16th Annual Outsourcing Excellence Awards — Best F&A/Procurement: AstraZeneca and Genpact
“We felt we got a win-win when we penned the final contract.”
Tony Glynn, senior director of transformation, AstraZeneca
Definition: The service provider worked with the client to improve its F&A and/or procurement process, which then positively impacted the client’s bottom line.
Many pharmaceutical companies’ product patents are expiring. At the same time they face increasing competition from generic competitors. And don’t forget about increased regulation. What is today’s prescription for financial success in a challenging industry?
A key part of AstraZeneca’s response was to transform the way it operates its business—including creating a leaner, more agile and more efficient finance function, according to Tony Glynn, senior director of transformation for the company.
AstraZeneca (AZ) partnered with Genpact to set up a delivery network flexible enough to support AstraZeneca’s changing business needs across the globe and to access Genpact’s process improvement expertise.
Together AZ and Genpact charted the journey toward the ‘to be’ process solution. Then the partners employed a “two in the box” structure: an operations leader and global process owners from both companies were responsible for implementing the changes across 40 markets. The catalyst for success was clear—the close collaboration between teams.
Why this relationship works
It started at transition. Glynn says AZ was wary of globally-led initiatives. AZ leadership had seen many of these projects fail. “We watched European teams try to run global projects in Asia and North America. Few worked,” he says.
So the partners set up regional teams on both sides at the outset. Especially in transition, that is not how Genpact typically works. Glynn says AZ told the provider: “This won’t work for us. You need to set up transition teams that match ours.” Genpact did; it’s team then mirrored AZ’s retained organization. The result: “There was close alignment,” reports Glynn. “And no more conflict because the roles and responsibilities were clear,” adds Manu Goel, vice president, Life Sciences, Europe, for Genpact.
The alignment extends to the core of the relationship. “They understand what transactional processing and procurement means to our business,” says the AZ executive.
Continuity is a big contributor. Glynn says 80 percent of the key members of the Genpact team involved in the earliest negotiations are still involved in the account. If there’s an issue, the parties rarely review the contract. Instead, they remember the business outcome they originally wanted. The AZ executive adds his company also respects Genpact’s business case. “We understand both parties need to make a reasonable return. We know if we cut their prices to the bone, their return will suffer and in turn our service. We know we both have to reach the middle ground,” he explains.
He likes how they solve problems. First they tackle the issue. Then they have the commercial discussion.
Glynn says Genpact has “a high level of responsiveness.” Goel says Genpact is “responsive to our customers’ needs. We care about their satisfaction.”
The service provider worked hard to complete difficult assignments like finding employees with complex skill sets in emerging markets. For example, Genpact HR found a Turkish-speaking charted accountant in Romania. “We had to relocate executives or retrain them if they were missing a skill,” Goel recalls.
Goel says the real reason this relationship works is that “AZ embraced the new model quickly and completely. This allowed us to deliver.”
The big challenge: IT. The big win: analytics
The original plan was to use Citrix as AZ’s IT solution. But the platform wasn’t conducive. So the partners gave the challenge to both their IT teams, who can up with a different IT solution so they could keep to their rigorous implementation timeline.
Process improvement, however, is a different story. Genpact’s analytics captured granular data around processes to determine how to improve them. This is how the end-to-end roadmap came to be. “We wanted to know: if we change A, what does it do to subprocess B?” explains Goel.
The back story
Glynn says AZ decided to outsource for three reasons:
- Instituting a big change initiative. “Leadership wanted us to look at doing things in a different way,” he reports. For example, historically, pharmaceutical companies insisted on performing every process themselves “according to the gold standard.” Glynn says “we realized there are other people who can also do this, and by the way, it is their core competency.”
- Making the cost base variable.
- Needing a more efficient cost for the services.
“How they discover, develop and commercialize innovative medicines are their core business. How they manage their transactional processing and office purchases are not,” says Goel.
During the negotiations, AZ included two of its procurement experts in the core team. AZ had four criteria in searching for its procurement partner. They included:
- They were known for their capabilities and offered a best-of-breed solution.
- The commercial terms were attractive and flexible.
- They would sit down to discuss and resolve problems.
- There was a good cultural fit. Glynn says this was the most important criterion. “They felt we would be able to take them on a journey to be best-in-class,” says Goel.
“We felt we got a win-win when we penned the final contract,” Glynn says.
After they signed the deal, Genpact had to make AZ employees aware of the new model in each country. “This was a challenge because we conceived the project at a global level but had to implement it at a regional level,” recalls Goel. The regional employees “were not as clued in and didn’t understand what the new processes meant to them,” he continues.
Genpact held workshops. For example, it assembled CFOs in Latin America and Europe so the global team could explain the project. The team invited leading European stakeholders to visit their delivery center in Romania “to see everything in action.” Latin Americans went to Guatemala. The CFO in the US and other English-speaking countries traveled to India. “We showed them what we needed from them,” says Goel.
Thereafter, Genpact incorporated their feedback and tweaked the plan.
The bottom line: this F&A transformation has improved service, extended hours of business, increased business resilience, reduced cost to serve and now has the capacity to make procurement more strategic.
P.S. This is not this partnership’s first accolade. AstraZeneca already recognized this relationship with an internal CFO Award, with the finance leadership community voting it the “Best of the Best.” No wonder!