Bio-IT World: Cognizant’s President of Healthcare and Life Sciences Writes About Maximizing Success from Vendor Consolidation

“To cope with the changing industry dynamic, Big Pharma has turned to mergers and acquisitions (M&As),” writes Krish Venkat. “Emerging challenges have forced most leading biopharma companies to embark on extensive restructuring and cost reduction efforts.” Excerpts from the article:

“M&A integration, with its attendant cost synergies, has led major acquirers to systematically rationalize their vendor portfolios across hardware, software, and services. For CXOs, maintaining a long list of vendors significantly increases operational complexity and management overheads, including multiple governance meetings for IT leaders, and a larger than optimal vendor management organization.

The inability to use automation technologies and significant management overheads resulting from the operational complexity of working with multiple vendors can not only burden the finance and administrative functions, but also reduce the synergies and productivity gains across related processes that can drive costs down further and improve efficiency.

Transformational vendor consolidation in the life sciences industry has yielded some best practices.

- Develop a focused sourcing strategy.

- Obtain executive commitment on vendor consolidation.

- Identify, plan, and manage vendor-to-vendor transitions.

- Enhance the sourcing process.

- Establish a vendor governance model.

Companies that have gone through the [vendor consolidation] journey are reaping considerable benefits across critical parameters ranging from cost and innovation, to quality and compliance, while also building deeper, more meaningful relationships with vendors. A systematic approach to vendor consolidation is key to unleashing the full transformative potential of strategic partnerships.”

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