Category: Insurance

SS&C Technologies: Multi-Tenant Machine Learning at Scale

SS&C Technologies: Multi-Tenant Machine Learning at Scale

For the past few years I’ve poked around the machine learning (“ML”) and artificial intelligence (“AI”) space. I advised Boston-based DataRobot back in 2014 when they started to build their machine learning platform. I’ve thought about how we at CEORater may leverage ML to score CEOs and companies. Typically when we read about ML and AI it’s from the perspective of a pure-play vendor who markets and licenses its platform across multiple industries for a variety of use cases. Often the use cases we read about are focused on “power users” – people who have a PhD in Statistics or some similar quantitative background.

Recently I had the opportunity to demo SS&C’s (tkr: SSNC), new back-office, middle-office platform (“Singularity“) which has machine-learning, artificial intelligence and robotic process automation (“RPA”) at its core. This was my first opportunity to observe a fintech platform that was built from the ground-up to fully-leverage ML, AI and RPA.

From a background perspective, Asset Management firms of all flavors (small, mid-sized and large, traditional, hedge funds, private equity etc.), Fund Administrators and Insurers use a variety of SS&C products and services to value assets (equity and fixed income securities, derivatives, bank loans, private placements and real assets to name a few asset classes)/ strike an NAV, settle trades and report on asset holdings. The company’s Singularity initiative will replace siloed products with a common ML-based core layer that will have modular AI and RPA services that sit on top.

Multi-tenant machine learning is a significant competitive differentiator. Some readers pride themselves on identifying businesses that have a competitive “moat”. For non-investors a “moat” is a source of sustainable competitive differentiation. Challengers who wish to compete against companies with established moats best be prepared to completely shift the paradigm and render the moat obsolete. You’re simply not going to spend your way around, over or through a moat. Brute force won’t work. If any company ever had a moat, SS&C has one in the world of portfolio accounting systems.

SS&C’s moat is about to get significantly wider and deeper as Singularity is rolled out. This is in no small part due to the multi-tenant machine learning layer. This means that as Customer X has an experience that requires a “learning”, the benefit of that learning is enjoyed not only by Customer X but also by the other customers on the platform. This multi-tenant element to Singularity’s machine learning layer is a powerful scale differentiator primarily for three reasons:

  • Large installed customer base: SS&C has a great many customers and users – therefore more opportunities for machine-driven learnings – the benefits of which accrue to all SS&C Singularity customers.
  • Purpose-built from the ground up: SS&C has incorporated machine learning into Singularity from Day One, providing the company with a significant and sustainable advantage over competitors who may try to retrofit a third-party’s machine learning layer on top of legacy products and services. Retrofitting legacy technology simply can not be as effective from a throughput and efficiency standpoint as a new, modern-architected platform.
  • Cost prohibitive: It’s not an insignificant dollar amount that’s required to build a modern, ML/ AI/ RPA-powered Fintech platform from scratch. To replicate Singularity from a domain-expertise and technology perspective would be cost prohibitive.

VC’s would be wise to avoid trying to disrupt this market. As I see it, the only way to replicate what SS&C has built would be to acquire the company.

Apple Should Double Down on Apple Health Now<span class="badge-status" style="background:red">Premium</span> 

Apple Should Double Down on Apple Health NowPremium 

The iPhone Is A High-Priced Commodity The iPhone is little more than a high-priced commodity at this juncture. There is little differentiation between it and lower cost alternatives (OnePlus for example) both from a design and feature functionality standpoint. However, with 2 billion-plus devices in circulation, Apple’s future does not rest exclusively with new device…

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Personality Analytics: Technology CEOs Analyzed: Part Deux

Personality Analytics: Technology CEOs Analyzed: Part Deux

Some have asked the question regarding our most recent article: Personality Analytics: Technology CEOs Analyzed – “what does it mean?”

Let’s contemplate one example as depicted in the enclosed picture which plots the 56 Mid-Cap Software CEOs we reviewed against the personality trait “Openness“. The output is that the two CEOs who scored in the 99th percentile (Ryu of Guidewire Software, “GWRE” and Marr of Tyler Technologies, “TYL”) are:

1.) less likely to suffer stalled revenue growth on their watch;

2.) less likely to allow their products and services to become stale;

3.) less likely to be disrupted by a competitor or new market entrant;

4.) less likely to see their respective customers move elsewhere and/or become disintermediated from customers;

5.) more likely to adopt new technology to deliver their respective products and services;

6.) more likely to identify adjacent market opportunities..

..as compared to the Mid-Cap Software CEO universe we analyzed (56 CEOs in total), all else held equal.

 

AmazonGo for Healthcare?

AmazonGo for Healthcare?

A New Heavyweight Healthcare Entrant

The recently announced non-profit joint venture between Amazon, J.P Morgan and Berkshire Hathaway was notably scarce on detail. We previously wrote about how Apple is well-positioned to “consumerize” healthcare. The good news is that there is room for others to add value to the healthcare ecosystem.

Trust, Payments & Price Discovery

If we were to fast forward 5-10 years its easy to imagine that Amazon’s contribution to the “NewCo” healthcare joint-venture will borrow heavily from the company’s experience in online retail where three key elements may come into play: trust, price discovery and payments.

1.) Trust: Since its founding Amazon has developed a deep trust with consumers. Consumers trust Amazon to securely store payment-related information, to offer competitive pricing, to provide a wide variety of goods and services and to deliver goods and services in a secure and timely manner.

2.) Price Discovery: Transparent pricing is a key value-added element of Amazon’s platform as it enables consumers to quickly assess value. Further, Amazon has extended the visibility and reach of independent third-party sellers (3rd party sellers generated $32 billion on Amazon in 2017, a 39% increase over 2016), by allowing them to list their businesses.

AMZN 3rd Party Revs
Amazon Third-Party Revenue and Total Revenue

It is the “Price Discovery” category where we believe the NewCo venture can create the most value. It could on-board independent healthcare providers such as neighborhood urgent care centers – forcing them to disclose pricing as a pre-requisite for listing. This would be a “win-win” for providers and consumers. Healthcare providers would benefit from listing their businesses and consumers win by having greater choice and pricing transparency.

NewCo Similarities
NewCo JV could create value in a similar fashion as AMZN’s retail platform

3.) Payments: consumers and businesses have widely adopted and trust Amazon’s payment platform. This technology could easily be leveraged within NewCo’s platform to facilitate payment transactions between interested parties.

AmazonGo for Healthcare?

How far back in the healthcare stack will Amazon/ NewCo participate? The more information Amazon/ NewCo collects about consumers, the more friction can be removed from the process. One example is patient check-in. It is easy to imagine how Amazon/ NewCo could quickly become the industry standard for Electronic Medical Records (“EMRs”) enabling patient check-in to consist of a phone swipe on an electric reader. AmazonGo for healthcare?

Meet Luminar Technologies – the LiDAR Company Powering Toyota’s Autonomous Vehicle Program<span class="badge-status" style="background:red">Premium</span> 

Meet Luminar Technologies – the LiDAR Company Powering Toyota’s Autonomous Vehicle ProgramPremium 

What Is A LiDAR System? Light Detection And Ranging (“LiDAR”) sensors are detection and survey systems to estimate the proximity of a target object. LiDAR sensor systems consist of four primary elements: 1.) Lasers 2.) Scanners 3.) Photodetector receivers  4.) GPS navigation systems. LiDAR systems enable autonomous vehicles (or robots), to observe the world with: a.) Continuous 360…

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Apple Is Well-Positioned to Lead A Consumer-Driven Healthcare Revolution

Apple Is Well-Positioned to Lead A Consumer-Driven Healthcare Revolution

HC-IT Landscape 1

Welcome to Apple Health

Apple recently announced that this spring it will release an update to its iOS for iPhones and iPads that will include a new “Health Records” feature that will provide access to personal medical records covering allergies, conditions, immunizations, lab results, medications, procedures and vitals. Given the ubiquity of the iPhone we believe that Apple is well-positioned to succeed where others – most notably Microsoft and Google – have failed. Listen to our recent podcast on the subject:

Tower of Babel

The Healthcare IT industry suffers from data fragmentation. Some healthcare providers store medical records using difficult to account for paper-based filing systems. Forward-thinking healthcare providers leverage Electronic Medical Records (“EMR”) which are an improvement over paper-based records yet are far from perfect. EMR products from different vendors don’t talk to one another and it’s common for different software versions from the same vendor to experience less than perfect communication. A lack of standards typically creates friction in any technology process and healthcare IT is no different.

EMR software is used by healthcare professionals at small, mid-sized and large medical practices/ healthcare providers to replace inefficient paper-based medical records. EMRs are required to store patient/consumer data in compliance with HIPAA.

How to Achieve EMR Nirvana

Step 1.) Universal Adoption of Secure EMRs: All electronic medical records are required to be stored in a secure-HIPAA-compliant format. This includes text-based, image-based and video-based health records. I considered breaking out “security” as its own “step” given that many CEOs and Boards are slow to address CyberSecurity (see our many CEORater Podcasts and TEK2day.com writings that cover CyberSecurity). No industry is more at risk of CyberBreaches than healthcare given the vast stores of sensitive Personally Identifiable Information (“PII”). We’ve frequently communicated about CyberSecurity and have been a vocal critic of Equifax and “sleepy” CEOs and Boards in the aftermath of Equifax’s 2017 CyberBreach (discovered in July 2017, disclosed in September 2017). I ultimately decided against breaking out CyberSecurity as a separate step given that it must become a way of life, embedded in every workflow, implicit in every operational process. That said, the EMR should become the single version of the truth replacing paper-based medical records.

Step 2.) EMRs On-Demand: EMR data elements must be searchable and readily accessible by any authorized person any time, anywhere in a HIPAA-compliant manner across platforms (zero friction goal). This is true both at the point of care and outside the point of care. One such example outside the point of care would be the application of advanced analytics across millions (if not billions) of anonymous personal medical records – only of course when patients/consumers elect to share their anonymous information. For example, if everyone who owns an iPhone volunteered certain anonymous health record elements to Apple it is not unreasonable to expect that Apple could move society steps closer to personalized healthcare by way of machine learning analytics at massive scale. For our money the world’s most valuable company over the next 100 years will be the company that cracks the code to personalized healthcare/medicine. But I digress..

Step 3.) Portability: EMRs must be portable. For example, if I take a job with a new employer that moves me from Dallas TX to Seattle WA a great deal of friction is eliminated from my move process if my complete EMR is readily accessible from one location that I control (iPhone).

M&A as a Catalyst

Apple could accelerate its Health initiative with one of several Healthcare IT acquisitions. We would focus on the EMR segment.  Acquiring an EMR vendor would enable Apple to tightly integrate its Health App with EMRs to a greater degree than would be possible through EMR partnerships. Cerner and Epic are the leading EMR software vendors – each with a long history and vast domain expertise. Cerner recently recruited a new CEOBrent Shafer – after the untimely passing of its former founder and CEO Neal Patterson. Epic continues to be led by its founder and CEO Judith Faulkner. Were we to advise Apple from an M&A perspective we would focus on Cerner (tkr: CERN) and Epic (private) with athenahealth (tkr: ATHN) as the alternate.

  • athenahealth: Boston-based athenahealth is led by its founder and CEO – Jonathan Bush – cousin to former President George W. Bush. Jon Bush is an entrepreneurial dynamo and in the event of an acquisition would be unlikely to stay beyond the negotiated earn-out period. In addition, ATHN has recently experienced senior-level turnover. Therefore, it would be essential that Apple gain comfort with the key senior leadership team members before executing an acquisition of athenahealth.
  • Epic: Judith Faulkner founded Epic in 1979 and doesn’t have to deal with the turnover that is typical in San Francisco, New York and Boston. The firm is culturally stable.
  • Cerner: enjoys similar cultural stability. New CEO Brent Shafer comes from Philips North America where he was CEO since February 2014. Co-founder and former interim CEO Cliff Illig remains a significant CERN shareholder.

CEO Profiles
CEO Profiles via CEORater.com

Consumerization” of Healthcare

We believe that if the iPhone becomes the preferred EMR access point the patient/consumer will be empowered at the expense of:

  • Healthcare Providers: will have less customer lock-in as a result of portability/ reduced friction associated with changing providers. Many healthcare providers will gravitate toward transparency (i.e. publish pricing if they feel they are price competitive) in an effort to capture business. Major hospital systems are already losing share to neighborhood providers and urgent care centers. We expect this pressure on the large hospital systems to continue (see our earlier post on the healthcare industry).
  • Health Insurers: will continue to face economic pressure. The perverse government subsidization of various components of the healthcare system makes it impossible to have true price discovery and to establish a real healthcare market.

More Fodder for Apple Pay

  • Apple Pay and Apple Insurance? Should Apple Health effectively execute its strategy of becoming the preferred medical record access point it will be the connective tissue between consumers and healthcare providers. This will afford Apple the opportunity to monetize this symbiotic relationship by way of facilitating payments and/or offering its own brand of healthcare insurance – perhaps offering pay-as-you-go and peer-to-peer insurance models. Time will tell.

Healthcare IT Vendors

Partial List of Healthcare IT vendors sorted by Run Rate revenue. The “Run Rate” figure for each company was derived by multiplying the “Most Recent Reported Q” or “MRRQ” revenue figure for each company by “4” unless otherwise noted. For example, GE’s MRRQ revenue figure of $5,402 x 4 = Run Rate revenue of $21,608. Note that rounding may impact certain of the Run Rate revenue figures.

Healthcare IT vendor revenue

 

 

 

 

 

 

 

We’ve Been Critical of Xerox Since 2012

We’ve Been Critical of Xerox Since 2012

We have been critical of Xerox’s (tkr: XRX) senior leadership since 2012 when I wrote a letter to former Xerox CEO Ursula Burns advocating a strategic M&A plan (read my letter here). We agree with Messrs. Icahn and Deason that XRX put itself up for sale. Listen to our recent CEORater Podcast on the subject: Ep. 114: We’ve Been On The Xerox Case Since 2012

PII-Centric Organizations That Don’t Take CyberSecurity Seriously Ought Not Be in Business<span class="badge-status" style="background:red">Premium</span> 

PII-Centric Organizations That Don’t Take CyberSecurity Seriously Ought Not Be in BusinessPremium 

I never thought I would advocate litigation, but perhaps that’s what needs to happen. PII (“Personally Identifiable Information”)-centric organizations (think healthcare providers and online retailers for example, any organization that stores credit-card numbers, social security numbers, etc.), that choose to neglect CyberSecurity and subsequently suffer data breaches where sensitive customer data is exposed ought to…

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Cybersecurity Overheated? LPs Beware<span class="badge-status" style="background:red">Premium</span> 

Cybersecurity Overheated? LPs BewarePremium 

It feels to us that the Cybersecurity venture market is a bit overheated (listen to our recent podcast on the subject, Ep. 104 CEORater Podcast). The National Venture Capital Association does not break out the Software industry by subsector, therefore it’s difficult to find precise numbers. However, our unscientific analysis (industry publications, reported deal flow,…

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Automobiles as a Service (AaaS); Uber Completes Tender Offer

Automobiles as a Service (AaaS); Uber Completes Tender Offer

Cadillac‘s “BookbyCadillac” premium automobile subscription service (we refer to as AaaS), sits comfortably between the traditional car ownership model and the pure rideshare model (Uber, Lyft, Waymo). Priced at $1,500/month (plus $500 initiation fee), we don’t believe that Cadillac’s bundled subscription service is a good value – flexibility and convenience come at a price. Listen to CEORater Podcast Ep. 102 to learn more.

In other news, Uber completed its tender offer to an investor group led by SoftBank. Listen to CEORater Podcast Ep. 103 to learn more.

The Wall Street Journal published Uber’s financials.

Uber Financials