Merck [NYSE:MRK]

Anne Spoldi

Only in the world of digital technology— which has the shortest half-life ever—can an organization confidently use the term “veteran” with two years of experience under its belt. However, as we look around and see the growing number of companies just now beginning to consider a platform strategy for their IT enterprises, the fact that Merck is two years into our platform transformation puts us in a position where we might be able to offer some valuable wisdom.

Today, we can confidently say that our platform model is helping to transform how we work as an IT organization, and it is liberating the way we deliver value to Merck.

We started out on our journey after seeing platforms like Uber, Amazon, Google, iTunes, LinkedIn, and Facebook take off around the world. As an IT organization, we wanted in, even if that meant blazing trails for the entire industry. The question was, how could a nearly 125-year-old company with entrenched legacy systems and ways of working successfully adopt a platform strategy that, at the time, had been mostly reserved for newer, high-tech companies that were born in the platform world? We knew we could never become an Apple, but was there a way for our organization to evolve aspects of what we do so that our traditional end-to-end IT model and a platform model could co-exist? We weren’t sure, but there was a strong desire for us to try.

A Call for Agility

As technology advances were increasing consumer, customer and employee expectations across all parts of our business, our company was facing an unprecedented need for technology solutions. We wanted to build a more global, cohesive and agile IT organization that was capable of not only supporting the bottom line of our business through utility and productivity work, but also driving the topline through modern digital business services for customers, revenue-driving programs for our franchises and disruptive innovation for the company. Unfortunately, fulfilling the promise of this ambitious vision wouldn’t be as simple as investing in new software, skills, and capabilities. We were managing a highly complex application landscape across the enterprise, with every new application adding to our operating cost—a heavy and unsustainable proposition.

This push-pull standstill became the driving force of our IT transformation, which aimed at simplifying and modernizing how we work so we can deliver innovation and value to our business faster and at less cost. One of the engines for our transformation was our platform strategy. We believed platforms, if we could execute them successfully, would help to deliver many benefits to the business, including: 

• Increase the speed and decrease the effort required to launch new solutions, since we would be building upon a strong knowledge foundation, technology base and muscle memory;

• Drive out cost and complexity in our portfolio by slimming down our point solutions and application silos and by leveraging economies of scale across the enterprise; and

• Improve our performance and innovation with fewer resources consumed by operations and through harnessing the power of sharing through APIs and third-party contribution.

Our Platform Journey

The first stage of our platform transformation focused on developing and getting really clear about our strategic intent. We established a platform definition that was specific for our purposes and outlined the different types of IT platforms we would focus on. 

Next, we put together a small team that scoured every corner of our company to come up with a master list of all of our applications.

We engaged many stakeholders to trim the excess fat and eliminate obsolete, duplicative, and low-value applications, and then we grouped the rest into common functionalities.

The next leg of our journey has been considerably more challenging. A common misconception about a platform transformation is that it is an exercise in technology, but—in truth—it’s change management that will win or cost you the game. We needed to create an entirely new way of working, which meant we needed to add and redefine roles. For instance, we created a new “platform leader” role and leveraged centralized IT hubs to drive shared responsibility for the transformation across the organization. In addition, we created a community for the platform leaders in which each leader created roadmaps— including technology and capabilities, identified dependencies with other platforms, defined APIs and much more, which provided IT with a “single source of the truth” for all of our platform assets. We conducted an enormous amount of enablement to support the new ways of working and established realization metrics so we will be able to track our success based on Return on Asset (ROA).

So far, our platform strategy has been very successful. We are working in new ways and managing our technology portfolio with greater purpose.

Tips and Insights for an Enterprise Platform Transformation

1. Be disciplined and consistent. Life happens, and the business can throw a lot of organizational changes at you along the way. Our transformation has succeeded to date because of our ability to manage the strategic intent consistently through every distraction and never lose sight of what we were trying to accomplish.

2. Secure strong sponsors. The sponsorship of and empowerment from our top leadership (including our CIO) helped us not only secure the investments we needed to make the changes, but also it helped us limit the organizational distractions so we could stick to our track.

3. Bring in experts. We were smart enough to know that we didn’t have all of the answers ourselves and that we needed some outside perspectives. Don’t hesitate to bring in external advisors to help you take the transformation to the next level.

4. Build a fan base. We knew from day one that the amount of people this transformation would touch would be in the hundreds, if not thousands. For that reason, we engaged a large number of stakeholders early and allowed them to help us shape our strategy. By doing so, many leaders had a stake in our success.

5. Know that “the pain you feel today will be the strength you feel tomorrow.” The transformation will certainly be painful at times for everyone. But know that the pain is just a symptom of the organization flexing new muscles and that it will get better each time.