It's Sunday and thus a relatively peaceful day. A day that gives me a chance to see what others are writing about our industry.
So, I wanted to share with you a quite sobering and clinical piece about the method a drug company should/could use to figure out how many people they need to run their R&D operations. The post appears on the IN VIVO blog.
Now, I don't particularly want to say anything about this post since you can just as easily read it yourself. What I do want to do is pose a question to the biopharma CIOs out there: "Have you ever thought about determining optimal and/or minimally sufficient IT staffing levels using a strictly clinical approach?"
This reminds me of that craze from the late 1970's called "zero based budgeting (ZBB)," that our then President, Jimmy Carter, brought into use for the federal budget. According to this article, ZBB "puts the burden of proof on the manager, and demands that each manager justify the entire budget in detail and prove why he or she should spend the organization's money in the manner proposed." It matters not whether the program being budgeted already exists or is brand new. It has to be justified/re-justified with each new budget cycle.
The approach suggested by the IN VIVO post seems to make a lot of sense to me at a time when the biopharma industry is going through tremendous upheaval and a prolonged period of meager new product introductions. Add to these the pressures on drug pricing, product litigation, greater reliance on outsourcing, budget cutbacks, staff reductions and many other factors, the CIO can no longer simply increase the IT budget by a few percentage points.
Whatever budgeting approach is taken, it must incorporate several key elements:
- A true understanding of the corporate mission and product strategy;
- An impact analysis on IT programs of the mission and product strategy;
- A critical evaluation of required current and future IT skills within the organization;
- A determination of what skills need to be retained, dropped or outsourced;
- A prioritization of IT projects including an impact analysis related to the consequences of non-implementation or cessation;
- A systematic evaluation of the IT infrastructure and the opportunities available for consolidation and/or replacement to achieve maximum performance at minimum cost; and
- An analysis of key applications/services and the potential for license fee reductions (with current or alternative vendors) or migration to a SaaS model.
Doing all of this will not be easy or pain free. Realistically, it can only be done properly if the budget preparation is begun at least a year before the start of the next fiscal year. Just how many CIOs will have the stomach for this is not clear to me. I do know, however, that the current approach is no longer sufficient.
I’m writing this on the plane to New York from Barcelona having just attended the 2008 DIA Euromeeting. As a veteran of many DIA annual meetings in the USA, I must admit that this year’s Euromeeting was like a breath of fresh air. A key reason for this may be the calculated risk that the meeting planners took by redesigning the program around themes and sessions.
