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With 20+ years of IT experience, Keith Sarbaugh has led SaaS management at some of the biggest names in pharma – Eli Lilly & Co, Biogen, and now Zoetis. What’s his secret for driving impact at scale with the business complexities of a pharmaceutical company? In this episode, Sarbaugh lets us in on his enterprise SaaS management strategy, indelible moments that shaped his career, and the biggest opportunities for IT teams in the year ahead.
The average enterprise has around 600 applications in their portfolio – sometimes even thousands! It’s no wonder scaling SaaS management is a challenge.
But for pharma companies, SaaS management gets even trickier. They face “boom and bust” cycles based on drug performance, making SaaS and OpEx management crucial.
When it comes to OpEx, “get the base as low as you can possibly stand to get it,” said Sarbaugh, “and then pour your investments into the things that are going to differentiate you in the market.”
Whether you’re a digital native or not, SaaS management is an essential discipline to master. Sarbaugh added, ‘Left unmanaged, the SaaS landscape can spiral out of control.”
Read on for Sarbaugh’s guidance on how to navigate this ever-evolving terrain and uncover the biggest opportunities for IT teams in the year ahead. And learn from the wisdom of a true industry leader.
Name: Keith Sarbaugh
What he does: CIO at Zoetis
Connect with Keith online: LinkedIn
Get the Right People in the Right Chairs
“It’s about getting the right people in the right chairs and having the right team around me. And one of the things I learned pretty early in my career is the importance of having people who are engaged, who are committed, who believe in the purpose of the company. Because I think when you have that, that sort of helps you overcome a lot of other obstacles. So I would say first and foremost, get the right people, get the right team, get the right kind of engagement and excitement. And if that happens then everything else sort of falls in line.”
OpEx Management Is Required to Enable Innovation
“I think the important thing is to be able to use technology to innovate as a business. And to be able to show up in the market with products that have innovative technology in them and be able to run the company in innovative ways. And I think to be able to do that, you need to sort of manage, I’m not going to call it a necessary evil, but manage the cost as aggressively as you can so that you can divert your resources to the things that make a difference. So my philosophy on that is always follow the money, go after the base, get the base as low as you can possibly stand to get it, and then pour your investments into the things that are going to differentiate you in the market. That’s a little bit of what we’re trying to do here at Zoetis.”
Managing SaaS Is Critical for All Companies
“[Eli] Lily, when I was there, we were a 140, 150 year old company. I would argue the importance of managing SaaS and software subscriptions in a company like that is every bit as important as it is a digital native company. And I think back to some of those early days as software providers were starting to make the pivot to subscription services and SaaS services, it wasn’t quite at the level of let’s say urgency or importance as it is today, but it was an important piece of the puzzle. And I think a lot of the principles of SaaS management apply to managing licenses for on-prem perpetual type licenses where you’re dealing with maintenance agreements and those sorts of things. So whether you’re digital native or not, I think it’s an important discipline to have. And I would just say today almost every software company I can think of that maybe historically has grown up as an on- prem, perpetual cots, whatever is making the pivot to SaaS. So I think the timing is right in this market for a product that can help companies manage that type of spend. I’ll say in the budgets that I’ve been responsible for today and in the past, software subscription, software maintenance is the number two or number three line item in the OpEx budget only behind maybe comp& ben. And it’s just growing in importance. And all these companies that used to be perpetually licensed on- premise are now pushing everybody to subscription models. So the time is right to kind of up our game and figure out how to manage those relationships the right way.”
The Sheer Number of SaaS Apps Makes It Daunting to Manage
“In a company like ours, we’re in the three to 400 renewals a year sort of ballpark. So a lot of these things, there’s a tendency to just sort of push it through. It’s part of the job, you just cycle through, you issue the PO and you move on. And I think making the case for, yeah, this may only be 50 or 60,000 for this one incident. Making the case for, there’s 400 of these incidents that happen in a given year. You can make a big difference if you bring discipline to how you do it. And I think back maybe 10 or 15 years, we would look at the biggest three or four things we had renewing in a given year. And they were things like, of course Microsoft SaaS, not software as a service, but the analytics package, Oracle, those sort of big deal, big enterprise agreements. And if we were good, we could do a handful of those a year. The problem is now, yes, those are still in the environment, but there’s hundreds of other titles that aren’t at that same level. But we don’t have the organization to scale and sort of bring high rigor, high discipline to every one of those renewals without some kind of support or process changes like you need in SaaS management.”
Boom and Bust Cycles in Pharma Require Diligence with Renewals
“In innovation-based businesses, like the ones I’ve had the privilege of being a part of, there are boom and bust cycles, right? The company goes the way of the pipeline, and when the pipeline delivers and we’re able to bring innovation to the market, the investors reward us. And when we don’t, boy do they punish us. So there’s a lot of volatility that comes in being an innovation-based business, and I would say SaaS at a headline level, the whole concept of SaaS pay by the drink, it’s flexible, it’s not big capital outlay is fantastic. And at a headline seems perfectly aligned to a business that has volatility and revenue like that. The challenge has been it’s not always pay by the drink and these guys are not always willing to go down as willing as they are to go up. So we’ve had to really step up our game and make sure we’re 100% on top of those renewals, anything that’s waste or not utilized, get rid of, lower the subscription, lower the maintenance, whatever the cost may be. So I guess that’s a long way of saying, yes, there’s volatility, staff should help with that, but left unmanaged, it just gets out of control.”
Renewing with Intelligence Starts with Utilization Data & Benchmarking
“It’s a lot about knowing the actual utilization. And while that seems like an easy thing to understand, it actually is not as you guys are well aware. We know entitlements, we know what we’ve bought before and we know a lot of times how many licenses we’ve assigned, but we really have no idea how it’s being used. So coming to the table with data about what are we actually using and having some idea of the pricing we’re being charged is in the ballpark for a deal of this magnitude, I think really gives us a credible place to start in those engagements with the vendors themselves. A part I didn’t mention again, is just knowing what’s coming. And again, as simple as that sounds, in a company like ours where we all have a million different priorities, staying on top of a schedule and knowing what renews when also is not an easy thing to do. So the intelligence to me is: know what’s coming, know what you’re using and know what you’re paying is a reasonable price. And again, that’s 90 plus percent of it, I think.”
IT Leaders Will Focus on Unlocking Innovation in 2024
“Who would’ve anticipated we’re going to have a banking crisis and we’re going to have the geopolitical tensions escalating and talk of another round of COVID. All these things that have happened this year and in years past, it’s just been crazy and from my perspective unprecedented. I think when I sit in my seat today, it’s about we’re the world’s leading animal health company. How am I doing everything I possibly can to make sure I’m supportive of the mission of the company? And how are we bringing innovation in both how we run the company and how our products show up on the market? My priority and my focus is 100% around that. To the extent I need to sort of manage the base and do other things responsibly, for sure, we’re going to do that. But it’s about delivering innovation. So my priorities are around innovating the products that show up in the market, making sure we’re sitting there with our business colleagues, helping them see possibilities and helping try new technology.”
3:32 – “Get the right people, get the right team, get the right kind of engagement and excitement. And if that happens then everything else sort of falls in line.”
5:25 – “Get the base as low as you can possibly stand to get it, and then pour your investments into the things that are going to differentiate you in the market.”
7:09 – “Whether you’re digital native or not, I think [SaaS management] an important discipline to have.”
12:49 – “Left unmanaged, it just gets out of control.”
15:39 – “Intelligence to me is: know what’s coming, know what you’re using and know what you’re paying is a reasonable price.”
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