Dale Danilewitz, who came to AmerisourceBergen in 1999 as vice president of information technology, had been CIO of AmerisourceBergen Specialty Group and became senior vice president to lead an IT restructuring. Early on, it was important for him to know the lay of the land. In 2012, AmerisourceBergen took spot 32 on the Fortune 500 list and ended the year with its revenues approaching $80 billion.
With no plans of slowing down, the pharmaceutical services company set its sights on continued growth, but leaders repeatedly encountered the same problem—IT and IT services had grown independently of each other across the three major units, each having their own systems, staffing, and strategy. “None of our business units even shared an e-mail server,” Danilewitz recalls. “Everything was isolated.” When the management team decided two years ago to centralize IT to leverage AmerisourceBergen’s tools and technologies across the business and drive down costs, Danilewitz dug deep into how each entity was handling its IT function.
He didn’t find much overlap. Each business unit—Specialty Group, Drug Corporation, and Consulting Services—and their respective IT shops were at different stages of evolution and each ran IT independently. Specialty Group had implemented an enterprise-resource-planning system in 2001. The much larger Drug Corporation had spent four years upgrading its infrastructure and back office by implementing system-applications products, which as a result, led to a pent-up demand for services. Consulting Services ran a different business model in which applications were developed to support their customers, resulting in a large IT development and testing community. “We had to match three totally different cultures at three totally different stages of their IT life cycles,” says Danilewitz. Each business unit had a system designed to meet its unique needs, and no single system would work perfectly for the other two.
From the start, Danilewitz and his team had their work cut out for them. They had to please three groups with specific needs—three units accustomed to their own IT way of life. “I purposefully didn’t talk about it as a shared service because I didn’t want the businesses to believe we would simply integrate everyone and put them on a shared platform,” he says. “My aim was not to centralize but rather to gain leverage.” Instead of throwing everyone together and cobbling together the IT version of Dr. Frankenstein’s monster, Danilewitz set out to provide the best of all three worlds by maintaining a system where “employees remain local to their business but are still connected to the larger company.” Services may be shared globally but managed locally.
“You only enjoy the benefits of shared service when you get everyone on the same platform,” Danilewitz says. He kept that firmly in mind from day one and worked to get all three units operating in the same space early. AmerisourceBergen uses Salesforce.com, which integrates the enterprise level with local management.
The IT team is moving all three business units to the same network, implementing the same platform when it makes sense, and adopting the same underlying exchange and identity management systems. The move will enable the company to centralize and leverage whenever it makes sense. Centralizing sourcing drove immediate benefit, both financially and from a governance perspective.
With the integration underway, Danilewitz and his staff developed a service-management office and provided the opportunity for all IT employees in the company to receive training on an industry-best-practice framework, IT infrastructure library, and IT service management. By using this framework, Danilewitz avoided parochial resistance to a set of processes because they did not emanate from any of the original IT teams. It also provided a common vocabulary and a standard set of processes that drove discipline around quality, performance, reliability, and accountability for both the business and IT. They have enjoyed early buy-in, as a large percentage of employees have attended training and achieved certification.
It has taken considerable effort to initiate the restructuring, but there is still a long way to go. While executives had expected huge reductions in costs, the changes are proving most effective by preventing cost increases and adding value by increasing the level and quality of services provided by leveraging best practices. In just 18 months, the program has helped AmerisourceBergen decrease its number of data centers from 23 to 19. Leaders hope to eliminate 17 more in the next few years.
Today, each business unit at AmerisourceBergen still operates with its own profit and loss statements, marketing, strategies, and leadership. Danilewitz instructs his team to work virtually to support all functions and drive a single culture forward. In doing so, he’s creating a brand for IT services and emphasizing that the group will also operate as a business. IT will actually manage services, and they’ll compete with third parties to deliver those services. Danilewitz and his colleagues will have to maintain quality and costs comparable to their competitors.
Danilewitz is looking back at his work so far as he tweaks future plans. Internal surveys with the IT staff and business units provide invaluable feedback, he says, and he’s also relying on focus groups, monthly town hall meetings, and Salesforce.com’s internal social media network, Chatter.
Danilewitz’s work is far from over. In 2012, AmerisourceBergen paid $520 million to acquire World Courier, a clinical trial logistics provider. As expansion, acquisitions, and growth continue, his team will be there to integrate the new businesses and assimilate their information technology to deliver a full array of services.