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AstraZeneca’s CIO on making his IT department twice as good for half the cost

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AstraZeneca's CIO, Dave Smoley, sits down with Hot Topics to explain how he has cut IT costs by over $300 million in under 4 years, whilst improving efficiencies.

Dave Smoley looks back with pride on almost four years of IT-led transformation at pharmaceutical giant AstraZeneca. Since becoming CIO in April 2013, he has simplified business processes, made best-use of insourcing and turned a risk-averse IT department into one with an entrepreneurial vision. In total, he has cut IT costs by more than $300m.

“We had an ambitious goal – we said we wanted to be twice as good for half the cost,” says Smoley, whose annual IT budget tops $1 billion. “Our work continues in that area and we’ll be achieving that objective at some stage next year, so I’m pretty excited.”

Measuring ‘twice as good’ has required quantifiable metrics. Smoley draws on classic IT variables, such as project delivery, level of innovation and customer satisfaction. A regular pulse survey traces user sentiment and provides feedback from employees across the organization.

All indicators point to a successful IT-led transformation strategy – and Smoley also reflects on a job well done. “I’m really enjoying the role. I knew I’d face a big challenge, and it was probably bigger than I’d imagined. But AstraZeneca has some great people and I’ve brought in some talented people from outside,” he says.

“I’m really proud that we’ve been able to build a very strong team that has shifted its attention from being focused on vendor and contract management to technology leadership and operational excellence. We’ve now got a very different and stronger team that has developed a much closer partnership with the business.”

When Smoley joined the firm, AstraZeneca relied on a mix of 30 per cent insourced and 70 per cent outsourced IT provision. He says $600m was being spent outside the company with third parties and he wanted to bring three-quarters of that cost back in-house. Today, through his IT-led transformation strategy, the blend is 70 per cent insourced and 30 per cent outsourced.

“We knew there would be efficiencies in terms of the operating model and that we’d also be able to reduce the number of project hand-offs,” says Smoley. “By bringing IT back in-house, you save money because you’re not paying someone else’s profits.”

Smoley has bolstered AstraZeneca’s IT skills base by using low-cost but high-quality sources of labor as the cornerstone of his IT-led transformation, including a new global technology center in Chennai, India, which opened in 2014, employing about 1,500 people. Smoley has allied his strategic use of new talent to a commitment to the cloud. “The ability to scale up or down quickly drives change and produces cost-efficiencies,” he says.

As CIO, therefore, Smoley has had to make some big calls. He suggests prior experience has informed his decision-making strategy.

Smoley previously served as CIO of global manufacturing firm Flextronics. Earlier executive positions include CIO roles at both Honeywell and General Electric. “These experiences shaped my feelings on team-building, insourcing and the cloud,” he says.

Smoley recognizes that much of the hard work around the firm’s IT-led transformation is complete. Now, Smoley must ensure the good work on operations is maintained, while also helping the business solve new challenges through the application of innovative technology. “We’ve got to juggle and chew gum at the same time,” he says, explaining the dual role of the IT department.

“We’ve developed strong partnerships with the business and out IT team understands their requirements. We now need to take the top trends in technology, and the top trends in business, and bring those two areas together. That will help us to come out with new, innovative ways of doing business.”

Smoley has created a technology innovation group to promote joined-up thinking. The group draws on intellectual knowledge from the main technology hubs of the world, including Silicon Valley, Cambridge in the UK, Shanghai and India. Smoley also runs monthly engagements with AstraZeneca’s chief executive and his c-suite counterparts.

These meetings include a review of top technology trends, where external experts talk about innovation opportunities and internal experts from individual lines-of-business present their requirements. Smoley says one recent session reviewed enterprise data management. Forthcoming sessions include artificial intelligence and machine learning.

Smoley recognizes there is huge excitement around hyped areas like the Internet of Things and artificial intelligence. What underpins all these developments, says Smoley, is the significant changes that have taken place in enterprise IT during the past decade, especially in regards to the use of the cloud.

CIOs looking to make the most of IoT and AI will need to ensure their business objectives are articulated clearly and their internal skills base is strong. Smoley says the key to success during an IT-led transformation, just as it has always been, will be to create a strong case for change through a close relationship between IT experts and line-of-business peers.

“We’re very active in growth stage companies and have good relationships with venture capital firms that invest in creative ideas,” he says. “We’re constantly looking for interesting firms and then we run pilot projects. The key to success is being able to connect those pilots to the rest of the business and to create sustainable value.”

The good news is Smoley is extremely confident about the potential impact of IT innovation. “I love what I do and I think AstraZeneca is poised to take off in terms of our ability to affect people’s lives in a positive way through the work we do,” he says. “Technology will help us to connect with patients and healthcare providers in new ways and the future looks very exciting.”