What’s at the heart of Baxter’s IT transformation

Baxter, a nearly $11 billion healthcare giant, has been undergoing a significant transformation journey. In 2023, the company announced the divestiture of its Kidney Care and BioPharma Solutions businesses, and a restructuring of its organizational model to three distinct, verticalized global business segments. Today, Baxter is continuing to evolve its operational and technological capabilities.

CIO Rusty Patel shares how the IT organization, in partnership with the Baxter executive team, is building resilient and valuable technology capabilities to enhance both organic and inorganic growth, and help drive accelerated performance.

Baxter is several years into its massive transformation. Take us through IT’s role in this journey.

We wanted to increase our focus on our global business segments, so we changed our go-to-market approach. We moved from a regional model, where a regional general manager would pull from the product portfolio to create a geographic market, to three global business segments, whose general managers have full visibility and accountability for their global markets.

During this change, we realized that while there are many common needs across our businesses and customers, there are also distinct differences within each segment. Making pharmaceuticals isn’t the same as making a vital signs monitor, for example.

For that reason, in IT, we have a leader for each segment to curate strategic solutions and generate differentiated value, and also for core global functions to deliver digital process capabilities that meet the distinct needs of each business unit, all while improving efficiency. This way we can bring more domain expertise and proactive capabilities to our support functions, which we’ve aligned into corporate, supply chain, as well as commercial, and R&D functions.

For the commonalities across the businesses, we’re leveraging IT shared services leaders responsible for strategy and transformation, governance and policy, M&A, application delivery, cyber, data, AI, and IT operations. Together they deliver standardized and enterprise-wide solutions ensuring cost efficiency, scalability, and alignment.

How does IT influence or enable new product development?

Our work in IT is to improve the processes in the core architecture by which our pharmaceuticals, medical products and devices, and technology systems are designed and delivered. With an organization like Baxter that has many product areas, there are distinct differences and considerations when it comes to product, design, and maintenance needs.

For example, earlier this year Baxter unveiled its Voalte Linq device, a push-to-talk wearable badge that lets primary care providers and nurses stay connected with their peer healthcare team for direct, real-time feedback about how patients are doing. The device also provides insight that identifies opportunities for improvement. IT also enables further development by providing tools to develop software so the platform manages product lifecycle and facilitates collaboration for cyber assurance.

What are a few technology solutions you provide elsewhere in the organization?

Baxter’s supply chain is complex. We have 40 manufacturing plants globally and more than 1.5 million connected medical devices that support patient care across more than 100 countries. We have to get devices and solutions to customers where they need them by solving the challenge of matching the demand signal to the fulfillment capability. You could characterize this as a classic sales and operations planning need, which is certainly relevant to Baxter.

We’re using a commercial solution to improve that capability, with a tremendous amount of cross-functional activity involving commercial, supply chain planners, and IT teams. We’re identifying where we need supply chain planning the most, and then driving incremental improvements across the entire geography and product portfolio in a deliberate way. We’re making progress, but there’s a lot more to do.

You’ve had the experience of starting new CIO roles several times throughout your career. What’s your advice about moving into a different industry?

I love the phrase “Organizations aren’t destinations, they’re journeys.” You start with a goal in mind, assess your current state, and make organizational decisions to achieve that goal.

Before Baxter, I hadn’t been in healthcare, but I had been in high tech devices and software, which is important to Baxter’s product line. I’d been in industrial product, wholesale distribution, automotive, and services businesses, both public and private companies, including high-compliance environments, and supported many transactions. So while a healthcare-regulated environment is new to me, I have relevant experiences that can complement the healthcare knowledge already here.

Every time I spend time in a new environment, I focus on a few key areas. I look at governance, tech and ops, financial and value management — which always consumes a disproportionate amount of my time — and business capabilities including IT capabilities with roadmaps. From this, I work with my team and internal and external stakeholders to build a balanced and pragmatic view to address our needs in a clear sequence.

I work with teams to create common definitions of business and technology concepts so we can communicate. Once we have a common language, we can start to create change. So switching industries is no different than starting any new leadership role, but with the industry diversity as an added positive.

How do you guide your board and teams to evolve in the age of AI?

The role of the board is governance, business strategy, and asset allocation. While AI certainly brings unique dimensions, the role doesn’t change. I’d encourage boards in general to focus on the compliance dimensions of the markets they serve, which at Baxter is around healthcare and the ethical use of AI. Since the board’s role is also strategy, they need to start asking new questions of their management teams, like how AI will inform where and how we compete and how we can assess AI investment opportunities. The board’s role doesn’t change, but their level of knowledge about AI does.

AI offers incredible opportunities to boost productivity, minimize errors, and optimize decision-making. Like any relatively new technology, the expansion of Baxter’s AI footprint requires that we acknowledge and address a variety of issues including data quality, data access, and regulatory compliance. We’ll also continue to emphasize cross-functional collaboration, human oversight and training, and change management to minimize errors and maximize value.

We must also apply AI ethically and responsibly. That’s why we have an AI governance team that conducts cross-functional legal, financial, and technical evaluations to determine a proposed AI project’s risk profile, ensuring decisions and mitigations are documented. Our cross-functional product teams continue to work closely with their business counterparts to prioritize the most sought-after and high-priority AI use cases and applications. To strengthen AI literacy and adoption, we’ve taken several actions that include establishing an AI segment COE focused on commercial use cases, working with functional and segment leaders to prioritize value delivery, and facilitating a network of AI change agents to spread the word via promptathons, newsletters, and training.

How do you build your senior team?

I use the concept of success. We want to be a winning team for our customers, in our markets, and for our stakeholders. I also strive for balance, so the team represents depth across the businesses and domain expertise, with global perspective when necessary, and a blend of legacy team members, augmented where appropriate, with external perspective to help foster the culture we need.

The word I focus on the most, though, is resilience. Years ago, when I moved out of consulting into my first operational job, I walked into an IT leadership role in the handset segment of Motorola when they were repositioning as a mobile device and consumer electronics business. I had to shift from focusing mainly on strategy to managing a mix of strategic and operational challenges like major business downsizing, growth cycles, process and system changes, tech innovation, M&A and divestitures, competitive pressures, and occasional politics.

Each time I’m confronted with something new, I think back on that Motorola experience, which set a watermark for me on how to handle a lot going on at once. Ever since, I’ve been increasingly comfortable with unpredictability.

My job now is to help my team get to the same level of comfort with change when needed, so we can stay focused on what’s next and deliver value. Our team needs to think in an innovative way, collaborate with each other, and discuss and debate when we need to. But once we pick a direction, we move together and support each other, and when we see the need for course correction, we do this as a unit. Keeping us moving as a team is where I spend much of my time.