Gilead Sciences, a science-led company backed by business-led IT, uses Oracle solutions to simplify business processes and establish a foundation for continued growth.
by Fred Sandsmark
One key to success in treating chronic disease is a simplified treatment regimen. It’s human nature: a patient is much more likely to consistently take a single daily pill containing multiple medications than a handful of different pills on a complicated schedule.
A similar case can be made for business processes and IT: if you make processes simple and consistent, and consolidate the datasources that support those processes, the result is a healthier business with more-efficient operations and improved decision-making.
Gilead Sciences of Foster City, California, has a strong track record in both areas. Gilead is best known for single-tablet regimens for HIV: Atripla, approved in 2006, was the first of its kind; Complera followed in 2011, and Gilead’s newest single-tablet treatment, Stribild, received approval from the U.S. Food and Drug Administration in August 2012. On the business process front, since 2008 Gilead Senior Vice President and CFO Robin Washington has led efforts to standardize and improve processes and build an IT infrastructure—heavily leveraging Oracle applications, including Oracle E-Business Suite, PeopleSoft, Hyperion, and Oracle Fusion Middleware—that enables and supports those processes. The single-minded goal is to support the continued growth of a science-led company with business-led IT capabilities.
Despite Gilead’s success—including steady growth in revenues and earnings per share—its management can’t afford to relax. Approximately 80 percent of current company revenues come from HIV medications, the patents for which begin to expire in 2018. In response, Gilead is diversifying—through both internal development pipeline and acquisitions—into treatments for other disease areas, such as Hepatitis C, oncology, and inflammation, while continuing to focus on innovative HIV treatments.
Gilead’s leaders want to diversify without straying from the company’s roots as an enterprise founded and led by scientists. “We want to focus on our core competencies while continuing to have a highly leveraged business model,” explains Robin Washington, senior vice president and CFO at Gilead Sciences. This means making extensive use of contract research organizations to manage clinical trials, and contract manufacturing operations to produce product. Indeed, the majority of Gilead’s clinical trial management and more than half of its manufacturing are outsourced, a leveraged model that Washington calls a competitive advantage.
Diversification into new treatment areas is just one challenge Gilead faces. According to Washington, many additional challenges loom large for all biopharmaceutical companies, including an increasingly complex regulatory environment and a difficult macroeconomic environment with increased focus on reducing healthcare costs globally. For Gilead, these pressures are compounded by the company’s rapid growth—revenue nearly doubled between 2007 and 2011, from US$4.23 billion to US$8.38 billion.
To better manage this complex business environment, in 2008 Gilead’s management embarked on a centralized enterprise resource planning (ERP) program, based on Oracle E-Business Suite. They sought to establish an IT foundation on which the company could standardize and integrate manufacturing and supply operations, along with the financial systems that support them. Furthermore, the focus was on the business processes and the data, not the technology itself. “We were trying to worry less about which technology and more about what business problems people were trying to solve,” Washington recalls.
Moving to this business-led IT focus proved to be tough going at first. Washington eventually needed to assume sponsorship of the project, hire a new CIO, and bring in experienced project managers. This team brought the Oracle ERP system online in October 2011. “Along with the Gilead ERP team, Robin got the project over the finish line,” says Dennis Self, who joined Gilead as vice president and CIO just 17 days before the Oracle ERP system went live. “It is one of the most pure forms of leadership I have ever seen in my career.”
Clearly, the Oracle platform and the integration of [Oracle] Hyperion help us relative to the tools we used before. We’re spending less time on an arcane tool, or a tool that’s not integrated, and more time analyzing the output of that tool.
“We did go live in the fourth quarter of our fiscal year—which is an absolute no-no as a CFO—but we had so much momentum,” Washington says today. “We closed the books successfully for the year, and had the lowest level of SOX [Sarbanes-Oxley] deficiencies ever in the history of the company.”
Creation of a financial shared services center for Europe running Oracle E-Business Suite—a project that began in 2007—contributed to building that momentum. Gilead employees initially pushed back against the shared services concept—they saw it as a poorly planned, technology-centric cost-saving measure, whereas Washington envisioned it as a catalyst to move to globally consistent processes.
So the entire shared services center project was relaunched in 2009, this time led by an experienced shared services expert and a business council consisting of the people who would own and use its services. Many country-based financial processes (procure-to-pay, for example) were consolidated into a single global process; legacy systems were either integrated or eliminated. “I think the shared services center and the ultimate implementation of Oracle forced us to focus on the 80-plus percent that we’re alike, as opposed to the nuances of how we’re different,” Washington says.
In the process, trust was established between the business, IT, and Oracle. “Some of the best meetings we had with Oracle were when we had the development folks in the room with the operators,” Washington recalls. “Not the project people, but the people who, for instance, wanted their inventory system to do A, B, and C. When the developers understood their needs, then the dialogue really started to occur.”
The Business Process Council (BPC), launched during the reboot of the ERP implementation, has become a standing group of around 20 Gilead employees, convened by CIO Dennis Self and representing every major department in the company. The council looks at Gilead’s process needs semiquarterly, determines and prioritizes projects to address those needs, and provides oversight of these projects until they are completed. “Most of these projects are devoted to standardizing, integrating, and scaling various business capabilities throughout the company,” Self explains. The council has also helped foster open communication and closer collaboration across the entire company.
The analytic needs are changing constantly, so you really need flexible, nimble systems that can be used in a lot of different ways.
Standardizing processes does more than just save time and money; it also aids with compliance, which is one of Gilead’s ongoing business drivers and a “must have” within any life sciences company that operates within a regulated environment. Technology’s role is huge, Washington says; recording and maintaining accurate records requires core IT strengths such as application, data, and infrastructure quality and security. “When you think about a process, you have to think about it relative to meeting all of our various compliance needs. The more standardized and integrated we are, and the better we are at documenting and accessing information quickly, the better we’re able to meet all those regulatory standards,” she says.
In order to enable standardized and integrated business processes, Gilead’s business operations are underpinned by a “loosely coupled” technology architecture whereby IT has decoupled its applications, data, and infrastructure. Indeed, Gilead has deployed approximately 175 applications—many from a variety of vendors—that are integrated via Oracle Fusion Middleware and are enabled by a highly virtualized infrastructure platform. Single sources of data are also integrated using this same integration platform. “The concept is that we should only populate customer data one time, using Oracle master data management solutions,” Self explains. “Similarly, we should only populate product, supplier, and people data one time.” Those datasources, because they’re not directly associated with individual applications, are accessible to other applications via an Oracle Fusion Middleware integration bus.
To further support the standardization and integration of business processes, Self has restructured the IT department to reflect Gilead’s business-led philosophy, including the establishment of three teams that are assigned to managing formal and informal relationships with key business partners throughout the company—one assigned to R&D, another assigned to manufacturing and finance, and a third assigned to sales and marketing. “They’re paid to listen,” Self says. “What are the business requirements, and where can IT help?” Once the answers are identified, the IT teams then work with functional leaders to build a business case—with a strong ROI component—that is presented to the BPC for approval.
“This BPC and IT governance model we’ve put in place ensures that we don’t do projects unless there’s business sponsorship,” Washington explains. “We were successful with our ERP implementation because we had business sponsorship at the highest levels—in manufacturing, supply chain, and finance. It was focused on business needs, as opposed to someone saying, ‘Wow, this seems like a cool thing to implement.’”
Having a single global source of financial data has also assisted in the refinement of Gilead’s budgeting and planning processes. When Washington arrived, the company had 1- and 10-year planning cycles and annual budgets. The 1-year planning cycle couldn’t cover the typical lifecycle of Gilead’s clinical milestones, while the 10-year planning cycle was too speculative given the uncertainty inherent in a post-financial-crisis world. Today, a robust 3-year planning cycle and rolling forecasts (rather than annual budgets) are the goal. And because technology supports business processes, IT planning is synchronized with the 3-year business planning cycle.
In the near term, having data decoupled from applications will enable the quick and efficient scaling of analytic capabilities throughout the company, Self believes. “We have these capabilities in place today, but now we’re in position to take it to a whole other level,” he says. Every part of the company—from sales to manufacturing to finance to HR—has analytic requirements and wants to make faster, better, fact-based decisions, he says, and Gilead’s business-driven technology foundation can enable that.
Washington says Gilead’s product and geographic diversification efforts will require enhanced analytic capabilities. “It’s going to be even more important as we diversify into other therapeutic areas, in terms of getting that data and those analytics correct,” she says. “The analytic needs are changing constantly, so you really need flexible, nimble systems that can be used in a lot of different ways.” (See the “Planning and Modeling” sidebar.)
And with Gilead’s Oracle E-Business Suite live for a year, the focus there has shifted from deployment to adding capabilities and deriving more value. “When we automate operations—make them more efficient, scalable, and low-cost—we can actually derisk them,” Self says. “That keeps folks in R&D and commercial, and at the executive level, from having to pay attention to these back-office, operational issues.”
Put another way, automating Gilead’s business operations gets IT systems out of the way of science—indeed, out of the way of the business—which will help the company continue to thrive. “There’s a belief here at Gilead that, if we focus on the science—on being the best, and on being differentiated—everything else will work itself out,” Washington concludes. “People will want our product because ultimately it improves their lives.”
Fred Sandsmark is a regular contributor to Profit.
Before Robin Washington became senior vice president and CFO of Gilead Sciences, she served as CFO of Hyperion Solutions and senior vice president and corporate controller of PeopleSoft. “I’ve been acquired by Oracle twice,” Washington says with a laugh, but she’s serious about how both of those Oracle solutions—and Oracle Hyperion solutions in particular—are used at her current employer.
“Clearly, the Oracle platform and the integration of [Oracle] Hyperion help us relative to the tools we used before,” she says. “We’re spending less time on an arcane tool, or a tool that’s not integrated, and more time analyzing the output of that tool.”
Oracle Hyperion Planning is a key tool for Gilead’s overall business planning and is increasingly used in the finance department. Take Gilead’s US$11 billion acquisition of Hepatitis C drug developer Pharmasset, which closed in 2012. The acquisition required Gilead to incur significant debt and leverage cash located in geographies outside of the United States.
“Having a tool that allowed us to look at the balance sheet and the cash flow statement simultaneously helped us analyze our options more efficiently,” Washington says.