Building Blocks of an ECM Business Case for Life Sciences

Baselining the metrics that matter

Romuald Braun, Peter Li and Jonathan Burd

Printed by kind permission of FCG. Copyright 2004. www.fcg.com

An industry in a state of flux
The life sciences industry is at a technological crossroads. The trend within the pharmaceutical industry has been to take a piecemeal approach to document, data and knowledge management. However, with mounting demands and pressures throughout the industry, if companies are to survive, let alone remain competitive, they will need to find ways to co-ordinate and consolidate information.

To date, companies have been cautious about implementing large-scale content management or document management solutions—and for good reason. Cost is a primary consideration. Much-touted enterprise content management (ECM) solutions, customised to a company’s specific internal processes, can run to tens of millions of dollars to implement, update and migrate to new hardware and software. More troubling are the hindrances customisation can create. Over the years, life sciences companies have adopted a mishmash of information technology (IT) solutions from multiple vendors with proprietary data formats, making it next to impossible for data to be shared across the different platforms. This has made companies hesitant to take the next step toward true ECM, which is broad management of all documents and content rather than mere Web content solutions.

In recent years, however, standardised solutions that encompass industry best practices have started to emerge. Those collaborative solutions mean substantially lower costs of implementation, integration and migration, as well as vastly improved connectivity between technologies, thereby enabling users to access vital data and content simply and rapidly.
To take advantage of the opportunities that truly integrated ECM affords, there needs to be a paradigm shift in the way companies view IT solutions for information, data and knowledge management. Instead of the departmental silos that have prevailed for decades, companies must approach IT investments by means of a clear and actionable ECM strategy.

The Cost Model is Changing
A raft of complex pressures, both intemal and external, have weighed upon the life sciences industry for the past decade. Among them are the upheaval from mergers and acquisitions, shrinking pipelines, the rise of the biotech industry and the attendant partnerships with traditional pharma companies, breakthrough technologies in research and development, and global regulatory demands such as those of the Intemational Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) Common Technical Document, 21 CAR Part 11, and the Clinical Data Interchange Standards Consortium (CDISC).

All of that is taking place amid skyrocketing increases in the cost of producing drugs. According to Rain & Co., development of a new medicine can cost as much as $1.7 billion, taking into account failures during clinical trials. Compounding those costs are demands by the US Food and Drug Administration (FDA), the European Medicines Agency (EMEA), and other regulatory bodies for more clinical trials to combat safety concerns, as well as the trend by these agencies to approve fewer compounds.

Data Challenges
One of the biggest headaches for life sciences companies today is the sheer volume of data that exists across the business. Reports show content is growing at an alarming rate, and the vast majority of content—80-90 per cent according to analysts—is unstructured. Time wasted on document maintenance and management because of inefficient data gathering, storage, and retrieval systems is extremely costly. Gartner says the explosion of unstructured data is negatively affecting the productivity of individuals and the overall competitiveness of enterprisesi. The inability to easily access information—whether it be Web content, intranet information, external documents, or internal data stored in repositories—will impede the way employees do their jobs and will not only increase an organisation’s costs, but also make it more difficult for that organisation to ensure it is compliant with regulatory requirements.
It is vital that companies find a more efficient way to leverage and share the data, content and knowledge that exist across the enterprise and with partners and vendors.

Breakthroughs in ECM technologies enable enterprises to devote their time to bringing products to market rather than spending it on non-strategic areas such as data gathering, storage and retrieval. While some companies have taken the first step toward ECM by incorporating data from all of the business units in one repository, few have made the leap to a collaborative strategy that encompasses both internal and external parties or that considers interdepartmental relationships such as how savings in one area might lead to expenses in another.

The next step must be toward what Forrester analysts refer to as an enterprise collaboration strategy, whereby tools and technologies operate from a unified platform aimed at optimising interaction among employees, partners, vendors, and customers.ii Such a holistic view might also be termed an Enlightened Enterprise model. An Enlightened Enterprise envisions and plans ECM solutions that encompass the entire life sciences value chain—from speeding a product to market to improving patient care and patient safety. It enables companies to gauge improvements at the organisational level and even within the communities they serve. It entails approaching ECM as a business strategy rather than as a set of technical standards, and it requires that the organisation understand the need for transparency and take a flexible approach to implementation.

Common Platform and the Enlightened Enterprise
In the Enlightened Enterprise, the emphasis is on corporate asset management and making the knowledge worker smarter and ‘enlightened’ through better access to information, more-automated processes and less re-use of data and functions. Considering that workers now waste 30-40 per cent of their time on non-value-added document management tasks, according to analysts, the labour-saving possibilities the enlightened model presents are immense.iii

In the area of post-approval lifecycle management, for example, companies must maintain and update regulatory and marketing documentation on numerous products. An ECM programme with standardised tools and taxonomies might reduce the time spent on document updates by several minutes or even half an hour, which could potentially cumulate in a cost savings of millions of dollars per year.

While much has been made of customisation to the client’s specific needs, the move to a standardised content management solution is a logical one for a complicated, change-induced industry. As regulatory demands escalate and clinical trials expand, customised legacy systems must be updated. Again, as a company seeks to expand the solution to cut across functions, departments and regions, it must go through another costly migration of its ECM system.

Standardised Systems Transcend Silos
On the other hand, standardised systems encompass industry best practices, have been validated as compliant with regulatory requirements, and transcend silos. Through a standardised, universal infrastructure, the enterprise can run content management as the architectural backbone of the various vertical solutions that exist within the organisation. It simplifies records management across the entire enterprise by integrating ECM into the infrastructure, which vastly improves storage, retrieval, and sharing of content within the organisation and with partners, vendors, regulatory bodies and customers.

Standardisation is being propelled by changes within the ECM industry. There has been a sharp consolidation in the ECM and enterprise management (EM) market that has left just a handful of players in this space. Those leading ECM vendors also have been acquiring various collaboration tools and integrating them into the overall ECM infrastructure.

By working with such a vendor, a life sciences company is able to take a united approach to enterprise-wide operations, including document management, Web content management, digital asset management, collaboration technologies aimed at fueling discovery and reducing redundancy, portals that enable users to track content and workf low, and systems that manage the organisation’s various knowledge assets. Leading ECM vendors also are focusing on identification of their clients’ business needs and are designing and building strategies that lead to quicker, easier and more efficient data retrieval—and consequently, improved profits for the client.

The emergence of what analysts have dubbed ‘Smart Suites’, beginning in 2002, did much to facilitate the convergence of portal, collaboration, basic content management capabilities and enhanced collaboration within organisations and with external partners. Further developments have increased the integration of content repositories and operating procedures. Gartner analysts have said this has the potential to substantially reduce integration costs for support of extended enterprise processes. Indeed, lower integration and maintenance costs—potentially as little as several hundred thousand dollars to $1 million depending on the organisation’s sise and needs—would enable the enterprise to break even and start to reap benefits within one year to eighteenth months of implementation.

A New Paradigm: Measuring Performance
Step 1: Building the Business Case
Before implementing an ECM solution, companies must first measure and evaluate their business needs. Forrester analysts advise putting in place a strategy committee to define the goals and scope of the project and to ensure that technologies get applied to specific business needs.

Content management programmes often fail when an organisation views the project solely from a technology perspective rather than a business function that is supported by technology. The planning methodology should span every aspect of the business, from the current state of policies to business processes, to external partners and customer information needs, as well as information systems. Among the recommendations made by Gartner analysts in evaluations of application integration are:

• Develop a business case, not just return on investment (ROI). Focus on business improvements and faster implementation and look for cost reduction in large, long-term-usage scenarios.iv Essentially, a business case is a form of gap analysis. It describes an organisation’s current status versus desired status and how the organisation can achieve its goals. The plan and the supporting ROI analysis should address the cost of implementation relative to the following areas.
• Overall cost savings. Improved cost measures and cost displacement together with enhanced models built on cost efficiencies enable the organisation to lower costs without sacrificing quality. It is important to consider cost within a strategic framework beyond the initial investment and short-term financial gains.
• Time to market. Time saved on producing internal reports, regulatory reports, manufacturing reviews, and marketing documentation accelerate speed to market, thereby enabling the company to realise profits more rapidly.
• Speed to implementation. Out-of-the-box configurable products ensure a faster implementation which can translate into accelerated product launches. This approach lowers overall total cost of ownership (TCO) or what the investment will cost the enterprise over its lifetime.
• Business performance improvements. Time saved in the search for and retrieval of data enables users to spend less time on updates and more on quality improvements, thereby improving business performance and effectiveness.
• Compliance risk reduction. This determines how the ECM program can improve compliance with such regulations as 21 CFP Part 11 and Good X Practices for computer validation. Solutions that lower the risk of implementation failures lead to enhanced compliance with regulatory requirements, greater safety for patients, and lower risk of legal liability.
• Improved collaboration. A collaborative environment, both internally and externally, enhances the managing, storing, and accessing of content, ultimately reducing TCO and increasing ROI.
A well-formulated business case is a tool that supports planning and decision making regarding purchases, vendor selection and implementation strategies. It offers a clear statement of the business problem and a potential solution, outlines consequences resulting from specific actions, and recommends ROI metrics for the proposed solution. More important, a business case provides in opportunity to propose learning options that are based on objective data and offer an increased sense of understanding and ownership of the effort.
Before the building of a business case, it is important to be aware of a basic limitation: each organisation requires different financial metrics, such as ROI, TCO, and return on assets.

Here is a breakdown of the basic elements of a business case:

• Clarify organisational goals: Identify and clarify specific business problems that ECM solutions need to address.
• Quality the goals: Ensure that the ECM strategy can address these organisation-wide goals.
• Develop needs assessment: Clearly state the specific business problems that the solution needs to address—beginning with the biggest pain points in the organisation—and map the current applications and supporting technology architecture to those needs.
- Develop business understanding: Review application road map and understand the user community and expectations.
- Review ancillary applications: Features and functions, application technology platforms and tools
- Understand current and future project needs
- Agree upon a high-level collaborative delivery model
- Select a proposed initial project
- Agree on critical success factors.
• Background: Include significant information regarding internal/external skills required, budgeting, and other critical elements to implement the ECM solution. Indicate, in general terms, the steps that must be taken to resolve or reduce the core business problems.
• Project objectives: Establish the objectives that are being sought by implementing the solution.
• Current processes: Map current organisational processes that the proposed solution will affect, including training, other departments within the organisation, and relationships with clients, external partners and the competition.
• Resource requirements: List the resources needed to complete the project, such as staff, hardware, software, print materials, time and budget.
• Alternatives: Outline other options to implementing the proposed solution. Include the basic requirements for each and estimate project risks, ramp-up time, training costs and project delays. Compare and contrast each of the alternatives with the proposed solution. State similarities and differences, benefits and detriments, and the costs associated with each option.
• Make the case for IT: Simply and factually frame the technology solution relative to stakeholders and the business need.
• Make the case for the stakeholders: Explain the business problem and outline the way the ECM solution will help address core issues affecting the business stakeholders.
• Analyse expected results: List critical success factors, including ROI metrics, as well as other measures that will be important to business decision making.

Step 2: Benefits Management and ROI
Given the time and expense involved in implementing complex IT systems, it is important to measure the benefits of a solution from two perspectives: cost and value creation.

Current demands and pressures have left the life sciences industry struggling to juggle organisational priorities. Budgets continue to shrink, while at the same time, the industry is being tasked with delivering quality care to patients. Against that backdrop are IT resource shortages and business process inefficiencies that are so deeply ingrained that retooling the industry to operate more efficiently will require significant overhaul.

In that context, keen consideration must be given to evaluation of cost against enterprise measurements rather than departmental or functional costs or even against straight ROI gains. Cost is now considered within the context of how savings can be redirected toward high-impact, strategic initiatives. The risk of the investment also must be factored in. High-profile, high-cost failed IT projects have left many executives wondering whether IT firms can deliver on their promises. Clearly, there is a lot at stake. With continued regulatory stringency, additional issues concerning information security, and the necessity for valid data, there is no tolerance for failure.

The answer is a formal but flexible methodology for maximising investments across the enterprise and for plotting key benchmarks for the measurement of specific points of success.
With that methodology as the backdrop, it is possible to quantify value creation such as ROI. However, the calculation of ROI will depend on how senior management views value and what factors constitute an opportune investment. While ROI is a moving target and will require ongoing analysis, there are steps that organisations can take to calculate the value of the investment. They include the following:

• Quantify the goals to determine what they are worth to the organisation (current costs and potential savings).
• Calculate the cost of investment, including technology acquisition, training and consulting, and lost productivity when staff are moved to a new project.
• Calculate ROI by subtracting the anticipated investment costs from the potential savings.

Equally as important as ROI in terms of assessing value is benefits management. This might include an analysis of how the ECM strategy enhances partnerships and relationships with vendors and customers, how it improves the effectiveness of the knowledge worker, or how it gives the enterprise a broader view and a more extensive reach. The business benefit of strengthened relationships with customers, for example, will affect top-line growth with increased sales and market share. Improved collaboration with partners can translate to decreased cycle time and cost of operations.

Distinguishing Tangible versus Intangible Results
Overcoming the functional silos that pervade the life sciences industry will require a shift in thinking as well as determined efforts by senior management and key players throughout the enterprise. The benefits of adopting the Enlightened Enterprise model—one that is transparent, extended and intelligent—are pervasive. Implementation of an ECM strategy that transcends boundaries will enable organisations to reap both direct and indirect benefits.

Metrics that Matter
The ever-expanding volume of content; the time associated with document authoring, approval, and delivery processes; and the time spent on content search and retrieval mean that the need for steps that will improve the efficiency of life sciences organisations is pressing. Though quantifying value will vary from one enterprise to another, savings from a standardised approach to ECM and data management are demonstrable. For example, reducing the amount of time spent on labeling updates, good manufacturing practice documentation, or launch preparation by marketing and sales will lead to business improvements and enhanced effectiveness. With regard to regulatory demands, risk reduction through improved compliance made possible by a standardised solution can lead to lower liability and insurance payments.

Adding complexity to the current situation, regulators are stepping up demands for information submitted through electronic format. In December 2003, for example, the FDA announced that as part of an effort to enhance public information and safety through improved processes, it was amending its regulations to require electronic submission of labeling for review with new drug applications, certain biological licence applications, abbreviated new drug applications, supplements and annual reportsv. Companies that have streamlined their content, document and data management processes will be able to react rapidly to FDA expectations without having to start from scratch with document and data sorting.

In Europe the regulatory landscape also is fast moving toward electronic submission under the New Medicines Legislation which will be enforced from November 2005. For example, under Article 24 of the legislation, the report states that “except in exceptional circumstances, [adverse] reactions shall be transmitted electronically in the form of a report…vi. Companies submitting applications electronically also will be required to conform to the electronic Common Technical Document (eCTD) as laid out by the ICH.

In a separate paper that provides an overview on the EMEA’s specifications for the exchange of product information, the agency points out that “in line with the general principles of the ICH eCTD Specification Document, it is intended that eXtensible Markup Language (XML) will become the submission format for product information documents, as they contain structured datavii. The impact on product information management extends to the centralised procedure, under which companies submit product applications directly to the EMEA for evaluation by the Committee for Proprietary Medicinal Products, a body of the EMEA that brings together the scientific expertise of the European Union to provide opinions on the marketing of medicinal products. The EMEA’s requirements further cement the need for sound document management processes.

The industry itself is working to improve data quality and accelerate product development through the CDISC. The CDISC is committed to developing industry standards that “support the electronic acquisition, exchange, submission and archiving of clinical trials data and metadata for medical and biopharmaceutical product development.” viii

The chart (see p.37) demonstrates the savings over five years for a pharma company in replacing a customised, legacy system with standardised ECM technology for a system with 500 users. It takes into account initial project costs, including hardware, software, implementation costs and training costs; the annual costs of maintaining and supporting the technology; and ongoing costs from migration to new standards and updates.

• While the initial costs of a customised system can exceed $11 million, a standardised system would set a company back less than $2 million in initial outlays (including all external and internal costs).
• The savings are even more dramatic over the longer term. Over five years, the annual costs of upkeep for a legacy system might exceed $12 million, while the costs of migrating to new modules and implement updates will set a company back an additional $5.5 million over five years.
• Meanwhile, a standardised system will likely cost less than $500,000 in upkeep over five years and less than $1.5 million in migration and update expenses.
For the Enlightened Enterprise, the establishment of a collaborative environment that improves managing, storing, and accessing of data means enhanced benefits management, reduced TW, and greater ROI. By streamlining the way an enterprise leverages the detailed information it has across functions and across countries, companies can truly start to reap business rewards.

CASE IN-POINT:

Electronic Document Management and Publishing

Overview: In 2001 a leading pharmaceutical company seeking to implement global enterprise document management sought help in building and implementing the IT infrastructure and applications to support electronic document management (EDM) and publishing processes Several factors drove the need for a global solution, including an increasing number of development projects, a competitive landscape, cost and efficiency considerations, the need for improved corporate intelligence and knowledge sharing, and compliance with regulatory requirements

Building the case: The analysis revealed the following cost savings and benefits:
• An incremental time savings spent by core personnel on document management, from 5% in 2003 to 10% in 2004, to 15% in 2005
• Based on experience at comparable companies, the analysis revealed that the introduction of an EDM system and publishing tool in the R&D processes could incrementally shorten both internal and external time to market
• Calculations showed the company could fairly quickly expect to reap cost savings as a result of improved business drivers, Therefore, taking into account various internal and external factors, by 2003 the company could start to achieve cost benefits of between $1.66 million to $14 million; by 2007 those cost benefits could range from $7.5 million to $44. 2 million

References
i. K. Slzegda, M. Gilbert, D. Logan. S. Hayward, L. Latham, F Caldwell. The First Wave of Smart Enterprise Suites, Gartner Inc., May 8. 2002
ii. Erica Rugullies. Nate 1. Root, Gene Leganza, Laurie M. Orlov and Cohn Teubner. Road Map to an Enterprise Collaboration Strategy. Forrester Research Inc., August 2, 2004.
iii. D. Logan. Document Management: Assessing Costs and Benefits, Gartner Inc., September 27. 2000.
iv. Gary Long. Roy Schulte. Building the Business case for Application Integration, Gartner Inc., 2002.
v. FDA News. FDA Publishes New Requirements for E-Labeling of Drug and Biologics Applications. US. Food and Drug Administration, December 9, 2003.
vi. Official Journal of the European Union. Regulation (Ec) No. 726/2004 of the European Parliament and of the Council of 31 March 2004.
vii. Juan Antonio Rueda Montes, EMEA. Exchange of Product Information Specifications, Version 1.0. October 8, 2004.
viii. DISC Inc., www.cdisc.org

IM@T Online January 2005