#FutureReadyHealthcare
Life Sciences Commercial
IT Trends 2024
What are the Primary Concerns and Key Priorities Keeping Commercial IT Leaders in Life Sciences Awake?
Introduction
Four years ago, life sciences companies’ commercial IT leaders swiftly increased their technology investments in response to the COVID-19 pandemic1. Since then, this trend has continued to grow, with most companies eager to realize the business outcomes that embedding digital and analytics capabilities throughout their organizations can deliver. Industry research found that life sciences firms making transformational changes are investing at least 20% of the company’s EBITDA in digital and analytics programs2. This spending is expected to further grow at a 27% annual rate, reaching $1.2 billion by 2030—clearly reflecting the industry's confidence in the transformative power of IT technologies for business goals.3
However, how much of their existing technology and innovation stack is currently yielding returns? What made sense in the days of the pandemic may now need re-examination, especially in the wake of newer, more innovative technology disruptions, changing customer needs and preferences, and a rapidly evolving business landscape. Therefore, commercial IT leaders are currently evaluating and reassessing their technology stacks to determine what to keep, what to tweak, and what needs to be scrapped. They are also examining technologies that they may be overpaying for (or perhaps underinvesting in) to optimize returns and elevate the impact they can bring to customers and the business.
We interviewed 154 commercial IT leaders from the life sciences industry to gain insights into their investment priorities, drivers behind their investment decisions, technology transformation goals, and challenges they face.
The study is designed to offer peer insights, empowering commercial IT leaders to enhance their capabilities and establish a best-in-class function, ultimately elevating their organization’s overall maturity.
Participant Demographics
The participants represented a diverse mix of commercial IT leaders from large, mid-size, and small life sciences organizations. Geographically, respondents were almost evenly distributed across North America (34%), the EU5* region (36%), and the global arena (30%).
It is important to note that some survey questions allowed for multiple selection options, resulting in percentage totals that may not always add up to 100%.
* France, Germany, Italy, Spain and the United Kingdom
Balancing Act: Unveiling the Commercial IT Investment Landscape
More than half (54%) of leaders increased their commercial IT budgets in 2023, showing a proactive approach and recognizing the importance of investing more in commercial IT for their organizations
On the other hand, 42% of leaders chose to keep their budget levels unchanged, indicating a decision to maintain current spending levels
Most leaders have directed their investments primarily towards cloud infrastructure (77%), AI/ML applications (62%), and automation (56%)— the top three highly invested areas, reflecting a continued prioritization of cloud-based solutions and transformative potential of AI and ML in areas such as predictive analytics, decision-making, and process optimization, driving investments to stay competitive in a data-driven landscape
More than half of the leaders are neither increasing nor reducing their investments in areas such as Customer Data Platforms (54%), Business Applications (52%), Data Center Infrastructure (55%), and Collaboration-based tools and applications (60%). The decision to keep investments in these established areas steady could indicate that leaders still find value and stability in these technologies for their businesses. It shows a balanced approach where organizations mix new technologies with reliable ones to meet ongoing business needs
Way Forward
Establish a dynamic budgeting process that allows for adjustments based on the evolving IT landscape
Collaborate with business units to identify specific use cases for AI/ML applications that can enhance decision-making, predictive analytics, and process optimization
Establish cross-functional teams to assess technology needs and priorities from multiple perspectives, including sales, marketing, and operations
Implement key performance indicators (KPIs) for each IT investment and conduct periodic reviews and assessments to ensure alignment with organizational objectives
Propelling Technology Investments: Drivers Behind Technology Investments
51% of commercial IT leaders rank enhancing customer experience as the most important factor that drives their organization to invest in new technology, reflecting their goal of remaining competitive by meeting the evolving expectations of healthcare professionals, patients, payers, and other stakeholders
44% see technological investments as avenues for new revenue streams, highlighting their strategic focus on leveraging technology not only for operational improvements but also to drive more innovation
43% invest in technology to improve operational efficiency and business processes, underscoring their recognition of the transformative potential of technology in streamlining internal operations and improving overall business functionality
Way Forward
Implement customer feedback mechanisms and agile development practices to swiftly respond to evolving customer expectations
Implement automation and process optimization tools to enhance workflow efficiency and reduce operational costs
Establish innovation Centers of Excellence or agile POD teams to explore and prototype new ideas that align with market trends and emerging needs
Proactively integrate feedback from customers and external stakeholders into the decision-making process for technology investments. Subsequently, closely monitor adoption rates and user satisfaction to assess the practical effectiveness and acceptance of these technologies
Quantifying Success: Measure of Effectiveness of Commercial IT Investments
A majority of the respondents (83%) acknowledge the positive impact of technology investments, particularly in automation and artificial intelligence to boost operational efficiency. 56% find automation and AI technologies to be somewhat effective while 27% consider these technologies to be very effective, indicating a significant proportion acknowledging a high degree of impact on efficiency. In several instances involving our collaborations with global life sciences companies, the integration of automation and AI has yielded efficiency gains of up to 20% and accelerated outcomes by roughly 80%.
64% of leaders rate the effectiveness of their commercial IT investments as good. This indicates that a majority of leaders perceive some level of effectiveness in their IT investments
Only 21% of leaders are extremely satisfied with their commercial IT investments. This suggests that while the investments may be considered effective to some extent, there are factors or aspects that leave a significant portion of leaders less than extremely satisfied
The 15% of leaders who rate their commercial IT investments as average further highlight that there is room for improvement. This segment suggests that a notable proportion of leaders see their IT investments as neither highly effective nor ineffective, signaling a potential need for enhancement or optimization
Commercial IT leaders ranked "Innovation and continuous improvement" (55%) as the most important metric to measure the success and effectiveness of the commercial IT function, emphasizing a strategic focus on fostering a culture of innovation and a commitment to ongoing improvement within the commercial IT function
The second and third highest common metrics include the impact on operating costs (54%) and the impact on revenue (52%). Organizations are likely aiming to achieve efficiency gains (reflected in operating costs) while also ensuring that the commercial IT function contributes directly to the organization’s financial performance through revenue generation
A significant proportion of leaders also measure success based on the impact on customer satisfaction (47%) and the impact on the time-to-market of commercial content and campaigns (52%). The inclusion of customer-centric metrics indicates a strong alignment with meeting the needs and expectations of stakeholders. The focus on time-to-market underscores the importance of agility and responsiveness in customer engagement and satisfaction
Way Forward
Foster a culture that encourages employees to contribute ideas, participate in hackathons, and engage in continuous learning to drive innovation
Strengthen the focus on customer satisfaction metrics to ensure that the commercial IT function aligns with the needs and expectations of stakeholders
Conduct regular reviews of time-to-market metrics, identifying bottlenecks and implementing strategies to enhance speed and efficiency
Conduct regular cross-functional workshops and forums to share insights and align strategies for mutual success
Harmony in Action: The State of Collaboration in Technology Adoption Decisions
Joint decision-making (25%): Both IT and business sides work closely together and make decisions collaboratively. This suggests a high level of cooperation and integration between the two sides in the adoption of new technologies/ platforms
IT takes the lead with input from business (42%): The IT side is primarily responsible for leading the decision-making process, but they actively seek input and feedback from the business side. This model suggests a more IT-centric approach with consideration for business needs and perspectives
Business takes the lead with input from IT (21%): In this scenario, the business side plays a leading role in decision-making, but they involve and consider input from the IT side. This suggests a more business-driven approach with acknowledgment of the technical aspects provided by the IT team
Independent decision-making (12%): Decisions are made independently by either the IT or business side, highlighting a more segregated approach to decision-making within certain organizations. This could result in potential challenges if there is a lack of alignment between the IT and business perspectives
62% of commercial IT leaders described the collaboration as “good,” and a substantial percentage (28%) went further to characterize the collaboration as “strong.” This suggests that a notable portion of respondents perceive a high degree of synergy and effectiveness in the collaboration between commercial IT and the commercial function. A smaller percentage (10%) expressed a neutral stance.
Overall, these findings suggest a variety of approaches to decision-making, with a notable prevalence of IT involvement in the process. The level of collaboration may impact the success and efficiency of technology adoption, as effective communication and understanding between IT, commercial, and business sides are crucial for the successful implementation and integration of new technologies.
Crafting a Case: Challenges Faced While Building a Business Case for IT Investment
Navigating compatibility challenges with the existing tech stack is the most significant concern for a majority (58%) of leaders, underscoring the complexities involved in aligning new technologies with current infrastructure
Working with tight budgets is the second most cited challenge, with 51% of leaders expressing concerns, indicating the struggle to maintain a balance between maximizing the value of technology investments within tight budgets
Mitigating the long gestation period to realize the return on investment is a shared concern for 44%, pointing to a need for strategies to expedite the benefits of technology adoption
For 39%, the importance of selecting reliable external partners emerged as a key challenge
Addressing the limited availability of skilled staff is another major challenge, with 50% of leaders highlighting this concern
In fact, only 25% believe their workforce is genuinely enthusiastic about their daily work and fully aligned with the company’s vision. Another 63% acknowledge the need to explore ways to enhance staff motivation and engagement. (Figure 12)
Way Forward
Implement a phased approach to technology upgrades, focusing on interoperability, reusability, and modularity, while minimizing disruptions to existing operations
Develop strategies to expedite the realization of ROI, mitigating concerns related to the long gestation period for technology adoption
Implement a technology governance framework to streamline decision-making and address compatibility challenges
Include a risk mitigation plan and a comprehensive cost breakdown to instill confidence in stakeholders
Future-ready Gauge: Assessing Organizational Readiness for the Next Evolution
74% percent of leaders believe that their organizations are both ready and willing to implement new ideas for the commercial IT function. Underscoring this positive mindset, a leading global life sciences company recently embraced innovation by integrating Explainable AI into their traditional decision engines that were designed to deliver real-time recommendations for sales representatives. The outcome was impressive—a 70% uptick in the adoption of these recommendations (boosted by the transparency of the recommendation model) coupled with a noteworthy 15% increase in incoming leads
On the other hand, a small percentage (14%) of leaders claim that their organizations are ready but unwilling to implement new ideas. This could imply potential barriers or resistance to change, even though the organizations may have the necessary resources and capabilities
Additionally, an even smaller percentage (11%) of leaders stated that their organizations are not ready but willing to implement new ideas. This suggests a willingness to change, but they may currently lack the necessary infrastructure, skills, or other prerequisites. Here is an example of how we helped a global life sciences company navigate a similar challenge related to its data operations
While a majority of leaders (78%; 16% highly prepared + 62% prepared) are optimistic about their organizations being prepared for omnichannel transformation, there is a notable percentage of leaders (18%) who are either neutral or have concerns about their organization’s ability to navigate the challenges associated with omnichannel transformation.
The study revealed a diversity of opinions among commercial IT leaders regarding the existence and effectiveness of current strategies to address potential disruptions. Only 50% of the commercial IT leaders agree that their organization has a strategy in place to address potential disruption from new technologies and entrants. On the flip side, 44% of commercial IT leaders do not agree that their organization has a strategy in place for potential disruption, suggesting skepticism about the adequacy of their current strategies to address emerging technologies and new market entrants.
Investment Outlook: Priorities and Focus Areas for the Next 12 Months
53% of commercial IT leaders plan to reallocate the existing IT budget for these priorities, indicating a strategic approach to optimizing resources
38% intend to increase the IT budget for specific priorities, suggesting a recognition of the need for additional financial support in key areas
A smaller percentage, 5%, do not anticipate any changes in IT budget allocation, possibly reflecting stability in current strategies
36% of leaders are focusing on strategically aligning IT initiatives with overarching business goals, emphasizing the need for a harmonious integration of technology and organizational strategy to drive organizational success
There is a resolute focus on elevating customer experience, with 35% ranking it among the top 3 priorities driven by evolving expectations and demands within the industry, seeing it as the guiding star of innovation
34% of leaders are championing the fusion of AI with analytics. Organizations are keen on harnessing data-driven insights, potentially enhancing decision-making, streamlining processes, and gaining a competitive edge
The emphasis on cost control underscores the importance of financial stewardship within the commercial IT function, with 33% ranking it among the top 3 priorities. This likely reflects a dual focus on efficiency and resource optimization, ensuring that IT initiatives contribute positively to the organization’s financial health
Way Forward
Establish regular communication channels and a governance framework that requires IT initiatives to demonstrate clear alignment with the broader business strategy
Enhance the customer experience focus by integrating customer-centric design principles into IT initiatives
Invest in AI-driven analytics tools and platforms and foster a culture of data literacy within the organization, ensuring teams can effectively interpret and leverage analytics for informed decision-making
Emerging Tech: Riding the Wave or Getting Swept Away?
Leaders have their eyes set on key emerging technologies that they believe will make the biggest impact in the next 12 months: Artificial Intelligence (AI) commands a leading position with 68%, closely followed by Generative AI at 65%, signifying their forefront roles in various applications and use case within the life sciences sector. The ascent of 5G technology is also highly anticipated, with 51% expressing optimism about its potential for transformative advancements in connectivity and communication. Robotic Process Automation (RPA) is also poised to wield a significant impact, as indicated by 49% of respondents, reflecting the escalating integration of automation technologies to elevate operational efficiency.
Monetizing existing data is ranked by 55% of respondents as a key area for innovation, indicating a recognition of the untapped potential within existing data assets and a desire to extract additional value
54% of respondents cite the creation of new revenue streams as a key area for innovation, suggesting a strong emphasis on leveraging technological advancements to uncover novel sources of income. This aligns with a strategic business growth agenda and reflects a forward-looking approach to commercial IT
Improving time to delivery (43%) and operating in an agile and lean manner (41%) hold significance. Innovations in these areas can lead to streamlined processes, faster delivery of products or services, and enhanced overall operational effectiveness
Exploiting new sources of data (40%) and new and efficient sourcing models (37%) also emerged as key areas. Interest in new data sources signals a dedication to leading in data-driven insights (here’s an example) while exploring efficient sourcing models reflects a strategic approach for potential cost savings and operational enhancements
Way Forward
Develop pilot projects to test the viability and effectiveness of Generative AI in specific use cases
Explore alternate sourcing models, partnerships, and collaboration models to drive higher efficiencies and optimized costs
Establish a knowledge-sharing mechanism within the organization to disseminate insights gained from external engagements
Cultivate a culture of continuous improvement to drive ongoing innovation in commercial IT
Key Factors for Choosing Your Outsourcing Partner
66% of leaders plan to increase investments in the managed services model, indicating a growing reliance on external expertise for specific functions
Leaders highlight the importance of partnering with trusted entities possessing domain and tech expertise (36%), the ability to scale (29%), the capacity to create an impact on cost savings (29%), and demonstrated success and case studies (28%)
A majority of leaders intend to keep their investments steady in areas like vendor diversification (49%), regionalized services (49%), and centralized outsourcing (62%)
This collective perspective reflects a forward-looking approach emphasizing the commitment to leveraging advanced technologies and strategic partnerships for sustained success
35% of respondents place a substantial emphasis on the “Right mix of domain and tech expertise” when considering outsourcing partnerships. This underscores a strategic reliance on external partners possessing specialized knowledge for specific functions
28% prioritize factors such as “Impact on cost savings,” “Demonstrated success and case studies,” and “Ability to scale the engagement in future” when selecting their outsourcing partners. This highlights a balanced approach, showcasing the significance of financial impact, proven performance, and scalability in their investment decisions
18% value firsthand references and a wide range of services when selecting their outsourcing partners
Environmental, social, and governance initiatives are emerging considerations, as indicated by 10% of the respondents. This suggests a growing awareness of social responsibility in outsourcing decisions, though it may not yet be a decisive factor for leaders
Way Forward
Develop a structured assessment process that thoroughly examines the partner’s industry knowledge, technological capabilities, and past experiences relevant to your business needs
Incorporate scalability criteria in your vendor assessment process, ensuring that potential partners have the capacity and flexibility to grow alongside your business
Recommendations for Commercial IT Leaders
Leverage AI and Automation for Operational Excellence: Given that 68% of respondents expect high impact from AI and 49% from RPA, strategically integrate these technologies to enhance operational efficiency. Invest in AI-driven analytics, and automation of repetitive tasks, and explore RPA applications in business processes. Develop a roadmap for AI and automation implementation to realize tangible benefits in the next 12 months
Optimize IT Budget Allocation: With 53% of respondents planning to reallocate existing IT budgets, conduct a thorough review of current allocations to ensure alignment with organizational priorities. Identify areas where reallocation can drive maximum impact and consider reallocating resources to emerging technologies, such as AI, which has been rated as having a high impact by 68%
Strengthen Collaboration for Technology Adoption: Foster a collaborative decision-making environment where the IT and business sides work closely and make joint decisions. Establish forums for regular communication to ensure alignment on technology adoption strategies. Leverage cross-functional teams to harness diverse perspectives and drive successful implementations
Enhance Evaluation and Adoption of Emerging Technologies: Recognizing that 56% of respondents find AI and automation technologies somewhat effective, it is crucial to persist in efforts aimed at enhancing their impact on operational efficiency. This entails investing in upskilling IT teams, exploring advanced AI applications, and establishing clear KPIs to gauge the effectiveness of automation and AI initiatives
Strategic Talent Engagement for IT Teams: Recognizing that 63% of organizations rate their talent engagement as “Good” but with room for improvement, implement targeted initiatives to keep IT talent motivated and engaged. Conduct regular feedback sessions, invest in professional development, and explore innovative approaches, such as mentorship programs, to enhance job satisfaction and commitment
References
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Authors
Vivek Ghai
EVP, Enterprise Commercial Solutions, Indegene
Nitin Raizada
VP, Enterprise Commercial Solutions, Indegene
Anant Puranik
Director, Marketing, Indegene