The history of the company from the interview with Petro Konovalov for MS..today

Doctor Eleks — how we got into Healthcare

The idea of Doctor Eleks began with the fact that my colleagues and I, working at ELEKS, had been written code in our free time. It was designed to create various information systems. Of course, we had plans to monetize this "hobby", but we managed to do it much later. In 1996, we were contacted by representatives of a medical rehabilitation institution in Truskavets. In fact, the first working product was a separate module. It was a program for monitoring movement changes in the process of rehabilitation of people with cerebral palsy. A 3D model of a person was built and the changes in angles and range of motion could be seen.

That is how our developments began to be used in the medical field. Both we and the customer liked the resulting product—they offered to automate the processes taking place in the clinic. We also successfully implemented this—our information system was much better than all those that existed at that time. It was 1998. We realized that we would not find such customers in Ukraine anymore and started outsourcing.

Mastering the product model

For the next seven years, we successfully worked in outsourcing. In 2005, we realized two facts. The first one is that working on outsourcing, we get only money, and with the work-for-hire scheme, the profit comes all the time. Secondly, our ideas and developments can and should be used in the healthcare of Ukraine.

We did not evaluate the prospects specifically—the product became an investment. Everything came together—we began to diversify our business model towards the product and simultaneously solve a social problem.

The first client was a private clinic, which was located not far from us.

Reaching the break-even point and the first profit It took seven years to break even

This time was needed to understand the needs of customers. Without this stage, the product could not become a universal CRM system for clinics. We earned something, but we still spent more.

Doctor Eleks came out thanks to the trust in the project of the company's top management. During the first seven years, options and salaries were cut, but the project still remained in operation, because I was able to convince the top management that Doctor Eleks would be successful.

About $1 million was invested in the launch and promotion of the project. My opinion is that it makes no sense to invest less in a technologically complex product. If it did not work out with such an investment—you need to kill the project. If you succeed—you need to enter a new stage of investment. One million is the minimum to understand whether the project will work or not.

Is the product a separate business or part of ELEKS?

Doctor Eleks is a separate company with its own finances. At the same time, we are part of a large holding and are based in the same office.

We sometimes involve outsourcing specialists, but for a specific task, for example, designers. Thus, you can close only some specific cases, but not develop the product.

The team now consists of 70 people, including 20 developers. Most of the team works in the implementation and support department. Approximately 10 people are engaged in accounting, marketing, and customer support.

The core of the team is 90%—those who started with us in Truskavets and in the first (1-3) years of work. These people are co-owners of the product, some of them have already retired. Not all of them are developers.

Now, when we see that a developer brings value to the project, we give options. But it is unrealistic to keep developers. The first question I ask at the interview is: How long will you work for us?. Developers go to outsourcing because it is easier, better paid and there is no direct communication with the customer.

On the other hand, there are guys who are bored in service companies, and they specifically come to work in a product company. In the product model, you can work with new technologies and here you can see the real results of work faster, in contrast to outsourcing.

Selection of target markets and expansion to the West

Now we have become leaders in Ukraine in the niche of large commercial clinics. 95% of them work only with Doctor Eleks. We are practically the only one there, although competitors are growing up now. In addition to Ukrainian, we have Polish, Belarusian, Moldovan, and Tajik projects.

It is more difficult with small clinics and dentistry—there is much more competition. But we are interested in this niche. Last year we presented a solution for medical offices, and it is popular. This year we launched a solution for dentists, it is too early to summarize, but we received good feedback at specialized exhibitions.

In the state-funded sector, we are one of the three leaders. We are actively involved in healthcare reform. And along with the reform, the number of state-funded institutions that work with us has indeed increased significantly. Although it is more correct to say municipal non-profit organizations. Medical institutions have become much more independent and can choose, make management decisions, including the choice of the system.

The key direction is to enter international markets with greater profit. Technologically we are strong, we know everything and can do everything. In Ukraine, the market is much less saturated than in the West. There are enough private clinics in the country, but not enough money.

Briefly summarize: how to create a new product while outsourcing?

Working on outsourcing, you can develop technological ideas and sell them to customers. In a large company, you will be given the opportunity to do your project if they see potential in it.

Another option is possible when your outsourcing customers offer to create a product and become partners. Recently, this has become quite popular among corporations. They want to develop the product direction and invest in startups. Such a partnership is a great opportunity to enter the corporate niche with your product.

If you don’t have the resources of a large company, it will be difficult. It is very difficult to raise a technological product by yourself because you need people who are able to make it, and they want money or big options. In such a situation, you need to follow the standard startup model: create a prototype, show it and look for investors who will give you a minimum of time.

In any case, it is difficult to make your product: you need sponsors, brains, great desire, and enthusiasm. But if you guessed the market and the product, all these difficulties pay off in the long run.