IT Outsourcing Strategies in Drug Discovery

Chip Allee,  CEO, CeuticalSoft Inc., USA

Outsourcing pharma or biotech research IT can be very difficult to implement but with a well-planned strategy the benefits can easily outweigh the risks.

There are many potential benefits that can be derived from IT outsourcing. Apart from cost savings, access to resources is also a driving force behind the outsourcing phenomena. With the right outsourcing partner enabling a flexible allocation of resources, IT projects can be scaled rapidly and affordably. Success or failure of outsourcing often has less to do with the provider and more to do with the customer. This is because discovery R&D organisations are rarely equipped to manage IT and have great difficulty specifying and implementing their goals. If any organisation has a poor track record of defining, managing and deploying IT projects either with internal capabilities or outside vendors, then outsourcing will probably create more problems than it will solve.

Delivery models for outsourcing

There are several possible delivery models that can be applied to IT outsourcing. On-site contractors, offshore contractors, hybrid sourcing and cyber sourcing are the broad categories. On-site contractors can be provided from overseas on a short term visa or they can be arranged for a longer term through an offshore company that has an onshore presence. In many countries, a company with operations in the local country can arrange internal transfers under visas that can last several years.

Another effective option is to place an offshore contractor on site for a knowledge transfer period of one or two months and then send them back to the offshore site to continue working for the customer. This builds a working relationship, nails down technical issues and facilitates the transition to executing projects remotely.

Hybrid sourcing involves working with a company that combines onshore resources with offshore resources. This is the "best of both worlds" scenario since subject matter expertise, technical support, requirements gathering, field service and administrative functions can be handled onshore while high-cost labour-intensive work like software programming can be executed overseas. Companies that do not have sophisticated project management capabilities will benefit greatly from the hybrid model.

Cyber sourcing is rapidly making headway in the outsourcing arena under the banner of Software as a Service (SaaS). SaaS essentially involves web delivered software applications that are entirely hosted by the provider and currently has many viable entries in the business intelligence area soon to be followed in more specialised areas such as pharmaceutical R&D. Cyber sourcing is an option that is usually not mentioned in the outsourcing conversation but it is rapidly becoming an attractive solution to remove the hassles of developing and maintaining in-house software. Some of the advantages of SaaS include banking level security, low cost of entry since there are no large up-front costs, rapid implementation that in some cases can entail nothing more than logging in and simplified software evaluation for purchasing decisions.

Benefits of IT outsourcing

It is prudent to evaluate outsourcing in terms of expected benefits and with realistic objectives in mind. The most obvious potential benefit is cost savings. A realistic expectation in this regard is probably about a 50% or lower cost reduction. This is because a competent provider will have all the ingredients for success including highly qualified personnel, project management, modern facilities and quality communications capabilities. It is possible to find independent programmers who will charge very low rates and they can be very effective for small, well-defined projects. But this type of engagement will not scale and can be very difficult to manage. Another, arguably the most important reason, is access to resources. It is often very difficult and very expensive to find qualified personnel locally and outsourcing becomes the only viable option. A large project can be scaled and resourced in India very fast and for reasonable costs if the provider has the right systems in place including a comprehensive HR capability. Another key benefit of outsourcing IT comes when key scientific personnel are relieved of time consuming IT duties and redirected to basic R&D.

Some types of projects that lend themselves to outsourcing include legacy migration, new system design / build, database consolidation and maintenance, code migration and maintenance, commercial software development and web portal development. Indian outsourcing companies can be roughly split into three categories: major players, mid size and small life science specialty firms. The major players are companies with revenues of US$ 1 billion or more, mid size are companies with revenues below US$ 500 million and the small firms are companies that have a particular expertise in some area of life science IT. Table 1 gives a brief list of some companies that fall into these categories and whether or not they have a life science practice or offer life science software products.

Engagement models

Most offshoring business relationships consist of one or more of the following engagement models:

1. Project-Specific Engagement: This involves conveying a specific project to the provider with an expected completion period. It can be based on a fixed price, milestone payments or time and materials. A project based engagement is likely to be more expensive than other models since they are difficult for the provider to resource especially for smaller projects. The project model is more likely to succeed if the provider has an onshore presence.

2. Full Time Equivalent (FTE) Engagement: This is the practice of committing to long-term contracts for a specific number of dedicated people working exclusively for the customer. This has a number of advantages not the least of which is cost optimisation. Since the provider can safely hire personnel without concern for project duration they can operate at lower margins and share the risk reduction benefits with the customer. FTEs can be thoroughly trained on customer processes and can establish good working relationships with customer personnel. The customer can also have a hand in selecting FTEs that fit their needs. All these factors make the FTE model very effective for long term ongoing work which is why it has been used extensively for organic synthesis

3. Build, Operate, Transfer (BOT) Engagement: This model consists of hiring an outsourcing firm to help establish a permanent facility in an offshore location. The provider can start and manage the entire operation for an appropriate time period and then hand over the keys to the customer when the time is right. BOTs represent a substantial commitment on the part of the customer and should not be attempted without signif cant experience with other forms of outsourcing. One caution is that key roles may disappear when the provider pulls out due to overlap with their permanent staff who may have been filling those roles.

4. Offshore Dedicated Centre (ODC): This is the latest trend in outsourcing jargon and is essentially a BOT without the T. In other words, the provider establishes a dedicated team and facility but is expected to permanently manage the operation. ODC eliminates the risk of being hung out to dry but provides the continuity that may be lacking in an FTE approach since FTEs are often stopped and started on as needed basis.

The reality is that most offshoring engagements will not fit neatly into any particular mould. The essential ingredient for any model is the presence of key roles on both the customer and provider side such as project managers, engineers, support and particularly subject matter expertise. Ideally, there should be a solid triad of available subject matter experts that include someone on the customer side, someone on the provider side but located onshore and someone from the provider side located offshore. This is of particular importance to highly technical enterprises such as pharmaceutical R&D.

Productivity measures

The following discussion is critical to IT offshoring but can be equally applied to any version of IT implementation, including exclusively in-house operations. It can be encapsulated with the statement that IT tends to be predominantly framed in terms of technology and rarely in terms of productivity. Without this fundamental shift in thinking about how to measure achievement it can be very difficult to implement any IT objective and particularly difficult to transfer objectives to a third party. Some measures of productivity that can be applied are as follows:

1. Discovery IT efficiency: This is a programme of continuous improvement to reduce bench scientist information processing time. This means that there is an intentional objective to focus on reducing time consuming repetitive IT related tasks. Scientists often find themselves drowning in these tasks but they seldom get attention because they are not related to large scale enterprise systems that IT groups tend to be enamoured with.

2. Application utilisation: This is the continuous monitoring of software application usage. Some utilisation road blocks include: show stoppers (hard coded application requirements that do not fit established processes and make the software unusable), unregulated laboratory process changes, manual intervention steps, home grown patches, stagnation (applications are not maintained or upgraded), lack of proper file conversion capabilities and lack of effective database integration. By monitoring application utilisation many opportunities may present themselves such as the elimination of unwanted applications or major usage improvements through additional training and customisation.

3. Data quality: Reviewing database and other data storage resources for inconsistencies, false positives and false negatives and the effectiveness of data validation procedures can lead to many productivity enhancements.

4. Compliance monitoring: This is the practice of monitoring actual usage of sanctioned IT systems versus gorilla work-arounds that lab personnel frequently engage in primarily involving Microsoft Excel workbooks.

5. Data availability: Data published in corporate black hole databases often requires an act of God to recover in a desired format and complicated reporting tools and the lack of end-user self sufficiency means everything has to be channelled through an IT fortress on a glacial schedule.

6. Process automation: The careful analysis of actual laboratory processes can result in the elimination of manual intervention steps, sneaker nets (carrying data around on disks or paper) and Cliffware (dedicated instrumentation software that drops data off a cliff in terms of downstream integration).

In order to stay focussed on productivity, technology discussions that obsess over things like the latest technology, eye-popping graphics, Web delivery, fastest servers, grand unifying database backbones and feature myopia need to be avoided.

Obstacles to successful IT implementation

Outsourcing Companies
IT implementation is also a generic topic but the obstacles are amplified when pursuing an outsourcing strategy. One of the common obstacles is poorly defined requirements. This is a direct result of the stake holders not having the time or expertise to determine and convey requirements. Also, front line practitioners are often left out of the loop which guarantees that the assumed processes will have many undiscovered variations. Additional obstacles to successful IT implementation include high level mandates without end-user buy in, poor architecture, and the deployment of systems that do not scale. Other areas of concern are designing applications for poorly defined processes and assays, especially processes or assays that do not exist yet or systems that have not been stabilised and are therefore subject to frequent changes (moving targets). The most common hindrance to successful IT implementation is the lack of support. This can take the form of no qualified support, no embedded support (no one in the lab with advanced application knowledge), no DBA support (particularly in smaller companies), dying of thirst next to the well (in-house IT not available), IT support preoccupied with grandiose self serving schemes and inadequate provider support (including no onshore presence).

Counter measures

Some effective counter measures to IT meltdown include:
1. Develop embedded super-users: These are laboratory software end-users that have advanced knowledge and understanding of particular applications and can serve as ambassadors to their colleagues. They can be critical to successful implementation and often represent the difference between success and failure.
2. Engage front line practitioners (FLPs): Front line practitioners are the people actually executing a particular process. FLPs should always be consulted when defining processes and gathering requirements.
3. Implement pilot programmes. Any software project should be tested in a pilot setting prior to large scale rollout.
4. Choose outsourcing providers with domain expertise.
5. Focus on productivity and not on technology.

Discovery R&D operations can often be chaotic because of intense financial pressures, immature processes and lack of engineering support. Effective IT implementation needs to adapt to this reality and cater to scientific rather than technological goals. An effective Discovery IT strategy does not operate in a vacuum and is guided by periodic productivity measures. This feedback loop is the gatekeeper for taking on new ground.

Author Bio

Chip Allee

Chip Allee is the CEO of CeuticalSoft, a company dedicated to the design and development of expert data analysis applications for the pharmaceutical industry. He has twenty years of experience with scientific programming and an extensive background in drug discovery research. He is also the Chairman of Phoenix & York Business Solutions a company based in Chennai India.