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Global Healthcare Analytics Market 2013-2020 - Growth driven by Predictive & Prescriptive Analytics

Healthcare analytics gained prominence since past few years as number of new companies have emerged that offer specific analytical tools that use statistical, contextual, quantitative, predictive, cognitive tools to analyze the huge chunks of data that is generated by healthcare companies. Huge amounts of data are being generated by healthcare companies that need to be analyzed for efficient decision making by the managers. Healthcare analytics uses statistical tools and techniques to analyze healthcare-related data in order to analyze operational performance or clinical outcomes to improve the quality and efficiency of clinical and business processes and performance. The global market is estimated to be $4.43billion in 2013 and is expected to reach $21.35 billion by 2020, at a CAGR of 25.2%. Growth is mainly driven by predictive analytics and prescriptive analytics in the U.S. and Asia, according to a report provided by MarketsandMarkets, a global market research and consulting company. Data analytics particularly the big data analytics is a very important strategic advantage for the company as the companies can look at improving the processes and also design products and services that best suits the needs of the consumers. New technologies like wireless technologies, sensors, mobile devices, etc. have even more fuelled the need for data analytics as more and more data is being captured and this must be used by companies for decision making. Some of the big players in this segment are IBM, Oracle, SAS, etc. Many small and start-ups are also coming focusing particularly on the healthcare analytics segment.

Healthcare analytics is being aggressively adopted by both payers (insurance companies) and providers (hospitals) and some of the most important  functions include improving the accuracy of diagnoses, cost reduction, fraud prevention, revenue generation, service improvement to real-time view of the business. The major driver for business analytics is the return on Investments (ROI), with a median of five years, from 10% to 1,000%, according to a report provided by MarketsandMarkets, a global market research and consulting company. The global market is dominated by the U.S., followed by Europe, Asia, and the Rest of the World. The U.S. will continue to lead the global market till 2020. Apart from the U.S., the Asian region is also expected to drive the market growth. The European market is the second largest market, growing at a lower rate due to the economic crisis. Governments are also incentivizing the companies that are adopting the data analytics tools and also using such tools in the decision making. Governments across the globe spend trillions of dollars on healthcare and they are looking for ways and means of reducing the cost or looking for significant value from their healthcare investments. Despite the advantages there are certain issues and challenges related to healthcare analytics like as data security issues, patient data confidentiality, doctors and hospitals lack of interest in IT adoption, and lack of skilled professional cross-functional analytical skills in medicine, statistics and IT.

Global IT Spending 2012 – Key Trends

IDC predicts that worldwide IT spending will grow 6.9% YoY to $1.8 trillion in 2012 and  20% of this total spending will be driven by smartphones, media tablets, mobile networks, social networking and Big Data analytics. Forrester research says IT purchases will be $2.042 billion in 2011 and $2.154 billion in 2012, with the growth driven mostly by underlying economic growth and adoption of newer technology. Gartner forecasts IT spending will be $3.7 trillion (7.6% YoY) in 2011 and expects the IT spending to reach $3.9 trillion (4.6% YoY) in 2012. Gartner IT spending includes Telecom spend and without telecom spend, total IT spend is $1.53 trillion (8.4% YoY) in 2011 and $1.62 trillion (6% YoY) in 2012.

IT spending and budgets did not see any cuts in 2011 but there will be cuts in spending in 2012. There will not be any drastic cuts as IT spending is critical for ongoing business success, but spend scrutiny and conservative plans are expected. The worst case scenario of the total unraveling of the Euro crisis is that the IT spending will increase by 1-2% YoY. This growth will be driven by the emerging economies like India, China, etc. Due to the Euro zone crisis and US Economic slow down IT spending is expected to grow by 4- 6% YoY way below the current levels of 7-10% YoY. Europe will be most affected market compared to US market.

Hardware, Software, IT Services will see single digit growth in 2012. Spends on these categories will be slow as companies will try to cut down spend and will not go for up gradations aggressively. Only business critical spend will be made. Mobile devices such as notebooks, tablets, and smartphones will overtake the PCs. Mobile applications and operating systems revenues will grow and will even surpass the mainframes revenues and the competition is expected to intensify with major vendors like Microsoft, Amazon, Apple and Google coming into market with new offerings.

Cloud Computing will become more competitive as all the major vendors like Amazon, IBM, Microsoft, Google, etc are focusing on creating application platforms and ecosystems. Not only these major vendors but also Indian Outsourcing vendors are developing the cloud based offerings and platforms and are aggressively marketing these to the clients. According to IBM, the demand for cloud computing is on the rise as organizations look to expand the impact of IT to deliver innovative services while realizing significant economies of scale. IDC analysts expect that cloud spending will be $36 billion next year. M&A is also expected in cloud space where the major vendors look to buy smaller and medium players looking to add more applications and content.

Social media is on the rise and it is expected to be critical for the consumers as well as businesses. Businesses are looking for social media tools that help them reach their customers, track their reputation and feedback of the customer and use it internally in the organization to interact with employees. Social media analytics is expected to be a big business as the businesses look for tools and gain critical insights from these tools to determine the effectiveness of their marketing programs, call center performance and cross-selling initiatives. There have been acquisitions in this segment where larger vendors are buying out smaller niche players with good product and platform and integrate it in their core offerings.

According to IDC, Big Data is critical in 2012 as the volume of digital content grows to 2.7 zettabytes (ZB), up 48% from 2011. More than 90% of this information will be unstructured (such as images, videos, MP3 files and files based on social media and Web-enabled workloads) -- full of rich information, but challenging to understand and analyze. 2012 is likely to be a busy year for Big Data-driven mergers and acquisitions as large IT vendors seek to acquire additional functionality. Business Intelligence and analytics key to unlock the data and use the data in organizational decision making and strategy formulations. Analyzing in real time is the future of analytics.

IT and BPO will also see growth in 2012. Clients will look for offerings from vendors that will have significant impact on their businesses. Vendors are adopting cloud computing and also offering end to end platform offerings and are increasingly looking for outcome based offerings that will increase their margins. Indian Outsourcing vendors are forecasting and preparing for the volatile economic situation and are actively interacting with clients on regular basis. As of now vendors are positive but they are expecting definite headwinds in 2012 and are confident to tackle such scenario.

App stores with lot of new applications, intelligent devices with sensors, tablets, and smart phones are being launched and these devices and apps are creating new businesses and are adding more functionality and are being actively integrated by the large vendors in their core product offerings. 2012 will see many new offerings in terms of hardware, software and services and despite the tough and volatile economic environment, vendors will launch them.

2012 will be a tough year and businesses and clients both are cautious about the way that things will turn. The second half of 2011 was supposed to be slow and budget/spending cuts were expected but there were not any drastic cuts. There is a least possibility of a deep recession like the one in 2008 but the down grades and the economic issues will take time for resolving and this volatile economic situation is expected to continue in 2012. Businesses are having strong balance sheets and financially strong but the overall consumer confidence is low due to high unemployment rates and fall in incomes. Emerging markets play a critical role for keeping up the growth and how much these economies are affected by the Euro Zone debt crisis and US economic slow down is also critical fact and these economies can always look for their domestic market as the governments and businesses in these markets are investing in IT for good governance and citizen services.