Global business services in life sciences - KPMG

24 Pages·2016·2.81 MB·English

Global business
services in life
sciences
A window to the future
KPMG International
kpmg.com/lifesciences
Authors
Shamus Rae Victoria Phelan Rick Bertheaud
Partner Managing Director Principal
KPMG in the UK KPMG in the US KPMG in the US
Contents
Contributors 04
Introduction 05
Five key benefts of GBS 06
Ten fundamental dimensions of GBS 08
Five levels of GBS maturity 10
GBS maturity: actual vs. aspirational 12
Overcoming the stumbling blocks 14
GBS and the bottom line 18
How can cognitive automation enhance GBS? 19
Lessons from experience 20
How KPMG can help 22
Global Life Sciences thought leadership 23
Contributors
Gavin Donaldson, KPMG in the UK
Introduction
International pharmaceutical processes in a way that is cross-
companies are seeking ways to functional, centralised, global and
transform their operations, at a integrated. Based on the research
time when proft margins are under with over 150 global enterprises,
pressure, blockbuster drugs are orgnisations with mature GBS deliver
coming off patent, and research and year-on-year selling, general and
development (R&D) costs continue to administrative expenses savings of
rise. The heightened trend of mergers 1.8 percent per year in comparison to
and acquisitions in life sciences is one their peer group.1
of the results of these pressures, and
A key element of GBS is the focus
these activities require more fexible
on processes that span the entire
and robust organisational structures
enterprise, from one end to the other.
capable of withstanding future shocks.
In this report, the orientation of end-
Since the 1990s, pharmaceutical
to-end processes as part of GBS can
companies have relied on offshore
enable the enterprise to adopt new
shared services and business process
technologies more rapidly and beneft
outsourcing to reduce costs and
from them faster. An example of this is
achieve economies of scale.
cognitive automation, a continuum of
But the signifcant, early business technologies that companies can use
enhancements have diminished over to automate business processes and
time, causing companies to look for operations.
a more transformative model that
Pharmaceutical companies are familiar
yields sustainable improvements,
with the use of cognitive automation
not only in effciency gains but also
in their R&D operations, where it is
in unlocking value.
used to accelerate the development
One important means of achieving of new drug compounds and to
these results is the establishment reduce costs.
of global business services (GBS),
When cognitive automation is included
a cross-functional, globe-spanning
as a key set of technologies in GBS,
model that integrates resources,
it can enhance dramatically both
capabilities and systems throughout
the effciency and effectiveness of
the entire enterprise.
the delivery of services across the
GBS includes shared services and enterprise and the future direction of
outsourcing in the model and then the pharmaceutical company.
goes beyond to extend the operational
I hope you fnd this report informative
improvements further into every corner
in its future-forward look at GBS and
of the organisation.
where the industry stands the most to
Outsourcing has been going on for a gain in the years ahead. Chris Stirling
long time, although it was fragmented. Chair, Global Life Sciences
Today, companies are taking it to the Partner, KPMG in the UK
next level to support core business
Five key benefits of GBS
GBS was pioneered in other industries, integrate outsourcing, shared
and the pharmaceutical sector services and internal improvement
is coming somewhat later to the into their broader transformation
realisation that there are considerable strategy,” says Ruben Gallego,
benefts to be derived from it. Latin America lead, Shared Services &
Outsourcing Advisory practice,
KPMG member frms have been active
at KPMG in Brazil.
in advising on GBS implementation
around the world. “We provide Among the main benefts of a GBS
clients with the knowledge, data, organisation are:
technology and experience to
Cost savings
Cost reduction remains a major of executives’ minds. GBS takes
concern of the pharma companies cost reduction to the next level,”
that face continued pressure on their says Vicki Phelan, Managing Director,
proft margins. Shared Services & Outsourcing
Advisory practice, KPMG in the US.
By centralising core functions,
companies can continue to extract When cognitive automation is part
savings long after companies of GBS, labor costs are reduced by
have exhausted other avenues for 40 to 75 percent, more than double
achieving effciencies. the savings derived from shifting
operations to cheaper labor markets,
“Almost all life sciences companies
KPMG in the US has found.
have reduced the workforce, and yet
cost reduction remains at the forefront
Stronger compliance
Organisations are able to build more regulators. For example, once you
robust structures to comply with have integrated GBS activities,
growing demands from regulators then within the R&D function you
around the world, for better business can report to the US Food and Drug
conduct. Administration in a standardised format
and profle, meeting the expectations
“If a company has standard structures
of the regulator in a way that is easily
and processes across the organisation,
auditable,” says Phelan.
it makes it easier to comply with
6 Global business services in life sciences
Faster implementation of corporate transactions
Completion of mergers and rationalisation happening in the 2 years “and its GBS organisation
divestitures can be accelerated, market today, they want to know how was able to help disentangle and
shortening time-to-market and they can make their organisation the integrate all of them into the central
time-to-beneft. highest quality, to be acquired or to organisation”, says Rick Bertheaud,
be the acquirer,” says Phelan. a Principal in the Shared Services &
“M&A is top-of-mind for most
Outsourcing Advisory practice and a
executives in the pharmaceutical For example, one pharmaceutical
Practice Lead in GBS for Life Sciences.
industry. In support of all the portfolio company bought 11 businesses within
Increased fexibility
“The recent acceleration of corporate says Bob Cecil, a Principal in KPMG’s that is more responsive to business
transactions in the industry is Shared Services & Outsourcing needs globally than a regionally
creating the need for a fexible and Advisory practice in the US. focused, siloed structure of shared
adaptable platform for the back and services.
A strong GBS organisation will play
middle offce, enabling it to scale up
a crucial role in creating a platform
quickly to meet new business needs,”
Global reach
By incorporating all key services Despite these key benefts, many The roles and responsibilities of many
worldwide into a single GBS pharmaceutical companies have not people at all levels of the organisation
organisation, companies can fully yet taken full advantage of the effect of will be affected, as one would expect
realise economies of scale. establishing GBS for their organisation. with any profound alteration in
governance and processes.
“This is a particular asset for Once they see the wide-ranging gains
Japanese pharmaceutical companies from GBS and implement it fully, they Effectively managing the transformation
where the English language is not will be able to realise the value. to a full GBS model is essential if all
widely spoken and there is a need the benefts are to be achieved. Seen
But they should not underestimate
to standardise processes globally,” from the opposite perspective, “a
the scope of the changes required and
says Hideki Machida, Manager, GBS strategy is inadequate without
the degree of resistance they might
KPMG in Japan. a carefully thought-out method of
be met within the company.
operationalising it,” says Phelan.
Global business services in life sciences 7
Ten fundamental
dimensions of GBS
The implementation of a GBS strategy begins with an independent assessment of
the pharmaceutical company’s maturity along 10 dimensions that encompass the
organisation’s operating model.
Delivery and sourcing strategy Enabling technology
1 6
The business service organisation’s A technology platform for enterprise
strategy and relationship to the overall resource planning, applications and
enterprise. tools to enable the deployment of
standardised services.
Service portfolio Enterprise service governance
2 7
The functional breadth, depth and A systematic approach to working
geographical reach of business services with stakeholders to manage risk and
in the company, from fnance and drive the value derived from business
internal audit to HR and compliance. services.
Commercial perspective
Data and analytics 8
3 The way in which business services
Its capability to analyse large amounts
engage with internal customers, based
of data, fnancial and otherwise, for the on a customer relationship model.
purpose of business decision making.
Tax and risk optimisation
Talent management A company’s capability to monitor 9
4
The ability of the company’s and manage its tax, legal and risk
HR department, working with exposures around the world.
other functions and levels of the
organisation, to attract, retain and Change and programme management
nurture the skills of the workforce. 10
A focused, holistic approach to ensure
everybody in the company is ready,
Process excellence willing and fully to adopt and sustain
5 changes in the organisation. This
The deployment of end-to-end business helps to realise expected benefts,
services throughout an enterprise’s global reduce resistance and manage risks
operations with a focus on continuous that might undermine the value of
improvement, quality and innovation. the initiative.
All of these dimensions need to be evaluated from different vantage points to be
assessed for their maturity level.
For example, tax and risk capabilities may vary widely, depending in which part of the
world the company is operating.
“When doing its assessment of pharmaceutical companies in Peru, for example, the KPMG
member frm deploys subject matter experts with a range of qualifcations to advise and assess
companies operating in the country, where labor regulations are very complex,” says Gallego.
“Similarly, the company must assess the degree to which the Board is aligned with the
GBS initiative, which falls under the commercial perspective”, he says.
8 Global business services in life sciences
Figure 1: Sustainable business services enabled by the KPMG 10 dimensions of GBS
Delivery and sourcing strategy
The defined strategic intent of the business
services organisation, its purpose and
relationship to the overall enterprise Service portfolio
Tax and risk optimisation
Definition of the breath, depth,
Monitor and manage change
geographic reach of services
and regulations, including
provided by business services
fiscal, legal, and tax
Data and analytics
Commercial perspective Enhanced value through
Customer relationship model the capture, collection, analysis
defining the way business and visualisation predictive
services operates "like a business", and prescriptive analytics
and engages with customers
Change
and programme
Enterprise service governance management
Talent management
An integrated way of working
Flexible, integrated enterprise
with stakeholders to manage
talent management model
risk and drive business value
designed to attract, retain
from business services
and engage resources
Enabling technology Process excellence
Common technology platform Deployment of end-to-end services
across ERP, applications, and tools with focus on quality, continuous
to enable standardised services improvement and innovation
Change and programme management
“Change and Programme Management can make or break a GBS deployment across the enterprise. The nature of a GBS
structure means that reporting lines, career paths and colleague perceptions are altered and this needs to be managed
carefully. Selecting the right leaders and providing the right support from day one can position GBS as a powerful business
function but there are many examples where this has hindered success. Given the significance of the change and number
of touch-points the Programme Management needs to well designed and executed, not just at the design phase but well
into deployment and service provision. Getting these factors right will make the difference in GBS being a well-respected
and value adding business function.”
Gavin Donaldson, Partner, KPMG in the UK
Source: KPMG International, 2016
Global business services in life sciences 9
Five levels of GBS maturity
Each of the 10 dimensions (see fgure 1 The higher the level of maturity, the Organisations are assessed
on page 9) must be analysed to assess greater the company’s ability to deliver according to their position in fve
their level of maturity along a spectrum business services in a seamless, levels maturity:
from basic to advanced. global and integrated way.
Level 1 Level 2 Level 3
Fragmented Sub-scaled Scaled
Service delivery is decentralised The delivery of services Services are delivered across
and processes, functions and is consolidated to achieve multiple functions but the silos
technology are duplicated. There is economies of scale in the remain in place. Processes,
little central control and services provision of highly transactional technology and governance of
are ‘pushed’ to the internal services. Some services are business services are not fully
clients, rather than being driven by shared and outsourced, usually for standardised.
demand. single functions and regions.
Level 4 Level 5
Integrated Strategic
Multi-functional services are delivered seamlessly from Multi-functional services are delivered across the
one end of the enterprise to the other across several enterprise. Processes, technology and governance
channels that are managed through an integrated, are supplied across several channels. Internal
outcome-oriented governance structure. At this stage, capabilities support the delivery of services via a
GBS is able to provide analytic services to the enterprise, single contact point.
as well as expert advice on a range of important business
issues, such as compliance, innovation and agility.
10 Global business services in life sciences