Written by: Crossfuze
The pharmaceutical industry routinely makes significant, long-term R&D investments. And for better or worse, a positive ROI is never a given. In fact, it’s not uncommon for pharmaceutical companies to pour significant resources into clinical trials, distribution networks and other investments that take years to pay off—if they ever pay off. The average internal rate of return on R&D investments in the pharmaceutical industry hit a seven-year high of 7% in 2021, according to 2022 Deloitte industry research—a dramatic jump from just two years prior, when pharmaceutical companies averaged only a 1.5% rate of return.
While pharmaceutical companies will perpetually experience ups and downs, one of the most important things they can do to optimize their chances of riding the next ROI wave to financial stability and profitability is to focus on optimizing resource and demand management. Whether the company is fortunate enough to be increasing its R&D investments, or needing to pare back existing investments, the demand for resources within an organization always seems to exceed availability. That means pharmaceutical companies need a clear strategy, tools and vision for how to allocate their limited resources in the most expeditious, consistent manner. Unfortunately for pharmaceutical companies, even the best-laid resource allocation plans are often dwarfed by internal politics: Whoever clamors the loudest and/or knocks on the right doors invariably seems to get what they want—even if that means the company’s most important, strategic initiatives languish.
Fortunately, pharmaceutical companies can take back control of the huge responsibility of resource demand management by embracing digital transformation. Through digital transformation, pharmaceutical companies gain the tools and infrastructure they need to holistically monitor and manage demand of all kinds—for employee services, for patient and provider services, for clinical trials, for marketing and engagement initiatives. Digital transformation enables organizations to adeptly and strategically decide when, where and how to allocate resources, and to track how those resources are expended over time. By providing unprecedented visibility, controls, and data-driven insights, pharmaceutical companies can make consistent, intelligent resource allocation decisions devoid of bias and undue outside influence. Let’s explore five key digital transformation strategies that pharmaceutical companies should implement to holistically manage demand and optimize how they allocate resources:
In the average pharmaceutical company, every division fights fiercely for sufficient allocations of resources. Most will—knowingly or unwittingly—put their own best interests ahead of the organization’s. In fact, if the company’s leadership does not impose consistent, fair decision-making processes, resource allocation planning can quickly become reduced to infighting, jockeying and backroom deals. Digital transformation helps pharmaceutical companies rise above this fray, providing powerful tools for analyzing and assessing the value of projects and programs in relation to overarching organizational goals and budgets. By generating a broad range of highly relevant KPIs (key performance indicators), decision-makers in the C-suite and/or the PMO (project management office) can readily understand how existing resources are being utilized, the cost of these resources in relation to benefits realized or anticipated and how infusions of additional resources would change the ROI trajectory of one or more of these projects. Significantly, these data-driven analyses are intuitive, automated and being generated in real time. Through these analyses, decision-makers are able to systematically evaluate how well individual projects and initiatives are aligned to organizational goals and budgets.
Resource allocation decisions should never be made based on gut instinct or political pressure. And yet that’s precisely how these decisions often get made in pharmaceutical companies—or at least how they’re perceived to be made. Pharmaceutical companies can fight these stereotypes by embracing a data-first philosophy—a central tenet of digital transformation in which hard data and analyses become front and center in every action and decision. Indeed, instead of relying on gut instinct or bowing to political pressure, decision-makers use data—and only data—to make informed, consistent, transparent decisions about resource allocations. Data-informed decision-making becomes especially important during times of budget cutting, when decision-makers must optimally balance short-term operational disruptions with a weakened long-term revenue trajectory. In other words, when budgets must be trimmed, no one wants the excruciating task of deciding whether the company’s marketing budget should be cut by 25%, or if the company’s next clinical trial should be delayed by a year. By turning to data, pharmaceutical companies can make resource allocation decisions that are consistent, fair and informed.
Much of resource demand management, by definition, focuses on the demand side. But demand is only half of the equation. Equally important is managing the resources side. As any team in a pharmaceutical company can attest, there’s waste and inefficiency hiding in every corner. The problem is how to systematically identify and efficiently weed out this waste—it’s certainly not cost-effective to do so manually. Digital transformation gives pharmaceutical companies the technology infrastructure to holistically manage usage and entitlement information for resources across the organization, including cost information, utilization rates, and quantification of the business value derived from the resource. Using this data, pharmaceutical companies can automatically flag underutilized, overutilized and noncompliant resources—both human assets and physical assets, including digital ones. In this way, companies can focus on eliminating waste—instead of spending copious time just working to identify it. Furthermore, when there’s a compliance problem with a resource, it can be identified and rectified immediately, mitigating risks to the organization.
Just as departments and teams tend to put their own resource needs before the organization’s, many departments—or at least individuals within them—ignore and downplay the costs of their resource consumption. Thus, the solution is to make the costs of resource consumption more apparent and explicit. Digital transformation gives organizations the ability to build awareness and understanding of these costs. For example, pharmaceutical companies can create a service catalog that—in addition to providing a menu of HR, IT, and other services that teams can request—puts a dollar value on the cost of these services. Every time a team requests services, and every time team leadership approves the requests, the system can automatically communicate the costs of these services to the requestor. These insights force every employee to think critically about every resource request they made—and ultimately make smarter resource allocation decisions aligned with organizational priorities and goals.
Resource and demand management will never be an easy task for an industry that is constantly innovating and pushing the boundaries of what is possible. But digital transformation can help ease the burden by optimizing visibility, controls and the types of insights available to the C-suite, the PMO and project managers and facilitators. Digital transformation enables pharmaceutical companies to align their projects to organizational goals and priorities, make resource allocation decisions based exclusively on data, identify resources that are noncompliant or being sub-optimally utilized, drive home the costs of resources for those who consume them, and enhance the data-driven insights available to decision-makers.
Crossfuze specializes in helping pharmaceutical companies understand how resources are being utilized and how to optimize resource allocation decisions for the benefit of the entire organization. To learn more about how we leverage the ServiceNow platform to drive digital transformation for pharmaceutical companies, please reach out to Crossfuze today. We look forward to helping you gain unprecedented visibility, control, and insight as you adeptly manage resources and demand across your organization.