Topic: Everest Group PEAK MatrixTM for Healthcare...

Copyright © 2013 Everest Global, Inc.

This document has been licensed for exclusive use and distribution by Cognizant

Focus on Cognizant

September 2013

Topic: Everest Group PEAK MatrixTM for Healthcare Payer

ITO Service Providers

EGR-2013-12-E-0936

Copyright © 2013, Everest Global, Inc.

EGR-2013-12-E-0936 2

Introduction and scope

Everest Group recently released its report titled “IT Outsourcing in Healthcare Payer Industry – Service

Provider Landscape with PEAK Matrix™ Assessment and Profile Compendium 2013”. This report analyzes the

changing dynamics of the payer ITO landscape and assesses service providers across several key

dimensions.

As a part of this report, Everest Group updated its classification of 12 service providers on the Everest Group

Performance | Experience | Ability | Knowledge (PEAK) Matrix for payer ITO into Leaders, Major Contenders,

and Emerging Players. The PEAK Matrix is a framework that provides an objective, data-driven, and

comparative assessment of payer ITO service providers based on their absolute market success and delivery

capability.

Based on the analysis, Cognizant emerged both as a Leader and a Star Performer. This document focuses

on Cognizant’ payer ITO experience and capabilities and includes:

Cognizant’s position on the payer ITO PEAK Matrix

Detailed payer ITO profile of Cognizant

Buyers can use the PEAK Matrix to identify and evaluate different service providers. It helps them understand

the service providers’ relative strengths and gaps. However, it is also important to note that while the PEAK

Matrix is a useful starting point, the results from the assessment may not be directly prescriptive for each

buyer. Buyers will have to consider their unique situation and requirements, and match them against service

provider capability for an ideal fit.

https://research.everestgrp.com/Product/12162







EGR-2013-12-E-0936 3

Background of the research

The healthcare industry witnessed a rapid increase in the IT and business process outsourcing adoption in recent years.

Regulatory reform, consumerization of healthcare, market consolidation, and emergence of new technologies accelerated

outsourcing in the healthcare market. In order to cater to this growing market segment, a number and variety of service providers

developed capabilities.

With healthcare companies stepping up adoption of outsourced delivery, there is an uptick in demand for research and market

intelligence on demand and supply trends in healthcare outsourcing, across the three major market segments – payer, provider,

and life sciences. The need is more pronounced for the vertical-specific IT Outsourcing (ITO) function, where business

challenges are driving greater adoption. Everest Group’s healthcare outsourcing research program addresses this market

requirement by analyzing outsourcing trends and service provider capabilities specific to ITO in the healthcare vertical.

In this report, we analyze the capabilities of 15+ ITO service providers specific to the global healthcare payer sector.

Twelve of these service providers are mapped on the Everest Group Performance | Experience | Ability | Knowledge

(PEAK) Matrix, which is a composite index of a range of distinct metrics related to a provider’s capability and market

success. We focus on:

The landscape of service providers for healthcare payer ITO

Assessment of the service providers on a number of capability-related dimensions

Characteristics of the Leaders, Major Contenders, and Emerging Players on the Everest Group PEAK Matrix

Implications for healthcare payers and service providers

Scope of this report

Industry: Healthcare payers (public and private health plans)

Services: Large (TCV > US$25 million), multi-year (>three years), and annuity-based IT outsourcing

Geography: Global (though with a skew towards the U.S. payer market, given dominant market activity)

Sourcing model: Third-party ITO transactions; excludes shared services or Global In-house Centers (GICs)

Payer ITO service provider landscape: Background

and scope of the research


EGR-2013-12-E-0936 4

This report examines the service provider landscape

for large annuity contracts in the healthcare payer

ITO market

Private health plans

Public health plans

Payer

Pharmaceuticals

Medical devices

Biotechnology

Others1

Life sciences

Large health systems

Standalone hospitals/clinics

Pharmacists

Physician practices

Diagnostic labs

Provider

Healthcare

Services industry

Traditional IO

Remote Infrastructure

Management (RIM)

Infrastructure Management

Services (IMS)

Cloud

IT Infrastructure

Outsourcing (IO)

Applications development

Applications maintenance

Independent testing

Package implementation

ERP services

Business intelligence / data

warehousing

IT Application Outsourcing

(AO)

BFSI-specific BPO

HRO

FAO

PO

Contact center

Knowledge services

Business Process

Outsourcing (BPO)

IT strategy / operations

consulting

Business consulting

Infrastructure consulting

Infrastructure roll-outs

Consulting

This report assesses ITO service providers in the payer vertical with a focus on large (TCV > US$25 million), annuity-based, and multi-year

(>three years) relationships

NOT EXHAUSTIVE

Focus of report

1 Includes healthcare data and information services and medical products distribution


EGR-2013-12-E-0936 5

From a landscape of 30+ service providers, Everest Group

assessed twelve service providers for their capabilities in

payer ITO space on the Everest Group PEAK Matrix

1 Assessment for Accenture and IBM is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service providers’ disclosures, and Everest

Group’s interactions with payers

Source: Everest Group (2013)

Service providers assessed on PEAK Matrix

Assessment based on:

RFIs submitted by service providers1

Everest Group Transaction Intelligence database

Service provider disclosures and interviews

Everest Group’s interaction with payer buyers

Criteria for inclusion in the

assessment

Success in large payer

ITO relationships, i.e.,

– >US$25 million TCV

– >three years

relationship duration

– Active as of December

31, 2012

Everest Group’s

experience and RFI

response

Service provider outreach (partial list)

http://www.indracompany.com/en


EGR-2013-12-E-0936 6

Scale Scope Domain

investments

Delivery

footprint

1

These service providers cumulatively represent ~75% of the global large-sized payer ITO transactions1

PEAK Matrix assessment dimensions

1 Contracts that have a TCV of more than US$25 million and are active as of December 31, 2012

These service providers were mapped on Everest

Group’s Performance | Experience | Ability | Knowledge

(PEAK) Matrix

Service providers assessed

2 3 4

Ma

rke

t s

uc

ce

ss

5

Delivery capability

Everest Group PEAK Matrix

Emerging

Players

Leaders

Major Contenders


EGR-2013-12-E-0936 7

Cognizant is positioned as a Leader on the Everest

Group PEAK matrix for payer ITO

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for payer ITO1

1 PEAK Matrix specific to large (>US$25 million TCV) multi-year (>three years) IT outsourcing relationships within the payer sector (i.e., public and private health

plans)

2 Infosys officially reports its payer revenue under BFSI. For the purposes of 2013 PEAK Matrix evaluation, Infosys’ payer revenue have been considered under

healthcare; Infosys’ 2012 positioning was based on estimates derived from numbers Infosys reported under the healthcare industry

Note: Assessment for Accenture and IBM excludes service provider inputs and is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service

provider public disclosures, and Everest Group’s interactions with payers


High

Low

Low High

Delivery capability

(Scale, scope, domain investments, and delivery footprint)

Syntel

Infosys2

TCS

Dell Services Accenture

Cognizant

Leaders

Major Contenders

CGI

Emerging Players

Ma

rke

t s

uc

ce

ss

(Tra

nsa

ctio

n a

ctivity)

HCL

Virtusa

Hexaware

Fujitsu

IBM

75th percentile

75

th p

erc

en

tile

25th percentile

25

th p

erc

en

tile

Leaders

Major Contenders

Emerging Players

Star Performers


EGR-2013-12-E-0936 8

Additionally, Cognizant is also identified as a 2013

Star Performer based on its strong forward movement

on the PEAK Matrix

Methodology

Everest Group selects Market Star Performers based on the relative YoY movement of each service provider, on the

PEAK Matrix

Major Contenders

2012

2013

Leaders

Cognizant Distinguishing feature of 2012 market

success

Top quartile performance in overall

revenue growth in 2012 driven by

strong renewal activity

Strong traction witnessed across

different buyer segments (based on

size of buyers)

Entrenched its presence in the top U.S.

payers, with established engagements

in 15 out of the top 20 payers

Distinguishing feature of 2012 capability advancements

Added over a 1,000 payer ITO FTEs in 2012

Over 8,000 resources trained and certified in the payer

domain

Enhanced domain capabilities through key investments in the

payer space such as the MediCall acquisition and proprietary

solutions such as ClaimSphere HEDIS Reporting

Mark

et

su

ccess

Capability


EGR-2013-12-E-0936 9

Key financial parameters

Revenue figures in US$ million

Service mix

FY 2012; US$ million

Geographical mix

FY 2012; US$ million

Company description: Founded in 1994, Cognizant is a provider of

information technology, consulting, and business process outsourcing

services. Cognizant derives over 26% of its revenue from healthcare;

other industries served include BFSI, manufacturing and retail, and

logistics. The company serves its global customers through its dedicated

nearshore and offshore development and delivery centers, primarily

located in India, China, United States, Canada, Argentina, Hungary,

Mexico, and the Philippines

Headquarters: Teaneck, New Jersey, United States

Website: www.cognizant.com

Services offered for the healthcare vertical: Application

services across the payer, provider, and life sciences segments.

Services for the payer segment include ICD-10 transition,

healthcare reform compliance, health analytics and BI, claims

processing, managed care product configuration and

implementation, privacy and security, quality and claims auditing

and reporting, and legacy systems modernization

Major healthcare clients: HealthNet, AstraZeneca, Pfizer,

Merck, Eli Lilly, and Pistoia Alliance

1 FY ends on December 31


Revenue1 from healthcare

Revenue1 from other verticals

Enterprise operating margin

Scale of healthcare subverticals

Payer Life sciences Provider

>US$500 million US$100-500 million <US$100 million

51% 49%

100% = 7,346 100% = 7,346

North

America

Europe

Others IT

Outsourcing

IT consulting

& technology

services

3,415 4,499 5,412 1,177

1,622 1,935

FY 2010 FY 2011 FY 2012

18.8%

4,592 6,121

7,346 18.6%

18.5%

79.4%

16.3%

4.3%

Cognizant | Payer ITO profile (page 1 of 6)

Corporate and healthcare overview

http://www.cognizant.com/


EGR-2013-12-E-0936 10

Scope

Primarily serves private health plan clients

Geographical scope of contracts is primarily the United States

Services include infrastructure services, ADM, testing, and DW/BI

Equal mix of revenue from large and small deals

Strong focus on transformational deals including various aspects

Delivery footprint

Payer ITO services mainly delivered from India

Delivery presence in Shanghai in China, Toronto in Canada, Manila in

the Philippines, and Phoenix in the United States

Transaction success

Average TCV of ~US$100 million for large-sized payer ITO deals

Major payer ITO clients: 15 of the top 20 payers

Domain investments

Proprietary solutions for ICD-10 transition, claims management,

audit/processing, health records, etc.

Alliances in areas such as claims, ICD-10, network management, fraud

detection, health portals, HIE, EMR, BPM, CRM with vendors such as

PEGA, EDIFECS, HealthEdge, InterSystems, Microsoft, SAP, and Oracle

Headline assessment

Cognizant positioned itself as a global Leader in the payer ITO services

showing strong growth even on a large revenue base. To maintain this growth

momentum, it is looking to expand beyond the North American market.

Scale

Strong focus on healthcare with over 26% revenue (US$1.9 billion) from

the healthcare vertical

With over US$800 million revenue from payer ITO, Cognizant is the

largest among offshore majors for payer ITO

Over 15,000 FTEs engaged in delivering payer ITO services

1 Transaction success for large-sized deals


North America EMEA

Latin America APAC

Geographic scope Payer subsegments

High Medium Low Success dashboard1

Public health plans

Private health plans

Everest Group PEAK Matrix for payer ITO

High

Low Low High Delivery capability

(Scale, scope, domain investments, and delivery footprint)

Mark

et

su

ccess

(Tra

nsaction a

ctivity)

Cognizant

Emerging

Player

Major Contender Leader

Cognizant

2012


Payer ITO capability assessment and market success


EGR-2013-12-E-0936 11

Proprietary solutions (representative list)

Line of Business Solutions

Payer Claims Audit: End-to-end solution for the claims audit process

ClaimsCop: Solution covering detection of fraudulent claims, subsequent investigation, and

recovery process

ClaimSphere Analytics: Suite of payer analytics focusing on the cost of care, membership

analytics, utilization management etc.

ClaimSphere HEDIS: NCQA-certified HEDIS solution with standard analytics to identify care

opportunities

eCareManager: Care management solution to offer member identification, stratification and care

manager workflows, interventions, assessments, outcome analysis, and E2E analytics

eHealth Framework: Payers’ self-services portal and framework to offer self-services to members,

providers, groups, and brokers

Enrolment and membership pre-processing framework: Payers’ enrolment solution to address

paper and electronic enrolment processing and convert the data to EDI 834

Enterprise managed care services library (eMCSL) Framework: SOA services and Process flow

framework addressing areas such as membership, enrolment, claims, and ProvidersmyHealthLog,

a personal Health records solution, which integrates data from multiple sources

RTClaim Framework: Real-time claims adjudication services to support implementations at payers,

providers, and TPAs

T10 Suite for ICD-10: Cognizant’s tool suite enabling ICD-10 compliance

Drug Switch Tool: Helps pharmacists identify the low cost therapeutic drug alternates for a

member, based on their prescription details



ITO domain investments


EGR-2013-12-E-0936 12

Acquisitions

Target Date Capabilities added

MediCall October 2012 Acquisition of the U.S.-based medical management services firm with operations in the

Philippines provides Cognizant a significant presence in the space

IP investment

Ongoing To build reusable IP, platforms, tools, and frameworks around ICD-10 compliance, care /

patient management, payer/provider analytics, mobility, and BPaaS/cloud services

Certifications

Ongoing Training and certification in domain areas such as AHP, HL7, DICOM and various

technology platforms (.NET, Java, J2EE, IBM, EAI tools, etc.)

Key alliances (representative list)

Alliance partner Purpose of alliance

(Several) Alliances in joint go-to-market programs, implementation services and centers of excellence in areas

such as claims, ICD-10, network management, fraud detection, health portals, HIE, care

management, HIS/EMR, EDI, EAI, BPM, and CRM

Vendors include PEGA, HealthEdge, InterSystems, Microsoft, SAP, Oracle, EDIFECS, VUE, Plexis,

Kony, NetApp, Caradigm, etc.



ITO domain investments


EGR-2013-12-E-0936 13

Appendix


EGR-2013-12-E-0936 14

Top quartile performance

across market success

and capability

2nd or 3rd quartile

performance across market

success and capability

4th quartile performance

across market success

and capability

High

Low

25

th p

erc

en

tile

75

th p

erc

en

tile

75th percentile

Ma

rke

t s

ucc

es

s

Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix

Emerging Players

Leaders

Major Contenders

Delivery capability

Low High 25th percentile

Everest Group Performance | Experience | Ability |

Knowledge (PEAK) Matrix classifies service providers into

Leaders, Major Contenders, and Emerging Players


EGR-2013-12-E-0936 15

Service providers are positioned on the PEAK Matrix

based on evaluation across two key dimensions

Measures the scope of

services provided across

segments, processes,

industries, geographies,

etc.

Measures the capability

and investment in the

enabling areas that help

deliver better services

Measures the delivery

footprint and the global

sourcing mix

Measures success

achieved in the market.

Captured through a

combination of

ACV/TCV/number of

contracts, renewals, etc.

Measures ability to deliver services successfully.

Captured through four subdimensions

Measures the scale of

operations (Revenues,

Number of FTEs, etc.)

Scale Scope Enabling capabilities Delivery footprint

Emerging Players

Leaders

Major Contenders

Ma

rke

t S

ucc

es

s

Delivery capability


EGR-2013-12-E-0936 16

Year 1

Year 0

Service

provider

Ma

rke

t s

uc

ce

ss

Capability

Methodology

Everest Group selects Market Star Performers based on the relative YoY movement of each

service provider, on the PEAK Matrix

In order to assess advancements on

market success, we evaluate the

performance of each of the service

providers on the PEAK Matrix across a

number of parameters including:

Yearly ACV growth

Number of new contract signings

Yearly growth in total payer ITO TCV

Success with large payers

Payer ITO revenue CAGR

In order to assess advancements on

capability, we evaluate the performance

of each service provider on the PEAK

Matrix across a number of parameters

including:

Annual growth in scale

Increase in scope of services

Expansion of delivery footprint

Technology / domain-specific

investments

The top-quartile performers on each of the

identified parameters are identified and the

“Star Performer” rating is awarded to the

service providers with:

The maximum number of top-quartile

performances across all of the above /

left-listed parameters and

At least one area of top-quartile

performance in both market success

and capability advancement

The “Star Performers” designation relates to YoY performance for a given service provider and does

not reflect the overall market leadership position. Those identified as “Star Performers” may include

“Leaders”, “Major Contenders”, or “Emerging Players”

Everest Group designates the “Star Performers” title

to providers that demonstrate the strongest forward

movement over time on the PEAK Matrix

Market

Star

Performers


EGR-2013-12-E-0936 17

FAQs (page 1 of 2)

Does the PEAK Matrix assessment incorporate any subjective criteria?

Everest Group’s PEAK Matrix assessment adopts an objective and fact-based approach (leveraging service

provider RFIs and Everest Group’s proprietary databases containing providers’ deals and operational capability

information). In addition, these results are validated / fine-tuned based on our market experience, buyer interaction,

and provider briefings

Is being a “Major Contender” or “Emerging Player” on the PEAK Matrix, an unfavorable outcome?

No. PEAK Matrix highlights and positions only the best-in-class service providers in a particular functional/vertical

services area. There are a number of providers from the broader universe that are assessed and do not make it to

the PEAK Matrix at all. Therefore, being represented on the PEAK Matrix is itself a favorable recognition

What other aspects of PEAK Matrix assessment are relevant to buyers and providers besides the “PEAK

Matrix position”?

PEAK Matrix position is only one aspect of Everest Group’s overall assessment. In addition to assigning a “Leader”,

“Major Contender”, or “Emerging Player” title, Everest Group highlights the distinctive capabilities and unique

attributes of all the PEAK Matrix providers assessed in its report. The detailed metric level assessment and

associated commentary is helpful for buyers in selecting particular providers for their specific requirements. It also

helps providers showcase their strengths in specific areas

What are the incentives for buyers and providers to participate/provide input to PEAK Matrix research?

Participation incentives for buyers include a summary of key findings from the PEAK Matrix assessment

Participation incentives for providers include adequate representation and recognition of their capabilities/success in

the market place, and a copy of their own “profile” that is published by Everest Group as part of the “compendium of

PEAK Matrix providers” profiles


EGR-2013-12-E-0936 18

FAQs (page 2 of 2)

What is the process for a service provider to leverage their PEAK Matrix positioning status ?

Providers can use their PEAK Matrix positioning rating in multiple ways including:

– Issue a press release declaring their positioning/rating

– Customized PEAK Matrix profile for circulation (with clients, prospects, etc.)

– Quotes from Everest Group analysts could be disseminated to the media

– Leverage PEAK Matrix branding across communications (e-mail signatures, marketing brochures, credential

packs, client presentations, etc.)

The provider must obtain the requisite licensing and distribution rights for the above activities through an agreement

with the designated POC at Everest Group


EGR-2013-12-E-0936 19

Everest Group

Leading clients from insight to action

Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping

Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a

fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and

delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting,

original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and

sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global

services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For

more information, please visit www.everestgrp.com and research.everestgrp.com.

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Topic: Everest Group PEAK MatrixTM for Healthcare...

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