Monday, March 22, 2010

Healthcare Regulation requires Business Agility

Whether you agree with the US's recent bill on health care reform or not, it is clear that businesses will need to be agile in order to comply with the new forthcoming regulations they must comply with. There are always byproducts of regulation (i.e. secondary markets) and I have to think SOA will be one of the beneficiaries from organizations having to be flexible enough to comply with new regulations. How fast can a business change without disrupting current business operations and without impacting new growth opportunities? That is a scary question to many organizations and sends shivers down CIO's backs. A lot of organizations either don't have the IT flexibility to change with these new demands on their business, or can only adapt through manual, non-automated processes (such as hiring more business analysts to collect and disseminate the corporate information-- see "swivel chair integration"). They might be able to throw an army at the problem, but that is not only resource expensive, but risky in waiting until the problem bubbles to the top.

SOA is premised on the philosophy of "designing for change". The goal is that when business requirements change, IT can rapidly make adjustments to support the business demands because the IT systems are designed, documented, and impact transparent to allow IT to quickly adapt to new requirements. Businesses are always changing-- new business opportunities, new channels (see "Internet"), new partnerships, Mergers and Acquisitions, or in this case NEW REGULATION. The challenge is IT can't keep up with their current architecture and IT envirnements, let alone support all this change! Unfortunately, the whole company suffers from lack of agility! I would love to see a poll of Fortune 2,000 companies on how quickly their IT departments were able to adapt and change when Sarbanes Oxley regulations were enforced upon them? My bet is this would be measured in years, not months, and there are still quite a few companies struggling to adopt Sarbanes today.

Now that we know businesses will need to comply with new health care reporting, financing, personnel, operations, and taxes, how many are equipped to comply with the new reform? Will this be Sarbanes Part 2 and will IT departments be scrambling to change their tightly interwoven legacy systems, CIO's hiring more business analysts for more swivel chair integration, companies being fined for lack of compliance, or even worse making the front page of the Newspaper? How about more regulation coming down the pipe? If there is one constant we do know, is that the business will always change. Regulation is never a 1 and done initiative.

There will always be new regulations enacted on companies, so I advocate that businesses bite the bullet now and invest in agility by considering how SOA approaches can help them solve these problems, limit their impact from required changes, and prevent risk. The payoff from SOA investment will easily be achieved in this case, simply by reducing the cost of regulation compliance (lower resource cost) and "future proofing" the organiztion for adapting to new regulations on the horizon. Let's not forget, SOA-driven agility also opens doors for new revenue opportunities too-- another topic for another day. The early bird gets the worm, so be proactive instead of reactive by architecting your IT environment to meet these important business needs!

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