Admittedly this is not a new concept. When enterprise resource planning (ERP) was first introduced the focus was on integrating finance/accounting, manufacturing, sales and service. ERP provided the means for ‘integrating; the business processes within an organization. So why raise the topic of “ERP for R&D?” Pharmaceuticals and Medical Devices develop new products in an environment that is driven more by science than a ‘business process.’ Scientists will suggest that forcing a business process into R&D limits their creativity. Today we are well aware of the problems facing R&D: lack of new products, reduced productivity, significant capital cost with diminishing results in terms of new products.
In my last blog post “Improving the Business of RandD” the focus was on the impact that cloud computing could have on R&D. Platform as a service (PaaS) and Infrastructure as a Service (IaaS) are alternatives that can help IT supplement their existing business process. Today contract / clinical research organizations (CRO) are being used to supplement R&D in the area of clinical development. Basic research and clinical manufacturing (in some organizations) are also being ‘outsourced.’ Given this quilt of organizations and separate business processes I’ve concluded the need for “ERP for R&D.”
Ultimately change will occur. I read an interesting article “Pharmaceutical Innovation Hits the Wall: How Open Innovation Can Help” by Henry Chesbrough. He writes about the need for changes to the industry’s innovation process. You may already know about the industry’s focus on ‘blockbuster’ drugs where the business is using science to find that next billion dollar product. Which comes at the price of research in seeking medications for smaller patient populations, so I contend that the business processes with R&D need to be ‘integrated’ with visibility to the data across the organization. I do agree with the point that Henry makes in his blog post that ‘there needs to a change in the innovation process.’
I have begun this journey to offer ERP for R&D as several of my customers have asked our company to give end-to-end services. I would like to see the industry focus more on new treatment and medication innovation and leave the IT to systems integrators (SI). Unlike software development companies SIs is pretty much agnostic to the software solution and more about how to drive out cost and improve IT performance.
What lessons can Healthcare Information Technology (IT) take from the Life Sciences IT? My background has been in Life Sciences and looking into Healthcare I can’t help but notice the similarities and differences in the use of technology. Over the past few weeks I’ve been engaged with rolling out a new business unit to cover the full value chain for Healthcare. Like most of us we are well aware of the cost for healthcare and the promise of “personalized medicine.” So how do we ‘evolve’ from our current position to fulfill this new ‘model’ of healthcare? In this posting I will focus on the Life Sciences portion of the value chain.
Last week I was in Orlando, Florida to attend the SAP conference @SapphireNOW. I came away with the following key points:
- Acquisition of Sybase brings mobile computing into a ‘strategic’ offering for SAP.
- In-memory resident database will help solve customer issues with legacy systems.
- SAP is making an effort to enter into cloud computing for key applications.
My perspective includes both being a user of technology – providing technology to solve business problems – and now adding value via IT services. IT executives within Life Sciences are under pressure to add value by leveraging IT to support the business. Unlike other industries that are more ‘customer centric,’ Life Sciences suffers as a result of being ‘disconnected’ from the end-user, the patient. The change in moving to a ‘patient centric’ model is part of the challenge. Yet their hands are tied because a large portion of their budget is spent on maintenance and internal IT operations. So when recent articles highlighting messages about Oracle by Bob Evans, Global CIO: Oracle’s Phillips Says Standardizing On Oracle Is The IT Cure, Information Week, April 23, 2010, and most recently on SAP by Bob Evans, Global CIO: Oracle Hammered By SAP For Stifling Customer Choice, Information Week, May 20, 2010 where does this leave you? How to solve this dilemma of minimal funding and yet provide unique “value-added” solutions that can bring the organization closer to the end consumer?
Providing IT Services for Life Sciences IT
Service providers offer “integration” and an increase use of IT. Since the challenge for Pharmaceuticals and Medical Device companies has been to leverage their existing technology. Here is the graphic that I use to convey what we mean by this, and I have several a very real customers who are looking for support across this ‘value chain.’ In a perfect world we would look across each department and leverage one common IT solution, yet within Life Sciences this is not the case. There a few companies that can standardize on one IT solution for the whole organization. (Some Generic companies have opted for one vendor solution since there is a limited R&D requirement for clinical trials.) IT must be the enabler for an organization’s ability to change in today’s market. To me this means looking into advances in technology that can improve agility.
Let’s see how the available solutions have an impact on Life Sciences IT and where IT services companies can add value:
- R&D to Operations – Oracle’s Agile solution is widely used for product development and with their recent acquisition of Phase Forward and Relsys they now have solutions for clinical trials and drug safety. SAP ERP and Supply Chain are de-facto solutions within Operations. Effectively connecting these solutions can accelerate products to market.
- Operations, Services to Sales & Marketing – Within Life Sciences the ability to gather pertinent customer information (more than just sales orders) is relevant to supply chain, and to new product development. Oracle and Salesforce.com are key solutions for Sales and Marketing. There is value in understanding how ‘patients’ are using your products.
- Analytics – Underlying all of these solutions is a workforce that utilizes IT applications and Microsoft Office products for their daily work. Databases that gather application data across the value chain must be made available to the workforce and ‘served up’ so that data can be transformed into information for business decisions. There are Business Intelligence (data ‘cubes’) applications installed across the organization. Documentum is widely used for storing ‘compliance’ documents while Microsoft SharePoint is used to process data across a variety of sources. Users do not want complicated systems and most of all they want their data fast.
Next Steps in achieving alignment
The economy has impacted Life Sciences in terms of:
- The high cost of healthcare which is driving need for ‘efficiency’ (from new product development to supply chain). Life Sciences now see the relevance of ‘patient’ feedback.
- Lack of new products (either from R&D or enhancements to existing products) have forced the industry into M&A, realignment of existing resources, and IT investments to fuel new business.
IT services can connect the ‘dots’ within Life Sciences. Customers need to ask their service providers:
- What can they offer to resolve the problem between applications within the value chain? Look for vendors with multiple technology expertise and a delivery model that is a mix of off-shore and near-shore resources. Low cost does not guarantee success if you’re not able to diagnose the problem area.
- Are we leveraging our IT to the ‘maximum’ within our organization? I speak to customers who tell me they have multiple IT vendors for application support. Again while this may curb costs you may miss out on a ‘strategy’ that improves your business processes.
- Are you within ‘compliance’ to the regional regulations? Can you improve operations and still be in compliance? When was the last time you had your regulatory group and IT processes reviewed?
Healthcare IT can learn from Life Sciences IT since there is no ‘one’ solution for the industry. SAP and Oracle are the dominant players in the market for Life Sciences. There are ‘excellent’ smaller niche players are likely to pose a problem for IT from an ‘integration’ perspective. Within Life Sciences IT we hear about the 80/20 budget crisis (80% is spent on maintenance and IT operations, and 20% for new projects) and with the advent of ‘cloud computing’ IT will need to see how they can leverage this technology. What I heard at the SAP conference that was quite interesting is that ‘in-memory’ databases could be applied to legacy systems. Given the current need for fast access to data this is very encouraging. I’m sure when I head to the Oracle conference we’ll hear of even more technology improvements.
In the next blog post I will share my perspective (that of an IT service provider) for Healthcare. There are some new business processes that can add value as Life Sciences and Healthcare IT move closer to each other.
While at the same time continuing to learn and strategize more about Healthcare IT solutions.