Business acquisitions can be a headache for the IT department: adopting new systems, integrating new divisions. Frederic Wohlwend, Group CIO at Merck, shares his experience.
For Frederic Wohlwend, Group CIO of chemical and pharmaceutical company Merck, integration is a never-ending task; as soon as he has completed one, he starts on the next. As CIO of biotechnology company Serona, which Merck acquired, he replaced the Oracle software. Now, as Merck’s CIO, he’s doing the same at Millipore, the life sciences company Merck acquired in mid-2010.
Mr. Wohlwend, you have been Group CIO at Merck for just over a year now. What is your mission?
My predecessor Kai Beckmann set up IT services at Merck, and defined 70 binding global business services. As a number of benchmarks show, we have reached the highest standards here. My job is now to take this further, and continue the work of creating one IT organization that focuses on business value and understands how IT creates value for the company as a whole.
You still have more of a supporting role, though…
Yes, that’s true. We have to understand that we not only have to do things right, but we also have to do the right things. If you have four divisions and try to make each one of them happy, that’s just not efficient. If we take IT services’ key performance indicators, we are well on track; but if you look at our application landscape you can see that there’s plenty of room for improvement. Before these two major acquisitions, different processes and business models meant that almost every country was using different SAP implementations. IT ultimately mirrors the business.
Merck acquired life sciences company Millipore in mid-2010, a company that runs Oracle. What has changed since then?
We have opted for SAP globally, and have set up a department of functions that is tasked with defining central processes. Managers in the divisions are also responsible for global processes and are heads of functions, helping to shape the standardization and harmonization process. Our next task is to use the same ERP system in every country. We are about half way through the integration process.
You are responsible for business process harmonization at Merck, so you have to bring together the divisions and corporate IT. Not an easy job….
Sure, every division has different targets and business models. Time and again we have long discussions with the managers of the divisions and corporate IT. And it soon becomes clear that IT does more than just implement technology. It does not dictate what others should do; instead it brings the divisions together, and so simplifies decision-making.
At a time when budgets are shrinking…
Of course it can only work if we drive innovation at the same time. We have to spend less time on commodity IT and invest more in business value. That’s why it’s certainly better to think about the e-commerce platform of the future rather than typing code or solving IT problems. IT is still not doing enough about developing new products. Let me give you some examples.
It took scientists at Merck too long to analyze data. The processes involved were not efficient. We developed a tool for them, the Data Analysis and Report Tool, or DART, which is an interactive Web application that helps our researchers analyze complex data and display it on the screen. Another example is “easypod,” an application for which we delivered the software. It records when a patient takes medicine, and what dose, and stores this information in a database, helping both doctors and patients. Our job was to find new services for administering medicine.
Effectively you are redefining the IT organization’s role. Your staff have a different background. How do you handle that?
New skills are needed, no question, but that’s no reason to look for new staff. We want to use the same people who have always worked in Merck’s IT. Managing how skills evolve is part of a CIO’s job.
Let’s return to Millipore, Merck’s latest acquisition. A company with 6,000 employees that runs on Oracle; not exactly the starting point an IT boss would choose.
That’s not really the case. What’s important is that global standards are in place. This is an enormous help in an acquisition. We learned a lot about this when we integrated Serono into the group. And we’d just finished this when Merck acquired Millipore in July 2010. We expect the integration to take about three years, and be finished by the end of 2014. At the same time we are working on the global standards so that we can do things much faster in future acquisitions. Ideally in less than six months.
That sounds utopian…
Yes, that is an ambitious goal.
SAP is an important part of your plans. What do you expect from SAP as a software partner?
My wish would be for SAP to join us in shaping and creating the future. And that we establish a joint road map. We’ll be holding talks on this in October. We will be working with four or five strategic partners who will not just provide us with technology but also new ideas for our business. SAP can certainly have a key role here.
Technology is not much use without the business expertise to go with it.
But it’s not much help if the technology doesn’t work, either. I can’t discuss strategy with partners if the underlying IT is not stable. That’s a basic requirement. SAP always gets that right.
You are in the middle of change processes at Merck. You must be calm personified, else the program would not be doable…
That’s not at all true. Our recent compliance audit found the same problems as the last time round. That shouldn’t happen. We are an organization that learns, and I firmly believe in continuous improvement. But the proviso is that you do not make the same mistake twice.
Hopefully there are not too many hitches, and you still enjoy your work.
Sure. It motivates me every day to find teams that bring us closer to our goal, and to have the feeling of getting something done. The more challenging the circumstances, the happier I am. Just like at Merck.