Wolters Kluwer CEO, Nancy McKinstry, discusses the future of the company.
Wolters Kluwer CEO, Nancy McKinstry, was interviewed by China Publishing and Media Journal about the company's future and industry trends.
In 2013, what are the most important things that happened in your company and in global STM publishing market? What impacts will these things have on your company’s business and developing strategy in 2014?
Important milestones for the company
We started off the year by launching our new three-year strategy, and continued to transform our portfolio towards digital and high-growth businesses through focused investments, strategic acquisitions and divestments – all in the service of helping our professional customers make critical decisions with confidence. Also at the beginning of 2013, we launched a new single brand strategy to reinforce our customer-focused growth ambition. With a single Wolters Kluwer brand for all its businesses, we also announced a new tagline, ‘When you have to be right,’ illustrating our commitment to solving customers’ challenges and enabling them to make critical decisions with confidence, every day.
We continued to expand into emerging markets by acquiring Prosoft, a leader in tax software in Brazil, giving us a strong foothold in this fast growing market. Moreover, we appointed Corinne Saunders as CEO of Emerging Markets. This new senior management role underlines our strategy by continuing to focus on shifting the portfolio’s geographic mix. The company also continued its focus on cloud-based products, launching CCH Axcess, the only cloud-based modular tax preparation, compliance, and firm management solution. Another area with top priority is mobility: solutions which drive decisions and outcomes and products which are tailored to specific customer groups. For example, today we have over 350 apps available for use on tablets and smart phones, including 105 of our medical journals. Innovation remains a focus for us. We annually invest 8-10% of our revenues into new products. Innovation continues to play an important role with employees of the company. In 2013, we held our 2nd annual company-wide Global Innovation Award Tournament. This annual award is awarded to employees who make significant contributions to innovation. The 14 finalist teams from last year were highlighted for their innovation in delivering superior value to our customers.
2013 important happenings in global STM publishing market
Wolters Kluwer provides information, software and services to professionals in four main areas: law, tax, finance and healthcare. So in terms of the STM market, we operate mainly in the ‘M’, or Medical sector. What we’ve seen in the Medical information services market over 2013 is that it’s a market in transition. We are seeing growth in enrollment to medical schools due to the global need for doctors and nurses (in the U.S, medical school enrollment is expected to increase 30% by 2017). We’re also seeing an increase in demand for solutions that drive competency in education and training (only 10% of hospital and health system nurse executives believe students are fully prepared). Lastly, there is a continuous need for education and training throughout the professional’s career. The most important growth area, the market for clinical decision support solutions, continues to be robust, fueled by investments in health care IT. Wolters Kluwer is a leading in this area and we continue to see strong demand for our solutions such as Up To Date.
How do you predict 2014 STM publishing? What kinds of trends will there be?
We are seeing several trends within the Medical publishing market. First, there is a continued demand for high quality medical information and content worldwide. In China for example, health care spending is expected to rise to 6.5% of GDP by 2018.
Secondly, we are seeing that the globalization of research elevates demand for top-tier medical content. Another trend were seeing is that open access models are creating opportunities for authors, users, and societies. There was a 34% growth rate in open access models over 2012, and we have seen this double digit growth rate continuing in 2013. Finally, clinicians are facing an overload of information, and this drives the need for tools and technology to improve research results. For example, there are 2 million scholarly articles published annually; and this is growing at 3% per year.
What opportunities and challenges will Wolters Kluwer face in 2014?
Four emerging technologies are rapidly and fundamentally changing the professional markets we work in and this guides how we are investing in those markets. The key technologies are: cloud; mobile; social media; and big data.
- Professionals worldwide are increasingly turning to cloud and mobile technologies to help them manage the ever-growing complexity more efficiently within their day-to-day work. Cloud and mobile solutions are able to streamline and integrate workflows, provide service anytime, anywhere, enabling real-time collaboration. Our customers are also able to minimize the time they spend on non-value add work (back office, tech upgrades, low level tasks) and differentiate themselves through frequent client interaction. Lastly, it allows professionals to create new ecosystems, with the customer at the center of connected workflows and relationships that serve them, as never before. These technologies are providing platforms for innovation and can drive new business models.
- Social Media, at its most basic, can be a marketing tool. But its greater power comes from engaging with customers to strengthen relationships and generate new business. It’s also an important instrument in finding new clients. Social media is changing how businesses interact with customers, how they build communities and how they respond to changes in the market.
- Data is an emerging area that we see great potential in. Gleaning insights from Big Data offers new ways to deepen customer understanding, to enhance client service, and to create competitive advantages. In each of the professional markets we serve, our customers are looking to analytics to drive better results, whether that is making a better decision regarding patient care, or as a lawyer mining customer data to drive new business. We are actively developing “big data” solutions which are designed to provide greater insights for our customers.
The economic conditions in the European markets, certainly in the southern part of Europe, remain a challenging area for Wolters Kluwer. However, we do see that there is a bit of abatement in the rate of decline, but at this stage it's too early to call the bottom to that.
Which field will Wolters Kluwer focus on in 2014? Are there any changes in your company’s developing strategy in those areas?
Wolters Kluwer’s strategy is focused on accelerating profitable, organic growth, and in particular we are focused on 4 key segments which are high growth areas for our business. For our Tax & Accounting division, our growth area is Tax Software, for our Legal & Regulatory divisions, Corporate Legal Services makes up our high growth area. In the Health division, Clinical Solutions is a strong growth area, and lastly, in our Financial & Compliance Services division, the focus lies on Finance and Audit Risk & Compliance.
Across our business, our priorities are to:
- Expand our leading, high growth positions through organic investment and bolt-on acquisitions focused on our leading, growth positions, while divesting selected non-core businesses.
- Deliver solutions and insights: we will continue to invest 8-10% of revenue in new and enhanced products. Specifically, we are investing significantly in mobile and cloud-based applications and building tailored solutions, in close collaboration with our customers.
- Drive efficiencies through cost reductions in select areas such as technology: We will continue to find more ways to drive efficiencies in areas such as sourcing, technology, real estate, organizational processes, and distribution channels. As in the past, these operational excellence programs will deliver cost savings to support investments and margin expansion, while mitigating cost inflation.
What do you think about digital publishing in 2014?
An important trend we’ve seen developing is that our professional customers in virtually every market are under a great amount of pressure to deliver results. They need tools and solutions that not only deliver information, but provide them with answers fast, enabling them to act quickly. Digital, and in particular, cloud and mobile products, are an important way to achieve this. Across all of our markets, professionals are adopting mobile and cloud solutions. For example 8 in 10 physicians use smartphones in their daily practice and 6 in 10 use tablets. Over half (55%) use both smartphones and tablets in their daily practice. In addition, mobile apps are being used by 24% of physicians. In our Tax & Accounting division, cloud and software are the fastest growing solutions in our portfolio, making up the majority of our revenue. 75% of revenues from Tax & Accounting is made up of software and online, with increasing adoption of cloud and mobile solutions under way.
In the last ten years, Wolters Kluwer has divested 50 mainly print-based assets (divested revenue: €760 million) and acquired mainly digital businesses (acquired revenue: €854 million). The result: a bold portfolio transformation into a digital business with global positions of strength. In moving Wolters Kluwer from existing business models to digital ones, today 77% of our revenue comes from higher value and more profitable online and software products and services, up from 45% since 2003, including over 350 mobile apps and 150 e-journals. Print now accounts for merely 23% of the company’s revenues. This drive towards digital publishing will continue to advance in 2014.