Download Lights, Camera, Analytics: How Analytics Process

Lights, Camera, Analytics:
How Analytics Process
Optimization Directs
Data Success
for Medical Device
Companies
Raj Jayashankar, Andrea Traverso
and Amol Joshi
Lights, Camera, Analytics:
How Analytics Process
Optimization Directs
Data Success
for Medical Device
Companies
By Raj Jayashankar, Andrea Traverso
and Amol Joshi
Only 4% of respondents to a recent ZS study of medtech companies outsource
sales analytics, which includes segmentation targeting and performance
tracking. Just 8% outsourced marketing analytics such as closed-loop
marketing and campaign ROI analytics.
Several reasons account for medtech companies’ reticence to outsource
analytics, but failing to do so may prove to be a strategic blunder. That’s because
as the medtech industry slowly embraces sales and marketing analytics,
outsourcing becomes an essential component to ensure quality and efficiency.
Analytics Process Optimization (APO)™ addresses the concerns that medical
devices companies have about outsourcing analytics. This paper shows how APO
can improve medtech companies’ analytics capabilities while using outsourced
resources to enhance efficiency.
You’ve heard this story before: Analytics can improve customer segmentation,
pinpoint cross- and upselling opportunities, and find new ways to deliver value,
and do so while being more efficient than today.
As an executive or manager at a medical device manufacturer, it may
sound a little too much like the clichéd ending to a movie: And everyone
lived happily ever after.
This distrust of analytics and analytics outsourcing is probably well-earned.
Some medical device companies may find it too overwhelming to consider
sophisticated analytics—much less outsourced analytics—when they struggle
with routine sales and marketing reports. They may blanch at the cost of
investment in technology and personnel. Most important, they may not see the
need for this type of analytics. The medical device industry has been able to sell
largely based on product features rather on value for specific customers’ needs.1
As a result, few medtech companies outsource analytics. Only 4% of
respondents to a recent ZS study outsource sales analytics, which includes
segmentation targeting and performance tracking; 8% outsourced marketing
analytics such as closed-loop marketing and campaign ROI analytics; and just
12% reported outsourcing Big Data analytics like clickstream data, social media
and market information.2
The pharma industry had the same skepticism about outsourcing analytics,
concerned about upfront costs, control and computing capabilities. But those
fears have not materialized: Pharma companies that trusted third parties with
some or all of their analytics have been rewarded with greater opportunities
and lower costs. Industries of all types now optimize forecasting, marketing and
customer service capabilities, and their product offerings through analytics,3
and many of those operations are outsourced.
The reticence of medical device companies to outsource their analytics may
prove to be a strategic blunder. As analytics grows in importance, and the
medtech industry slowly embraces it,4 outsourcing will become akin to making
a major motion picture–do you outsource the project to an experienced director,
who can make a great film under budget, or to a relative novice, who might
ultimately figure things out, but not after a lot of struggle and expense?
Pete Masloski and Priyan Patkar, ZS Associates, What’s It Worth to You? How Value-Based
Innovation Improves Medtech Development, January 2014.
1
ZS Associates, Not so Future Shock: ZS’s Commercial Operations Benchmark Study for Medical
Products, Devices, and Services Industries, April 2014.
2
Ventana Research benchmark report, Predictive Analytics: Improving Performance by Making the
Future More Visible, February 2012.
3
ZS Associates, Not so Future Shock: ZS’s Commercial Operations Benchmark Study for Medical
Products, Devices, and Services Industries, April 2014.
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1
An answer in Analytics Process Optimization (APO)™
Analytics Process Optimization (APO)™ addresses the concerns that medical
devices company have about outsourcing analytics. Through the right
combination of outsourcing and in-house processes, of onshore and offshore
resources, APO can improve analytics capabilities while using outsourced
resources to enhance efficiency.
What is essential to a winning analytics operation is that it cannot be a
backward-facing endeavor. Foresight is key. Lacking predictive capabilities,
analytics tends to be journalistic rather than insightful. Because it leverages
third-party expertise and allows commercial operations to focus on issues
other than reporting, APO can deliver the foresight that makes analytics a true
competitive advantage (see Figure 1).
Foresight
Value / ROI
However, divining this kind insight is often not a strength of medtech companies.
They have made enormous leaps in technology through cutting-edge research
and development, and have developed successful commercial models to sell
their products. But they are not usually well-versed in data management, nor
are they necessarily expert in generating insights from data even when they do a
good job of processing it.
Would changing the rebate
structure lead to strong growth?
Has a price change
affected top IDN sales trends?
Insight
Insight
Hindsight
Hindsight
What are the monthly
sales for the top GPOs?
Current Investment
65
Foresight
Figure
1. APO addresses “hindsight” reporting to show what has already happened; delivers insight
Source: ZS Associates
to show why something has happened; and, at its most advanced, can give foresight to show what
Figure
2. APO
addresses
“hindsight” reporting to show what has already happened;
will
happen
in response
to changes.
delivers insight to show why something has happened; and, at its most advanced, can
give foresight to show what will happen in response to changes.
Source: ZS Associates
3
Making movies, developing insights
Directing a big-budget motion picture is a triumph of organization: It requires
coordination on a large scale, specialized technical expertise and filming on
multiple locations. A director must work with screenwriters, cinematographers,
actors, location scouts, set designers, lighting and sound engineers, film editors
and so on. The director must cope with deadlines and budgets, and satisfy a
large group of stakeholders at the studio. The amount of organization, skill and
vision required is immense.
The glamour of Hollywood aside, commercial analytics actually has more than
a few similarities to making movies (see Figure 2). You serve a wide variety of
stakeholders and must manage an even wider variety of workers with highly
specialized skills and industry expertise. You have to coordinate across different
locations (some overseas) and business units. There are budgets, deadlines and
enormous pressures to deliver results.
Ultimately, it’s not a job for a novice. Like a movie studio chieftain, you’re probably
better off bringing in a seasoned director to make a big-budget action flick rather
than a novice or someone who is an expert in filming instructional videos.
Movie production
Commercial analytics
• Requires collaboration
with a wide range of
talent, ranging from
actors to editors
• Must satisfy studio chiefs,
who are closely scrutinizing
the product and costs
• Entails work in multiple
locations, some overseas
• Delays and errors cause
costly reshoots, resulting in
inferior work that misses
seasonal release dates.
• Requires collaboration
with a wide range of talent,
ranging from data scientists
to marketing managers
• Must satisfy C-level
executives, who are
closely scrutinizing
the product and costs
• Entails work in multiple
locations, some overseas
• Delays and errors cause
costly rework, and result
in inferior analytics that
are already out of date.
Figure 2. The glamour of Hollywood aside, there are striking similarities between making movies and
commercial analytics.
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Five success factors for analytics
In any APO project, specific factors determine how well the project succeeds.
Here are five success factors that we’ve found to be crucial in optimizing
analytics at a medtech commercial operation:
1. Being able to leverage the proper expertise. Developing a competitive
advantage through analytics requires supporting analytics services across
different sales and marketing channels, while having broad experience in
sales and marketing processes and capability-building programs in the
medical device industry.
Like a movie director, the ideal APO partner has expertise in a multi-vendor
environment, and expertise in the area offered. The partner can use a library
of analytics assets, along with technology accelerators, a deeper domain
expertise and end-to-end ownership of analytics solutions, in order to develop
economies of scale across scope across several products and regions,
reducing total cost of ownership.
2. E xploration, capability and operations—three pillars of analytics operations—
need tight integration. Because APO is an end-to-end process that integrates
capabilities and operations, it is essential to have a partner capable of
implementing and managing the process. Again, the movie analogy is apt:
Lacking central direction, both a movie set and an analytics operation are
likely to see costs spiral out of control and results suffer.
For instance, we worked with a medical products company whose sales and
marketing analytical needs varied throughout the year, usually peaking in the
second and third quarters. It lacked integration across work streams, leading
to responsiveness and communications challenges during the peak periods.
This led to costly delays and rework, and only average (at best) internal
customer satisfaction ratin.
We helped the company integrate the operation, which entailed writing
detailed work plans in advance, identifying key phases of the operation and
setting up a dedicated, 50-member team in India. The result was improved
responsiveness, quality and customer satisfaction.
3. A
ll analytics are not the same: Each analytics function needs its specialized,
optimal process. Analytics services should be tailored to an individual
company’s needs, from initial business design to building the right technology
to operations and support. It’s like picking the right director and actors for an
action movie rather than a romantic comedy.
or instance, a medtech company we worked with had several types of
F
customer contracts, each with different levels of discounts and rebates.
But the company lacked an analytics framework to see how those different
discount levels affected sales and market share.
We helped the company implement a specialized approach to analyzing its
customer database and the discounts afforded different customers, helping
develop better contracting strategy. In meeting these specialized demands,
the company separated its contracting analytics needs and defined and
developed an optimal approach for that particular issue..
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4. Without strong leadership and governance, an analytics operation will fail.
This can be the difference between an analytics operation that delivers ROI
and one that’s eating precious resources with no return. An optimal analytics
solution must include program governance and the ability to manage change
and ongoing performance. Leadership must clearly communicate program
objectives; develop governance guidelines and a risk mitigation plan;
implement workflow management tools and train employees; measure key
performance indicators (KPI) regularly; and review performance to ensure
continuous improvement.
5. U
ltimately, companies reap competitive advantage via “operational analytics”
that leverages automation and well-defined processes. The focus will shift
from transactional reporting to generating predictive insights that have a real
impact on sales.
This is only done through automated and well-defined processes. There are
many reasons for this, but mainly because the volume of monthly reports
remains large, while different stakeholders make several ad hoc report
requests on a regular basis. Moreover, data quality management and QA/
QC measures are often weak. Automation and well-defined processes are
essential tools to overcome these challenges.
We’ve seen medical device companies make this transition to a limited degree;
it is certainly not an industry-wide shift yet. Those analytics processes that were
able to transition to insights reporting from transactional reporting used an
automated process, and addressed issues that had high business impact. Cost
declined. Sales and marketing teams were in a better position to pivot and adapt
to changes in the business climate. In terms of operational analytics, business
reports were delivered to key stakeholders with little or no disruption in service.
What lies ahead
The call for outsourcing has been with us for some time. For reasons outside
medtech companies’ control, the industry has been slow to embrace analytics
outsourcing, or even analytics at all. There’s no need. The data’s no good. The cost
savings is minimal and the end product doesn’t justify the investment.
But, as this paper has documented, it is a mistake not to consider APO. With less
product differentiation, tougher competition and a shifting customer landscape,
there’s clearly the need. Data and data sources are far more advanced than even
a few years ago. And there is ample evidence that the cost savings in APO does
not lead to an inferior product—to the contrary, APO delivers superior analytics
at a lower cost.
The alternative is not necessarily an attractive one: your commercial operations
slowly falling behind while your sales force struggles to close deals and uncover
new ones. Or put it in more cinematic terms, the difference between APO and
keeping all analytics in-house is like allowing an experienced director make a
blockbuster, or having a first-time director try hard but probably end up with a
box-office flop.
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About the Authors
Raj Jayashankar is a Principal with ZS in Boston. Raj has
more than 15 years working with medical device companies
and the pharmaceutical and biotech industries on their
commercial operations. He has led transformational
change on analytics solutions, business model innovation,
business operations and organizational change for both
high-growth and mature life science companies.
Andrea Traverso, an Associate Principal with ZS in
Evanston, Ill., has more than 14 years of experience in
consulting. She has helped companies in the medical device
and pharmaceutical industries across a wide range of
issues, including go-to-market strategy, commercial
excellence, analytics, operations and a variety of other sales
and marketing issues.
Amol Joshi is a Manager at ZS in Philadelphia. Amol has
worked with a variety of pharmaceutical and medical device
clients, focusing on sales and marketing operations and
analytics outsourcing. Prior to joining ZS, Amol worked for a
global management consulting technology services and
outsourcing company.
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About ZS
ZS is the world’s largest firm focused exclusively on improving business
performance through sales and marketing solutions, from customer insights
and strategy to analytics, operations and technology. More than 3,000
ZS professionals in 21 offices worldwide draw on deep industry and domain
expertise to deliver impact where it matters for clients across multiple
industries. To learn more, visit www.zsassociates.com or follow us on
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For more information,
please contact:
ZS Associates
+1 855.972.4769
inquiry@ zsassociates.com
www.zsassociates.com
© 2015 ZS Associates, Inc.
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