Uh, Oh. Here Comes the Cavalry

By now, every one from the press to Obamacare's critics to the Obama Administration themselves have come to the same conclusion: that the issues with healthcare.gov are not just a few glitches that can be resolved in a few weeks but rather large-scale, fundamental system design problems that are going to take an awful lot of work to fix.

Today comes an announcement from Kathleen Sebelius that they are sending in the cavalry: a "technology surge" that includes a management expert to provide executive-level guidance for the massive project and "additional experts and specialists" that include "veterans of top Silicon Valley companies" to diagnose the issues and help fix them.

Rather than filling me with confidence and making me think "Great, now things are finally going to get done," this announcement left me saying, "uh oh." For, boy, have I ever been there.

It's a natural response to a technology crisis: throw everything you've got at it, bring in strong leadership, and get in as many experts as you can to iron things out. The problem is, they're not, metaphorically speaking, taking a defective car back to the shop to inspect, overhaul, and fix it; instead, they're trying to diagnose what's wrong with the car as it careens down a freeway and repair it without taking the foot off the gas.

When you bring in the proverbial army of experts, the first thing they need to do is get up to speed on the whole project and the whole complex system. They don't have the context, the history, the background into why whatever decisions were made ended up being made the way they were. At best, trying to bring the new experts up to speed just distracts the efforts of the team that's already in the weeds and trying their best to fix the issue. At worst, it throws a whole bunch more cooks--and pushy, confident ones at that--into a kitchen that's already way too crowded.

Any bright software engineer can take a look at the work of another engineer--especially one who is perhaps not as talented--and identify a zillion problems in the technical design and in the code and a zillion things that could be changed to "make it better." (The classic "not invented here" bias.) But, how many of those changes would actually improve the overall system performance versus making just slight improvements that are insignificant in the grand scheme of things?

It takes a very rare engineer indeed to be able to look past all the warts and knots and be able to find the small handful of changes that can bring stability and improved performance to a very troubled system. And, if you quickly determine--as I'm sure many of the experts will--that the whole system was architected wronged, well, how do you fix that, without going back to the starting line and rebuilding the whole thing?

My hope is that all these specialists and experts are truly cream of the crop and that they have the exceptionally rare capability to bring perspective and balance to the fire-fighting operation. My hope is that they can support, mentor, and guide the many teams of engineers as they frantically try to right the ship instead of just second-guessing and distracting them and sending everyone running off in all sorts of new, chaotic directions.

My experience, unfortunately, suggests its far more likely to be the latter and, if so, healthcare.gov is in for a very long, bumpy ride.

IPOs Let Companies Raise Capital: Myth?

"Tweet, tweet. I need capital!"

Over at Slate, Matthew Ygelsias calls out four interesting points from Twitter's S1 filing, and all of them are good ones. His fourth point, though, did make me pause: "IPO's aren't about raising capital."

In a sense, he's absolutely right. Almost all tech IPOs--and Twitter is certainly no exception--are not undertaken because the companies need to raise capital to fund the business. Indeed, they are exit vehicles for the original investors--generally venture capitalists--to get their money out of the business (along with, in most cases, a handsome profit.)

IPOs like Twitter, Yglesias argues, puts the lie to the old myth that the purpose of the stock market is to let firms raise capital. But, I don't quite buy that. The stock market is doing exactly that for tech firms, only in an indirect way.

No one could create a start up in his or her garage, hire a few people and make a splashy demo, and then file an S1 and go public. No one would buy the stock. Instead, early investors are willing to take a risk and invest multiple millions of dollars in the company because there stock market is out there as one potential "exit strategy" so they can have a "liquidity event", as the jargon goes.

An IPO is not the only way for investors to cash in--they could always sell to another larger company, for instance, which frequently happens. But, without the prospect of a potential IPO out in the future, it would be far, far harder for tech entrepreneurs to raise the money they needed to get their big idea off the ground. So, to my mind, at least, it seem the stock market is doing exactly what it has long been rumored to do: letting firms raise capital.

Private Exchange Momentum Increasing . . . But Let's Not Panic

As might have been expected as we approach the open enrollment season, there's been a flurry of news over the past week about the latest big-name companies to shift away from traditional company-sponsored health benefits and send their employees out to an Exchange.

Last Friday, the Trader Joe's grocery chain announced that it was ending health benefits for part-time workers and instead sending them to the public exchanges with a $500 stipend. On Wednesday, Walgreens announced that it was moving 120,000 employees to Aon Hewitt's private exchange. In doing so, it joins IBM and Sears in exploring the private exchange approach, and we can reasonably expect similar announcements to follow from other firms in upcoming weeks.

In a curious side-effect to the news, the stock for both Catamaran, who provides PBM services to Walgreens, and Express Scripts, a peer PBM competitor, plunged 8% and almost 5%, respectively. Investors are worried, apparently, that the move to a defined contribution and exchange-purchase model (whether via public or private exchanges) will be harmful to PBM revenue.

I personally can't see how this makes a difference. Regardless of how members acquire their insurance, they will still need a PBM to manage all the pharmacy benefits.

But, the larger issue is this: the immediate reaction is to see a change in the benefits-funding and sales model to be disruptive to the entire spectrum of insurance operations. This goes hand in glove with what I typically see among payers and other healthcare-related companies when they contemplate the notion of "private exchanges." They tend to blow it up to be a much larger and more mysterious beast than it needs to be.

"Private exchanges" are really nothing new. They're just a different type of sales channel, and payers should look at them that way. From a sales and marketing perspective, they will create huge new challenges for how to reach new prospects and, in particular, ensure that payers can win the loyalty of consumers shopping side-by-side with the their competitors.

But, from an operational perspective, once that member has decided to get coverage from that payer, everything else--the enrollment, new member fulfillment, invoicing and payment, member service--should just flow through the existing operational processes.

The more we are able to see that public and private exchanges are just new sales and marketing channels and not entirely different insurance markets the more effective--and less panicked--we can incorporate them into existing technology and operational processes.

And Suddenly There Were Three . . .

This article from Michael Endler at Information Week on Apple's move to make iWork free on iOS devices got me thinking, and my conclusion is that, suddenly and out of the blue, we might have a new office productivity application battle on our hands.

Years ago Microsoft Office crushed alternatives like Lotus and WordPerfect as the ubiquitous office application suite. Now, suddenly, we've got Google with its Drive (nee Docs) and Apple with iWorks stepping up to potentially give the old gray mare a run for it's money.

My data points are more anecdotal and observational than empirical at this point. Here are just two:

• I'm seeing more and more small businesses--design firms, publications, even health insurance co-ops--using Google Docs to share and collaborate.
• Every time I visit a corporate setting, more an more people are showing up in meetings with iPads, many complete with keyboards to serve as a full mobile computer. In fact, one client I am currently working with recently did away with laptops and issued company-owned iPads (with aftermarket keyboards and cases) to anyone needing mobile computing. And, everyone said that it took a few days of a learning curve but they have no desire to go back to their old slow, clunky (Windows OS) laptops.

I've not done much personally with the iWorks apart from using the Keynote presentation suite (which is pretty slick), but I've consistently been impressed with the progress that Google Docs/Drive has made with each passing year. And the sticker price (free) is a pretty compelling proposition.

So, I wouldn't be surprised if we see a new war for enterprise market share crank up over the course of the next year or two as desktop PCs go the way of the buffalo and we all start shaking out what the productivity devices and productivity software suites look like.

Buying an Exchange Health Plan: No Need to Rush

A lot of emphasis has been put on the October 1st date as the day the federally-mandated health insurance exchanges go live, and there's starting to be a lot of noise made about whether the exchanges will be ready. The recent decision by the Feds to delay their final agreements with insurers is just one indication of the technical glitches that we are likely to see once the exchanges are open for business.

But, the real key date is January, the date exchange-purchased insurance will go into effect. For any consumer planing to shop through an exchange to take advantage of Federal premium subsidies, there's no more need to rush out to your state's exchange on October 1st than there is to rush out and buy your Halloween costume the first day that pop-up Halloween shop opens down the block (which, in my town, was sometime in July).

When I used to manage web systems overseeing open enrollment for large employers, we would see the two biggest spikes in traffic when open enrollment first began and right before it ended--usually for the first 3 to 5 days, as all the early birds piled in to select their benefits for the next year, and then for the last 3 or so days as all the procrastinators finally responded to the repeated reminders from the HR department and logged in to select their plans.

Based on what we know so far, consumers would be well advised to wait a few weeks after the exchanges open in October to check them out. Sometime around Thanksgiving might even be ideal. But, don't wait until after Christmas. The end of the year laggards may well bog the systems and make the experience downright painful.

Exchange Pre-Go-Live: A Few Technical Glitches, But We Shouldn't Be Surprised

Reuters is reporting that the Department of Health & Human Services will not sign its final agreements with health insurance carriers selling on the federal exchange next week as was planned but are instead delaying until mid-September.

Reuters' sources attributed the delay to "it to technology problems involving the display of insurance products within the federal information technology system." This echoes what I've heard from some of the insurers I work with, who have reported that the plan displays are, to use one client's words, "a total mess."

Have built and deployed numerous health insurance shopping and enrollment systems in the past, I can pretty much guess precisely what they are dealing with. When you're building a system and working with test data, you try to plan in advance for everything you are going to see. But, when the full set of real data comes in all sorts of glitches--some minor, some dreadful--can crop up.

For example, carriers put longer pieces of text than you expected in a product description and suddenly the text starts wrapping bizarrely or gets cut off. The job that loads the data from the files submitted by the carriers mangles some data or puts it in the wrong place. Non-alphanumeric characters play havoc with your HTML.

All of these things are normal and to be expected. It's something you have to deal with when launching any new system into production. The only problem here is that the systems are going live with one big bang with a lot of public scrutiny and media attention trained upon them.

Expect a lot of this over the upcoming months as the exchanges work through all the normal kinks. The joys of v.1.0 software . . .  

Misunderstanding Microsoft

I've been a little surprised by news stories like this one from the New York Times that have used the occasion of Steve Ballmer's announcing his retirement to crack on Microsoft's track record as an innovative software company.

In particular, there seems to be a commonly accepted notion that Microsoft has been a one-trick pony, unable to adapt to the changing tech landscape over the decades. Prime example: this quote from the above NY Times piece:

The rare tech company manages to thrive from one generation of technology to the next. Only a few of the big ones — I.B.M., Intel and Apple — have done it. And it is not yet clear if Microsoft has a clear path to joining that list of multigeneration kingpins.

Huh? I'm not sure what the author, Quentin Hardy, is thinking. Microsoft was founded a year earlier than Apple, and you can say what you want about Microsoft's struggle to adapt to and stay relevant in today's tech market--smart phones, mobile devices, the Web, cloud computing. But, the notion that Microsoft has been a single generation company is laughable.

Generation 1 and 2: the operating system for personal computers (DOS, then evolving to the second generation, Windows).

Generation 3: the Office suite, which squashed earlier competing products (remember WordStar, WordPerfect, and Lotus Notes?) and made Microsoft an almost monopolistic fixture on desktops in the corporate IT environment.

Generation 4: foundational enterprise technology--Windows NT Server, Exchange, Active Directory, SQL Server, SharePoint, etc.--which made Microsoft one of the leading vendors of enterprise software.

Microsoft's may be struggling to get out in the market with mobile and cloud technology and figure out what it's going to be in the future, but how can you make the case that they aren't a "multigenerational kingpin"?

One common thread in the Microsoft history is this: year in and year out people have tended to underestimate them. SQL Server was a joke of a database compared to Oracle until, suddenly, with version 7.0 it wasn't--especially at the price. Exchange was far inferior to Lotus Notes until suddenly every company in the United States was running their email through it.

This doesn't mean that Microsoft will figure out mobile or smart phones or cloud computing. But, it would be foolish to dismiss them out of hand. And, considering the number of businesses in the United States that still have Microsoft Office on their desktops (which is to say, almost all of them), perhaps the fact that they aren't winning all the B2C battles these days may not really mean that much.