Are organizations in the life sciences industry headed towards the Cloud?
Indications are that more and more CIOs in the industry are taking a hard look at Cloud Computing, a business model that offers companies the promise of greater efficiency in meeting their key challenges: innovation, new product development, and expansion into new markets.
The Cloud is becoming an increasingly attractive option for those companies undergoing critical stages in their existence, such as following a merger or acquisition or facing the natural “end of life” of their legacy platforms.
Cloud Computing – an overview
In general, the massive computational power of cloud, available on a “pay as you go” basis, offers the potential for organizations in virtually any industry to realize significant benefits. Unlike a traditional computing environment in which resources are housed on specific servers, here servers and applications reside in a distributed, globally accessible environment.
Cloud Computing is comprised, in essence, of online, supersized data centres containing tens of thousands of servers hosting web applications that can be turned on and off when needed. As such, the Cloud requires little or no capital investment and offers variable pricing determined by use, rapid acquisition and deployment and lower ongoing operating costs. This allows organizations to bypass the expense and lead time of buying, installing, operating, maintaining and upgrading the networks and computers found in their data centres. Instead of licensing software, users simply tap into a service when it’s needed, for as long as they need it.
Organizations add processing power by simply attaching more servers. Everything is virtualized so that software can be operated on any available server with excess capacity. With everything hosted on the Cloud, users can run processes and build applications without loading every tool onto their computers.
The potential of Cloud
The potential exists for life science organizations to leverage the cloud to gain benefits in terms of:
Cost: At a time when organizations in the life sciences industry must learn to do more with less, leveraging Cloud technology presents a promising opportunity for any company looking to lower the operating cost of its IT infrastructure. GlaxoSmith Klien, for example, is migrating to Microsoft’s Business Productivity Online Suite to support more than 100,000 users in over 100 countries. The company, as a result, expects to realize a 30 per cent savings in operational costs and better scalability.
While pound for pound, Cloud Computing may not make sense for a company with an entrenched set of technologies; as they replace, for example their sales force automation platform, or as a company increases its scale and scope and looks to upgrade its technology capabilities, Cloud presents an interesting way to quickly assemble the application and infrastructure needed to support these technologies in a cost effective manner.
Agility: Cloud services provide organizations with short-term access to sophisticated analytic capability and tools that would tax many internal systems. A company with plans to move into the big leagues of large-scale sales force automation or enterprise resource planning, for example, would normally be looking at an 18 to 24 month lead time to assemble these technologies and enhance, configure and deploy them. With the Cloud approach, that time can be cut down to single digit months. Eli Lilly, for example, wanted to quickly scale up analysis of a potential drug without spending the time and effort internally to put the technology together to run the analysis. They did this by using Amazon’s EC2 platform. The bill for Amazon’s services was $89; the company calculated the cost avoidance in waiting for their internal IT group to assemble a data platform as $1 billion. Similarly, Pfizer’s biotherapeutics & bioinnovation centre took advantage of the flexibility offered through Cloud Computing to develop models in antibody docking runs to optimize drug candidates and select targets. By having access to as much simultaneous computing power as necessary, rather than relying on the finite number of servers in its data centre, Pfizer used the Cloud to shorten the running of some of its applications from two to three days to two to three hours.
Tapping into emerging markets: A company looking to aggressively expand into emerging markets can use Cloud Computing to allow the local market to “buy into the capability” without a significant and prohibitive upfront capital investment. Cloud Computing can also allow an organization to more quickly bring a technology into the market, such as sales force automation. This addresses a real challenge for an emerging market: How do you make a significant technology play, while staying relevant to your own profit and loss obligation? This is not just an opportunity for a mid-tier company trying to grow, or a small-tier company looking to move quickly, but also for some of the largest global pharma organizations with aggressive emerging market ambitions.
Collaboration: The ease of continuous access and collaboration across entities, locations and platforms also exist with Cloud. Considering the urgency of improving drug discovery and clinical trial performance, the Cloud model allows organizations to gather huge data sets from many sources in one place and apply analytic tools quickly to expedite the time to market or help companies identify early when to abandon costly trials. Furthermore, there is the opportunity to combine Cloud Computing with social networking to assemble a virtual network of collaborators. This can support the challenge of quickly assembling a global research and development team, which requires internal resources and external opinion leaders, without being encumbered by a six- to 12-month lead time and the costs associated in putting a proprietary platform together. Such a pairing of technologies seems particularly applicable to a firm’s R&D organization in terms of reaching out to other companies and external opinion leaders.
A gradual shift
At a time when Cloud Computing has been quickly adopted in other industries, life sciences organizations have predictably moved with caution. In addition to working off the significant costs of prior technology investments, companies have always experienced a high level of concern, and rightfully so, over information security, information control and compliance with jurisdictional requirements.
Much of this early reluctance in the case of the Cloud model has been due to the documentation and control placed over the quality and integrity of the information systems that develop, manufacture and distribute their products, as the ultimate responsibility for compliance remains with the life sciences company, not the third-party Cloud provider.
Additionally, there are continued questions raised over security when, in fact, security can actually be viewed as a driver for adopting Cloud. Many organizations have holes in their existing security and a move to the Cloud affords a potentially huge opportunity to close them. One compelling example that speaks to the enhanced security potential of the Cloud is its use by the U.S. Department of Defence to improve its collaboration and battlefield communications, and to consolidate its disparate systems. Workingg with a well-established Cloud provider – such as Salesforce.com, as the first and most pervasive implementer of Cloud, and Veeva as an industry overlay – promises more robust security than a small to mid-sized life sciences company could otherwise afford.
Still, the industry is choosing to dip their toes into the water, rather than jump in with both feet. Envisioned in the future, as a result, is a staggered switch, with companies shifting over time to the Cloud as the investments they’ve made in their sales force, ERP and R&D technologies eventually reach an end stage, or as they increasingly view Cloud Computing as a viable post-merger or emerging market technology option.
Cloud Computing can make a huge difference for life sciences companies challenged with the urgent need to drive innovation, transform their operating models or capture emerging market share. At the very least, the time has arrived for them to begin to develop and test their Cloud strategies and position themselves to take advantage of this new paradigm.
- The author is Managing Director, Technology Practice, Accenture