Simon’s Blog

One of the things we do is help companies be really smart about their IT strategy and operations. In this business area, we like to partner with companies that see IT not as a cost centre, but as a competitive weapon. How do you use IT as a competitive weapon? There are different answers for every business. However, there is always some low hanging fruit to be had by increasing productivity, and increasing the quality of operation of core business processes.

With one of our current partners, a European VC-backed biotech company, we’re responsible for the entire IT strategy and operations. Their business is focussed on the pre-clinical and clinical development of new drugs. I like this company a lot - they have a high quality senior team that really understands how to do drug development properly; which believe me, is much rarer than you might think.

When it comes to IT-infrastructure for supporting preclinical and clincial drug development, many biotech and pharma companies, including start-ups spend huge amounts of money: often quite unnecessarily. I’ve seen it happen time and time again.

I know several pretty small biotechs that have spent single digit millions of dollars on their IT infrastructure to support the drug development process. Sometimes even millions on solving a single issue, such as managaing electronic documents. Why do they do this? Three words - “fear of failure”. The argument goes thus: clinical development of drugs is hugely expensive (many millions of dollars), we can’t afford to take the risk of something going wrong with the IT. And so… that translates into another widely used phrase - “cost isn’t an issue”.

So worried, then, are people about something going wrong, that they don’t care what they spend. The problem is - that is really NOT how you should go about assessing and managing risk. It’s a mistake to believe that simply by spending money, you are mitigating risk.

Here’s a question for you: if you spend $1M on a computer system to manage documents, how much more reliable and powerful is that system than a free, open source system? Are you sure? No, I thought not!

The point is: how much a computer system costs does not equate to how reliable and/or powerful it is. For example, consider operating systems - which is the more powerful operating system: Microsoft’s Windows 2003 Server, or Sun’s Solaris? You’d probably have to say that Solaris is more powerful Windows 2003 Server. Yet, how much does Solaris cost? Nothing. Not a single penny. It’s free. How much does Windows 2003 Server cost? More than that.

The point is: there’s really no need for small biotech companies that do drug development to spend millions on their IT infrastructure. In 2006, it’s amazing what you can do to keep costs down with low-cost hardware and open source software. What does that mean? Firstly, simply by keeping costs down without sacrificing capability, you are beginning to use IT as a competitive weapon. How so? Because your competitors will be doing one of two things: either they will be spending millions on IT that they could have better spent on their core business (e.g. clinical trials); or, even worse, deciding they can’t afford a serious IT infrastructure, so they end up not using IT to help them be more productive and do higher quality work.