IBM Spends to Make Watson Healthier, Hopefully Quickly

August 7, 2015

I noted the article “IBM Adds Medical Images to Watson, Buying Merge Healthcare for $1 Billion.” The company is in the content management business. Medical images are pretty much of a hassle whether in the good old fashioned film form or in digital versions. The few opportunities I have had to looked at murky gray or odd duck enhanced color images, I marveled at how a professional would make sense of the data displayed. Did this explanation trigger thoughts of IBM FileNet?

The image processing technology available from specialist firms permitting satellite or surveillance image analysis are a piece of cake compared to the medical imaging examples I reviewed. From my point of view the nifty stuff available to an analyst looking at the movement of men and equipment were easier to figure out.

Merge delivers a range of image and content management services to health care outfits. The systems can work with on premises systems and park data in the cloud in a way that keeps the compliance folks happy.

According to the write up:

When IBM set up its Watson health business in April, it began with a couple of smaller medical data acquisitions and industry partnerships with Apple, Johnson & Johnson and Medtronic. Last week, IBM announced a partnership with CVS Health, the large pharmacy chain, to develop data-driven services to help people with chronic ailments like diabetes and heart disease better manage their health.

Now Watson is plopping down a $1 billion to get a more substantive, image centric, and—dare I say it—more traditional business.

The idea I learned:

“We’re bringing Watson and analytics to the largest data set in health care — images,” John Kelly, IBM’s senior vice president of research who oversees the Watson business, said in an interview.

The idea, as I understand the management speak, is that Watson will be able to perform image analysis, thus allowing IBM to convert Watson into a significant revenue generator. IBM does need all the help it can get. The company has just achieved a milestone of sorts; IBM’s revenue has declined for 13 consecutive quarters.

My view is that the integration of the Merge systems with the evolving Watson “solution” will be expensive, slow, and frustrating to those given the job of making image analysis better, faster, and cheaper.

My hunch is that the time and cost required to integrate Watson and Merge will be an issue in six or nine months. Once the “integration” is complete, the costs of adding new features and functions to keep pace with regulations and advances in diagnosis and treatment will create a 21st century version of FileNet. (FileNet, as you, gentle reader, know as the 2006 acquisition. At the time, nine years ago, IBM said that the FileNet technology would

“advance its Information on Demand initiative, IBM’s strategy for pursuing the growing market opportunity around helping clients capture insights from their information so it can be used as a strategic asset. FileNet is a leading provider of business process and content management solutions that help companies simplify critical and everyday decision making processes and give organizations a competitive advantage.”

FileNet was an imaging technology for financial institutions and a search system which allowed a person with access to the system to locate a check or other scanned document.)

And FileNet today? Well, like many IBM acquisitions it is still chugging along, just part of the services oriented architecture at Big Blue. Why, one might ask, was the FileNet technology not applicable to health care? I will leave you to ponder the answer.

I want to be optimistic about the upside of this Merge acquisition for the companies involved and for the health care professionals who will work with the Watsonized system. I assume that IBM will put on a happy face about Watson’s image analysis capabilities. I, however, want to see the system in action and have some hard data, not M&A fluff, about the functionality and accuracy of the merged systems.

At this moment, I think Watson and other senior IBM managers are looking for a way to make a lemon grove from Watson. Nothing makes bankers and deal makers happy than a big, out of the blue acquisition.

Now the job is to find a way to sell enough lemons to pay for the maintenance and improvement of the lemon grove. I assume Watson has an answer to on going costs for maintenance and enhancements, bug finding and stomping, and the PR such activities trigger. Yep, costs and revenue. Boring but important to IBM’s stakeholders.

Stephen E Arnold, August 7, 2015


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