Strategic Impact of IT Trends

Research, ideas and comments about the way IT is changing organisations


Executive Summary

Strategic Impact of IT Trends In the Pharmaceutical Industry

A quick glance at the pharmaceutical industry shows that it can be a very profitable one, but also one with a significant cost component in its income statement. An increase in life expectancy and the number of high-income households growing year-on-year on emerging markets contribute positively to the wealth of the industry.

Moreover, the market is well protected by entry barriers. A typical product lifecycle is lengthy from idea-to-market, it normally requires an extraordinary investment and, when successful, products tend to be secured through patents, regulations and intellectual property rights, making it difficult for others to copy them. For each blockbuster drug that generates a significant revenue stream, there are many others that fail. Coupled with concerns of information leakage, such as of research data, and any association to mistrust, that is to say ethics issues, contribute to make this industry very careful with their databases and, therefore, perceive IT trends as a potential security risk. As a result, organisations tend to be very resistant to IT adoption. On the other hand, healthcare and life science organisations are heavily dependent on innovation to develop new products and, ultimately, to provide better living conditions to the population of the world. This is tightly linked to IT and without it enterprises lose their competitive advantage and the ability to survive in the market. Therefore, if the industry is so sceptical about IT but it depends on technology to survive in the market, is the pharmaceutical industry ready to accept and adopt the latest IT trends? And, if so, what is the strategic impact of such trends on their operating model?

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The purpose of this report is to assess the pharmaceutical industry’s readiness to adopt cloud computing, mobility and BD&A (i.e. Strategic Big Data and Analytics), and their impact on the enterprises’ Operating Model. In order to answer such questions, this report firstly reviews academic literature available about the industry, its operating models, and different IT adoption determinants and frameworks. Due to the complexity of adopting technology, one key conclusion from the literature review is that each organisation is distinctive and so there is not a unique model or framework that guarantees a successful IT adoption process and, consequently, multiple determinants ought to be considered along the journey. Furthermore, this report proposes a framework to be used by decision makers as a starting point for discussions that must happen in modern organisations.

One of the determinants considered here is the Operating Model. Research by the Massachusetts Institute of Technology (MIT) in 2004 identified that 63% of large organisations tend to choose Unification as their preferred model, mainly to enjoy the benefits of the highly integrated and highly standardised business processes. Nearly a decade later, pharmaceutical companies are creating Centres of Excellence (CoE) and Shared Service Centres (SSC) to treat, organise and distribute their data, demonstrating that MIT’s research holds true for this industry. To confirm this assertion, a survey, created as part of this report, corroborates that this is indeed the perceived operating model that best fits the industry’s needs.

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This survey also concludes that IT trends are seen as a risk rather than a benefit, mainly due to lack of knowledge.

Other relevant conclusions are summarised below:

  • None of the respondents perceived their organisations to be ahead of the industry on using cloud computing, and a majority believe they are at par with the competition on all three trends;
  • Respondents are happy to have Sales & Marketing data stored on the cloud and mobile access to it, but not data from other functions, especially if it is sensitive;
  • Security, privacy and regulations are common barriers for IT adoption. Technology management and lack of specialist talent are also seen as limitations to implement mobility and BD&A solutions;
  • Strategic decisions are already being made based upon BD&A, complemented with professional experience;
  • Overall, the IT function is not seen as data owners, but the organisation is.

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With the conclusions from the academic literature review and by analysing the survey data, this research proceeds to assess each trend individually.

Cloud computing, mobility and BD&A bring agility, speed and knowledge sharing into organisations, yet they are seen as threats rather than opportunities. Although cost savings often trigger the need for IT adoption, many organisations find post-implementation benefits not foreseen in the initial business case. For example, running businesses as a service enables companies to integrate their business processes more efficiently, while keeping a high level of standardisation. Furthermore, companies are just beginning to realise the full potential of combining these trends to identify and resolve problems that have not happened yet.

The main adoption challenges derive from data (location, ownership or security), and talent (mind-sets and skills). The latter is especially relevant for building analytical models and algorithms that enable Big Data to be processed and presented as strategic information. Currently the global workforce is short in knowledgeable resources capable of defining these models.

Mobility also brings in additional complexity to businesses in terms of technology management. Until recently, companies made an effort to standardise the technology used by their employees, however IT consumerisation has resulted in employees beginning to demand the same tools that they use at home. These tools are often better and more advanced than those found in their workplaces.

The industry is experiencing all these trends but there are still potential growth opportunities, especially when combining cloud computing, mobility and BD&A to create value.

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The key conclusions from this research are listed below:

  • IT trends play a key role in supporting the chosen operating model;
  • Not enough budget is currently allocated to educational programs to help lower adoption resistance;
  • IT standards are not defined or advertised in this industry, so companies do not have guidelines, nor are they challenged to quickly embrace new technology;
  • Return on Investment (RoI) is a selling point of IT trends due to the size and cost of such implementations (when compared to former IT programmes).

The lessons learned in the pharmaceutical industry can be applied to other regulated sectors, for example, the financial services industry. Other sectors, such as technology and telecommunications, are more dynamic in their nature and, therefore, more open to accept IT.

With this in mind, this report sets the following recommendations to successfully implement these trends:

  • Re-allocate budget from other areas and proactively invest in IT adoption;
  • Re-access the operating model and choose the one that best meets the needs of the organisation. Once agreed, any investment made should support such a decision;
  • Share information with third-parties to allow better and quicker product development;
  • Be a business partner in the organisation so IT can resolve real business issues;
  • Become a pioneer in order to take advantage of innovation, but look at other sectors and competitors that have embraced the technology already to be aware of the risks involved.

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