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Innovation Rethought Gross-to-Net (Part 2)

By  Leigh Anne Siino Leigh Anne Siino  on 2015-02-18 10:00:00  |  Featured in  Life Sciences
Leigh Anne Siino
Posted By Leigh Anne Siino
in Life Sciences
on 2015-02-18 10:00:00

innovation-gross-to-netIn Part One of this blog series, we focused on the micro-strategy of innovation by execution. Now, I’d like to take a couple of steps back and look at the macro-strategy, or rather execution on a program-level, as a part of a larger initiative. Where we left it last, we were discussing how to get as close to a ‘performance engine’ as we could, by focusing on execution in and around the business process. Now, consider yourself in this situation: a particular program is looming in which affects your functional area (directly or indirectly.) In this case, some sort of innovation (‘new idea’) is, in a sense, already decided upon and being implemented.

Here’s where everyone goes wrong.

The great ‘idea’ is the main focus, and the execution of that idea (from an implementation standpoint.) Execution is considered only from a program perspective, and not a business process or business architecture perspective. One step further, that program execution, while not only missing the business process piece, is also not structured to reflect our definition of ‘innovation by execution.’ In short, the holistic, end-to-end is not looked at in a way in which several varying processes (and data) flow through it, and this implementation potentially changes the way that it does flow. And if it doesn’t change the way processes and data flows, maybe it should.

Why consider all of this, all at once?

Well, most likely at this point in the game, you have the resources (both internal and external) already committed to efforts in this area; can’t think of a better time than now. It’s like when you take your car in for an oil change, and the service guy lets you know that your tires need to be rotated in the next so many thousand miles. It may not be imperative that you rotate them now, but the car will be up on the jacks already; why not? And save yourself another trip back to the dealership, because who needs another hour in the waiting room next week with daytime TV, stale vending machine snacks and that ‘hangry’ two year old running around screaming.

So, you’re in Phase zero of a new program, and for this example, one that affects G2N Forecasting and Accrual processes. While you’re under the hood, let’s break out what you can do into three parts, in regards to implementing innovation as execution.

Data Acquisition and Automation

In attempting to steer clear of the technical here, I’ll review two data-specific capabilities which I consider ripe for business execution excellence during a program. The first being data alignment, and I cannot speak enough to this. Too often do I see organizations spend the time and resources forecasting their demand at a super granular level of detail, only to allow the translation through G2N to net sales and ultimately accruals, end up at a level in which that detail is now lost. The effectiveness of the forecast process is in turn ‘diluted.’ And this is a shame, especially when you consider how your actual payments must be calculated, processed and captured financially, which is usually down at the customer/NDC level.

Now, when it comes time to compare your forecast to actual payments, you are forced to allocate or guess even at what true-up adjustments are required, as well as what your forecast KPIs are.

Versioning is another place I like to focus in on. Typically, existing system and data architecture allows for extensive use of versioning without much, if any, enhancement. I’ve seen such standard versioning capabilities provide ‘repeatable, predictable’ solutions for such requirements as contract effective period management, budget/forecast version comparisons, what-if scenarios, etc. By leveraging one, existing, standard functionality, these related capabilities can be managed similarly and with less room for error.

Modeling (Process and/or Methodology)

While there are many capabilities within modeling, a few always stick out to me while involved in a program regarding G2N execution. The first, being views (including aggregate and granular views.) Too often, as part of a program when we look at things like forecast models, reports, data extracts, etc., we attempt to either mirror every scenario that exists already, or attempt write separate requirements for each any every scenario. Keep in mind: repeatable, standardized. The more you can relate or treat most if not all models, as well as the business processes that apply, the closer you are getting to achieving innovation via execution.

Another, more process-related modeling capability which applies here is workflows. Now, workflow can mean various things. It can apply to the actual business process workflow in and around the solution in which you are implementing. It can be the workflow that is created and maintained within a system itself, or tasks such as review and approval. Regardless of what type of workflow it is and where it exists, ensuring standardization and repeatability within and amongst processes, as we’ve noted earlier, is at the heart of achieving innovation through execution. You can utilize some of the ‘quick wins’ we discussed in the prior post, such as standard forms and approval methods.

Financial Reserve Liability

Many of the areas above lend a heavy hand to this next piece: accrual management. Alignment, standardization, even versioning; all G2N capabilities that if done right, make managing the booking and reporting of your accruals, and ultimately net sales, much easier (and more accurate!) Continue to follow this blog series for further discussion on G2N alignment between forecasting and accrual management!

Also, reconciliation, reconciliation, reconciliation. This a requirement of all programs and all groups. No matter what. Always. Find ways to standardize reconciliation efforts and schedules across varying sets of data, different systems and cross-functional areas within your organization. This topic is another post (or novel) all on its own. Stay tuned.

I will leave you with a few thoughts from the read that inspired this series: ‘…innovation execution, is its own unique discipline. It requires time, energy, and distinct thinking. Unfortunately, few companies treat is as such. In fact, few companies give it much thought at all.’ (Beyond the Idea: How to Execute Innovation in Any Organization, by: Vijay Govindarajan and Chris Trimble)

So, stop being a statistic; and in fact, if you’ve started by reading this post and in turn allowed yourself to participate in that ‘distinctive thinking,’ you’re already one step ahead than the masses.

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Leigh Anne Siino

Leigh Anne Siino

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Leigh Anne Siino is the Finance and Legal Solutions Lead with the Corporate and Enterprise practice at Paragon Solutions. In this role, she supports finance and legal teams at life sciences and healthcare payer organizations by helping them take a more prominent role in maintaining collaboration across business operations, as well as defining a company’s overall strategy. Leigh Anne has a decade of experience in such functional areas as: Finance (Operations and Reporting, Consolidations,) Planning, Budgeting, Forecasting, Enterprise Legal Management, Managed Markets, Gross-to-Net, Trade, Sales and Marketing Operations, Supply Chain, Order and Inventory Management, Contracting and Information Management. She is also an experienced project manager and technical liaison.

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