In my experience an acquisition as this usually fails when the vendor tries to maintain both systems over a long period of time, and /or tries to integrate his disparate offerings with the new acquired products.
However this acquisition can be financially beneficial to Cerner if they avoid that route. Considering they are paying $1.3 billion for a company that has recurring revenues of about 1 billion/yr. By cutting duplicate overhead (execs/finance /sales/ marketing/ R&D) you can easily generate profits of $300 million/yr so in 3-4 years the acquisition pays for itself. Of course not all Siemens clients will convert to Cerner products but even if only 50% do that’s all gravy with a minimum sales/marketing expenditure.
At this point you might say but what about the customers? The reality is Siemens sold the division because they did not want to make the big R&D investments needed to keep up. So over the next five years the product would have received mediocre support and little or no enhancements. Just bug fixes and regulatory changes. Customers lost out when Siemens decided to get out, not when Cerner decided to buy in.
Now a real winner in all this is Epic and they did not have to spend a dime. If Cerner holds onto 50% of the clients or even 70%, where are the others going to go? Based on past experience, the majority will go with Epic. I think Judy will be buying Neal drinks at he next HIMSS.
michele - 10 years ago
Yes. It will succeed and be innovative.
Tom - 10 years ago
This will either be a great success or an epic (pun intended) failure. Despite the corporate lingo, it's painfully obvious that Cerners grand scheme is to divest of the Siemens software and employees thus forcing migration to their platform. However with several Siemens employees already running for the exits, how long can they (will they) support the legacy solutions until the cutover?
Hashslingingslasher - 10 years ago
I think this is a great thing. There is a lot of walking dead in the HIT vendor market. Siemens, God love them, was one of them. EHRs are now a commondity and the sooner these products come out of the marketplace the better. We clinicans need viable and vibrant choices of EHRs not investing in a stillborn piece of technology. Companies like this just stopped innovating and in Siemens case, HIT is not their core competency.
Will this be successful? I don't believe that's the point at all with this M&A. They came to bury Cesear in terms of Siemens. The point is marketshare. Most of Siemens customers have been on waivers for a long time. With Cerner and Epic the predominant options, the percent of conversion will move to Cerner.
TRQ - 10 years ago
My view is that it will not succeed due to Cerner's corporate culture which is based on growth through development. It is not built to bring in outsiders. They have no experience with such a large scale acquisition.
This inexperience is illustrated by their belief they will keep the Siemens customers on a seperate track. What the must fail to understand is that many top Siemens employees will now look for the exits knowing that their employment is finite. How will they support those customers as more of the SIemens team leaves? What will the remaining customers think of the Cerner organization who has left them with a skeleton of the former Siemens team?
Pamela - 10 years ago
Big vendor acquisitions, while normally not successful in the long term, haven't had the same compatibilities of this acquisition. I believe there is good synergy in this partnership. Siemens brings a solid revenue cycle solution in addition to a client base that needs attention, specifically on the clinical side that Cerner can deliver. Additionally, this is a different environment and may be more receptive to the success of this acquisition.
Customers of both Cerner and Siemens will suffer as Cerner spends the next 3-5 years developing and executing a strategy to get customers on to one platform. Can anyone name a big vendor acquisition that was successful and where customers of both companies benefitted?
In my experience an acquisition as this usually fails when the vendor tries to maintain both systems over a long period of time, and /or tries to integrate his disparate offerings with the new acquired products.
However this acquisition can be financially beneficial to Cerner if they avoid that route. Considering they are paying $1.3 billion for a company that has recurring revenues of about 1 billion/yr. By cutting duplicate overhead (execs/finance /sales/ marketing/ R&D) you can easily generate profits of $300 million/yr so in 3-4 years the acquisition pays for itself. Of course not all Siemens clients will convert to Cerner products but even if only 50% do that’s all gravy with a minimum sales/marketing expenditure.
At this point you might say but what about the customers? The reality is Siemens sold the division because they did not want to make the big R&D investments needed to keep up. So over the next five years the product would have received mediocre support and little or no enhancements. Just bug fixes and regulatory changes. Customers lost out when Siemens decided to get out, not when Cerner decided to buy in.
Now a real winner in all this is Epic and they did not have to spend a dime. If Cerner holds onto 50% of the clients or even 70%, where are the others going to go? Based on past experience, the majority will go with Epic. I think Judy will be buying Neal drinks at he next HIMSS.
Yes. It will succeed and be innovative.
This will either be a great success or an epic (pun intended) failure. Despite the corporate lingo, it's painfully obvious that Cerners grand scheme is to divest of the Siemens software and employees thus forcing migration to their platform. However with several Siemens employees already running for the exits, how long can they (will they) support the legacy solutions until the cutover?
I think this is a great thing. There is a lot of walking dead in the HIT vendor market. Siemens, God love them, was one of them. EHRs are now a commondity and the sooner these products come out of the marketplace the better. We clinicans need viable and vibrant choices of EHRs not investing in a stillborn piece of technology. Companies like this just stopped innovating and in Siemens case, HIT is not their core competency.
Will this be successful? I don't believe that's the point at all with this M&A. They came to bury Cesear in terms of Siemens. The point is marketshare. Most of Siemens customers have been on waivers for a long time. With Cerner and Epic the predominant options, the percent of conversion will move to Cerner.
My view is that it will not succeed due to Cerner's corporate culture which is based on growth through development. It is not built to bring in outsiders. They have no experience with such a large scale acquisition.
This inexperience is illustrated by their belief they will keep the Siemens customers on a seperate track. What the must fail to understand is that many top Siemens employees will now look for the exits knowing that their employment is finite. How will they support those customers as more of the SIemens team leaves? What will the remaining customers think of the Cerner organization who has left them with a skeleton of the former Siemens team?
Big vendor acquisitions, while normally not successful in the long term, haven't had the same compatibilities of this acquisition. I believe there is good synergy in this partnership. Siemens brings a solid revenue cycle solution in addition to a client base that needs attention, specifically on the clinical side that Cerner can deliver. Additionally, this is a different environment and may be more receptive to the success of this acquisition.
Customers of both Cerner and Siemens will suffer as Cerner spends the next 3-5 years developing and executing a strategy to get customers on to one platform. Can anyone name a big vendor acquisition that was successful and where customers of both companies benefitted?