Massive IT Transformation at AstraZeneca

AstraZeneca

When Dave Smoley joined AstraZeneca as CIO in 2013, he found – as so many CIOs do when they walk in the door – that IT cost too much and delivered too little. So he developed a mantra: We want to be twice as good for half the cost.

But transforming an IT organization of more than 2100 people serving a pharmaceutical company of more than $26B in revenue takes more than a mantra; it takes a well-thought out, well-executed plan. Smoley chose a five pillar approach, which hinged on a dramatic change to his sourcing model. “We are repositioning IT as a competitive advantage for AstraZeneca,” says Smoley.  “These five pillars revolve around shifting the work from outside the company to inside the company. We are focused on delivering life changing medicines, but to do this we also need to be in the business of implementing world-class technology. We need to develop that capability in-house.”

Five Pillars of IT Transformation

1. Focus on the customer. To Smoley, this first pillar is all about creating a customer service orientation inside IT.  “Every IT employee needs to ask, ‘Who is my customer? How am I serving them? How well do I understand what they need to do? How am I linking what I do to what they do?’” he says.

Too often, according to Smoley, when large complex organizations rely on third parties, no one person has the broad perspective or clear accountability to make smart decisions on process, service or delivery. “With all of these third parties running around, people just turn one crank without stopping to think, ‘what does this activity really do?’” Smoley says. “We need people to think about how we are helping our customer, not our role in managing one narrow piece of a process.”

When Smoley inherited his IT organization, application development and maintenance all ran through a centralized group. Business analysts and relationship managers were in customer facing teams; they would define requirements and then hand them off to the central group who built and ran the application. “The business relationship managers didn’t have a clear view of how their own applications were performing,” says Smoley. “We’ve now moved accountability for application performance into the customer-facing teams. They know which applications to shut down, upgrade, or keep in steady state.”

2. Deliver operational excellence:  “While we need to be innovative, we must also recognize that we operate IT and that we need a stable and secure global infrastructure,” says Smoley.  To this end, AstraZeneca is building out a global footprint of technology talent in Chennai, India and in Silicon Valley, where Smoley’s CTO resides.

As an early move toward operational excellence, Smoley has brought SAP support in house.  “That was the first piece we brought in,” he says, “and it was a major one.  It’s easy to say, ‘SAP support is complex, so let’s outsource it. But we want to be better at running operations, and we want to reduce our costs, so we are supporting SAP ourselves.”

3. Lead through technology:  For years, consultants have been preaching that much of IT is a commodity and belongs in the hands of outsourcers. Rather than run IT ops, the pundits say, CIOs should focus solely on the technology that differentiates their businesses.  But what do you do when technology has moved into the forefront of business change?  “We had become somewhat removed from technology leadership through the use of third party consultants and advisory services who would select and run our technology,” says Smoley. “As a result, we were not as close to the technology as we needed to be.  We now recognize that with the potential for technology to transform our business, we have to master the technology ourselves. We are moving from ‘give us the requirements and we’ll go to the vendors,’ to ‘let’s think about where this technology is headed and how it impacts our business.’”
4. Simplify:   Smoley describes AstraZeneca’s previous IT sourcing arrangement as “A complex ecosystem of multiple third-party suppliers who were involved in everything we did.  We had multiple handoffs so you had to get 10 people in a room to make a change.” Having shifted from 70 percent of IT services outsourced to 30 percent, Smoley and his IT team have “minimized the handoffs and simplified our overall processes internal to IT.”
5. Collaborate:  “How do we collaborate as a large global function? How do we work more effectively between different geographies and business areas? How do we help our scientists collaborate with academics, payers and providers? How we let them share information and do video-conferencing on any device anywhere? How do we build a culture of collaboration?” For Smoley and his team, taking a “mobile first” strategy is one way to answer these critical questions. “We look at every application we develop and every package we choose from a mobile perspective,’ says Smoley.  “Can you use it from the phone? If the answer is yes, then we go back to see what it looks like on a desktop.”

Advice for CIOs Embarking on a Major IT Transformation

Smoley offers some advice on embarking on a transformation of this magnitude.

1. Bring it back inside.  “When you outsource, you are paying a premium to somebody who is not in your company,” says Smoley. “Employees at AstraZeneca believe with heart and mind and soul that they need to do the best they can for our business.” Smoley acknowledges that there are times when you have to outsource for the occasional ramp-up, but “in general, you will get better alignment, speed and delivery if you keep IT in-house.”
2. Do your homework:   Before Smoley changed a word on his outsourcing contracts, he and his team spent a full year inventorying their technology portfolio. “When you outsource the majority of your IT services, it’s hard to have a grasp of what you’re really running,” Smoley says. “Our first move was to ask each of our business facing IT leaders, ‘Do you know what you’re running?  If you don’t, take a clip-board and start talking to the people you’re supporting and ask them what’s running on their computer.’”

For Smoley, “This is good old fashioned forensics. You have to start with the inventory and ask: How much does it cost? Does it work?  If we bring this in, can we do it better, faster and cheaper? This inventory work is not sexy; it’s in the trenches. You have to sweat the details.”

3. Assess your team: An organization that has spent years in an outsourced environment may lack the skills to run everything themselves. “Where we had skills gaps, we brought in people from other companies and industries who had proven experience in running data centers and applications portfolios,” says Smoley.
4. Create some urgency:  Smoley suggests you ready the business for the sourcing model change by creating a sense of urgency.  “Whether it’s ‘We are too expensive or too slow or missing the digital revolution,’ you have to run around screaming hair-on-fire about what needs to change and have a clear articulation of what good looks like.  For us, it was that we were spending much more on IT than the industry average and that our performance is below industry standards.  When we kept saying, “We need to be twice as good for half the cost,” people listened.

About Dave Smoley

Dave Smoley joined AstraZeneca in April 2013 as Chief Information Officer. Before coming to AstraZeneca, he was Senior Vice President and CIO of Flextronics, a global manufacturing services firm, where he was for more than six years. Prior to that experience, Dave has an extensive IT background that includes divisional CIO roles at Honeywell and General Electric. Dave graduated from Clemson University with a BS in Computer Science and received an MBA from the University of Virginia.

About AstraZeneca

AstraZeneca is a pure-play global biopharmaceutical company that focuses on the discovery, development and commercialization of prescription medicines. Their primary emphasis is on the treatment of disease in three important areas of healthcare: Cardiovascular and Metabolic disease (CVMD); Oncology; and Respiratory, Inflammation and Autoimmunity (RIA). AstraZeneca operates in more than 100 countries, employs 57,500 people and is headquartered in London, United Kingdom.