“We see a lot of consolidation in the life sciences sector,” says Anthony Patullo, Head of Advisory & Project Delivery at Stratos Consulting. “As a result, organizations are looking for new ways to merge teams as quickly and seamlessly as possible while simultaneously optimizing efficiencies, increasing visibility, and reducing costs.”
According to McKinsey & Company, one of the opportunities for biotech companies to “disrupt the R&D landscape and open up new ways to invest, motivate teams, and shape the innovation pipeline” is by adopting a shared service model.1 Instead of companies focusing on a single area or technology, a shared service model enables them to target multiple areas or technologies in parallel via subsidiaries under a central management structure. Similar to the financial services industry, a portfolio manager uses skilled professionals to raise capital, find investors, fund R&D, manufacture products, raise an IPO, or engage in other activities as needed by each entity within the portfolio.
“As mergers and acquisitions occur and businesses transition from a single-asset to a portfolio model,” explains Patullo, “financial systems need to be re-architected to reflect the new organizational structure, ensuring managers have the visibility they need to track employee and operating expenses. Knowledge gaps also need to be filled and transitioning employees trained on the new systems.”
Enabling the future state of a large pharmaceutical organization
“A large, fast-growing pharmaceutical company incorporated another company as a subsidiary,” states Patullo, “impacting a number of their departments and employees, along with their associated cost centers and operating expenses. Stratos Consulting was contracted by the financial planning and analysis (FP&A) department to adapt their existing Oracle financial data warehouse, Hyperion environment, and Oracle E-Business Suite (EBS) ERP source system to the new structure, maintaining data accuracy and integrations across the end-to-end finance architecture.”
A management consulting firm enabling digital transformation, Stratos Consulting has extensive expertise in Enterprise Performance Management (EPM), Data & Analytics, and Integration & Automation, with experience ranging from supporting traditional IT landscapes to fully integrated enterprise cloud platforms. Partnering with clients throughout the project life-cycle, Stratos consultants leverage their experience, proven methodology, and innovative, “process first” engagement model to ensure success.
“Once we understood the full scope of the project,” declares Patullo, “we realized that our client’s business plans depended on how fast—and how well—we could re-architect their systems to include a flexible organization structure. It wasn’t simply a matter of remapping their people costs and operating expenses to the updated current state—including the new subsidiary. They wanted us to build in a scalable future state, allowing them to quickly transition to a shared services model as new opportunities arose in what is a fiercely competitive marketplace.”
Re-architecting end-to-end processes under rigid time constraints
“On top of the architectural requirements,” highlights Patullo, “we also had to work under an aggressive schedule with rigid time constraints. Not only did the leadership team want full visibility into the relevant financials of the new organizational structure; they wanted it in time for their annual budget cycle, which was just a few months away.”
Getting down to work, Stratos consultants remapped all of the cost centers, departments, and operating expenses in line with the new structure, updating the entity hierarchies and data integration processes throughout the financial planning and reporting (Hyperion), data integration (Informatica), and workforce planning (Hyperion) platforms. Performance was evaluated across the new workflow to ensure seamless data transfer across systems.
Enabling a future state, shared services model
“We carefully looked at each area to ensure the system would scale seamlessly as new subsidiaries are added,” explains Patullo. “This approach included updating the planning allocation methodology for the new shared services organization project, aligning FP&A’s actual process for allocating costs from shared services to the appropriate corporate admin cost centers.”
Throughout each phase of the project—development, clean up, and analysis—the Stratos team ensured that the new architecture and end-to-end processes are flawlessly scalable and capable of supporting the organization’s future state, shared services model—irrespective of how many entities are onboarded.
“When remapping the system to support the future state of the company,” says Patullo, “it’s critical that every data entity and every process is carefully evaluated and tested to make sure it’s repeatable. Automating as much as we could enabled us to create an agile FP&A environment we’re confident will support the organization’s addition and removal of entities from their portfolio as needed during their transition over the next few years.”
Disrupt or be disrupted – it all depends on how well you prepare
“Organizations in the life sciences sector need to adopt a proactive approach to organizational changes,” states Patullo. “Industry experts expect competition among pharma-service providers to increase as organizations adopt a shared services model and core, in-house functions are outsourced. As a wave of new vendors emerge to compete with existing research, development, and manufacturing pipelines, whether you’re the disruptor or the one being disrupted may well depend on whether your FP&A systems are agile enough to support a future state, shared services model.”