Why pharma needs to leave digital transformation behind and embrace digital business
Historically, the pharmaceutical industry has been slow to adopt digital business models. This is because the industry is typically highly regulated, and many companies have been hesitant to make significant changes to their business model until they have been proven in other industries.
However, that has all changed in recent years. The rise of digital health and the increasing demand for personalised medicine have forced pharmaceutical companies to embrace the transition to digital. A recent report by McKinsey found that pharmaceutical firms that are implementing digital change are investing at least 20% of their Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) on digital and analytics programmes.
This shift is being driven by several factors. First, digital technologies can help pharmaceutical companies to improve their Research & Development (R&D) processes, clinical trials, and drug manufacturing. Secondly, they can be used to create more personalised patient experiences and improve patient outcomes. Third, they can help pharmaceutical companies to better understand and respond to the needs of healthcare providers.
However, becoming an inherently digital business involves working independently from the current complex and siloed business and technology environment that is viewed as creating opportunities for growth. Another distinction is that digital business is focused on simplification, end-to-end workflows, and enterprise collaboration to deliver desired outcomes.
Digital transformation projects have been meeting with varying degrees of success. Often left to the IT department or a consultant to implement changes within the business, digital transformation suggests a fixed period of change; a single journey from A to B that concludes once you’ve reached your destination. Often just figuring out where to begin or how to orchestrate digital business adoption can be a daunting obstacle.
Siloed approach hinders adoption
However, this misconception is just the beginning of the challenges businesses may face if they decide to undertake a largely transactional ‘digital transformation’ process.
Digital transformation is often an inefficient, siloed approach that prioritises technology over aligning with core business objectives. This lack of collaboration hinders growth, innovation and, most importantly, adoption. Undertaken as a standalone project, it often takes a technology-first approach – effectively sourcing the ‘solution’, then reverse engineering it to meet the overall business needs.
Senior leaders may well see the significant investments that departments have made in digital transformation fail to have the desired effect, and so the projects are discontinued or written off as a failure.
In this problematic ‘transformation’ process, data and technology are just levers, whereas to have a truly digital business, organisations need a business-led approach to align with business objectives. For any true adoption in how a business functions, business owners need to be committed and lead this change.
It cannot be left to more junior members of staff to implement a new way of working and then leave them trying to sell that upwards into management. A digital business methodology (DBM) is a holistic, business-driven approach to scale digital growth and achieve outcomes with greater agility and collaboration without disrupting the business.
A business, and its leaders, takes ownership of the DBM to achieve outcome-driven, incremental growth that is enforced with a Digital Business Platform (DBP). A DBP enables a simplified, collaborative, end-to-end agile culture that is done independently of the current complex, siloed environment and leverages new and existing technology-agnostic tools (e.g., Snowflake).
Vital role of a Single Source of Truth
Major pharmaceutical firms with multiple international sites technically may use the same programme, but if the data is entered differently, or the software is customised over time to meet the needs of the team in each location, the business will find that the data varies so much that it is, ultimately, very difficult to bring disparate sources together and cannot be collated or analysed efficiently to produce insights or value.
Fundamental to a digital business is a Single Source of Truth (SSOT). Data democratisation, achieved via an SSOT creates valuable insights that inform the business and help it grow. Being able to accurately track product batches or analyse full data from clinical trials gives pharma companies more valuable information and can streamline processes to provide better, more accurate outcomes.
Through invoking a Digital Business Methodology, the pharmaceutical industry can provide better healthcare solutions to patients. In addition, it can improve their compliance, and operational, regulatory, and financial performance by a substantial margin.
With C-Suite level executives leading a digital business approach that filters down throughout the entire business, an SSOT can be achieved. Rather than a siloed approach using data that is not aligned or consistent, a top-down approach encourages buy-in and, demonstrated by business leaders, the teams will shift to this new mindset. This is also fundamental to progress. Artificial intelligence (AI) and machine learning (ML) are increasingly becoming a key part in a business’s function. However, the success of AI or ML hinges on a well-established data ecosystem. Without data to draw from, or siloed data that cannot be fully accessed, effective AI and ML models will not be achieved, lacking the insight and unified information needed to harness their power.
The North Star of digital business
Moving away from digital transformation and embracing a digital mindset is key to digital success. For pharmaceutical businesses looking for where to start, it is important to have a clear roadmap.
Focusing on the measurable outcomes the business wants to achieve is the optimum starting point. Ensuring the business has an aligned and motivated leadership is crucial; if those in the most senior positions do not recognise the value of a digital business, or don’t demonstrate their commitment to it, the likelihood of enterprise adoption drops precipitately.
The positive impact on the company’s financial performance proves a strong incentive; according to McKinsey, digital leaders produce better returns, have higher price to earnings ratios, and 67% higher total shareholder return. Additionally, IDC has found digital business is increasingly recognised as a strategic differentiator for organisations and is vital for accelerating revenue growth, as confirmed by 85% of CEOs.
Digital transformation takes a myopic approach to solving a technology challenge, without stepping back and determining what your business challenge is and what outcome you are striving to achieve. Instead, businesses need to look at it completely differently.
Digital business methodology encourages taking an incremental approach, with C-Suite level ownership and engagement, meaning the roadmap towards a digital business is far more likely to succeed, but also more likely to reflect a company’s leadership focus on strategic priorities and KPIs that are fundamental to long-term business success.