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Microsoft Acquisition of Nuance 2021 Microsoft Acquisition of Nuance 2021
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Microsoft Acquisition of Nuance 2021
Nuance Customer Perceptions of Acquisition's Impact

author - Boyd Stewart
Boyd Stewart
author - Joshua Jensen
Joshua Jensen
author - Tyler Sycamore
Tyler Sycamore
December 10, 2021 | Read Time: 6  minutes

In April 2021, Microsoft signaled a further push into the healthcare industry by announcing their acquisition of speech recognition and artificial intelligence vendor Nuance. To gauge customer perceptions of this acquisition, KLAS interviewed 39 of Nuance’s healthcare customers to get their thoughts on how the acquisition might impact their organizations going forward.

Majority of Respondents Report Neutral or Favorable Reaction toward Acquisition

Among this report’s sample, the most common reaction to the acquisition is a neutral, wait-and-see approach. This accounts for almost half of interviewed organizations, while another 31% report that their initial reaction is positive. Only one respondent views the acquisition unfavorably.

In general, respondents view Microsoft as a solid company with a good reputation, and they feel the Nuance acquisition will generate opportunities for synergy between the two companies. Nuance customers will benefit from a transition to the cloud and the full support of Microsoft, while Microsoft will be able to further solidify their healthcare credentials.

perceptions of acquisition nuance customers by nuance product in use
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“Microsoft is a great IT company overall, but historically, they have been a little disconnected in healthcare. People have to explain everything to them. I am hoping that Nuance’s long-term experience in the healthcare space will help Microsoft. Microsoft is a good company and having Microsoft’s backing will help Nuance.” —Vice president

Handful of Organizations Expect to Increase Their Engagement with Nuance

A handful of respondents—mostly Dragon Medical One customers—expect that they will increase their engagement with Nuance following the acquisition. These customers are looking forward to taking advantage of deeper integration with existing Microsoft products.

blue quotation mark on grey background“We are more likely to engage with Microsoft because of the acquisition. Microsoft already has deep relationships in the healthcare enterprise, and we are no different. We have deep relationships with Microsoft. We are really intrigued by how we can integrate some of Microsoft’s existing portfolio with the Nuance suite’s capabilities. We are highly interested in that.” —Vice president

However, the majority of respondents (69%) expect their level of engagement with Nuance to remain steady. These customers believe Microsoft will largely allow Nuance to continue operating as they have in the past, and they therefore do not anticipate any change in engagement.

blue quotation mark on grey background“I don’t foresee changes happening. Nuance is a pretty strong company, and I feel like they are going to continue to run the company as they have.” —Manager

PowerScribe 360 users appear to be least certain about the acquisition’s impact on engagement, with 44% mentioning that they are unsure if or how their engagement will change post-acquisition.

expected change in engagement post acquisition

Customers Highlight Opportunity for Increased Innovation, Note Concerns about Potential for Support to Slip

One of the most frequently mentioned benefits that customers see the potential to gain from the acquisition is an increase in resources to help solve existing product issues. They also see the potential for Microsoft infrastructure (e.g., Azure) to accelerate the rate at which Nuance is able to deliver new, innovative technology, particularly around artificial intelligence (AI). One interviewed manager believes Microsoft’s acquisition is the key that will enable Nuance to unlock AI technology: “I am not surprised by the acquisition. In terms of analytics and technology, the acquisition is probably a good move for Nuance, especially since AI is going to be our future. I think Microsoft can help Nuance get there.”

blue quotation mark on white background“Microsoft is going to have more talent. They have a stable of software engineers that are unrivaled. If they can use their experience with software engineering to improve on Nuance’s products even further by collaborating, any product that they come out with will improve on the new ones. They will also be more innovative. Microsoft just needs to keep innovating and keep up with the good support of their clients.” —Physician

While customers see a lot of promise due to Microsoft’s existing portfolio and expansive resources, some see the potential for challenges to arise. For example, some worry the level of customer support will decline given Microsoft’s size and some previous interactions with the company. A manager explained, “I am a little worried. I don’t want Nuance’s support to turn into giant Microsoft’s customer support, which tends to be rigid. I feel like Nuance actually listens to us and is trying to understand our specific needs. I have been on calls with Microsoft, and their support isn’t like Nuance’s. My advice to the leadership going forward would be to not ruin the current Nuance support.”

Additionally, because of Microsoft’s size and cross-industry ventures, some customers worry Microsoft will use the Nuance technology to focus on non-healthcare-related initiatives, allowing Nuance’s healthcare-focused technology to stagnate: “Maintaining a focus on healthcare and not getting lost in the bigger conglomeration of Microsoft could be a challenge. Nuance has a lot of balls in the air outside of healthcare with their voice recognition capabilities and work with Siri, so I hope the healthcare part of the product doesn’t get lost” (manager).

Nuance Customers to Microsoft: Don’t Lose Focus on Relationships or Nuances Core Products

Nuance customers’ top advice to Microsoft leadership moving forward is to allow Nuance to continue to provide the strong customer relationships customers have previously enjoyed and continue to improve and develop their core products.

Customers would also like Microsoft to maintain competitive price points for the Nuance products and ensure that prices don’t spiral out of control. One vice president’s impassioned plea summed up a common customer sentiment about the potential for cost increases: “The solution has to be affordable and scalable. We have gotten some initial feedback that it is extremely expensive to implement Microsoft’s tools and technologies. If we really want to do what is best for providers and patients, we have to make care more affordable for our communities. The tools are just too expensive, and that is not sustainable. We believe care should be affordable for everyone. If we could provide affordable care, then we could help people be healthier as well. People would have access to the right kind of care. When we look at some of the major technology implementations and innovations, the economics have to work. The technology can’t erode our ability to provide world-class clinical care at an affordable cost.”

nuance customer advice for vendor leadership post acquisition

Statement from Microsoft

Microsoft submitted the following statement from an April 12, 2021, press release regarding the Nuance acquisition:

“Microsoft’s acquisition of Nuance builds upon the successful existing partnership between the companies that was announced in 2019. By augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions, as well as the benefit of Nuance’s expertise and relationships with EHR systems providers, Microsoft will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services. The acquisition will double Microsoft’s total addressable market (TAM) in the healthcare provider space, bringing the company’s TAM in healthcare to nearly $500 billion. Nuance and Microsoft will deepen their existing commitments to the extended partner ecosystem, as well as the highest standards of data privacy, security and compliance.”

author - Madison Moniz
Madison Moniz
author - Joseph Ybarra
Project Manager
Joseph Ybarra
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This material is copyrighted. Any organization gaining unauthorized access to this report will be liable to compensate KLAS for the full retail price. Please see the KLAS DATA USE POLICY for information regarding use of this report. © 2024 KLAS Research, LLC. All Rights Reserved. NOTE: Performance scores may change significantly when including newly interviewed provider organizations, especially when added to a smaller sample size like in emerging markets with a small number of live clients. The findings presented are not meant to be conclusive data for an entire client base.