Global Outsourcing Conference Report

Over the last three days we've been taking part and presenting at the third Global Outsourcing Conference, jointly organized by Xavier University and the US FDA.

Although not the best attended of conferences this year, it proved to be one of the best in terms of content presented and the quality of the invited speakers, including a couple of key note addresses from senior members of US FDA. This resulted in some very interesting and beneficial discussions amongst the attendees, all of whom have taken home some thought provoking material and ideas for implementing positive change in terms of better securing the supply chain, assuring product and patient safety and in optimizing the performance of their extended enterprises.

The conference looked at a wide range of outsourcing and supply chain issues, ranging from the pragmatic management of outsourcing and supply chain management best practices, with a mixture of practical best practices from the pharmaceutical industry and research and experience from a number of leading Universities working in the field (presentations are currently available on the Xavier GOC website).

Of significant interest were the FDA presentations looking at the implications of the recent FDA Safety and Innovation Act (FDASIA - due to be signed into law next month) and the changes that this will have in terms of changes to GMP and GDP regulations.

There was a significant interest in the topic of serialization and ePedigree - which was covered in a number of sessions and signs are that companies are now realizing that rolling these solutions out will be necessary and more difficult than originally envisaged when compared to simpler pilot studies.

Supplier selection, assessment and management were also key topics with the focus on developing partnerships and relationships as the best way of meeting forthcoming regulatory expectations for the management of suppliers.

Business & Decision presented a deep dive session on the future challenges faced by ERP System and Process Owners, looking at the need to integrate with serialization systems, master data management systems, and supply chain partners systems. Acknowledging that many ERP systems were never designed to handle such a level of integration, the session looked at how middleware solutions such as Business Process Management solutions and SOA can be used to better integrate the supply chain.

Outsourcing clearly isn't going away and although some companies are looking to in-source some strategic products and services once again, the issues associated with outsourcing cannot be ignored. Although examples from India and China were much in evidence it was also acknowledged that outsourcing risks do not solely exist in so-called 'emerging economies'

This issues exist not only with product (API, excipients and other starting materials), but also with services such as IT services and it is clear that the US FDA expect companies to better manage their suppliers and supply chain.

For pharmaceutical companies looking to get involved in the debate there is the opportunity to follow the discussion on-line in the LinkedIn "Xavier Pharmaceutical Community".

In summary, the conference provided pharmaceutical companies with a comprehensive list of the topics they will need to be address in the next 1 - 3 years, which now need to be developed into a road map leading to on-going compliance, improved product and patient safety and more efficient and cost-effective supply chain operations.

Validating Enterprise Systems - Questions Answered

Thanks to those of you who attended the first session on our 'virtual book tour' - in which we looked at the some of the basics of validating corporate applications, based on the the book "Validating Enterprise Systems: A Practical Guide"

A number of people submitted questions before the webcast which we answered during the session and we also had time to answer a couple of questions submitted at the end of the session. You can see a recording of the webcast and download a copy of the slides at the Business & Decision Life Sciences website.

There were however a couple of questions that we didn't get around to and as usual we've addressed them here:

Q. What challenges to you see for Enterprise Systems in the next five years?

A. Over the past five years we've seen the functional footrpint of systems such as ERP, CRM, LIMS, PLM etc being extending beyond their traditional boundaries (as discussed in the webcast). However, even where business processes are extending beyond traditional 'silos' in the business, the extended business process is still very much within the enterprise.

We are already seeing Life Sciences companies struggle to extend their business processes beyond their own boundaries and this is becoming even more important as companies collaborate and outsource more. (I'm talking about this very issue at the Xavier / FDA Global Outsourcing Conference next week).

Enterprise systems will therefore need to be capable or orchestrating business process and consolidating data from across the extended enterprise - meaning across business partner, supplier and even customer processes and systems. While the tools and technical standards exist to start to do this today, very few companies are actually taking this step and it is an area which promises true business advantage.

Q. How do you see the use of Service Oriented Architecture changing the game with respect to validation?

A. This is really linked to the previous question. SOA - and Business Process Orchestration- is one of the enabling technologies that allows end-to-end business processes to be defined, monitored and optimized both within the traditional enterprise boundary and across the extended enterprise.
These changes will bring compliance and validation challenges.

Key regulatory business processes - such as adverse events management and product recall - will need to be coordinated across the extended enterprise. This will require validation of the end-to-end business process as well as the computer systems validation of the individual applications and Middleware / SOA components.

Like the technology, the techniques for this already exist but relatively few organizations know how to achieve such compliance efficiently in complex organizations and with such integrated architectures. This will be a challenge both to business process owners, to IT and especially to Quality and IT Compliance and CSV professionals, who sometimes tend to lag behind in applying well established principles to new technologies. It's therefore important that we keep up not only with the changes that have taken place over the past five years, but with the changes that are still to come.


In the next stage of the 'virtual book tour' we'll be looking at how the approach to risk management has changed in the last five years - we hope you'll be able to join us for that session, which is on 3rd October (registration is available here)

Successful and Compliant ERP Projects

Unfortunately we ran out of time in yesterday's webcast “Secrets to Success - Plan and Implement Compliant ERP Projects”.

That was partly my fault because I was late dialing in. (Apparently, Microsoft Exchange/Outlook still doesn't automatically recognize that the US and Europe change to daylight savings on different weekends - doesn't anybody validate this software?). My apologies for that, and for the fact that we ran out of time to answer all of your questions as fully as we would have liked.

During the webcast we discussed how small to medium-sized life sciences companies can plan for the successful implementation of their ERP systems. We looked at how to align project planning and validation planning activities, we reviewed the typical project activities that are the responsibility of the regulated company and we looked at the importance of assigning the right people to the project. Below are the questions we didn't have time to answer fully and our answers - we hope that you find them useful.

Q. How does implementing ERP in pharmaceuticals vary from other industries?

A. The main differences are that in many cases the system requirements represent mandatory regulatory requirements which have to be fulfilled. There is no option to defer these to a later release and so many of the software vendor's ‘accelerated’ implementations using out-of-the-box software configurations cannot be used. There is also the fact that requirements, design specifications and testing all need to be formally documented and there may also be the issue of electronic records and electronic signatures to consider.

Although it is possible to implement an ERP system in a small to medium business within 8-12 weeks, the above factors make this virtually impossible in the life sciences industry. The fastest that we have ever been able to implement an ERP system in life sciences has been 16 weeks and for small to medium business 6 to 8 months is more typical.

Q. Does the increased focus on formal project management have any benefits?

A. The focus on formal project management controls means that time and cost overruns are usually better controlled. The focus on the formal definition and documentation of requirements also means that systems are much more likely to meet the real requirements of the real users. While the time and cost of implementing in life sciences is greater than some other industries, the fact that the system more completely fulfills the user requirements generally provides a better return on investment.

As an industry we must do a better job in demonstrating return on investment in order to justify the increased time and cost when compared to other industries. Where case studies are available they clearly show that a formally defined project management process, documented requirements specifications and tests and the need to demonstrably confirm that user requirements have been fulfilled delivers an ERP system that is fit for purpose, better meet the needs of users and provides better return on investment over the life of the system.

Q. How realistic are regulated companies in their expectations when looking to implement ERP or CRM?

A. Clients can certainly be very demanding and their expectations can be difficult to manage, especially when those expectations are informed by software vendors and system integrators who don’t really understand the life sciences industry.

As a company constantly engaged in implementing ERP and CRM systems but also competing to win such projects we often see small to medium life sciences companies with unrealistic expectations with respect to the real project budget, how long it will take to implement the system and the level of commitment their people will need to devote to the project. This is natural where the procurement process doesn't really understand the need for regulatory compliance, under values the benefits of formal validation and focuses mainly on comparing costs and implementation timescales.

On the validation side of business we have worked with a number of system integrators who are inexperienced in the life sciences industry and as a result we’ve had to help a lot of regulated companies bridge the gap between their initial expectations and what is really required for a successful and compliant project.

The reality is that it takes a minimum amount of time and effort to successfully implement a compliant ERP or CRM system. Small to medium life sciences companies would be better served by starting projects with realistic expectations and thereby avoiding having to go back to stakeholders to ask for additional funding and to explain why the project is “late”.

Q. Where do most ERP implementations fail?

A. Failure is a relative term. Most projects go live and deliver acceptable return on investment but are often seen as challenging projects or having failed because of initial unrealistic expectations with respect to the level of effort required of the regulated company. As discussed during the webcast, it is important that regulated companies really understand the activities that they will be responsible for and the deliverables that they will have to produce.

These need to be resourced appropriately; funding needs to be available and realistic timescales need to be set. If realistic timescales were put in front of stakeholders at the beginning of a project far fewer projects would be considered to have ‘failed’. Key to this is involving experienced resources in the concept phase of the system life cycle and during the early stages of the project planning.

Such resources need to have experience of implementing and validating ERP (or CRM) systems in the life sciences industry and the experience and knowledge that they bring to the table is invaluable.

As ever, if anybody has any follow-up questions from the webcast they can comment on the blog will get in touch through a usual e-mail address life.sciences@businessdecision.com. If you missed the webcast and would still like to view it the recording is available here.

Cost Effective Validation of ERP and CRM - Your Questions Asnwered

In yesterday's webcast "Dissecting ERP and CRM Vendors for Cost Effective Validation" we discussed what regulated companies should be looking for when selecting ERP or CRM software and system integrators in the Life Sciences industry.

Specifically, we looked at how the choice of software vendor and system integrator affects the validation of the system, in terms of:

• Cost effective and efficient validation,
• Level of compliance achieved, both in terms of compliant business processes and compliant validation,
• The quality of the final solution delivered.

We also reviewed what regulated companies can do to ensure that projects obtain the right balance between project cost, timescales and quality.

Unfortunately we ran out of time to answers all of the questions submitted during the webcast and our apologies to the person whose question we didn't have time to get around to. As promised, here is our answers to your question.

Q. How current is your data on cost, time, and quality?

A. In the webcast we showed a slide that inferred that time and cost considerations are usually completely divorced from quality/validation, where of course they should be balanced. Our experience is that a small number of Life Sciences companies (mainly larger pharmaceuticals) have invested significantly in adopting GAMP 5 risk-based validation and have developed flexible SDLCs which can accommodate ERP/CRM implementation in a cost effective and efficient manner.

However, this is still a small minority and as the later vote showed, most companies are still struggling to achieve the proper balance between time, cost and quality.

We also mentioned that it is possible to reduce the cost of validation to around 2-3% of the overall project budget, but most projects are still around 10-15%. The 2-3% figure assumes a well-defined SDLC that is specific to the ERP/CRM system being validated and also a great deal of process repeatability. In the case of Business & Decision, we can achieve those figures because (a) with due modesty, we are experts in implementing ERP/CRM and are also experts in risk-based validation and (b) we have done this dozens and dozens of times before in Life Sciences.

Some large pharmaceutical companies are also quoting similar single digit figures for the cost of validation, but the reality is that they are being selective in the figures they are quoting i.e. they represent mature processes for validating the roll-out of new phases of an existing system, using a system specific, mature and well-understood SDLC.

For most companies implementing ERP or CRM for the first time, 10-15% is more realistic. 5-10% can be achieved if you engage a specialist who really knows ERP and CRM validation and you engage them early in the project planning. 10-15% is more likely if your own validation staff work it out with a less experienced system integrator.

These figure are based on experience over the last 3-5 years, since the publication of GAMP 5.

You can view the webcast and hear all the other questions - and answers - by viewing the recording of the webcast. We hope that people found the webcast useful and that you’ll be able to join us for the remaining webcasts in the ERP/CRM series – details of which can be found in the ‘webcasts’ page on the Business & Decision Life Sciences website.

Integrated ERP and CRM in Life Sciences

As many of you all know, over the last few weeks we've organized a couple of webcasts looking at the integration of ERP and CRM systems ("Leverage Your ERP & CRM Data to Make Faster, Smarter Decisions" and "How To Integrate Product, Customer and Patient Data"). This is as part of a series of five webcasts we are running related to enterprise systems.

The last two webcasts have looked not only at the advantages of integrating ERP and CRM systems, but also the use of master data management, business process orchestration and business intelligence tools.

There are some good questions the came out of yesterday's webcast session and unfortunately we didn't have time to answer them all during the live webcast. 

As we promised we've reproduce the unanswered questions and our answers here our blog.

Q. Can you say more about why some life sciences companies are keen to get into healthcare management and what they are doing?

A. We talked about this quite extensively in one about earlier webcasts () but basically were seeing a number of life sciences companies move more into healthcare as they see their traditional profit margins being increasingly squeezed. Moving into healthcare has several advantages such as:

• Opening sources of new revenue
• Ensuring better health outcomes for patients

In the case of this latter benefit this means that patients are more likely to continue using the regulated companies drugs or devices, thereby ensuring an on-going revenue stream. At a time when many payers (whether these are insurers or governments) are increasingly looking to pay based upon results it makes sense for life sciences companies to ensure that patients are complying with their medication regimes and treatment is successful.

In the case of yesterday's webcast were seeing a number of life sciences companies increasingly extend the use of their CRM systems to incorporate the use of patient and healthcare management.

Q. Can aggregate spend reporting be built into CRM systems?

A. It is certainly possible to build aggregate spend reporting based upon information that is held in CRM systems. For small to medium life sciences companies with only a single CRM system, these systems may indeed contain all of the information required to produce accurate aggregate spend reports. However, where there are multiple CRM systems data usually needs to be aggregated across the systems and as we saw yesterday's webcast there are also advantages in terms of integrating information from the ERP system such as cost information and expense data.

For those of you specifically interested in this topic we'll be talking more about aggregate spend in a webcast in the New Year

Q. With such a focus on external patient facing activities, easy ERP system becoming less important?

A. The traditional reasons for implementing ERP systems have never gone away. Those of us remember the days of early MRP and MRPII implementations understand the significant benefits that such functionality brings. For small to medium life sciences companies who do not currently leveraging ERP system there is considerable return on investment from implementing core ERP functionality. This should really be the primary reason for acquiring and implementing a new ERP system.

However, we are seeing ERP systems become increasingly integrated across the enterprise and not just in areas such as manufacturing and operations. While ERP systems are just as important as ever, they are becoming more and more integrated into the enterprise applications landscape.

For a company that has no ERP system implementation of a new ERP system is properly one of the most important things the company can do in terms of investment in IT. However once the basic ERP functionality has been implemented there are a number of additional end to end business processes that can be facilitated by integration of the ERP system and it is perhaps true to say that additional manufacturing functionality may not be the most important extension of functionality.

If you have any remaining questions please do get in touch and for those of you who missed the webcasts the recordings are still available on the Business and Decision Life Sciences website (see Past Events). We do hope you'll be available for the rest of the webcasts where we were looking at some interesting topics such as

• How to leveraged software and system integration activities for cost effective validation
• How to integrate good record-keeping and document management with your ERP and CRM systems
• How to plan for successful ERP and CRM systems as a regulated company

Product Lifecycle Managament Integration in Life Sciences

Sitting in on some of the conference session yesterday, looking at interfacing Product Lifecycle Management (PLM) solutions, it was quite obvious that not all PLM solutions are created equal.

PLM is one area where Oracle has grown strong through acquisition, initially by acquiring Agile. This brings arguably the best PLM solution for medical devices companies - what many still know as the Agile A9 product. Oracle also had a process version but is mainly used in food and beverage and although there is some good process functionality it was not specialized enough to manage the drug development lifecycle.

Then in June this year Oracle announced its intention to purchase the IP of Conformia, bringing a strong product to manage the drug development lifecycle into their portfolio, with the intention to integrate this into the Agile product line.

This will provide large Life Sciences companies first rate products for either medical device development and design management or for managing the drug discovery and development process. This will also provide some flexibility to manage the lifecycle of products that are manufactured using either discrete or process manufacturing operations.

Although many take a simplistic view, the world isn't as simple as medical devices companies use discrete manufacturing and pharmaceuticals uses process. In some cases medical devices use batch manufacturing and pharmaceuticals need discrete. At the PLM level, the medical device Quality System Regulations have specific requirements for device development which Agile A9 meets very well, but not so Conformia.

Back to the topic of interfaces: While Oracle is doing a good job in developing standard process integrations between A9 and their core ERP systems (E-Business Suite and JDEdwards, using AIA PIPs), there is a growing realization that the combination of regulatory requirements for managing the various lifecycles of devices or drugs and discrete or process manufacturing means that there will need to be complete flexibility to interface either of the two 'flavors' of PLM to either discrete or process manufacturing solutions in Oracle's own (and competitors such as SAP) ERP systems.

Oracle's AIA framework certainly provides that opportunity and is no doubt the easiest way to develop such integrations. Indeed, Oracle has a roadmap to develop such Process Integration Packs, but it will be a while yet until the Conformia product is integrated into Agile and the AIA PIPs developed.

From a business perspective this means that Life Sciences companies looking to acquire PLM solutions (not only from Oracle) really need to understand:

• The nature of their product development lifecycle
• The regulatory requirements which govern their PLM processes (depending on device class or drug profile)
• The nature of their manufacturing process - discrete, process or possibly mixed mode for some product lines
• Exactly how they want to integrate their PLM systems to their manufacturing systems from a business process perspective

It is this that will drive the functional requirements of their interface and determine whether an out-of-the-box integration will deliver what is needed, or whether integration tools will be needed to develop some customer elements of the interface.

On a positive note, for Life Sciences customers who have taken the step to integrate their PLM and ERP systems and processes, there is a good return on investment both in terms of reducing costs and helping maintain compliance through the design, development and introduction of new products and new versions of products. With respect to this latter point, with regulatory authorities now looking at risks introducing during new product introduction (or scale up) it is good news that these concerns can be addressed at the same time these processes are made more efficient.

China - Here We Come

After a lengthy sales cycle Business & Decision Life Sciences have just closed our first compliance and validation deal in China - to retrospectively and prospectively validate a number of ERP systems for one of the largest state owned pharmaceutical companies in China.

The interesting part is that this is not only driven by a desire to export products to overseas markets such as the US (and not just APIs, but also finished pharmaceuticals), but this is also being driven in part by the Chinese State Food and Drug Administration (SFDA) looking to assure the safety of products in their own local market.

While it is understandable that commercial objectives drive the need to meet US and European regulatory expectations in the export market, the SFDA requiring the validation of computerized systems used in the distribution of pharmaceutical products appears to be a positive sign with respect to improving overall product quality and tackling the issues associated with counterfeiting and supply chain fraud which is a significant problem in China.

We'll be engaging with the client with a mix of local computer system validation experts from our Business & Decision office in Beijing as well as ERP validation experts from the U.K. and U.S. It certainly looks like a very interesting project from a number of perspectives and it will be interesting to see how seriously the Chinese government and local manufactures are taking cGMP and GDP.