by Byron Connolly

Inside MSD’s technology transformation

Sep 11, 2015
CareersHealthcare IndustryInnovation

Technology has significantly changed the way $42 billion global pharmaceutical organisation, MSD, does business around the world.

In 2013 – four years after MSD (known as Merck in the US and Canada) merged with Schering-Plough – the IT team undertook a new strategy to differentiate the business from its competition, Post told attendees at the ANZ CIO Forum.

“The life sciences/healthcare industry is being impacted significantly by changes not only within the environment but through technology and the application of technology,” Post told attendees.

“Data has become critical inside and outside our organisation, and understanding that data to better address our core focus as a business.”

MSD’s technology strategy has three major components, the first being articulated by four major quadrants: IT enabled-revenue, IT-induced disruption, IT-driven productivity, and IT-powered utility.

These quadrants provide context around system and capability investments the organisation needs to make, Post said.

“The idea is you move from bottom line enablement and technology, through the quadrant to go more towards top line growth, which is directly impacted by IT,” said Post.

Historically, little to no time was spent leveraging IT to drive revenue but MSD intended to move some of the focus and resources from IT-driven productivity and IT-powered utility to IT-enabled revenue and IT-induced disruption activities.

“There was an opportunity for IT to actually change the business and we could potentially open up new opportunities that had never been looked at before,” Post said.

“This set the context which started the cultural shift and this became a way for us to evaluate the investments that we were going to make.”

The second part of MSD’s strategy is defined by three ‘horizons’: extend and define core operations, build emerging capabilities, and create viable options.

‘Defining core operations’ ensures stable operational systems are compliant with appropriate risk management, Post said.

“Those things that are the engine of the company, the railroad of the company, which need to run well. This is where you are looking to standardise and stabilise operations … the key lever being decreasing IT cost to enable the bottom line health of the organisation.”

‘Building emerging capabilities’ looks at where the business is going, where it wants to go, the outcomes it wants to achieve and the capabilities and services that will support these plans, Post said.

‘Creating viable options’ defines how MSD can identify and leverage disruptive technologies for business advantage. These technologies may include improved sensors that enable people to monitor their health. Google, for instance, recently partnered with Dexcom to make smaller, better monitoring devices for diabetics.

Post said that as these innovations become more real, the organisation will bring them into the MSD technology catalogue.

“At the same time, anything that ‘horizon 2 groups’ are doing as those emerging systems become mainstream, the global technology organisation takes those on and makes them part of the underlying engine of the company to ensure they run without issue in a compliant and risk managed fashion,” Post said.

The final piece in MSD’s strategy is to initiate a cultural transformation, shifting staff from the historical technologist mindset to becoming professionals with technology expertise – true partners to the business.

“This culture shift was critical in changing how people were thinking about their role, the responsibilities, and their interactions, and how they could enable and realise the strategy we had articulated … to focus on top line growth rather than bottom line enablement only,” Post said.

With the strategy in place, MSD rebalanced its global footprint, moving from a centralised model with a lot of local capability to a centralised one based on regional innovation hubs at its head office in Branchburg in the United States, Prague and Singapore.

Delivery and innovation teams are ‘co-located’ at these hubs, unleashing creativity and innovation that would not be seen in operational areas of the business.

“They have become culture and innovation centres for us – they are responsible for providing additional weight behind the innovation that we are trying to do. Innovation coming from a market sector or from those teams can be nurtured, grown and hopefully brought into the mainstream,” Post said.

MSD has developed solutions in areas such as medication adherence, supply chain management and improvement, and integrated disease management, said Post.

“There have been a number of solutions that have been made available that were new innovations for a particular area but then, because of this model, have been able to be extended to other markets and other partners very quickly.

“We are doing more partnerships with some of our top global customers whether its Walgreens, Premier Pharmacy Services and more – where we are co-developing solutions with them to address their problems and provide better healthcare to the patients.”

Post said the company is already seeing the benefits of the new strategy and 2016 will see true technology differentiation and opportunities for business partners.

“We are seeing much more innovation and opportunities for commercialising IT solutions ourselves. If you look at the strategy, the framework, the horizons and cultural shift – that framework really did provide a catalyst for changing the organisation and ensuring [people] are thinking in the direction that we wanted them to.

“That they are thinking about top line growth from the business perspective – they are thinking about ‘what can I do that makes a difference to the top line of the business,’” Post said.

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