The Promise of Digital Transformation in the Post-Pandemic Era

Thoughts about technology that is inclusive, trusted, and creates a more sustainable world

These posts represent my personal views on the future of the digital economy powered by the cloud and artificial intelligence. Unless otherwise indicated, they do not represent the official views of Microsoft.

The phrase “digital transformation” is quite recent. In fact, you will find only rare mentions of it on the web or in books before 2010, and the real take-off dates from 2014. As it happens, that was the year Satya Nadella became CEO of Microsoft, and not by chance, since Satya was one of the first tech leaders to start employing this term. Now just seven years later a quick web search turns up 36 million examples of its use. Every day we hear about so many new examples of this crucial idea being put into practice that you might think we are already close to exhausting its potential. In this week’s post, I want to argue that, on the contrary, we are only in the very early stages of digital transformation—much work remains to be done, and the best and most important applications are yet to come.

My prime example comes from a story last week in the Wall Street Journal revealing the inability of many US hospitals to share real-time data about how many COVID-19 patients they are treating. This failure in the most elementary kind of data sharing has had tragic consequences. Hospitals whose facilities and staff were completely overloaded at the peak of the pandemic struggled and frequently failed to find other hospitals able to accept transfers of desperately sick patients. Often empty beds were available in nearby institutions, but there was no quick and reliable system for finding out where they were. As a result, patients died who might otherwise have been saved.

The problems arose mostly at smaller and more rural hospitals that lacked the staff and resources to handle even a modest surge in COVID cases. Without access to a data-sharing system that could show spare capacity in real-time, hospital administrators had to work their individual networks of contacts over the phone, a labor-intensive and time-inefficient process. The outcome of lives lost is a harsh lesson in the value of timely information. It also points at the long-term value to society of carrying the digital transformation of our institutions and enterprises much further than we have today.

Knowing how many hospital beds and treatment resources are available and where they are at any given time is an inventory management problem. These are things that ERP systems installed in manufacturing firms have successfully managed for decades. But the scope of such systems is typically limited to a single enterprise. What we needed to cope with the COVID surge was an ERP system for the entire healthcare sector.

US healthcare regulators and policymakers were of course aware of this need before COVID-19 struck, and have in fact been building various health information sharing systems for years. The Centers for Disease Control and Prevention (CDC) has a system that gathers data on infections from 6,000 hospitals. Early in the pandemic, the CDC added COVID-19 to the list of diseases tracked. But the system is not suitable for real-time reporting and does not track how many additional COVID patients a hospital is capable of receiving at any given time. In April the US Department of Health and Human Services started to deploy another system to provide more detailed and up-to-date information on COVID cases, but it has proved to be technically burdensome for hospitals to use and is prone to errors—sometimes quite large. According to the Wall Street Journal, one hospital claimed that it had 15,000 beds available, an impossible number. Another reported that it had a negative number of beds.

There are many reasons why it has been challenging to build a system that lets hospitals share urgent health data in a timely and reliable way. Hospitals may hesitate to share data that they regard as proprietary, and they are required by law to be very protective of patient privacy. They rarely have enough staff to perform time-consuming manual data entry, and even when they do they may not have adequate procedures in place to minimize errors. Electronic Health Record software companies may lack incentives to make data exchanges with rival systems easy. Government agencies have sometimes sponsored multiple systems that overlap or even compete with each other. In the absence of a regulatory mandate, healthcare payers may be reluctant to fund the additional costs that sophisticated IT systems impose on hospital budgets.

The irony is that the IT industry has recently developed a rich new set of open standards implemented in open source software for the sharing of health data. Known as FHIR (for Fast Healthcare Interoperability Resources), these standards allow hospitals and other healthcare providers to exchange data through secure and private cloud connections. FHIR software is already in use in both American and European hospitals. (Readers interested in more information may want to look at my August 2019 post about FHIR.)

But going from a working technical solution for sharing health data to a full-fledged “ERP for the healthcare system” is a big step. More than technology, we need a regulatory mandate and a broad coalition of private and public sector actors working together to make this happen. Today’s technology—especially the cloud and AI—makes such transformative systems possible. But they will take years to build and mature. All the more reason to start now.

This concept of an ERP for health data corresponds in many respects to the European Commission’s concept of industry-specific data spaces that I discussed in last week’s post. So it’s particularly interesting to note that just a few days ago the European Council (the body that brings together the leaders of European Union member states) asked the EC to develop a European Health Data Space. Microsoft’s VP for European Government Affairs Casper Klynge has offered a full-throated endorsement of this initiative:

“There is a pressing need for more public discussion to help patients better understand how and under what circumstances their data can be used. We must start by increasing public understanding of the value of data sharing for research. However, this also requires regulatory guidance on what the applicable “rules of the road” for processing health data should be, including setting roadblocks for uses that should be prohibited. The European Health Data Space can play a key role in advancing these discussions and setting standards that will help increase public trust, while at the same time promoting innovation that is rooted in ethics and European values.”

My conclusion is simple: the greatest opportunities for social progress and economic growth from digital transformation lie ahead of us.