Paul Buckham:
Just to give you some background to AstraZeneca. So probably if I reflect on about two years ago, maybe two years ago, we were due to go to Dallas to Radiance in Dallas, and I received a telephone call to say, Paul, you can’t go. And that was kind of out of the blue. So this was, I think, January 2019. So many of you probably went to Radiance and AstraZeneca stopped us from going. So there was something they knew, then that we did not know. And here we are now, a little later. And since that time, AstraZeneca has delivered more than 2 billion doses of the vaccine that was being worked on at a time that we didn’t, we did not necessarily know about at the time. So that’s something that’s happened over the last two years, while this journey that I’m going to explain to you has also been going on in AstraZeneca, behind the scenes. So we as an organization, specialize in the three main, therapy areas, oncology CVRM, I’m going to shorten it because I needed to speed up. But cardiovascular, renal, and metabolism, respiratory immunology, and over the last two years, we start to create this vaccine business. And we’ve also, during this year, acquired a business called Alexian, which is a rare disease business. So quite a lot going on. Lots, lots of progress in the background.
And this is where it leads us to so AstraZeneca is about Accelerated Innovation. Last week, you may have seen that we opened the disk in Cambridge, the Discovery Center, which is focused on our research and development. And that’s really at the heart of AstraZeneca. So medicine, and you know, really making sure that we can create new medicines and bring those to patients as quickly as possible, is what we focus on. And that kind of leads us on to Order to Cash. So we’re on a journey. I’ll go into some of the detail on that. But we don’t necessarily start where we’d like to be. Which I guess many of you don’t either. What we start with is we start we’re about sort of midway through we probably we you know, we maybe have some advances in some areas of all the cash, we’re leading in some areas, but we’re kind of behind the curve, as far as where we start from. And that goes from the fact that the business has been going through quite a bit of change over the last decade. And I’ll come on to that in some detail. But where do we want to be? And you’ll see that when we’re not necessarily getting up to we want to be the best of the best of the best. And there are many, many reasons for that. But why the growth of 80% and not to 100?
So the question to you or so is your goal, in your Order to Cash process to be the best in your industry. And I didn’t know how this was going to work. But now that we are on the puddles to see where we are, so there are some yeses? I’d imagine you would be guessed Michael, yeah, yeah. So I think to some people, it’s important to others, maybe not. But if I come back to our journey being the best, having the best order to cash process in AstraZeneca is not necessarily a priority for our business. We’re focused on our research and development. We want to be the best pharmaceutical company. But we needed a fit for purpose and a good enough Order to Cash process. So when we say good enough, we don’t mean that we’ll do, it still needs to be good. It still needs to be productive, and it needs to be efficient.
So we set off on this journey. And when I arrived in AstraZeneca, about three and a half years ago, I started standardization, and we’re still working on the centralization of our operations. So we’re really trying to focus on that as a part of the business to make sure we simplify as much as possible. We’re starting to add automation and going on a digital transformation journey. And the other pillar to this is really effective project management across the business as well. Because project management and implementing these solutions into a business that’s not necessarily receptive to change is a polite way of putting it.
Give us some background where we come from AstraZeneca. We’ve got captive and outsourced shared service centres. We also still have some local businesses, local operations teams that are in countries we refer to them as markets. We process around one and a half million orders a year which doesn’t sound like an awful lot when you know you have heard Michael talking about the size of the dice and how many customers they have? We have about 50,000 customers, it’s predominantly the fact that when we talk about customers, and in our business, we have a sort of a healthcare supply chain, so to speak. So we stand between us, we have customers who stand between us and the patients. So we produce products for patients. And depending on the nature of the country that we were trading in the markets that we’re trading in, depends on the makeup of those customers in those markets. I see a lot of you nodding. So you recognize this. And that’s kind of part of the reason why we’ve progressed, the way that we have with the investments that we’re making in Order to Cash. 2 million invoices, doesn’t sound like an awful lot. But you can imagine with pharmaceutical products, the value that’s pretty high, and we manage an AR of around 5 billion. Is that about right, Steven? Yeah!
Standardization, we want to build a robust framework. So you know, we talked to people who have mentioned earlier that, you know, simplifying and reducing the complexity of your process is really important. And that’s where we start from. So going on this standardization journey, when I arrived, we’ve gone through an outsourcing process in AstraZeneca, about 10 years ago, we’ve outsource a lot of processes on a lift and shift basis or labour arbitrage move it to somewhere else, take the savings from that, but we’ve not really invested in the process, we’ve not really moved to a point where we’d actually develop the process. So we had kind of a lack of real good quality, process documentation, not real defined taxonomy, not really defined processes. And, and you can imagine, they’re trying to take those processes and automate and invest in them was really difficult. So we really needed to reset that. That process, we’ve gone on that journey. We’ve invested we’ve used or not used, but we’ve collaborated with our BPO to start and learn those processes and kind of get them back into the box, along with our captive shared service centres as well. And combine that with some really good external experience, to really, really bring together those processes. And we’ve also started to share that transformation journey with the BPO, and with our captive shared service centre, so people know the journey that we’re on. But we’ve took time to understand the business. And that’s really important, and you know, establishing this baseline from which to grow, we really want to see process improvement. But you can imagine trying to bring process improvement into a business where you didn’t really have a lot of recognizable processes, didn’t really have a lot of documentation, that becomes even more fragmentation. So really getting control, getting it, most of it back in a box, trying to make sure you understand where you need to invest, and then taking it from that point.
So another question to the audience. Do you have any experience in automation in your Order to Cash process? Some or more yeses than noes? Yeah. Okay. Okay. Well, fortunately, there’s a lot of people that do but you know, when we look at automation, if I give you some background to where we come from, so we’ve got multiple SAP systems, like many of you will have, but we want it when we invest in when I design the future, as far as what we need to do with automation, it’s looking at keeping it trying to keep a simplified system architecture. So making smart investments in technology that you can leverage across your whole business. Rather than making your tactical decisions on we can automate this, we can do your smart RPA here, that really then leads to quite a lot of maintenance and governance around that. But we needed to really adapt and adopt some SasS solutions and cloud-based software. And this approach, as I mentioned, you know, with the customer structures that we have in the different healthcare systems, in all of the countries around the world, some of the technology is applicable to some markets and others are not applicable to markets at all. And those are the decisions that we’ve needed to make. So the key areas that we wanted to focus on, were really in order entry, cash application, collections, and deductions as well which is which has actually been a pharmaceutical business and been heavily not so much heavily reliant, but having a much, much larger presence and a much larger business in the US. The deductions process is really, really important to us. So we really need to make sure that that’s slick. Michael mentioned, you know, dispute management being really difficult to manage the deductions process in the US is it’s a nightmare. But it is possible, it is possible. And you know, we’ve invested in that technology recently this year with HighRadius. And it’s starting to, you know, really pay dividends.
So when we focus on automation, what we’re really focusing on is our cost to serve. So earlier I mentioned about good enough, having a good enough Order to Cash process, which is really kind of controlling our costs. So it’s making sure that we don’t have you know, having that like having a nonlinear approach. So we don’t see costs and costs start to increase, as our business starts to increase. AstraZeneca has significant growth, and significant growth capabilities, but significant growth aspirations. And we’re expecting to, you know, double the business over the next 5 to 10 years. But we don’t want to double the cost of everything. As we go there, we need to be scalable and be flexible. We needed to improve our turnaround and our response times making sure that we get the product to patients as quickly as possible. We need to collect cash. So cash collections and collections efficiency index is really important. R&D burns up a lot of cash, we need to make sure that we’ve got that cash coming in all the time. So hence, the number of questions on collections, I guess from Steven earlier. And now straight-through processing rates or I think there was a question earlier heard about, you know, how do you keep people? How do you keep people happy when they’re doing, you know, transactional work, what we’re aiming to do is try and remove that transactional work and elevate those people into more not much more productive, but more enriching jobs. And that’s, you know, that’s really where we’re aiming to.
So is, as you move through this to the project management, project management’s been really important. All of the transformation that we’ve been doing with digital transformation has been done remotely, completely remotely over the last two years, we’ve not been able to run any workshops, we’ve not been able to visit sites. So everything that we’ve done with HighRadius and with some of the other SaaS platforms that we’ve invested in, has all been done remotely. So, we’ve needed to really coordinate that across with our IT teams. And what we’ve really been able to build over the last three years, which I think has been really important that whether it’s process mining, whether it’s our IT and our SAP capabilities, we’ve actually got a really small nucleus of a team that really understand where we’re going. But they also understand Order to Cash and what good looks like. With our vendors, we’ve also invested in making sure that our vendors on that journey, understand what we actually achieved by investing in these solutions. So the conversations that I have with Rena and the conversations I have with Shailesh in the team about HighRadius and what we’re aiming for, they know that what good looks like so you know, if out of the box, we’re looking for 75% automation, and we need to build from that point. Great. But we need to know everybody’s aiming for the same goal. Yeah, setting clear expectations with our stakeholders. So Steven, who’s my colleague, who sets it up in front of me is we have a very, very good close working relationship. And we know what we’re aiming for together. So Steven runs operations on the GPO. But I, in the Pharmaceutical business. But the last thing I want to give Steven is a hospital pass. Yeah. So we need to make sure that we’re all on the same page. The last two years have been tough for everybody. And I refer to having a stoic approach to, to this, you know, so you need to make sure that, you know, you keep focusing on what you’re aiming for, you’re going to come across many, many challenges along the way. But it’s not making, it’s making sure that you know, you keep that positive attitude, and you bring everybody with you as well. And that’s something that I hope that we’ve done. I’d like to think that we’ve done and that’s what we continue to focus on.
There are lots of bumps in the road. And it wouldn’t be me without mentioning running. We are in the Olympic Park at the end of the day. And this place I have some fantastic memories, but I can’t see any of them that are courtesy of Westham. But the trick is with this journey, as is not a sprint, it is a marathon. It’s you know, continuing to really make progress.
And you know, with a marathon that there are many, many challenges, you’re going to come along the way. Yeah. When when I talk about transformation and transformation and AstraZeneca we needed to assess the needs of the new systems or where we going to make those investments? Where are we going to get those benefits from and align them to the operational goals? So our operational goals are, let’s keep the cost of finance level as much as we can. Let’s make sure that we’re if we are as efficient as we possibly can be, and have a long, long term realistic expert to expectations about the systems. So we’re not necessarily investing in digital technology and transformation. And seeing that as being disposable. This is, these are investments that we make that we expect to leverage for a continued period of time. So we need to make sure that this is sustainable, and evaluating the system performance, so we’ve made these investments, but we continue to say, well, how can we help them to get better? How can we improve that? How can we, you know, take our straight through processing rate for cash application to 85 to 90, you know, taking your inspiration? 99%? Okay, we’ve got some data challenges, that’s all I’d say. But we you know, the other thing is about ensuring that the adoption of the new system and this is where come back to the change, we’ve, we’ve come from a business that’s not really been very focused on change for some time. And that’s also a part of our BPO as well. So BPO, BPO Genpact is, has been running our operations successfully for quite some time. But we’ve not necessarily took them on this journey. So this is new to them as well. And that’s some, you know, it’s something that is challenging by taking them on that journey as well. Because this means a lot of change and a lot of transformation within Genpact, too.
So in ending this, if I go back to the marathon analogy, I think you know, when you look at this standardization and centralization of your, of your global operations, that to me is your preparation you get you to know if you’re going to do a marathon if you’re going to do something that’s an endurance sport, you need to understand who you are, how far you can push yourself, what your limits are, and where you know, where you might have some weaknesses as well. So that’s, that’s really important. And when you’re training for that, you need to bet you need to help you need some help on that journey, you need to make sure that you’ve got the right training partners, you’ve got the right people around you that can provide that. Sporting and emotional support. Because it is important. So the automation and digital transformation is how you can make sure you know you can get your marathon done, but you can you know, you can, you can outperform. And that’s really where we want to get to, and then the project management is again, you know, as I said, the stoic approach. When you start these journeys, you don’t know what you’re going to come again, come up against. So we, we were planning all of this. And then COVID came along, put pressure on the business, but also put pressure on the fact that we still needed to do this because it became even more important to be resilient, you know, to make sure that when you got remote working, that we were not so reliant on people all the time, so that automation, the digital transformation, just becomes at the forefront of what you really want to be focused on. And it’s not over. So this cycle continues. You know, we still focus on this. We still need, we still got a lot a long way to go just yet.
Paul Buckham:
Now open the floor to any questions. Yeah.
Questioner 1:
Yeah, you mentioned about adoption, obviously, clearly, processes key people are key and technology is key. And we’ve had also challenges how do you what have you done to ensure that adoption because that’s really where you gain that efficiency and effectiveness, really. So you see the fruits of your labours? In the spaces?
Paul Buckham:
Yeah, so really involving the team and the journey. So part of it was your understanding, as I said earlier, you’re when we came to planning things like standardization, we involve a lot of the people who were delivering the processes in the workshop, so they were part of the design, they could see what we’re actually looking for. And they were able to contribute to that really constructively, share that share their frustrations as well as their experience. And we were able to build on that and they saw that as a positive, positive move forward. And it’s the same with the technology. So involved in a lot of the operations teams in the UAT in the preparation in some of the testing and then you then it’s flicking that switch to say well okay, well now we’re live with this. We need to make the most of it and that’s, you know, that’s when you start and test those individuals I guess, but it’s involving them in that journey so that we don’t do it to them. We do it with them.
Questioner 2:
Hi. Can you guys hear me? Yeah! Thank you for the presentation. You mentioned at the beginning that you guys did the lift and shift first. We’re really interested to hear your views about if you were to do this again, would you do it that way? What are the advantages? Disadvantages? Of that approach.
Paul Buckham:
Yeah. Great, great question. And it’s, it is something that, you know, sometimes you just can’t make it up. The things that we’re up against, you know, and the quick answer to your question is no, but there are certain needs at the time, you know, we know now that we wouldn’t do it that way if we were going to do it again. But at the time, it was a cost-saving, because AstraZeneca was in a completely different position at the time when the lift and shift was done. So it actually was a positive move for AstraZeneca at the time, but that gap between that lift and shift and where we started, this transformation journey was too long. And that’s why this becomes quite tough. So I think that you know, if that lift and shift is going to take place, then in my experience, it’s better to try and standardize while you do that shift, then the new organization doesn’t do any difference. And you can get, you know, you can get the outsourcing done as well as a standardization at the same time. But you know, even even if you do the lift and shift, then you know, don’t leave it too long before you need to standardize those processes. Yeah. Good question. Thanks.
Questioner 3:
Hi. So you spoke about BPO organization and a captive shared service or GPS. In terms of delivering this, you mentioned that kind of your teaching the BPO organization as you go, do you find it’s easier to deliver some of these changes through your captive parts of your Shared Service Center? Or is it a collaboration between the two?
Paul Buckham:
It’s definitely a collaboration, I would not, I wouldn’t, I would not distinguish it being any more difficult or less difficult with captive and BPO I don’t really see a significant difference to be quite honest. It’s more the fact that that the approach that they have has really been more of you know, the journey that we run was taking everybody from being market-led or country led with fragmented processes to being processed led from myself and from Steven in the centre. In that transformation, it’s so it was the same change for both organizations, whether it was captive or outsourced. Yeah. Great. Thank you.
