Procurement Meets Moore’s Law

The following is an article that recently appeared in Healthcare Information Management & Communications Canada magazine:

My father, the consummate bargain hunter, has never heard of Moore’s Law.  Yet, on a regular basis, he takes advantage of the falling prices that are one its inevitable consequences.  My father has learned that he need only wait a couple of years after a new technology is announced for the price of products based on that technology to drop to the level he is willing to pay.   Paradoxically, the same rapid changes in technology that benefits consumers like my father may, in the context of long government procurement cycle, stifle innovation and lead to failed health IT projects.

In a 1965 paper, Intel co-founder Gordon Moore noted that “the complexity for minimum component costs has increased at a rate of roughly a factor of two per year” and predicted that this “rate can be expected to continue”.  This prediction became known several years later as Moore’s Law and has been the source constant innovation in the IT sector for more than half a century.

The impact of long procurement cycles on IT related procurement has been evident in the defence and aerospace industries from quite some time.  A 2006 book on C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) for future naval strike groups prepared by the U.S. Naval Studies Board concludes:

“The current procurement process of the Department of Defense concentrates on buying ships, airplanes, tanks, and so on. Most of these items have lives that are measured in decades, with few major upgrades over their lifetime. Information technology is changing on the time line articulated in Moore’s law and does not fit into such a process.”

Closer to home, an article in Vanguard, a Canadian defence and security magazine notes:

“Today, the emphasis in federal government procurement is on inputs, with detailed specifications of what, in IT, are constantly moving targets.”

This same article quotes Kamel Shaath, chief technology officer of Kanata-based KOM Networks.  Mr. Shaath contends that “procurement even is inhibiting innovation at times because they [government agencies] are not able to take advantage of new technology.”  Mr. Shaath recommends:

“We need to foster innovation and to have procurement processes that allow the government agencies to embrace and adopt new technologies on a much more rapid pace.”

At the 2012 eHealth conference that took place in Vancouver earlier this year, the opening key note speaker, Dr. John Halamka, was openly critical of the processes used to procure health IT systems and claimed that these practices stifle innovation.    In a blog post written soon after the eHealth conference, Dr. Halamka asserts that “Traditional procurement approaches are likely to acquire technology at the end of its lifecycle.”

While procurement reform is certainly a hot topic, it will, by its very nature, take time to happen.  In the meantime, we might want to consider the advice of Chris Gunderson, a Research Associate Professor of Information Science at the U.S. Naval Post Graduate School and a retired U.S. Navy Captain.  Driven by what he call his “frustration at us Good Guys’ inability to get out of our own way when it comes to acquiring and applying to technology”,  Professor Gunderson is devoting the latter part of his career to “co-opt the government bureaucracy to consume my lessons learned about successful distributive, collaborative e-Biz ‘best practices’ in-spite of itself.

In an October 2009 interview with Ubiquity magazine (an Association of Computing Machinery publication) Chris Gunderson makes a similar case regarding the challenges of IT procurement in the face of rapid technological advances as others quoted in this article:

“The downside of all these restrictions is that the time for the government to procure and deliver a major system is easily a decade or more. With the environment of use changing at the rate of Moore’s Law, the delivered systems are almost always obsolete or obsolescent.”

While acknowledging these challenges, he offers hope that they can be overcome:

“I’ve learned that the best way to achieve powerfully disruptive change is by subtly co-opting the existing processes. By “co-opt” I don’t mean anything subversive or underhanded. I simply mean we should introduce more convenient and efficient methods within the constraints of the existing bureaucratic requirements. The improvements will be adopted because they are perceived as both comfortable and useful.”


One response to “Procurement Meets Moore’s Law

  1. Wililam Pascal

    Michael has touched on a topic that I also find in need of attention. My concern is primarly driven by the unfortunate position that we place end users; having to work in digitized healthcare eco-systems that are two if not three generations out of date with the tools that they use in their everyday life. The current procurement processes inhibit if not outright prohibit innovation. In part this is due to a political aversion to any negative issue attributed to to “eHealth” but also it derives from the position followed by all jursidcitions that we need to build big system infrastructure. This is an approach that views the health care system as an enterprise; exactly what it is not -it is an eco-system.

    Procurement built around addressing these two characteristics of eHealth lead inextricably to long processes overly concerned about minimizing political fallout and fitting into an IT eco-system that is more focused on integrating legacy systems with already dated solutions. 300 page RFPs not only kill innovation but also signal a focus on the past not the future.

    So what can we do. A couple of suggestions;
    1) separate to the extent possible the back office issues from the point of care interfaces. Do not force point of care vendors to solve back office issues.
    2) create a different process for point of care offerings that allows for innovation. Issue small RFPs with criteria on user satification, usability in clinical encounters, limited scope, and a “sand box” to test the solution(s) in real settings; those that work would be rolled out
    3) set up an innovation fund to support these type of projects which follow a different contracting process
    4) protect this innovation group/process
    5) set out “limited” but necessary national standards that enhance later integration into the broader eco-system

    Is this doable? The answer is yes. I am currently visting New Zealand and having a first hand opportunity to see how they have and are moving forward on building their eco-system. They are experimenting with an innovative approach to contracting that does open the door to new and at times untested ideas. it is called active Procurement.

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