Chris Day VP IT Transformation and Office of the CIO at AstraZeneca

IT Executive Leaders Event

Addressing the Digital Challenge

Chris Day 17 Sept 2015

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Agenda

• Introducing AstraZeneca and AstraZeneca IT

• The opportunities Digitisation presents to IT leaders

• New capabilities which need to be built

• Potential challenges to be overcome

Introducing AstraZeneca

• Focus on the discovery, development and commercialisation of primary and specialty care prescription medicines

• Invest in distinctive science in three main therapy areas where we believe we can make the most meaningful difference to patients

• Operate in more than 100 countries and our innovative medicines are used by millions of patients worldwide.

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A global, science-led biopharmaceutical company

Global dimensions

•$26.1 billion annual sales•57,500 employees

• $4.9 billion invested in R&D with research across 5 countries• 118 projects in clinical development and 13 new molecular entities (NMEs) in

late-stage clinical development or under regulatory review•More than 850 collaborations and partnerships globally•Manufacturing in 16 countries•3rd fastest-growing top 10 multinational pharmaceutical company in emerging markets in 2014

As at 31 December 2014

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We push the boundaries of science to deliver life-changing medicines.

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Our purpose

“Together, we can be confident that, by leading in science, we will transform the lives of patients around the world.”Pascal Soriot

Focus on three main therapy areas across key platforms

NeuroscienceInfection and

Vaccines

Cardiovascularand Metabolic

Respiratory, Inflammation and

Autoimmunity

Main TAs

Oncology

Opportunity-driven

Protein engineeringBiologics Small

molecules Immuno-therapies Devices

Personalised healthcare and translational science capabilities

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AstraZeneca IT

We are creating a world-class IT environment

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What is World Class?

A company that is truly connected and empowered by technology…

Where IT provides a lean, agile supporting infrastructure for everything we do. 1 Where IT works with

the business and is talked about for the right reasons. 2 Where competitive

advantage is gained through cutting edge innovation.3

TRANSFORMATION IS AT THE HEART OF OUR IT STRATEGY: TO DELIVER WORLD-CLASS IT, ACHIEVING TWICE THE VALUE FOR HALF THE COST.

We will get there by focusing on 5 key areas

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CUSTOMER FOCUS: Continued improvement to the overall experience of IT at AstraZeneca, working as a trusted business partner

1OPERATIONAL EXCELLENCE: Delivery of on-going excellence across our range of services; establish a global infrastructure that allows us to be agile, responsive and efficient.

2TECHNICAL LEADERSHIP: Pursue cutting-edge technology, partner with ground-breaking technology companies and utilise innovative new tools.

3SIMPLIFICATION:

Make life simpler for everyone who comes into contact with technology at AstraZeneca and reduce our reliance on 3rd party suppliers

4COLLABORATION: Stay ahead of the game with effective collaboration tools and agile working.

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The Digital Transformation

Business models are not new

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Manufacturer

Wholesaler

Retailer

Landlord

BrokerServiceProvider

Financier

Neither are business model innovations

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Loss LeadersOutsourcing

Automation Bar Codes DiscriminatoryPricing

Joint Ventures

Manufacturer

Wholesaler

Retailer

Landlord

Broker ServiceProvider

Financier

Two-Sided Markets

But recently things have been hotting up

14Source: Google nGram viewer

BU

SIN

ESS

MO

DEL

Something fundamentally new is happening …

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Businesses Born Digital Digitally Enhanced Business Models

Gamified Marketing

Information Businesses

Crowdsourced Design

Servicization

DematerializationHackdays

Open Source

Bounty-Based CreationPrecompetitive Information

Commons

Quantified Self

DIGITAL ADJACENCIES

CUSTOMER SELF-SERVICE

FREEMIUMCUSTOMER AS NANOFACTORY

ADVANCED ROBOTICS

AUTO DECISION MAKING

N-SIDED MARKETS

Widespread shift as business models are reshaped around new digital capabilities

Information Types• Multimedia data• Social data• Usage data• Operation technology data• Internet of things data• Ecosystem data• Open data

Social Groups• Internal crowd• External crowd• Gamification• Maker culture

Technology Types• Cloud• Social computing• Big data analytics• Mobile• Robotics• Sensors• Thinking machines

Channel Types• Online channel• Mobile channel• Social channel

Skill Types• Data science• Multichannel mining• Analytics• Customer Experience

Management• Dark data mining• UI expertise• Digital mashup design• Entrepreneurship• Cognitive computing

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Opportunities

The digital transformation presents great opportunities for IT leaders …

•IT is uniquely placed to drive digital collaboration across the business

•Real opportunity to embed IT at the heart of business decision making

•Opportunity to raise the strategic importance of IT

•Vehicle to expand the role and remit of IT

•Major opportunity for career advancement and personal fulfilment

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Realising the opportunity

Six traits of digital ready IT leaders

Have a strategic vision of how technology will transform the business

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Relentlessly focus on innovation

Focus on driving growth

Ensure their vision is understood

Move beyond Infrastructure and Operations

Embrace smart risk taking

IT skills which need to be developed

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Information Types• Multimedia data• Social data• Usage data• Operation technology data• Internet of things data• Ecosystem data• Open data

Social Groups• Internal crowd• External crowd• Gamification• Maker culture

Technology Types• Cloud• Social computing• Big data analytics• Mobile• Robotics• Sensors• Thinking machines

Channel Types• Online channel• Mobile channel• Social channel

Skill Types• Data science• Multichannel mining• Analytics• Customer Experience

Management• Dark data mining• UI expertise• Digital mashup design• Entrepreneurship• Cognitive computing

Barriers IT digital Leaders need to overcome

•Incomplete IT strategy, lack of leadership

•Siloed business organisations

•Insufficient business-IT and technical IT skills

•Slow IT project delivery; poor innovation processes

•Ineffective business models and budgeting

•Inadequate Digital risk management thinking and processes

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Recommendations

•Accept that we need to actively engage on digital innovation

•Understand how digital choices can be applied to your business capability model:

•How can we apply innovation to rethink our business capabilities?•What new opportunities do new technology choices enable?•What new threats have we uncovered – how can we address these?

•Work at pace to build the new skills and capabilities required

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Questions ?

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Backup Slides

Progression towards “twice as good”

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Area Measure 2013 Baseline

2015 Latest View

2016 Goal

Performance

No. of Severity Priority 1 incidents

19 per week <10 per week <8 per week

Mean Time to Incident Resolution

24 hrs <4 hrs <4 hrs & reduce repeats by 30%

Customer Satisfaction 44% 64% 75%

Simplification

No. of Applications 3,822 2,700 1,697Regional Data Centres 21 12 3Servers 12,765 10,965 8,920Cloud Usage 10% 30% >50%

Key metrics

Key enterprise

deployments

2013 2014 2015 2016

Progression towards “half the cost”

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Total IT costs as a % sales trajectory 2013-2019

5.5%

4.6%

4.0% 3.9%3.6%

3.2%

2.9%

2013 2014 2015 2016 2017 2018 2019

% Revenue

Pharma Benchmark

How did they do it?

What did they do?

Who should/shouldn't do it?

What is the general pattern? What are the lessons?

Leveraged their connected car to facilitate physical delivery of online shopping.

Why did they do it?

Differentiation opportunity.Solving a societal problem.

Digital value added service.Based on online commerce, cloud, IoT.

Innovation coming out of IT organization, based on connected car and vehicle cloud — thinking about how to use that platform more widely.

+Those with a digital platform to leverage.- Those not open to digital adjacencies beyond core business.

Opportunity to "flip dilemmas." Opportunity to use what you've got to solve persistent societal issues.