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 Its push into healthcare follows years of attempts by rival software
providers, including Microsoft Corp, to break into healthcare with
everything from personal health records to hospital information
systems. They have had mixed results.
Now Salesforce aims to bring in $1 billion in yearly revenues in
coming years - about a fifth of its current annual sales - from
health contracts, two people briefed on its plans told Reuters. The
company expects to make such inroads despite entrenched competition
and its own false starts in the sector, these sources said.
Salesforce declined to comment on revenue targets or its planned
investment in the business.
The company also would not say how many employees are in its health
and life sciences unit, but a LinkedIn search shows it has recruited
over a dozen people from the health and medical device sectors. Its
healthcare head, Todd Pierce, was formerly chief information officer
at biotech giant Genentech, a Roche subsidiary.
Salesforce is trying to sustain the red-hot growth that's given it
among the highest valuations in software with a price/earnings ratio
of more than 100 times for its current fiscal year.
Salesforce executives and sources briefed on its plans say the
company is already selling new software to the Department of Health
and Human Services and insurers including Blue Shield of California.
In April, it announced an alliance with Philips to develop medical
applications.
Salesforce now wants to help customers pull data into one place and
determine how it can be used to serve and talk to patients. This
sales push has already begun.
The University of California at San Francisco, for instance, rolled
out CareWeb Messenger, built on top of Salesforce's technology,
through which doctors, nurses and patients talk online and on mobile
devices. UCSF and Salesforce have close ties: in April, CEO Marc
Benioff donated $100 million to its children's hospital.
Salesforce will reveal more about its plans in November, Pierce
said.
He told Reuters the company sees a growth opportunity developing
tools for professionals to care for patients once they leave the
doctor's office. The company is also developing analytics to crunch
data about patients.
The healthcare industry has been resistant in the past to approaches
from Silicon Valley. But federal legislation such as the Health
Information Technology for Economic and Clinical Health - which sets
aside billions of dollars in incentives to spur the adoption of
electronic health systems - may turn the tide.
"Salesforce could really have some success in this area," said Missy
Krasner, managing director of healthcare and life sciences at online
storage provider Box, which is exploring similar opportunities.
Krasner said health systems are realizing that current systems are
"ridiculously bad."
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DOUBT
Others voice skepticism that Salesforce can make a dent in health, a
sector overflowing with vendors such as Dell Inc and IBM. Microsoft
may pose the most direct threat to Salesforce's prospects.
"Salesforce versus Microsoft: It's the battle to watch," said Ray
Wang, CEO of Constellation Research.
Microsoft has been building its healthcare business for over a
decade. It claims 168,000 customers in the industry in some
capacity.
It bought a hospital information system company seven years ago,
hoping to create a commoditized product, but found clients demanded
too much customization.
"We didn't make it work," said Neil Jordan, who runs Microsoft's
health business. "HealthVault," a health data repository, has been
its recent focus but that has not taken the market by storm.
"Just creating extra efficiencies ... is not going to cut it any
longer," Jordan said. "We have to think about wholesale use of
technology to transform the system."
In recent years, Salesforce toyed with but dropped the idea of
setting up a medical record service, the sources said. It later
considered developing infrastructure to help hospitals share data,
but decided a few years ago to rethink its approach, the people
said.
With its new approach, Salesforce may have a tricky time convincing
dominant health record vendors like Epic Systems and Cerner Corp to
share information. Their cooperation would be vital in serving some
major customers.
Such systems often don't talk to each other, critics say.
"It's fashionable to have a health initiative but it will hard for
them to do something," said Kevin Spain, an investor at Emergence
Capital, which has invested in Salesforce and health startups. "You
need to have a thriving ecosystem of applications."
(Editing by Edwin Chan and Martin Howell)
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