Rumors abound that Indian outsourcing giant Infosys is close
to a deal to acquire the healthcare information business of Thomson Reuters. If
the deal is in the $700+ million range as reported, it would be the largest
acquisition made to date by Infosys.
Has Infosys gotten religion about the content industry? It's
possible, but it seems to be the most immediate gain to Infosys would be a huge
boost to selling its existing services to healthcare organizations, primarily
in the United States.
I realize this may seem to be an odd stance for me to take.
After all, I have been one of the loudest proponents of the power of software
tools to increase the value of content, particularly data content. Indeed, many
of the most successful data publishers today are so successful because of their
strong and early embrace of integrated software tools. Yet as I think about it,
I see an interesting asymmetry: while data content companies clearly strengthen
themselves by developing software tools, it is not so clear that software
companies strengthen themselves by developing or acquiring data content.
Yes, Infosys can certainly boil some of the IT and editorial
costs out of the Thomson Reuters healthcare business, but that's hardly enough
reason to make such a large acquisition outside of its core competency.
Similarly, Infosys could arguably help the healthcare business get to market
faster with new platforms and new products. But if IT investment was truly all
that was holding back the healthcare group from certain growth, Thomson Reuters
is more than capable of making such investment.
What seems more likely is that Infosys wants to be a major player in the U.S. healthcare
industry, and the Thomson Reuters healthcare business buys it strong market presence,
entree and gravitas. With a mass of respected healthcare data and analysis,
Infosys will be in a position to not only identify problems, but solve them ...
and get paid for doing both.
Moreover, Infosys buys deep and trusted relationships within
the domestic healthcare industry, the ability to sell based on proprietary
knowledge, and at least some opportunity to bundle its data with the systems it
develops. It's all good for the goal of advancing the business of Infosys, but
it's not clearly so good for the goal of advancing its new healthcare data
business.
I say this because when Infosys gets into the healthcare
data business, that data business loses one of its key intangible strengths:
neutrality. Will the business be able to credibly continue its respected Top
100 Hospitals awards when Infosys is seeking multi-million contracts from these
same hospitals? Awkward. Can the healthcare business fairly evaluate electronic
health records systems when Infosys is developing same? Will analytical reports
citing various trends in healthcare start to be perceived as sales collateral
for Infosys? Indeed, can the healthcare business maintain a position of thought
leadership when its parent is actively selling big-ticket projects into the
same market?
Assuming this deal happens, maybe Infosys can pull it off
and make it work. But the path to accomplishing this means lots of independence
for the healthcare business, and the greater the independence, the less the
leverage for Infosys. We'll see how it plays out, but I think I am right in
saying that as a general rule, software sells data, but data doesn't sell
software.