Three quarters of healthcare businesses - 77% - have lost revenue as a result of a technology or systems failure in the past year, but few are taking the necessary contractual precautions to minimise the risk of loss or damage, according to research commissioned by the Technology Law Alliance.
Of those that had lost business due to a systems failure in the past year, 42% said they failed to deliver a customer order on time and 34% said a key project had been delayed or halted. A further 23% said they had lost a customer as a result.
Contracts should include proper testing and acceptance provisions, appropriate governance processes, and measures to help a customer if things go wrong
Stephen Ollerenshaw, director at the Technology Law Alliance, a specialist law firm advising companies on IT contracts, outsourcing and e-commerce, said: “Technology or systems failures can cause considerable business disruption and damage corporate reputation, too. Businesses should take a preventative approach by ensuring they have adequate protection in IT contracts.
“The process of agreeing a robust contract often drives out the issues and risks in advance and allows a customer to consider how it would mitigate problems should they arise.
“In particular, these contracts should include proper testing and acceptance provisions, appropriate governance processes, and measures to help a customer if things go wrong. These measures might include robust disaster recover provisions; the ability to step in to a failing contract; and adequate service handover in the event of termination.”
As the timetable for implementation of the new laws has recently been clarified, now is a good time to get your house in order and we are seeing an uptake in instructions to do data protection audits and internal training
According to the research, healthcare businesses are most affected by technology or IT-related disputes, with two fifths - 41% - reporting that such events have cost their business between £50,000 and £100,000 in the past year.
Ollerenshaw said: “The research indicates that healthcare is particularly prone to IT disputes. It is a sector that is becoming more and more reliant on technology and perhaps the speed of change has left companies exposed.
“It is important for healthcare organisations to consider the potential issues early on as part of their procurement and contract negotiations rather than wait and firefight if things start to go wrong.”
For the majority of healthcare businesses - 53% - the biggest IT-related risk for 2015 is compliance with incoming data protection legislation. The draft legislation will be approved by end of this year or early in 2016 and businesses will have two years from then to comply. However, only 14% of healthcare businesses feel they are ready for the incoming legislation.
The research indicates that healthcare is particularly prone to IT disputes. It is a sector that is becoming more and more reliant on technology and perhaps the speed of change has left companies exposed
Ollerenshaw said: “Healthcare data is particularly sensitive and the new rules will almost certainly mean bigger penalties if things go wrong. As the timetable for implementation of the new laws has recently been clarified, now is a good time to get your house in order and we are seeing an uptake in instructions to do data protection audits and internal training.”
By contrast, the main areas of IT-related opportunity for healthcare businesses in the year ahead are big data analytics and e-Commerce.
