Although both industries – Discrete Manufacturing and Process Manufacturing – are completely different, I see some similarities.
10 years ago, the only competitive threat for a traditional OEM came from another traditional OEM. All R&D Managers had an arrogant smile on the face when they heard about a small US company, which was entering the market with electric cars. Today this company – Tesla – is also an established player. But new competitors do appear on the horizon: Apple, Google, Uber and others. Companies with no knowledge about how to build, sell and maintain a car. Why is this possible?
The answer is fairly easy: Todays buyers don’t care so much about the car itself anymore (low emission and consumption is a must, but some more or less horsepower is irrelevant), they care more about the connectivity (to car, communities and entertainment) and the digital service around they get. Apple and Google know almost everything about the phone user, Ford, VW and Toyota (just to name a few of them) know almost nothing about the driver.
The same begins to happen in the Life Science industry, I guess large Pharmaceutical Companies believe they will mix ingredients and produce medicine forever. The Generics Market is a pure price battle. There is no difference between Aspirin from Walgreen, Aspirin from CVS and even Aspirin from Bayer. However, what will happen if the first manufacturer begins to understand that the real product is not the pill but the effect of the pill. What will happen if this manufacturer knows and understands the consumer / patient and offers a personalized medicine, in-time free delivery and valuable advices for up-coming activities such as vacation in a foreign country?
The answer is fairly easy: The service becomes more important as the product itself. Derived from the fact that the service is in focus, the Life Science industry changes from guessing what a patient needs to a full service health provider including the possibilities of cross selling products in order to maintain health and not cure just one illness. I’m sure we’ll see completely different players on the market soon who understand and offer this and let the medicine produce somewhere where it’s cheap.
In other words:
- Automotive and Life Science companies don’t know their consumers (car driver / patients).
- Therefore, Key Account Management is focused on wholesaler, dealer, some major customers (Fleet Customers / Hospitals) and political interests associations.
- In the past, competitors came only from the same vertical because of long, expensive and complex R&D cycles.
Based on the fact that today’s innovation is mostly driven by IT, there are some more similarities:
- There are petabytes of data about the product, about how, why and which conditions the product is used and about the user himself.
- Multiple independent IT Organizations e.g. Corporate IT, Business IT and R&D IT (aka IT as part of the product),
- IT is not part of the value chain i.e. CIOs are not part of the board,
- Corporate IT is seen as inflexible, slow and not state-of-the-art.
- IT budget is limited to “keeps the lights on”; just a small portion is for innovation.
Some of the car manufacturers are in the middle of the transformation process. They begin to understand how important information about the owner / driver are and that the competitive advantage based on the product itself becomes less important. Automotive CIO are investing in bi-modal IT to have both in the portfolio, the classic approach for large enterprise projects as well as the agile approach for fast consumer-oriented solutions.
What about the Life Science CIOs? Are their organizations part of the transformation or even better driving the transformation? Do corporate IT Organizations of Life Science companies have the experts in Big Data and Smart Devices who bring value to interesting related R&D projects? Are Corporate IT Organization able to offer a cloud-based development infrastructure within hours? In other words: Can they compete with PaaS provider like Amazon?
CIOs of Life Science Companies should start now to investigate in new PaaS technologies in order to
- be able to modernize proprietary applications in order to scale and
- being flexible where new / renewed applications should be operated best (Public Cloud, Private Cloud, Hybrid Cloud),
- significantly reduce maintenance costs of COTS products,
- build up Data Lakes to capture data of the product, how it’s used and who is using it,
- drive innovative ideas for next generation Life Science products and
- benefit from consumer data by using Big Data technologies to understand them better in order to support new business opportunities.
The time is now!