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com A Free source for live projects & business news analysis Going Small and Medium Introduction: Davinder Khillu, CEO, Healthcare IT Ltd. (HCIT), slipped into his comfortable flight seat, staring out into the clear sky over the Bangalore city as his flight smoothly took-off and rose into the high altitudes. He was contemplating his recent decision, with a bag of mixed feelings, on the investment done for a new software product for SME Healthcare Industry segment. His parent company enjoyed the 2nd position in the Indian IT services market and 10th position worldwide in the IT services market. Presently the other product offerings from HCIT had captured the majority 50% market share and saw strong repeat business within 6 years of the product existence in Indian and Middle East markets. APAC market showed mild responses while the US and European markets were deeply entrenched with big names like Cerner, Eclipsys and more. The company decided to concentrate on Indian and Middle East markets simultaneously improving the product offerings and enhancing the value chain for the existing customers. He was happy that his large sized competitors havent yet started investing heavily in this segment as well as reports showed that SME segment is still untapped by large players which is surely going to give him early movers advantage. He was confident that his technical and domain specialists, along with leveraging existing product knowledge, are the best of the lot, who can surely take up this challenge and build a product which will storm the market and cater to the needs of the SME hospitals and medical centers. However, few concerns were continuously intriguing him to compete with the small time players in the SME market segment. With the BIG parent company name would the SME market be intimidated? Would they be ready to pay a premium for the companys brand name or would they be happy with their existing small time vendor? Healthcare IT Industry Dynamics:

Integrated Hospital Management Systems

Fig. 1: Timeline for Healthcare IT Solutions Integrated Approach

All names and company are fictitious and bear no resemblance to anybody dead or alive, any similarity would be purely coincidental. This case is for educational purposes and shouldnt be used for any other purposes without prior permission. Courtesy: Mr. Sachin Uppal , Marketing Director ( Asia & Middle East)

www.internsindia.com A Free source for live projects & business news analysis Healthcare is a Sunrise sector with a lot of investment flowing in from healthcare providers and government too is laying emphasis on enhancing patient care in India and globally. The HCIT market continues to be heavily bifurcated between clinical vendors, which are seeing success in new customer sales, and Financial / administrative vendors, which are seeing elongated sales cycles and limited buyer interest. This decision came with an in-depth research done at different levels including neutral agencies as well as highly focused individuals from the HCITs research wing. Industry reports clearly showed that there is no single large player in the SME market segment. The industry is widely fragmented with small time players in each geographic location in India. Technology trends and Cues were taken from the US market trends, considering Indian market is bound to follow the advancements. Some industry noise of a rebound in financial and administrative vendors has surfaced over the past year; some companies such as IDX Systems, WebMD, and McKesson saw little improvement to the outlook for financial and administrative software. However, on the clinical side of the market, business continued to be strong. Cerner and Eclipsys were clearly capitalizing on their leadership positions (in US No. 1 and No. 2, respectively) in the clinical market. Based on current view of the market, there is no reason for the momentum of clinical vendors to abate in the near future. With just 5% of the market penetrated in India, this segment should provide solid growth opportunities in the coming 5-10 years. Last month Davinder called for a meeting with Stephanie, the Alliances and Marketing manager whom he had hired from the HCITs parent company. Stephanie had 7 years of Technical Marketing, Alliance management and Marketing Management experience. Sumit who had recently joined as a Marketing Manager also joined the meeting. The agenda was to come-up with the Goto-market (GTM) strategy as well as identify the USP of the product. Stephanies analysis showed that HCIT should recognize this sector as an important sector and actively come up with this product which should provide complete IT solutions for Hospital information management and automation in the SME segment. Sumit was responsible for giving the Middle East industry analysis. According to Sumit the product fitment didnt match the Middle East market as of now, hence he suggested holding on till the product is fit for the Middle East market. Now Davinder and Stephanie were focused on the GTM for India wide Launch. A USP was built into the product by having an Integrated Solution which included financial, administrative and clinical systems all integrated to match the requirements of the SME market segment. This product offering was unique as most of the products catered only to either financial or clinical requirements, and this product actually catered to all of the requirements in one single solution, saving cost and time for the Hospitals by taking up just one solution for all their needs. A draft of strategy was created and Davinder left the meeting handing over the responsibility to Stephanie and Sumit to proceed and build the specifics. Going after Small and Medium Healthcare Segment: After that meeting Stephanie and Sumit, got deeply involved in getting the GTM strategy out. Both did further analysis of the market and divided the healthcare market in the tier 1 and tier 2 and tier 3 segments. Tier 1 segment refers to hospitals with over 350 beds, super specialty, multi-specialty hospitals, corporate healthcare chains etc. Tier 2 refers to 150 beds to 350 bed hospitals both public and private, general, super specialty and multispecialty. Tier 3 refers to sub 150 bed hospitals, private nursing homes, clinics and diagnostic labs. HCIT is already addressing the tier 1 All names and company are fictitious and bear no resemblance to anybody dead or alive, any similarity would be purely coincidental. This case is for educational purposes and shouldnt be used for any other purposes without prior permission. Courtesy: Mr. Sachin Uppal , Marketing Director ( Asia & Middle East)

www.internsindia.com A Free source for live projects & business news analysis and tier 2 segments through HCIT HIS. However a need is felt to address the Tier 3 segments as well, which is a volume market. Hence HCIT is introducing HCIT HIS Lite for this segment. The total number of healthcare facilities today in tier 1, tier 2 and tier 3 segment is expected to be around 5000 numbers. Of which Tier 1 and Tier 2 are about 1000 numbers. Tier 3 segments is expected to be about 4000 in number and includes hospitals which are sub 150 beds, nursing homes, clinics and diagnostic labs.
Hospital Type Tier 1 Tier 2 Tier 3 No of Beds 350 + 150 - 350 < 150 No of Hospitals 300 700 4000

Exhibit 2: Hospital Split in India

Competitive Analysis in a Single Snapshot:

HCIT HIS Lite will be at the high end of the technology axis and low end of cost axis. Volumes will drive down cost. Also the Company will operate through a partner model which will enable serving volumes. There will be a product development roadmap with version management based on domain and technology trends. Davinder, Stephanie and Sumit again met this time with their Sales Manager, Technical and Delivery heads. This time they had to present the GTM strategy to the entire audience and finalize the same. With the support of Sales and Delivery managers they were supposed to come up with the entire business plan with the time-lined calendar for product launch and market activities and they came up with the following go-to-market strategy:All names and company are fictitious and bear no resemblance to anybody dead or alive, any similarity would be purely coincidental. This case is for educational purposes and shouldnt be used for any other purposes without prior permission. Courtesy: Mr. Sachin Uppal , Marketing Director ( Asia & Middle East)

www.internsindia.com A Free source for live projects & business news analysis Stephanie started by explaining the target market segment as follows Hospitals with less than 150 beds, nursing homes, clinics, diagnostic labs Pharmacy chains which can be national or local city based. Currently the target segment involves only units in the private segment. Stephanie continued with explaining the Marketing Channels. She suggested this will be a partner led model. HCIT will have partners who will be both sales and services partners. The partner will be responsible for breaking into new accounts and also carrying the installation and training needed for rolling out the solution. Post implementation support will be provided by HCIT directly through a remote support model which will have an e-helpline module and telephonic support. The partners will get a margin on the product license. The service revenue is for the partner. HCIT will have a partner manager for managing the partners. Also there will be technical specialists needed for enablement of the partners before they can take up the projects. Then she moved on to explain the Sales distribution strategy. It will be partner driven as mentioned earlier. The partner will make margins on the product license. He will make services revenue for rolling and implementing the project. If he provides L1 support then he can make services revenue for support as well. Davinder took over the space this time to explain the Pricing strategy and briefly put it as Volume Based. Product license will be per user based (concurrent users). It will be sold in blocks of 5 users or 10 users. Post this he retired into his chair and asked Sumit to explain the positioning. Sumit enthusiastically walked up and began explaining the Product positioning. He categorically mentioned it will be positioned in the SME market segment as explained by Stephanie. There is a perceived gap of a national level strong IT player who can service this market. Currently the players in this segment are mostly small players who give customized packages addressing customer needs on a piece-meal basis. These players are priced very aggressively. HCITs pricing and positioning will be above these players. There will be a strong brand pull for the HCIT product and has to be backed strongly by hardware and software partners. Sumit suggested some Strategic partners names like Microsoft, HP, Intel and Cisco. Just when the Delivery Manger, Technical head and Sales manager seemed to be convinced, Davinder jumped in and clearly told Stephanie and Sumit - Your Marketing budget is Rs. 2 crores annually. I want annual sales of 32 units of this product (8 units from each of the 4 regions). He continued and said the product should be ready within 3 months. Now the room was abuzz with energy and everyone started discussing the targets and how they were going to achieve the same. Sumit explained the Marketing Activities he has planned and he suggested: Road shows, sponsored events, marketing collaterals, direct mailers, press releases, advertisement in select health magazines. All names and company are fictitious and bear no resemblance to anybody dead or alive, any similarity would be purely coincidental. This case is for educational purposes and shouldnt be used for any other purposes without prior permission. Courtesy: Mr. Sachin Uppal , Marketing Director ( Asia & Middle East)

www.internsindia.com A Free source for live projects & business news analysis Branding: A new brand name HealthSmart IT with the parent brand name as umbrella brand was chosen and the Marketing communication message of: Simple, Comprehensive, Affordable Hospital Information Management System was decided upon and used in various places like the Logo, packaging-shipping, Brochures, Mailers etc. Please fasten your seat belts as we are about to land at the Hyderabad airport And suddenly Davinder came out of his chain of thoughts and gathered himself as he was going to review the first quarter performance of the company. Sales:
FY 2006-07 Units Sold Region/Quarter North West South South East 1 1 1 2 2 2 3 4

Exhibit 3: FY06-07 Q1 Sales Numbers Marketing:

FY 2006-07 Q1 Marketing Activities Roadshows 4 cities covering India Product Brochures 1 Direct Mailing to Accounts 1000 Leads Generated India 240 Customer Testimonials 3 Accounts tapped with responses and Visits 120 Press Releases(including online) 12

Exhibit 4: FY06-07 Q1 Marketing Activities undertaken

All names and company are fictitious and bear no resemblance to anybody dead or alive, any similarity would be purely coincidental. This case is for educational purposes and shouldnt be used for any other purposes without prior permission. Courtesy: Mr. Sachin Uppal , Marketing Director ( Asia & Middle East)