Last spring, AstraZeneca (AZN.LN) fought off a $106 billion takeover bid by Pfizer (PFE) that could have resulted in the world’s largest pharmaceutical company. The pharmaceutical market is facing colossal pressures that are undermining even its largest players and testing their leaders’ ability to adapt and work quickly to get ahead of competition.
Clint Boulton of the Wall Street Journal reports that the company’s CIO is reversing a longtime strategy of outsourcing their technology: “In the past, we’ve said we’re a drugs company, we’re not an IT company, so let’s give the technology to somebody else,” CIO David Smoley said. “But the reality is we are a technology company.”
The truth of the matter is, every market is going through this. Technology is now more than ever what makes companies competitive and what differentiates them, whether it’s the research and development going into their product or the systems and processes that allow them to market, sell, and retain their audience. We saw this last year when Tesla’s CIO Jay Vijayan and CEO Elon Musk decided to build an ERP system that custom-fit the first-of-its-kind electric car company.
Heck, even General Motors (GM) is keeping its technology strategy close to home. “For [GM CIO Randy] Mott, the contractual obligations of outsourcers means that project teams aren’t agile enough to keep up with the pace of the business. ‘We want to change the speed of how we do things and we don’t want to be constrained by the typical contractual obligations,’ he said,” according to CIO Journal’s Rachel King.
In the two years since AstraZeneca CIO David Smoley joined, his insourcing strategy has shown results: IT costs are down 13%, network outages are down 90%, and incident response times went from several days to a few hours. Smoley will reportedly focus 2015 on adopting an Agile methodology in its application development teams, wherein projects times should be cut from an average of two years to six months.
If you follow this blog, you probably know that here at Mendix we’re big fans of owning what makes your company innovative and different, and we’re really big fans of building and delivering them in an Agile way. Building innovative and differentiating applications iteratively by delivering bite-sized chunks of the project so that users and stakeholders can provide timely feedback throughout the project rather than at the end of it maximizes value delivered and minimizes risk. With the right rapid application development model in place, development teams are often able to get project times down to weeks (remember, time is of the essence).
I’m excited to see the CIO of AstraZeneca lead the company towards owning their own technologies and innovations, and focus his attention on big adaptability. No industry or company is too big and powerful to be immune to disruption from smaller, faster, smarter companies. In fact, new platforms of influence are created every day – just think of the threats and (and opportunities) that a million Apple Watch wearers could pose to pharmaceutical companies. I’ll definitely be revisiting AstraZeneca to see how Smoley’s plans are working out, but in the meantime, let’s applaud his ‘big adaptability’ priorities.