Breaking from the past might just be the toughest part
Life sciences companies are veterans in the deployment of enterprise technology solutions and the leverage of outsourced IT delivery models. However, healthcare convergence is rapidly transforming the business of healthcare and the environment in which life sciences companies operate. As this ecosystem transformation puts new pressure on the historic life sciences business models, it is putting significant pressure on the role and capabilities of the IT organizations that support them. The question is, “Can the current IT operating models evolve quickly enough to enable the required changes in the life sciences business models?”
Life sciences IT has become much more of an ecosystem model in and of itself. It is relying on more collaboration and relationships with third parties and is learning how to manage risk and protect information across a distributed IT value chain.
At the same time, life sciences IT is being asked to support expanded global operations, particularly in emerging markets, new stakeholders and new requirements that require additional skills in new locations.
Across the globe, industry market dynamics are changing as well—requiring life sciences companies to work more collaboratively with payers, providers, and intermediaries such as pharmacy benefits managers (PBMs). In addition, there is an increasing reliance on consumer and patient engagement and monitoring, which puts more demands on IT to improve capabilities to leverage big data and analytics.
Governments are also placing more pressure with new and complex regulations increasing risk and creating a need for improved compliance capabilities. And finally, many life sciences companies are adopting shared services models, so they have to change their mindset from simple functional outsourcing to a larger, more strategic and integrated business services delivery models.
So it’s not one thing but many things that are changing, and that creates new expectations in execution, architecture and strategic evolution for IT.
Problems of the past
Some of the most significant barriers to the evolution of life sciences IT are the implications of some of the good intentions of the past. Long-term outsourcing contracts and monolithic ERP systems come immediately to mind—while both enabled the achievement of past objectives, they now constrain speed and agility in provision of new solutions required by the business and the ability to reconfigure the supporting IT operating models.
What to do now
- First, IT should no longer be considered as a function. IT should be viewed as a service integrator—not the supplier of all technology needs to the business, rather an aggregator and coordinator of technology services aligned to business demand regardless of who actually delivers it.
- Second, IT organizations must invest in themselves, not just in the business. Rather than doing more, the organization must focus on doing better. Many IT departments are using new technologies to improve their ability to manage and deliver service with increased transparency and improved performance.
- Third, IT needs to recognize that one size does not fit all. As organizations become more global IT needs to support different entities with tailored capabilities. Operating models need to emphasize agility so that new combinations of centralized and decentralized services can be assembled when needed driven by business-aligned demand management processes.
- Fourth, IT needs to assemble the right internal talent. Current organizations are typically laden with application developers, business analysts and program managers— holdovers from the global ERP deployments. As the focus of the IT organization changes from delivery to service management, the emphasis should be on different talents with a focus on architecture, vendor management, information security, and big data skills.
We are still at the early stages of this evolution but are clearly seeing emerging leading practices from organizations embracing the service integrator model and more agile operating models. We are seeing great examples of large organizations reconsidering how to outsource elements of IT—shifting from horizontal structures such as application development towards a functional strategy where all applications are outsourced for a particular part of the business. We are also seeing investments in IT tools; particularly cloud-based tools that can deliver value quickly while helping IT gather more insight and improve responsiveness to the business. And we are seeing new hiring profiles.
So while the life sciences IT ecosystem is changing, we are not predicting extinction; rather, we believe that a new, better IT capability is emerging that can evolve with new markets, new customers, and whatever comes next.
Hear Liam talk about how the evolving pharmaceutical industry demands more scalable and flexible IT support to better respond to the industry’s new business model in the KPMG Advisory Institute podcast: The Evolution of Pharma IT.