An ongoing pattern of hesitancy exists within the pharmaceutical industry, a reticence that highlights how slow companies are to adopt new technology—an unfortunate trend that is costing companies literally billions of dollars every year. New data indicates that when it comes to Enterprise Quality Management Software (EQMS) implementation, managers are being particularly hesitant to move forward. According to LNS Research in its recently published Research Spotlight “The Cost of Inaction - Taking Quality Management Processes Digital” the industry’s uncertainty about adopting useful technologies like EQMS stems from the same issue: ”While nearly all executives acknowledge that quality is at the core of most business challenges, many position the health and capability of their quality management solution far down on the list of priorities.”
Unfortunately, the gap between quality needs and actual EQMS investment is nothing new. In 2008 Nora Dyer, Global Head of Clinical Development Operations at Novartis, suggested that a lack of understanding among key decision makers is the biggest hurdle to adopting an automated solution. “Adoption of e-solutions is hindered when important stakeholders do not clearly understand and support the overall business rationale,” said Dyer, “and don’t drive towards the change. Therefore, an effective communication strategy using multiple channels to reach the end-user is essential for a successful implementation.” 1
Most quality professionals see the need for an EQMS system. But the main challenge today, as in 2008, seems to be focused on executives and the budgets required to implement an EQMS system. As the data from 2008 and the more current data from LNS indicates, companies’ budgets are still being spent on what are perceived to be higher, more immediate priorities. Yet, improperly prioritizing EQMS can cost a pharmaceutical company millions of dollars each year, as well as cause them to lose market share to competitors who have already successfully invested in an EQMS system.
MORE PLANNING AND TALKING THAN IMPLEMENTING
LNS surveyed over 750 quality management executives and senior leaders. The results of this survey were telling. While more companies are talking about adopting an EQMS system, few are making progress when it comes to actually budgeting for and implementing such a system.
In Figure 1, Survey results show a clear trend when it comes to investing in EQMS. As you look at the graph, note the following observations:
1. Fewer companies each year say they have “no plans” to implement an EQMS system. This indicates that it’s on their minds more than before.
2. More and more companies are in the planning stages of implementing an EQMS – up from 25 percent in 2012 to 34 percent in 2014.
3. The number of companies that have actually implemented an EQMS has remained more or less steady, with conservative growth from 19 percent in 2012 to only 21 percent in 2014.
4. Actual budgets allocated to adopting an EQMS have remained stagnant at 6 percent to 7 percent over the last three years.
Not surprisingly, this corresponds with data MasterControl recently collected from almost 300 qualified prospects. Of those companies that fell out of the sales pipeline, over half declared either “no budget” or “other priorities” as the main reason for not moving forward with an EQMS. (Note that all of these companies were pre-qualified prospects who actively expressed an interest in getting an EQMS for their organization.) Just as the data from LNS indicates, even though quality management is viewed as being crucial, executives are still reluctant to invest in automated systems that can vastly improve this process, reduce costs, and increase profits.
The conclusion MasterControl draws from this data is that many executives managing highly regulated companies are still hesitating to implement EQMS system, especially compared to other departments that are eventually allocated the budget instead. It’s fair to say that most of these companies have the budget for an EQMS but are simply choosing to spend it on other priorities.
THE REAL EQMS ROI
LNS’ research indicates that, “…those companies with closed-loop quality processes recorded a median OEE (Overall Equipment Effectiveness) of 90 percent, which is 10 percent higher than those without closed-loop processes. Additionally, companies with closed-loop processes recorded a 4-percent higher median product compliance and 2 percent higher performance in percentage of on-time deliveries.”
Stating ROI another way, those companies who have implemented an EQMS improve manufacturing efficiency by 20 percent (from 80 to 90 percent), experience less than 1 percent product incompliance, and deliver 97 percent of their products on time. It doesn’t take a lot of accounting prowess to show that for even an average-sized, regulated company, these improvements can add up to millions of dollars in both cost reduction and additional revenue generated.
LNS points out that if you’re one of the 80 percent of regulated companies that have not yet implemented an EQMS system, the other 20 percent (your competitors) are probably experiencing a significant competitive advantage over you already. The “enemy” to overcoming this competitive disadvantage is the inability to replace outdated (and perhaps home-grown) quality systems with a proven, commercial EQMS system. According to LNS, “While homegrown and point solutions deliver value up to some extent, many maturing organizations have surpassed their usefulness and are essentially forcing quality management professionals to ensure quality at the global scale with less resources than competitors. Whether executives are facing pressures to improve costs, achieve compliance, serve customers better, or introduce products to the market faster, there is a strong connection between each of those goals and quality management. And next-generation quality management technology is accelerating progress toward those goals.”