Can 'going digital' increase sales and cut costs?
While animal health firms are witnessing an increasing digitalization of products 'in the field', this trend is also occurring internally. How will the uptake of digital technology impact the processes of animal health companies? Animal Pharm editor Joseph Harvey asked expert Kris Wadia to map out the themes in this area.
In recent years, human pharmaceutical companies have appointed chief digital officers (CDOs) to transform business operations into digital ones using modern technologies and data. It will be interesting to see if this trend occurs in the animal health sector.
With this in mind, as well as the increasing influx of futuristic technologies globally, Animal Pharm spoke to Kris Wadia about the real meaning and value of everything 'digital'.
Joseph Harvey: This feels like a difficult time for technophobes, so can you put the term 'digital' and the latest technology jargon into context, as well as into business language?
About Kris Wadia
Kris Wadia was most recently senior vice president at Quintiles, which is a leading services provider to the human pharmaceutical industry. Previously, he was managing director at Accenture – the global technology consultancy.
He is now a senior advisor to animal health businesses and can be contacted at email@example.com.
Kris Wadia: That's a tough one. We have included a helpful timeline and revenue/cost impact chart below along with a business explanation of digital-related terminology courtesy of 3nayan, which can be found here.
Understanding three important trends may be helpful. First, a lot of today's digital offerings are part of a continuum that has been developing for at least 15 years and applies to businesses of all sizes. For example, robotic process automation builds on business process re-engineering and basic automation.
Secondly, the speed at which new technologies are emerging is picking up pace, and benefiting from their adoption requires greater technology literacy and risk tolerance from business people than ever before.
Thirdly, digital solutions are as likely to focus on revenue generation as they are on cost reduction, which is a shift from the past. Given the above, it is advisable to think of digital not as a technology play but more as a way of doing business in the future.
JH: So, in this context, digital is much more than, say, wireless technology for monitoring cows. Are you sure those who have implemented it will not have to write off the costs of new software and related consulting fees when the technology rapidly becomes obsolete?
KW: Digital is not a fad. It's here to stay primarily because it makes commercial sense. Machines and software can now replicate, and improve upon, many human activities in business services as they have done already in manufacturing. This should result in: outputs with better and consistent quality; improved affordability; and even mass customization, all of which have a direct impact on a company's top and bottom lines.
More next week
In the third and final installment of Animal Pharm's interview with Kris Wadia, animal health's ongoing quest for sources of investment will be the key topic. This will be published next week at www.animalpharmnews.com.
Adoption is likely to be faster in industries where the processing of data in digital formats at scale is already the norm, as is the case with financial services and telecommunications. The focus of digital in these environments will be on creating new revenue streams rather than cost-cutting, as most of their end-to-end process chains are largely frictionless already.
JH: But if an animal health company is already profitable and efficient, why does it need to consider digital processes and tools? What's the business case? And do animal health companies need to hire CDOs as human pharma has already done?
KW: Yes, animal health companies should hire chief digital officers for the same reasons as human pharma. The intent, broadly speaking, is to determine how data, analytics and the latest technology can improve the product development process, pro-actively engage with external stakeholders and automate robust internal processes.
The high-profile appointees at GSK and Novartis, for example, have both come from retail backgrounds and will report directly to their respective chief executives. Given the seniority of the appointments, it is reasonable to assume they will be given the budgets to implement enterprise-wide changes.
The CDOs will attempt to create a 'start-up' culture internally, which re-imagines processes from a customer-centric viewpoint with implementation at speed. They will also evaluate which external start-ups have the potential to significantly impact legacy revenues and commence partnership or acquisition discussions with them.
JH: What if the company is not profitable? Can digital tools be used to cut costs today?
KW: If planned and implemented correctly, the potential to improve revenue-per-head and cost-per-unit-delivered is considerable.
An example would be the use of sophisticated analytics on available data sources to optimize the costs and time associated with clinical trials. Unfortunately, what appears to be happening is that senior executive teams launch their corporate digital agenda with great expectations, whilst their internal IT departments find themselves repurposing existing tools to try and achieve new outcomes.
Even when budgets are released for new tools, headcount restrictions often do not allow suitably-skilled IT resources to be hired, which may explain the high disillusionment rate amongst early adopters.
JH: Where do non-IT employees fit into this picture? Surely the success of these new technologies depends on how much a company's staff is willing to use them? If not, won't they automatically fail?
KW: Not necessarily. Digital implementations have a greater chance of success if they augment the employee experience, not replace it. An important facet of digital that is often not well understood is that the new generation of tools and processes are increasingly designed to be co-owned and co-implemented by business users, not just their IT departments.
Robotic process automation, for example, can succeed only if the current process operators diligently capture their pain points and outline their preferred solutions. There is, however, no getting away from the fact that the size and composition of the workforce will have to be adjusted as the digital revolution takes hold. Those who choose not to re-train and embrace the changes will find themselves at a significant disadvantage.
JH: So, there is some room left for good old-fashioned human know-how, right?
KW: Human know-how will always be critical. After all, it was human intelligence that invented artificial intelligence. As digital picks up pace over the next few years, workers who are willing to co-opt digital as their virtual friend will fare better than those treating it like an enemy.
Human know-how in the form of an advisor who bridges the technology-business divide by speaking both 'languages' would be a good starting point. Such as person could help the C-suite plot their company's digital journey before recommending any external product vendors or service providers.
Is offshoring viable in animal health?
Last week, Animal Pharm spoke to Kris Wadia about the benefits the process of offshoring could bring to the animal health industry.
Luckily, there is a simple test of the advisor's effectiveness. On completion of the assignment, put the least-technology-literate member of the senior executive team in front of a random selection of employees. If this executive can explain the commercial imperative for the digital journey, articulate the role of the employees and address their concerns credibly, the investment would have been justified.
JH: So what's a sensible first step on any company’s digital journey?
KW: Regardless of where a company starts its digital journey, it is going to need its existing processes properly documented. After all, you can't figure out how to get to your destination if you don't know your starting point. You would be surprised how few companies have this information on hand. And of those that do, many tend to treat the process flows of their operations as official secrets and hide them from view.
Here's an alternative approach and a real-life use case that fits with the digital culture of sharing rather than secrecy. When a new employee joins, share the relevant process flows with them – on the office walls or make them available on the company portal if they work from home. Not only will they become productive faster but they will be able to visualize the downstream impact of their work and, equally importantly, understand their value in contributing to the company’s bottom line.
JH: Right, processes have been documented and made available to employees. What’s next?
KW: The next step is to get external human know-how to help re-envision the business, not just improve existing processes. That's because existing employees' thinking, as always, is likely to be constrained by corporate hierarchies and reliance on the familiar. By using a combination of proven levers such as business process re-engineering and newer concepts like Big Data, it should be possible to generate some quick wins and prove two important points.
First, there can be beneficial co-existence between human employees and the technology that creates rewarding work by freeing them from repetitive tasks. Second, digital goes beyond cost-reduction and productivity improvements by also contributing to the company's top line through increased sales and customer satisfaction.
To increase the chances of success: choose small, discrete chunks of activity; include the re-use of employees' freed up time in the business case; and most important of all, implement.
JH: If you have one final piece of advice for Animal Pharm subscribers looking for the full benefits of the digital revolution, what would it be?
KW: Be bold. Like all major revolutions, this one will change the business world in ways we do not fully appreciate yet, so experiment today instead of waiting for perfect information that may never arrive. The survivors (and winners) are likely to be those organizations who make the time to understand the full potential of digital, set aside funds for tangible implementations, and retain the trust of their workforce along the way.
Their legacy will be a corporate culture that prepares future employees for the post-digital revolution, whatever form it takes. The legacy of those who did not act in time may be limited to bitter-sweet memories of a pre-digital era and not much else. The choice, as they say, is yours.