Life sciences firms should try to find cloud’s virtuous circle

By Raveen Sharma, managing director, and Lita Sands, managing director, Life Sciences Cloud Transformation, Deloitte Consulting LLP

The migration to the cloud typically requires companies to assess and modernize applications, close on-site data centers, and rethink how future business will be conducted. But cloud technology may not reach its transformative potential if momentum stalls after the initial migration.

We have been working with life sciences companies to try to drive value from cloud technology for more than a decade. But it wasn’t until the start of the COVID-19 pandemic that adoption of cloud technology really accelerated.¹ Some pharmaceutical companies, for example, wanted to capture data from patients (through mobile devices) to keep clinical trials on track until it was safe to bring them back to a clinical setting. Some companies used cloud to help ensure that scientists and researchers could continue to collaborate while working virtually. Cloud technology also helped make it possible for staff to work virtually with safe and secure access to critical systems. On the medtech side, cloud is used to store and analyze data generated by medical devices and wearables. Software used by a cloud-connected continuous glucose monitor, for example, could identify trends and transmit information directly to a patient’s care team.

Some companies used cloud to focus on shifting supply lines. Many of these organizations saw the benefits of moving data to the cloud and having access to advanced capabilities including artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT).² These capabilities helped give companies the ability to innovate and scale more quickly than in the past.

Virtuous circle or vicious spiral?

There are two general paths that life sciences companies tend to follow once the decision to move to the cloud is made. We describe the first path as the virtuous circle where companies close their on-site data centers and immediately reinvest the savings into efforts to retrain staff, develop new business capabilities, and enhance customer experiences.

Other companies, however, might opt not to reinvest savings, which can cause momentum to slow. And momentum can stall further when companies decide to modernize only their most business-critical apps. This could lead to a backlog of hundreds or even thousands of apps that need to be assessed and updated. We refer to this second path as the vicious spiral. Shutting down existing data centers and moving everything to the cloud is often just the first step. This is low-hanging fruit that can help reduce overhead and generate initial cost savings.

What can happen next is that the cloud costs start to increase without any associated business value. Apps built on older technology that don’t take advantage of modern tools— such as serverless computing—can drive increased processing costs due to their outdated architecture. After the initial celebration around the early cost savings, IT costs can start to creep up. At the same time, company leaders might notice that the business hasn’t seen the anticipated improvements in speed, agility, and innovation that cloud infrastructure can offer. One customer told us that it’s a little like buying an advanced electric vehicle and still trying to pump gas into it. With costs going up and no additional funds to finish the app-modernization work and demonstrate business impact, it can be difficult to stop the vicious spiral. As our colleagues Neal Batra and Michael Black recently noted in their blog, hospitals and health systems could be left behind if they don’t take advantage of cloud technology (see A strong cloud strategy may help hospitals avoid the storm). Life sciences companies caught in the vicious spiral could have a similar fate.

9 strategic priorities for moving to the cloud

Deloitte surveyed 500 senior cloud decision makers from a wide range of industries (see Closing the cloud strategy, technology, and innovation gap). Respondents identified nine strategic priorities for moving to the cloud:

• Increase efficiency and agility
• Mitigate business and regulatory risk
• Provide better sustainability in support of environmental issues
• Expand into new markets
• Create new operational processes or workflows
• Build new product/service revenue
• Expand existing product/service revenue
• Develop new ideas, approaches, or methodologies
• Reduce/optimize costs

Life sciences and health care organizations included in the survey share these priorities. It appears that more progress is being reported against mitigating business and regulatory risk than any other goal. But survey respondents also reported an innovation gap between their desire to do things (e.g., create new business processes, improve the customer experience) and their ability to execute.

Industry cloud may be the closest thing to an easy button that a chief information officer (CIO) can push. Industry cloud is a collection of solutions and applications that have been developed within the regulatory and compliance framework for a particular industry. It brings together digital blueprints, integrated high-tech capabilities, pre-built accelerators and solutions, and an ecosystem-development model.

Industry clouds are becoming more prevalent among life sciences companies, and they can offer ongoing opportunities to help drive value, according to the results of our survey. More than 40% of respondents from the life sciences sector said their companies have invested between $1 million and $10 million in cloud technology, and 24% expect investments will increase by 20% or more over the next year or two. Investing in pre-built assets, solutions, and accelerators could help companies derive greater business value, sooner.

Cloud opportunities can extend beyond data storage. This can include improving processes and providing an industry-friendly user interface design and user experience design (UI/UX). It can also unleash the power of industry specific AI/ML use cases and encourage organizations to think differently about how they expand and create new products, how they enter new markets, and how they can help employees collaborate across silos and regions.

IT leaders have high expectations, concerns

Successful cloud transformations may require a workforce equipped with the skills and organization to drive, operate, and sustain the transformation and achieve a return on investment (ROI) at scale. According to our survey results, IT leaders have high expectations, as well as some concerns:

Top three expectations:

• Faster innovation/timeline to market for business capabilities and use cases (56%)
• Accelerating the capacity to change (49%)
• Creating connections across an organization with their suppliers and customers (39%)

Top three concerns

• Company IT team might lack necessary skillset (39%)
• Fear of control over data and insights (36%)
• Ability to protect data (36%)

Cloud is an engine that can drive digital transformation

Digital transformation seems to have become inextricably linked to cloud technology. Life sciences companies could have an opportunity to re-envision their processes and the overall business strategy via industry cloud (see Reimagining digital transformation with industry clouds). But some organizations may not be harnessing the full power of the technology. This could limit their ability to reach their strategic goals. They should determine how to take advantage of those capabilities to help drive business ROI and business growth as well as operational savings.

Among all industries, the life sciences sector does not appear to be leading the pack in terms of cloud adoption. But companies that are able to embrace the virtuous circle and avoid the vicious spiral could be on track to be successful in the digital world.

Endnotes:

¹ How the pandemic accelerated cloud adoption, Forbes, January 15, 2021

² How the cloud can power next-gen life sciences, MedCity News, October 26, 2022

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