Balancing CapEx and OpEx

Balancing CapEx and OpEx

Cloud-based infrastructure allows a spinoff biologics company to focus on business opportunities, not technology.

A greenfield environment is the ultimate blank slate for a corporate information technology department. Unlike an upgrade or expansion, there’s no existing hardware to leverage, no applications to ensure operability with, no architecture to conform to. It’s an opportunity to take innovative approaches to IT challenges.

Bioventus faced just such an opportunity when global medical technology company, Smith & Nephew, decided to spin off its biologics division and stand it up as a new company.

Bioventus had to stand up an IT infrastructure for a worldwide company on a limited budget, within five months, and with only one person of a five-person IT department devoted to infrastructure, says Greg Lamm, director, IT infrastructure operations and vendor management office, Bioventus.

Greenfield opportunity

Fortunately, Lamm—who came on board a month after the May 2012 launch—made an immediate connection with the company’s then-CIO. Both envisioned a small IT shop leveraging cloud-based services for a technology infrastructure, leaving the day-to-day operations and management in the hands of trusted vendors. It was a vision Lamm had advocated at other companies, but there was always too much invested in legacy hardware and software to make that kind of break. In Bioventus, they had that greenfield opportunity.

“I walked in the door, and, without exaggeration, we owned nothing technologically,” Lamm says—no phones, no computers, no network, but 475 employees. “I had a big wish list that got narrowed very quickly,” he says.

But Bioventus had something many spinoffs and startups don’t have—a flagship product with a revenue stream. Its Exogen product, a non-invasive treatment to accelerate the healing of broken bones, had a ready worldwide market. A cloud-based infrastructure, hosted by NWN Corporation, a Cisco Powered™ service provider, made the most sense with the company’s cash flow and capital situations.

Benefits include cost certainties

Shifting technology costs from a capital expense to an operating expense model gave the executive suite one less thing to worry about come budget time—they had a degree of cost-certainty year over year, something that’s uncommon for a new company. “To a chief financial officer and a Board of Directors, that’s no small thing,” Lamm says.

As Bioventus deployed its network and saw rapid business growth, other opportunities to leverage NWN’s multi-cloud environment arose. NWN’s infrastructure-as-a-service offering gave Bioventus a stable, scalable foundation to roll out other service-based solutions, like backup-as-a-service. The company is looking at more service offerings to deploy in the fall time frame, including disaster recovery-as-a-service and desktop-as-a-service.

Hosted infrastructure leads to growth

The infrastructure-as-a-service strategy offers more flexibility as opposed to a platform-as-a-service strategy. Lamm feels that Bioventus doesn’t have to bend to fit the provider’s platform. “We weren’t necessarily locked into doing it their way,” Lamm says.

That cost- and performance-certainty has already paid off for Bioventus. Technology initiatives are synchronized with a global company calendar—in 2015, the emphasis is on honing an already-tight security regimen. “We can tweak it at a more granular level,” Lamm says. “We can come back not so much with an axe, but with a scalpel.”

And the approach has allowed Bioventus to focus on business issues rather than the underlying technology. In the last year, two of its most critical applications—its human resources application and its travel and expenses tracker—have undergone complete revamps. Managing those upgrades on-premise would have taken the company about a year, by Lamm’s estimate. Instead, Lamm’s team spent the year working on a tablet rollout for the sales crew. After having the tablets online for a month, Bioventus had its best sales period by far, recording an increase in November 2014 in the seven-figure range. And the company has grown to 700 staff worldwide.

That’s the value of hosted infrastructure—allowing an organization to focus on business issues and growth, instead of technology.

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