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Small companies prosper by travelling light

Sun, 16th Sep 2007

LIKE BIRDS that forage on the back of rhinos, a key success factor for small firms is the ability to move smartly to avoid being crushed by giant competitors or customers. This is doubly so in information technology, and double again when the company operates in the public sector. Take System C Healthcare, which specialises in the dangerous terrain of healthcare IT, working primarily with the NHS.

System C is at the heart of healthcare computing, working in four out of five of the regional programmes in Connecting for Health, the beleaguered pounds 7bn national programme to computerise the NHS. It is installing its own software in a pounds 7.5m contract to replace the Isle of Man's healthcare systems and is also growing rapidly in the independent healthcare sector through work on the NHS's new diagnostic centres. But getting there has required it to develop a sidestep as sharp as Jonny Wilkinson's.

When it started out two decades ago, System C had no connection with health: it developed software development tools, at which it was a modest success before its chosen territory was abruptly invaded by a mighty rival, Microsoft.

Cue for a first change of direction: the company developed a range of clinical and administrative IT systems for hospitals. In 1996 (yes, that long ago) it installed its first system, and five more followed. By 2003, System C was, it thought, well up with the field turning over pounds 5m a year, it was well placed to bring a tested product to an expanding market that clearly needed it.

Then came the second unforeseen circumstance, which, ironically, took the shape of the NHS's 2003 National Programme for IT (NPfIT). What should have been good news for System C turned out, at least in the short term, to be the opposite. Wanting to roll out hospital systems fast, NPfIT reckoned (perhaps rightly) that System C was too small to provide national coverage, opting instead for what turned out to be problematic solutions from much larger companies - the UK's iSoft and US companies IDX and Cerner. 'Our core market just went away,' says Markus Bolton, System C's founding director.

The company had no choice but to change tack again. Taking something of a gamble, it used the shake-up provoked by the new NHS procurement arrangements to scoop up 100 of the best-qualified people released by other IT sufferers, train them in specialised work streams (data migration, integration etc), and reinvent itself as a 'domain adviser' to the NHS. 'We'd installed multiple systems, so we knew how it was done,' says Bolton. 'We could apply everything we knew' - but to installing other firms' systems rather than its own.

The reinvention was successful, winning the 'new' System C contracts in four of the five regional programme clusters and trebling its turnover. Yet life in the new guise has not been all plain sailing. The announcement by iSoft in 2005 of a two-year delay to its Lorenzo hospital software package and Accenture's subsequent exit from the programme caused a significant downturn, just six months after the company's flotation on Aim - 'implementation work dropped by 50 per cent in a few weeks and took months to recover'. But a major contract win to supply expert support to Connecting for Health has helped to get business back on track.

Bolton is philosophical about the changing environment. He believes that the agility and resilience developed through the vicissitudes of the past few years are critical future-proofing for the company, while the driving ethos of helping the NHS to deliver continues to attract good people. Meanwhile, the accumulated experience is priceless. Bolton notes that the average healthcare experience of System C's 170 specialists is 15 years: 'System C staff have been involved in most of the important programme "go-lives" we've seen so far.'

Cannily, although shorn of its English market, the company has continued to maintain and develop its own MedWay hospital systems in hope of growth in the home countries and Europe. Ironically, other countries may be the indirect beneficiaries of the lessons learnt from the UK programme's early delays and setbacks. The private and independent healthcare sectors are also providing demand.

At home, the company is sporting a sizeable feather in its cap with the award of a major contract to supply the Isle of Man with an island-wide healthcare system, while its earlier generation of products continues to be used without fuss by thousands of medics and managers. If, as is possible, the next phase of Connecting to Health procurement allows trusts to range more widely in their choice of patient systems, System C should be well positioned to come (nearly) full circle, adding more hospital sales to its new-found services business. But given the history, it would be unwise to stop practising the fancy footwork just yet.

The Observer, 16 September 2007


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