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Medical Device Software Monetization and IP Protection

March 18, 2015

In the Internet of Things (IoT) era, few industries will be impacted more by the challenges, complexities and opportunities than the medical device sector.  The combination of technological innovation, global network connectivity and global vs. regional security, along with the growth in embedded intelligence in devices, is driving an unprecedented transformation in healthcare.  We are in the early stages of a new software revolution. 

Change is not just coming fast, it’s coming at the speed of light. Medical device manufacturers need to consider not only how they will be able to monetize their technology, but how they are going to ensure that their software is protected and secure.

Device manufacturers are being forced to change their traditional business model which historically has been based on devices sold.  As hardware is being commoditized, software is where the innovations are taking place.  Monetizing software represents one of their biggest challenges, and also one of their biggest opportunities.

I was fortunate to recently speak with Debbie Petre, Regional Sales Manager, Software Monetization at Gemalto (formerly SafeNet (News - Alert)) about the status and future of software monetization and security in the medical device sector.  A trusted advisor to her clients for many years, Petre is well acquainted with industry best practices.  

TMCnet:  As we move into a more connected world, what are the top drivers for medical device manufacturers that forces them the re-think their licensing and IP protection strategy? 

Petre: There are three key drivers—security, software monetization and compliance.  All three are equally as important. 

TMCnet:  In terms of security of the software that is embedded and/or part of, for example,  a cloud-based telemedicine monitoring solution, where are we and what should device manufacturers and ISVs be evaluating?

Petre:  Security, for obvious reasons is at the top of the list.  This is true for hardware devices and particularly true for software.  It is also essential to protect intellectual property from piracy and data in motion. In addition to security though, the ability to introduce new business models and pricing,  improve manufacturing processes, and increase customer satisfaction  are all fighting for equal billing because these aspects are no longer optional but part of the whole solution.     

In addition to security, data protection and the aforementioned software monetization, there is also the need to control access to the devices. It is very important to determine who is granted access to the software running the device, when they’re granted access, how long and to what extent. Information like this is critical when you are protecting yourself from malicious attacks or even unintentional misuse.  Essentially, hackers never stop. It is Gemalto’s (News - Alert) (formerly SafeNet) full-time job to stay one step ahead of the bad guys.  Most companies are not thinking of obtaining their anti-hacking solution from their software licensing vendor—mainly because they believe that their device is secure. We protect against hacks, secure intellectual property, protect the data in motion, license and monetize software—we are the only licensing vendor that offers it all. 

The software that is needed to authorize activation of a device can be embedded in the cloud.  The best practices that I have gleaned from working with many customers show that providing self-service activation can increase customer satisfaction almost immediately.   

TMCnet:  When it comes to software monetization for medical device manufacturers, this is actually a multi-faceted area, isn’t it?  Can you describe what needs to be taken into consideration when looking at how to optimize these opportunities? 

Petre:  Traditionally, software and services have been given away for free. What we have found is that when a software monetization strategy is implemented—a competitive advantage is gained.  You are correct when you say that software monetization is a multi-faceted approach.  The reality is that many companies are not sure how their software is being consumed.  This is the main reason that software and services are included with the purchase of a hardware device.  What I have discovered is that when companies give away software and services, they are losing out on revenue opportunities and as a result they are unable to remain competitive.  The ability to collect usage data allows device manufacturers to offer pricing models based on usage. It is a huge competitive advantage to know what features and how often the software is being used. Having complete visibility of usage data provides customer intelligence. This is a feature within our solution that has proven to help my customers stay ahead of the curve and gain that competitive edge.

Medical device manufacturers know that they can build smart devices, and they also recognize that hardware devices are becoming a commodity.  I can help them address the four aspects of software monetization: packaging, controlling, managing, and monitoring their software to essentially help them move their revenue stream from 80 percent hardware to 50/50 percent hardware and software revenue.  That’s the goal.

TMCnet:  The last point I want to discuss with you is compliance. It seems this can be another challenge for medical device manufacturers.

Petre:  Yes, compliance is very familiar to medical device manufacturers.  They have been working in healthcare where HIPPA compliance has been in effect for a while now. HIPPA states that whatever information is generated by a device and used for healthcare decision-making—be it patient data, device data, or any other detailed patient-related data—must be kept confidential or heavy penalties may be imposed.  This also ties back to the earlier discussion we were having about security; however there is another aspect of compliance that does not have to do with keeping patient data compliant with HIPPA but more around the end user’s compliance with the terms and conditions of the license agreements. It is having an avenue in which to enforce licensing fees without having to depend on mutual trust or creating an aura of intrusion to the end user.  Everyone is happy.  Medical device manufacturers have the assurance that their software is being used appropriately and the end users have the visibility into their own usage and know at all times that they are in compliance and can plan their finances accordingly for the future.

The ability to provide usage data for compliance should not be underestimated. This is not only about cost savings and only paying for what you use but it is also about avoiding unexpected costs, such as charges or fines.  Since the introduction of mandates in the healthcare industry, there a growing trend in having compliance departments.

We can drastically reduce the need for increased staffing for compliance enforcement. By addressing usage terms—such as duration and access privileges—ahead of time, end users are able to remain on the same page as software vendors, and there are no surprises.

TMCnet:  Any final thoughts?

Petre:  As in any traditional hardware market, the medical device market, software is becoming the dominant driver for revenue. Leveraging a comprehensive software monetization strategy is essential to medical device manufacturers gaining and maintaining a competitive advantage.

Edited by Dominick Sorrentino
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