Oracle taking traditional approach to health IT market

By 2012 the health IT space will not look much different than any other vertical the mainline vendors have approached in the past.

Oracle is taking what I call the traditional approach to the health IT market.

They're buying their way in. (That's Oracle's headquarters complex to the right.)

Oracle's pending $685 million purchase of Phase Forward, whose Clinical Research Suite is used for managing clinical trials, is typical of the way a mainstream IT company plays with verticals.

You buy a great application, with an important customer set, then you expand into everything else that customer set needs from an IT vendor. In this case, you make all the drug companies  into big Oracle customers -- Oracle operating systems, Oracle databases, Oracle (formerly Sun) servers.

When one of your favorite vendors becomes part of a big-name brand -- whether that brand is Oracle, HP, Dell, Microsoft or IBM -- you're going to take a harder look at that vendor's whole product line. The drug companies that do business with Phase Forward are going to feel more comfortable with an Oracle representative now.

Gradually the other "best of breed" vendors will find themselves surrounded, and those who specialized in that vertical will find that they're now facing much-larger competitors, where before they were the big fish in the pond.

And then they fall. They get bought, they hit hard times. Consolidation happens.

This is a process I was most interested in tracking when I took this beat for ZDNet back in 2007. I was fascinated to learn at the 2008 HIMSS that the process had barely begun, and interested at the 2010 show to see how far it had come.

By 2012, I predict, it will be virtually complete, and the health IT space will not look much different than any other vertical the mainline vendors have approached in the past.

So what do you think is the over-under on the acquisition of Cerner and McKesson?