Enterprise resource planning for life sciences: Do your homework first
INSIGHT ARTICLE |
For growing life sciences organizations, having the right enterprise resource planning (ERP) solution can be an important success factor that helps bring businesses to the next level of expansion, maturity and profitability. Benefits of an ideal ERP solution can include optimized supply management with material suppliers and contract manufacturer organizations (CMOs), as well as improved visibility into deviations and exceptions at CMOs and third-party logistics organizations. The more competent ERP systems can also manage contracts and chargebacks and support governmental pricing and regulatory compliance. Via ERP, tracking and oversight moves beyond the spreadsheet for organizations, and on to a modernized, automated and secure platform working across the entire business enterprise in real time for analysis and forecasting.
However, despite the efficiency and analytical benefits for biotech, pharmaceuticals and medical device companies alike, many life sciences organizations have concerns about choosing the right ERP selection and launching it successfully in the business. At a recent gathering of life sciences businesses, leaders were asked by RSM what concerned them most about the launch of an ERP solution in their organizations. Responses included concerns around internal resources limitations, scalability, functionality, testing and configuration challenges, delivery of appropriate reporting and business intelligence, as well as training issues.
Given this feedback, how can life sciences businesses alleviate these anxieties and set themselves up for a successful ERP selection and deployment? Note the following best practices:
Do your homework
Plan several months for your ERP selection process. One key tip: first, identify the best solutions for your unique business needs. As an initial filter, consider your most complex processes. For instance, if a validated system for current good manufacturing practices (cGMP) is a future need for your business, filter out all providers who can’t meet that requirement. Weigh your business’ particular needs and processes to confirm the right ERP solution that meets your present and growing operational strategies. Be an advocate for your unique needs and educate yourself by researching the various ERP software solutions online. In addition, in some cases, working with a third-party selection consultant to sort through and determine your system needs may be appropriate.
And, once a specific ERP solution has been identified, look for the right implementation partner to help with launch efforts. Using a similar methodology, focus on partners with industry and product experience; identify all the deal-breakers early to disqualify unworthy candidates. This allows you to focus on understanding scope, deliverables, methods, phasing, reporting and responsibilities with your prospective partners.
Understand cost levers
During the partner selection process and prior to ERP launch, take extra steps to understand as much as you can about the platform to optimize your efforts. Work with your implementation partner to review specific cost levers. Not factoring in these costs upfront can create unforeseen expenses later, causing a launch delay. The major long- and short-term cost levers include:
- Licensing metrics, including users, environments, portals, modules, site visits, transaction volumes, assets and database size
- Third-party partner integration
- Locations, languages and localizations for statutory reporting
- Ongoing maintenance and support
Configuration, testing and contingency
Today’s best practice is not only making sure your partner’s ERP system is configured for your industry, but also is accompanied by documentation for process and test scripts to accelerate the process. There can be up to 700 processes in an ERP deployment that must be verified for use, tested and documented. You should expect the documentation was done in the past and should be transferable from implementation to implementation, and doesn’t require creation from scratch each time.
Once initial configuration is ready for unit testing, challenge the system during this phase with your most complex and troublesome business cases to assess your ERP solution’s rigor. Your testing and evaluation may reveal areas that need to be addressed, causing additional tweaks to the solution system. These corrections and potential scope changes must be minimized and discovered early to avoid delays and additional costs. Anticipate these unknowns by considering an additional 20 percent of your launch budget to cover the costs of unanticipated internal work load, reporting needs and unforeseen changes to the business. This contingency funding decreases the blow of unforeseen project addendums later.
Finally, factor in the amount of time testing and training key personnel will take. How will testing and training affect current business flow? Will third parties need to be part of the testing and training, and if so, at what cost? Key end users should perform testing and documentation, but this is not always feasible and these efforts should be factored into the contingency planning.
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