation: The history of the London Underground railway” by Dr Stephen Halliday. The link has the lecture’s transcript and video, and it is worth viewing, and the anecdotes are often hilarious. As the title suggests, the lecture is filled with stories of fraud, bankruptcy and suicide from the Victorian businessmen (and they were men) who built the London underground:
[W]ithout these kind foreigners and without people like Charles Tyson Yerkes, we would have no Underground Railway. I hope that by the time I’ve finished speaking, you will have come to the conclusion that Ken Livingston is a pussy cat compared with some of these!
The National Program for IT is making a lot of mistakes and the latest issue of UK Health Informatics Today is full of my criticisms of these mistakes, including an insufficiently fluid marketplace for the contracts. But, at least they do have private contractors for this enormous public sector big project. These private contractors can lose money, as Accenture and iSoft have found out, and that concentrates the mind beautifully. By contrast public sector managers who have overpromised, overspent and underdelivered remain in their jobs and their careers continue to progress.
Of course the other side of the coin, however, is that when the remaining contractors do start making money – and they will, handsomely so – the public will not begrudge them the money.
Cellular technology for health records in the African countries
On Saturday in London I met Drs Peter Drury, Simon Fraser and Adesina Iluyemi to discuss using new cellular technology to serve electronic medical records to handheld computers in African countries. It was a useful discussion and my three colleagues were highly experienced in deploying projects in the developing world. Peter, who had originally called the meeting, has been helped formulate policy at the UK’s Department of Health, and is tailoring its Map of Medicine for Kenya.
Soon afterwards Adesina moved the discussion to the excellent HIF-net mailing list. And then Holly Ladd, Executive Director of the pioneering SATELLIFE team, weighed in with her experience. The original posting is archived, but I will quote it in full here because it is so informative:
A previous posting from a colleague in Uganda made passing reference to our project. I would like to take the opportunity to explain and update the list on the work currently underway and the plans for this year.
The Uganda Health Information Network project (UHIN), which currently does use the WideRay ‘jack’ to create a store and forward network, is now entering its third year. The network consists of a handheld computer at each participating health center, an access point located at several sites within each participating district, a centrally located router and desktop computer at the District Health Office. Users enter data onto their handhelds, travel to an access point and upload their data while downloading updates, news and continuing medical education material. Overnight the access point (which has a Linux computer onboard, as well as a data cache a sim card and a battery) makes a call over the cellular network to the centrally located router to exchange data. Data transmitted from each health center is sent by email attachment to the District office the following morning where a conduit automatically moves each file into the appropriate database (disease surveillance, HMIS, etc). Districts then complete the required aggregated reports to the MOH.
A cost benefit study after the first year showed that with only two of the fourteen forms that health centers use to the handheld computer and transmitted over the gsm access points there was a savings of 25% as compared to the paper based HMIS and disease surveillance reporting process. (We have not calculated the cost benefit of being able to provide access to CME through the network.) At this point the UHIN project has been deployed to 160 rural health centers in three districts. The WideRay
‘jack’ is now operating on the gprs network. The monthly cellular cost per health center to transmit routine data AND to receive continuing provider education material, daily Ugandan newspapers and notices from the District Health Directors is approximately $5.35 US – or, stated another way, the per handheld communication cost is $2.45US per month. We expect that a new cost benefit analysis, to be completed this year, will show continued increases in savings. In addition to the reduced costs of using gprs, the training and user support functions to support the network have been absorbed by each district thus reducing overall operating costs. This is possible because the districts have seen real savings by using the network.But, in response to acquisition cost concerns and a desire to further enhance capability SATELLIFE and our partners in Uganda and South Africa have built a new access point that we expect to start deploying in the next six months. The new ‘Africa Access Point’ will continue to use the gprs/gsm network to transmit data in both directions. It will additionally provide rural health workers with individual email access and will use both infrared and wifi to facilitate exchange with the handhelds that are in use in the three districts. These access points will be about 1/3 the acquisition cost of the WideRay ‘jacks’ currently deployed and
will use all open source software.The central feature of the store and forward network is that non-urgent information from multiple health centers can be consolidated into a shared access point and that data from each can be consolidated into one phone call /transaction reducing costs and effectively relaying information to and from district health offices to hard to reach (as in a two hour climb on all fours up a mountain!) health centers. We can rely upon existing cellular infrastructure and avoid the costs of building towers, etc. Our goal this year is to expand the number of access points available in the three districts to ensure that these are placed at a reasonably accessible location for health workers. Also, given the current power shortages, we will further expand access to solar chargers for all the equipment.
SATELLIFE and Uganda Chartered HealthNet are working with the Ministry of Health on a plan to expand the network nation-wide in order to support continuing provider development – distance learning for all health workers. We are also about to deploy this kind of network in another country in collaboration with the country’s Ministry of Health. Finally, UCH will be receiving an award for this project for Public Sector Excellence from WITSA to be presented at the World Congress on IT
meeting in May.
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