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Cranfield, UK, 14th October 2024, Written by Jake Bennett –
The exploration and investment in public cloud in imaging IT is hotting up, moving beyond the “first movers” observed in the US market. As a result, public cloud has been in the spotlight, with vendors evaluating how to invest in technological roadmaps and develop a relationship with hyperscalers to take advantage of the cloud revolution.
In truly basic terms, there are two options available to imaging IT vendors when it comes to implementing a public cloud strategy:
- Cloud Agnostic – Investment in agnostic cloud services that can be leveraged in any hyperscaler environment.
- Preferred Cloud Partner – Developing a deep integration with one specific public cloud provider. Importantly, with this strategy, vendors are also able to deploy on alternative cloud providers, however the technology’s optimisation would be impacted.
But what is the reality of public cloud adoption in imaging IT? Is there a threat of vendors in being left behind if a cloud strategy isn’t implemented, and if so, in what timeframe?
Preferred Cloud Partner
As you’ll observe from the figure below, amongst the top 10 global imaging IT vendors, the most commonly employed public cloud strategy has been “preferred partner”.
A preferred partner strategy allows an imaging IT vendor to take advantage of benefits such as rearchitecting technology stacks, with the intention of driving cost optimisation of image storage and compute requirements. Preferred partner status does also give an imaging IT vendor greater leverage to negotiate more favourable storage and computing fees, which a vendor can either pass on to customers to provide a more competitive solution, or can increase profit margins.
There are however drawbacks to this strategy. A high level of commitment could be misplaced if a hyperscaler falls behind the pack in terms of medical imaging services or strategy, geographical investment in data centres and coverage, or there are unexpected changes to its pricing structure.
Partner Choice Matters
Currently, Google, Microsoft and Amazon are the common choices for public cloud partners amongst imaging IT vendors. Although there are synergies across the main three hyperscalers present in the medical imaging market, each has slightly different strengths and market positioning. Whether that aligns to target customer segment or pricing strategies that can favour outpatient facilities for example, geographical presence outside of the US as well as opportunities and investment outside of radiology including generative AI, clinical AI and digital pathology.
While the big three hyperscalers are early front-runners in the public cloud space, there are other players in the mix, including Oracle, IBM, Huawei, Alibaba, Wasabi and a handful of others. With no defined “winner” yet, it’s important for imaging IT vendors to be aware of alternative vendors and which markets the “challenger” cloud vendors could have a bigger role in imaging IT.
From a US perspective, Oracle would be one to watch, following the recent acquisition of Cerner, now Oracle Health, and the opportunity it affords the cloud vendor. Oracle has an opportunity, if it chooses, to utilise its current EHR installed base to carve out a real niche in the medical imaging cloud market. At present, activity in the realm of medical imaging has been confined to a partnership with Ferrum Health, an AI Platform vendor, with no formal strategy or PACS related partnerships announced yet.
Some of these alternative players represent more selective opportunities, more applicable in emerging markets. In most examples, vendors such as Huawei, Alibaba and Wasabi present a cheaper option for public cloud hosting than the big three but have more specialised geographic coverage, limited by the number of data centres. Huawei for example has leveraged partnerships across Latin America to try and create a foothold in the healthcare cloud market, including a partnership with MV Sistemas in Brazil, to host its EHR offering on Huawei’s cloud.
Cloud Agnostic
The alternative to selecting one cloud partner, is to remain ‘cloud agnostic’. Being agnostic allows vendors to be more flexible and agile in the evolving landscape of public cloud adoption in imaging IT. Additionally, opting to remain cloud agnostic can be financially less resource intensive than preferred partnered. A strategic decision that could be made based on the priority of public cloud in a vendor’s core customer segment or geography, whereby R&D priorities may align to enterprise imaging or AI integration for example, instead of public cloud.
While the agnostic route is less common currently, we have to remember that overall cloud adoption is still relatively low, with on-premises representing over 75% of the global imaging IT market in 2023. As such, there is an element of time for those vendors yet to select a strategy, preferred partner or agnostic.
Public Cloud Alternatives
Public cloud is not the only deployment option in the imaging IT market. A significant portion of the current cloud hosted market remains on private clouds (either imaging IT, telecoms or third-party private cloud provision). It’s important that imaging IT vendors do not get lost in the hype surrounding public cloud and assess partnerships for cybersecurity to enhance their own data centres, or third-party private cloud hosting vendors. Depending on the geography and customer segment, there can still be a level of hesitancy for hosting patient data in a public cloud amongst providers, but also note the security and outsourcing benefits of an “off-premises” strategy. Thus, private cloud can be a solid option. Unlike public cloud, whereby overall costs and pricing transparency remains a struggle in the imaging IT market, private cloud can offer a more cost-sensitive alternative to vendors and providers.
What Should Vendors Do?
Given the nascence of the public cloud market, and being in the midst of a long transition, it will be important for imaging IT vendors to maintain a level of flexibility. As the cloud market matures, and cloud is increasingly deployed at scale, the need for flexibility will wane, but until that point it remains prudent to have a selection of hosting options for providers.
In the long term, we’ll see more of a market equilibrium being reached, as the cost of cloud reduces and the accessibility improves, the cost and efficiency benefit gap between public cloud and alternative hosting environments will begin to close.
Cloud isn’t, and never will be, a one-size-fits-all option, vendors will have to remain agile and adapt to a changing market and evolving demands.
Are you interested to learn more about the impact that increasing cloud adoption will have on the imaging IT market now and in the future? We at Signify Research have published our latest topical report Cloud Adoption and Business Model Evolution, available now. Please reach out to me at jake.bennett@signifyresearch.net if you’re interested in learning more about the report, or finding out more about our pricing.
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Signify Research’s imaging IT service provides expert market intelligence and detailed insights across radiology IT, cardiology IT, and advanced visualisation IT, alongside operational workflow & business intelligence tools. Combining primary data collection and in-depth discussions with industry stakeholders, our thorough research approach yields credible quantitative and qualitative analysis, helping our customers make critical business decisions with confidence. Throughout the course of 2024, the imaging IT team will be further assessing developments in the market through its’ Imaging IT Market Intelligence Service.
About The Author
Jake is the Senior Market Analyst on the Imaging IT team and joined Signify Research in late 2023, after over half a decade in the medical devices and healthcare market research industries.
About Signify Research
Signify Research provides healthtech market intelligence powered by data that you can trust. We blend insights collected from in-depth interviews with technology vendors and healthcare professionals with sales data reported to us by leading vendors to provide a complete and balanced view of the market trends. Our coverage areas are Medical Imaging, Clinical Care, Digital Health, Diagnostic and Lifesciences and Healthcare IT.
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