Six Success Imperatives for Building a World-class Digital Factory in Pharma
Digital factories—central, shared organizations that coordinate and deliver digital platforms and related services for the wider company—are here to stay. But are large pharmaceutical firms getting the most out of them? And how do you set the team up for success? Digital executives at global pharmaceutical firms need to calibrate six success factors to achieve the promised benefits of digital factories: a competitive time to market, reduced cost, and world-class digital capability.
Organizational Challenges Diminish Digital Factory Returns
Some years ago, “digital factories”—shared-services organizations that set up and coordinate the delivery of digital customer engagement platforms and related services—were the answer to reducing spending on digital development, stemming the proliferation of technology platforms, and helping business teams deliver multichannel customer experiences faster. Today, twelve of the eighteen large pharmaceutical firms we surveyed have embarked upon this journey, and most of the senior managers directly utilizing a digital factory are satisfied with its current performance (see Figure 1). But below the surface of satisfaction lie productivity obstacles that must be repaired in order to make digital factories even more efficient. The most prevalent challenges are:
- Delivery timelines. The strongest driver of dissatisfaction is when the time to deliver the requested service or platform is longer than expected (see Figure 2). Half of factory users and a third of factory builders cite delivery timelines as the primary reason for dissatisfaction.1 Delivery timelines lengthen for various reasons, but platform customizations and unclear project roles and responsibilities are primarily to blame.
- Access to services and platforms. Similarly, half of factory users and a third of factory builders have difficulty accessing their digital services and platforms. Access is compromised when points of contact to request or set up a service vary, engagement models change frequently, and request procedures differ by service and platform.
- Catalogue maturity. Regardless of whether they build or use digital services, three in ten digital leaders want the factory to offer more advanced digital capabilities. Resource constraints, time constraints due to the parallel development of back-end technology, overall complexity, and inaccurate demand planning all stand in the way more rapid catalogue maturation.
Use Six Success Factors to Maximize Digital Factory Output
To improve delivery timelines, digital capability access, and catalogue maturity, firms must look beyond just building more technology. According to digital factory leaders at firms that generate more and better factory output, six specific factors prime digital factories for success (see Figure 3):
- CTO/CCO alignment on vision. VPs of commercial IT/digital and commercial must align their strategic product or portfolio ambitions with digital factory priorities, backed by commitment from the corporate executive team. Firms whose executives align on the vision can prioritize investments into capability effectively, ensuring that core capabilities are rolled out quickly and before advanced niche capabilities. Alignment makes demand planning easier to interpret, which benefits resource allocation and signals that processes related to traditional marketing capabilities need to change in favor of 21 st -century customer engagement like insight-led campaigns, unified customer experiences, and on-demand services.
- A world-class service catalogue. The number and depth of services need to align with other factory success imperatives. Factories can’t charge market rates for capabilities that they’re in the process of building or which business teams perceive as being not as good as what they already have. Similarly, a shared vision between IT and business dictates the priorities of the catalogue’s road map. Effective digital factories have a strong mandate to improve back-end technology that enables excellence in digital marketing and customer engagement (see Figure 4).
- A simple delivery organization. Attracting business teams to your factory’s services with competitive prices is effective at driving digital transformation—but it won’t last if delivery is a lengthy, frustrating experience. The most efficient digital factories have multidisciplinary delivery teams where project managers implement factory offerings that meet user requirements, account managers coordinate the demand plan across regions or business units, and service/platform managers act as subject-matter experts who drive the maturity of any platform or service. Effective delivery organizations flexibly allocate these resources to individual projects and overall demand. When you align these roles in the factory’s governance model and delivery times, you’ll find that overall authority and simplicity in points of contact become manageable and measurable.
- Straightforward processes. Leading firms have clear rules of engagement between their digital factory and business teams. Successful engagement sets roles and responsibilities, but responsible planning is also important. Very few firms have the planning process as a strength, but those that do have one thing in common: their brand planning cycles align with demand planning and the capability road map.
- A competitive funding model. The right model for central tech investments and individual usage rests on two principles. First, funding for back-office infrastructure and core platforms should come from corporate budgets; second, the actual usage of platforms and services should follow a chargeback model. Chargeback can stimulate marketing teams to use internal capabilities rather than inhibit them from doing so. Setting usage fees that are more attractive than those of external agencies and vendors will create demand for internal capability; this reduces the share of fixed platform contributions, which leads to further fee reductions and increased usage.
- Clear governance. The right governance model distributes accountability evenly and transparently among the various stakeholders—a key component to keeping digital transformation on course to achieving higher digital maturity. While the right model depends on a firm’s overall strategy, the main roles of the digital factory team are to govern the road map, make technology decisions, and drive the funding model behind the access and use of platforms and services (see Figure 5).
Digital Factories Await New Challenges
The digital factory is here to stay for large pharmaceuticals. In the years to come, firms will invest resources, restructure, or realign with the six success imperatives to optimize their digital factory. Firms with an optimized operational model for their digital factory will free up head space to tackle additional challenges that loom around the corner, mostly:
- A digital factory for R&D. Building digital capability for R&D and Medical Affairs will gain momentum in 2017. Led by an annual multimillion-dollar opportunity, firms will invest in repeatable processes and technologies to reduce the cost of drug discovery, clinical trials, and patient engagement.So, the question is not when to set up a digital factory for R&D, but whether its technology should be in the same stack as commercial IT’s.
- A two-way door to Connected Health. Sharing data and connecting technology systems between healthcare providers reduces medical errors and improves overall patient outcomes. Pharmaceuticals will recognize this value and ask their digital factories to put in place secure, robust gateways to external systems. As with other forms of collaboration, digital factories will have to balance their heavy, enterprise-wide requirements for security and compliance with those of their partners in the wider healthcare ecosystem that are more agile or less advanced.
- Incumbent innovation. Led by the digital health startup community and its venture capital, maturing technology will increase pharmaceutical firms’ in-house innovation efforts. While some of pharma’s innovation will rely on the capabilities of startups, we expect pharma firms and their digital factories to prefer completely homegrown digital technology. But in doing so, digital factory teams will also have to cope with two main innovation holdups: legacy infrastructure and slow deployment cycles.
DT Consulting fielded its Q1 2016 The State Of Digital Excellence in the Pharmaceutical Industry survey to sixty-three managers who work in digital, multichannel, or digital customer engagement teams inside a pharmaceutical organization.
We fielded the survey from January 2016 to February 2016. Respondents received a copy of this report containing the collected survey data prior to publication.
Our sample is not guaranteed to be representative of the population. Responses do not convert directly into precise maturity scores for respondents’ respective companies. Unless otherwise noted, data is intended for descriptive purposes.
Tim van Tongeren
Dennis van Rooij