Orion and Microsoft
October 18th, 2011 at 12:00 pm by David FarrarOwen Hembry at NZ Herald reports:
New Zealand software company Orion Health has struck a deal with Microsoft enabling it to offer a complete applications package to hospitals.
Auckland-based Orion has bought Microsoft’s Hospital Information System software assets, including radiology information system and picture archiving assets. …
“Normally North American companies buy New Zealand companies and New Zealand software assets,” he said. “We’re doing the opposite.”
And this is why those who rail against free trade and foreign investment are wrong. If they get their way in a world with greater barriers, then deals like this wouldn’t happen. We can’t say that US companies should be banned from buying assets in NZ, unless we want companies like Orion banned from buying assets from Microsoft.
Orion’s business is 90 per cent overseas and turnover in the current financial year would be more than $100 million, McCrae said.
A nice little export earner. They also employ 500 people, and grew 40% last year taking on 100 more positions. Their aim is to grow by 200 more next year. Well done to Orion and Microsoft for what looks to be a win-win deal.
October 18th, 2011 at 12:14 pm
And this is why those who rail against free trade and foreign investment are wrong. If they get their way in a world with greater barriers, then deals like this wouldn’t happen. We can’t say that US companies should be banned from buying assets in NZ, unless we want companies like Orion banned from buying assets from Microsoft.
I agree with the basic message here, but this is not why. Inwards investment is not the price one ways for the benefit of outwards investment. There are benefits from both arrangements: in both cases the division of labour is deepened and expertise is shared and productivity of both sides is, on average, increased.
Gains from trade necessarily flow both ways in any deal, or no deal will happen.
Vote:October 18th, 2011 at 12:23 pm
Ben, doesn’t that depend on how good a custodian the investor is?
The US consortium that originally purchased Telecom did very little for the value of Telecom as a business, they basically ran down the asset. Same with the US rail operator that bought Tranzrail.
Vote:October 18th, 2011 at 12:49 pm
The Orion/Microsoft deal may go well & I sincerely hope it does. It doesn’t, however, mean that all investment by overseas companies is benign & in the case of infrastructure usually such takeovers portend asset stripping & crippling price increases.
‘adze’ gave good examples in Telecom & Tranzrail. There are others such as Powerco where the asset is run down in favour of high dividends to the parent company & I fear that the proposed sale of infrastructure will herald many more.
Vote:October 18th, 2011 at 1:54 pm
adze: doesn’t that depend on how good a custodian the investor is?
I would say how careful with their money.
adze: The US consortium that originally purchased Telecom did very little for the value of Telecom as a business, they basically ran down the asset
It doesn’t make sense to spend millions, and see it flow down the drain. No clue if your example is correct or not, but no self-interested party would do this.
adze: Same with the US rail operator that bought Tranzrail.
I’m not really sure you have your facts. Given you mention the US twice, my guess is you’re a leftie and America is the symbol for all you hate.
In reality Tranzrail was bought by the Australians (small difference, I know), and they made a lot of money on this deal as they got crazy Cullen to buy it back with the deal of the century, for the Australians that is.
Vote:October 18th, 2011 at 2:06 pm
Why do concerns about foreign investors “running down assets” not equally apply to local investors? Maybe you think Kiwis will be “patriotic” or rationally concerned about community backlash, but the issue could easily appear on an intra-country scale, for instance an Aucklander buying a Wellington business and not really caring what Wellingtonians think about it.
Vote:October 18th, 2011 at 2:08 pm
No, berend. TranzRail was sold by the Americans to Toll, who continued to run vital infrastructure into the ground. What was the option? Buy the railways back, or have no railways. If they’d never sold them in the first place we never would have had to buy them back.
Vote:October 18th, 2011 at 2:20 pm
Berend
I obviously can’t answer for ‘adze’ but I’m not by nature a leftie rather I am a consumer. Private enterprise works well generally but ONLY where there is comparable competition & NZ has for example only one copper information network & one rail system. When these are sold to outside interests those same interests stand back & look at where the money is made. In doing this they are doing what they should, ie. looking after their shareholders, but if say you live outside of city limits then it becomes a case of hard luck. They don’t terminate service…they just let those parts of the service run down until they are stuffed.
In the case of Telecom the years of infrastructure neglect are just now starting to bite. In some areas patch ups of patch ups are failing. Powerco are the same. The lying bastards never admit as such….their call centre staff are merely told to lie harder & make complaining impossibly fruitless until the customer gives up.
When the power generators, Kiwibank etc are sold no one will notice for a couple of years, maybe longer. Then the demands for higher & greater dividends from overseas owners will make us realise that the golden years are actually history.
Vote:October 18th, 2011 at 2:24 pm
Berend, do you imagine that my facts are wrong because I mentioned the US twice, or some other reason? I can tell you that I don’t hate the US either as a symbol or as nation and my politics are in the centre. Try engaging people with their arguments rather than assuming everyone with a different point of view to you is an evil leftie. Not that that has any bearing on the validity of one’s argument.
Wisconsin Central Transportation Corporation had in 1993 bought (what was then called) NZ Rail Corporation (I couldn’t remember what it was called at the time). Toll Rail – the Australian company you’re thinking of – didn’t come on the scene until around 2002.
Vote:October 18th, 2011 at 3:02 pm
Adze
The US consortium that originally purchased Telecom did very little for the value of Telecom as a business, they basically ran down the asset. Same with the US rail operator that bought Tranzrail.
That is absolutely false in the case of Tranzrail. The investors put a massive amount of money into the business to overcome deferred maintenance. Probably the most damaging urban myth going around is that Tranzrail was run down: it was not. See slide 9 here. Once it became clear that Kiwis would not switch to improved rail system, as they had in the US, then the business case collapsed and new investment dried up.
I am nearly certain the same is true for Telecom. Telecom invested heavily in the 1990s, as evidenced by the rollout of 3 cellular networks and DSL, and had a dedicated innovation center on Tory St. I recall a figure of $200 million invested each year in the late 90s.
Vote:October 18th, 2011 at 3:12 pm
Adze, even if you are correct that Transrail was asset stripped, which you are not, but actually we now know the correct course of action was to continue to defer maintenance and then close most (not all) of the network. All the funds that the US consortium poured into the network have been lost, and the new owner, the taxpayer, is and will be saddled with large losses for as long as the network remains open.
Road users pay for roads through road user charges. Airlines cover their own costs. As does coastal shipping.
Yet rail overall is burning around $100 million each year, and has not added value since (from memory) the 1930s, whether public or privately owned. Tauranga-Auckland and Christhcurhc-Westport are I think the only parts of the network which cover its own costs. Everything else should go. Substitution to road or coastal shipping will occur, and the taxpayer will be substantially relieved of a black hole of funding losses.
Vote:October 18th, 2011 at 3:25 pm
Berend is correct. Orion does benefit from this Microsoft deal. Comparing this deal to NZ Rail is irrelevant as they’re completely different. Orion must maintain the development of the product they bought from Microsoft going forward so to be competitive. Neglecting that, then they will become uncompetitive, since they’re not the only software house selling their services/products to the US market, so they have no option there but to advance/maintain the development of the product. This is one of the competitive markets in the US, so kudos to Orion for this move.
Orion hasn’t moved in to the domain of Clinical Decision Support System (CDSS) yet, which is something I did propose to their CEO, Ian McCrae and Orion’s management team in 2007 when I was still doing freelance software contracting, but they said that they preferred to concentrate on enhancing their existing/current products, so we didn’t go any further after a few email exchanges. There were various types of CDSS that I proposed to them (based on published papers that appeared in various issues in health informatics journals Medical Image Processing & Signal Processing, Artificial Intelligence in Medicine, Medical Data-mining, Expert System in Medicine, etc…). The proposed idea is that I develop the core numerical API engines then hand them over to their software architectures/developers to be used in the CDSS application development.
CDSS is a hot topic at the moment in health informatics and it is an area that Orion may go into at some stage in the future. CDSS can narrow down the pains of clinicians/doctors in their diagnostic work, since such system can help cut down time spend on diagnosing a patient. Wellpoint Healthcare in the US had recently teamed up with IBM to develop CDSS for use by clinicians. This technology is cutting edge.
IBM’s Watson supercomputer and WellPoint working towards computerized access to records and diagnoses
CDSS is the future of modern medicine. In the near distant future, we would turned up at some hospitals only to find a HAL 9000 computer doing the diagnosis of your illness and perhaps the human specialist will only turn up at the end of HAL’s automated diagnosis to check that HAL doesn’t make a serious error in its diagnosis.
Vote:October 18th, 2011 at 3:30 pm
Falafulu
You haven’t got time for this. We need you to run the numbers on that time machine patent.
Vote:October 18th, 2011 at 3:40 pm
This entire discussion is quite misguided. One private company has written an agreement with another private company. The agreement is expected to add value for both parties. One of the companies happens to be on the other side of a political border, but this is irrelevant from the perspective of how and why the deal is expected to add value. The very same deal would add the very same value if both parties were on the same side of that political boundary.
Vote:October 18th, 2011 at 10:39 pm
“And this is why those who rail against free trade and foreign investment are wrong.”
Railing against free trade does not necessarily mean one is against ALL trade. There is a difference between fair trade and free trade which the right does not want to know about.
The TPPA for example is not good news from my perspective because Pharmac might be curtailed in its ability to buy medication. I have severe hypertension that is checked by a heavy dosage of 4.5 pills in the morning, 3 in the afternoon and another 2 in the evening. The last thing I need – or want – is to have my medication stuffed around by bureaucrats.
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