How one tech exec turned a corporate spinoff into IT success

(Editor’s note: This story has been updated to correct Sean Hagarty’s title at Bioventus and clarify details regarding the company’s IT team. Changes are marked in bold.)

Companies spin off divisions for any number of reasons, including nonalignment with revised strategy, waning profitability, or inadequate competitive advantage. Regardless of the reason, the challenges for the new companies are enormous. They must quickly reposition themselves in the marketplace, create brand recognition, and develop a technology strategy that aligns with the new market strategy. As part of all that, spinoffs need to develop self-sufficient infrastructure and services to support the business and its customers. If done correctly, the payoffs can include improved customer value, increased revenue, and enhanced shareholder wealth.

Bioventus is a great example of a successful spinoff. I recently interviewed its Vice President of Global Information Systems CIO, Sean Hagarty, who developed the company’s technology strategy. Here is an excerpt of our conversation.

Phil Weinzimer: Sean, what is Bioventus?

Sean Hagarty: In 2012, the biologics division of Smith & Nephew partnered with Essex Woodlands, one of the world’s most respected and successful healthcare growth equity firms, to create Bioventus, headquartered in Durham, N.C. Our mission is to help sufferers of fractures or osteoarthritic pain heal more effectively in less invasive ways. To this end, we develop and market clinically proven and cost-effective orthopedic therapies and diagnostic tools, including osteoarthritis pain treatments, bone fracture healing systems, and biologic bone growth factor technology.

Bioventus’s products are known for their safety, innovation, and effectiveness. The company focuses its medical product development around its two segments, Bioventus Active Healing Therapies and Bioventus Surgical. The company is the recognized leader in bone healing devices and among the leading distributors of osteoarthritis injection therapies.

Weinzimer: What were the challenges of spinning off from a $4 billion-plus company?

Hagarty: Bioventus was spun off from Smith & Nephew in 2012. In doing so, the business brought only the relevant data along, but no applications. Our IT team, [under then-CIO Walter Kwiatek], stood up an entirely new set of infrastructure and application architectures using primarily cloud and hybrid-cloud technologies. It was the equivalent of more than just changing an engine out on a plane while in flight; it was like changing the engine, the wings, rudder, landing gear, fuselage, cockpit, and fuel all while not disrupting the passengers on the flight.

We assembled a strong technology team that enabled the global transition of Bioventus to an entire new architecture within 18 months of the announcement. I’m very proud of our IT team for such an incredible accomplishment.

Weinzimer: How did you approach the transition?

Hagarty: Bioventus approached the transition as if we had a burning platform that we needed to exit. And exit we did — rapidly, once business process and technology solutions were matched up. We took a cloud-first approach to nearly all of the application suites we were implementing. Our goal was to not own any servers or even staff any developers (or as few as possible).

We like to think we stood IT on its side and took advantage of the opportunity that cloud technologies provided us. The rapid leap to the cloud made a logical choice. And we [continued Walter’s cloud-first approach and] continually evaluate new services as we plan our strategic roadmap. We also highly leveraged several key strategic implementation vendors to assist us as we prepared our FDA-validated systems and non-validated system for production.

I was fortunate to have a highly skilled and experienced IT team to launch Bioventus. Today, Bioventus has customers in over 25 countries with offices in Australia, Canada, the Netherlands, and the United States.   

Weinzimer: How has the IT architecture improved the business in terms of products, customers, and shareholder value?

Hagarty: Bioventus has grown its product offerings and international reach. Last year, an entire new division was formed to focus on the orthopedic surgical market and [we] just recently acquired BioStructures, a California company. Our employees have embraced mobility, with many of our applications — like Microsoft Dynamics CRM, Workday, and Concur — available in the cloud so employees can stay productive almost anywhere while also connected to the data they need.

Our IT team members are now trusted advisers to the business and frequently called into brainstorm, ideation, and planning meetings where processes are being redesigned or new products are being considered. The relationship between IT and the business is a strong, two-way partnership. Differentiation is key to our success. We provide customer-facing and marketing reshaping ideas that strive to anticipate customer (big C and little c) intentions and needs by providing enticing, end-to-end experiences for the services IT provides.  

Weinzimer: What role does leadership play at Bioventus?

Hagarty: Leadership at Bioventus is a corporate focus and priority. HR sponsors executive leadership training that includes all levels of executive leadership down to first-line managers. Our IT personnel actively participate in Society for Information Management (SIM) Regional Leadership Forum training for IT executives. I would highly encourage my peers to take advantage of this excellent program. Informal coaching sessions for new leaders are also common.

Developing our leaders has allowed us to discover new ways to work, new ideas to explore, and new efficiencies to gain. The following is written on the glass wall of my office: “Create relevance … accelerate Results. Think. Dig. Gather. Change. Co-create. Understand. Build. Invent. Disrupt.” These words capture my leadership perspective.   

Weinzimer: How would you rate the strategic maturity of your IT organization?

Hagarty: I was intrigued by the IT Strategic Maturity Assessment in your book, The Strategic CIO, because it measures both business value and IT efficiency. I shared the assessment with my business colleagues and asked them to rate the IT organization. The results were very rewarding. Here are four key takeaways from our assessment:

Sean Hagarty-CIO, Bioventus

• The overall rating of our IT organization was very high, as you can see from the survey results [in the above graphic]. My business peers recognized our ability to be efficient in capital and operating expense, while leading, driving, and delivering true business- and strategic value in a significant way. 
• As a result of delivering value to the business, our 2016 budgets were increased by more than double the industry standard.
• We are recognized for developing and managing IT talent. Recently our CEO recognized key members of the IT organization with a Bioventus CEO Award.
• We recognize that we must continue to improve, and the business continues to challenge IT to strive to be more efficient and play a key role in the corporate objectives for 2016.  

Weinzimer: What lessons have you learned from this spinoff?

Hagarty: There were many lessons learned, but the following are the three that had the greatest impact in terms of our success:

1. Dedicate a transition team

A dedicated transition team assisted with the migration and helped to maintain focus and executive commitment when hard decision needed to be made. 

2. Make smart decisions

We also made a smart decision and refocused this high-performing team from transition to transformation of our company processes once the formal spinoff was complete. This has enabled some incredible efficiency initiatives that have had a positive impact on selling time, higher customer satisfaction, and shorter turnaround times. 

3. Focus company culture on improving efficiency

Our culture continues to think about efficiency in everything we do, and it continues to pay off.  

About Sean Hagarty

Hagarty is a strategic CIO technology executive who delivers results by leveraging information and technology in innovative ways. For more of Sean’s thoughts and philosophies on leading successful IT teams, read his LinkedIn posts.

If you are interested in obtaining a copy of my IT Strategic Maturity Assessment, please email me at pweinzimer@gmail.com.