SAP

SAP ERP implementation in a Global Organization would have followed several waves or roll-outs often executed by different  vendors who in most cases would have followed different solution templates resulting in less consistent solution in SAP Production System which in turn will have scope to achieve further simplification and harmonization. Not only it will reduce the effort and maintenance cost but will also be a step in having high degree of harmonized business solution across the Organization. This blog discusses options which can be put in place to effectively measure and increase the extent of solution harmonization in an Organization.

SAP ERP Support Managers should set the target for the SAP support operations team to provide solutions that forms standard solution for a given requirement and are flexible enough for deployment for all or majority of the live sites. Raising the bar on year by year basis such an initiative will amount to increased deployment of harmonized solutions for various requirements. The harmonized solution would consist of the standalone or combination of configuration and/or SAP standard transaction and/or custom development that enable a particular requirement in SAP System. It will also reduce abundance of custom developments which are mostly the cause for urgent incidents and thereby would result in making the SAP ERP Production system more stable.
 
The first step is to setup the KPI to measure the standard solution deployed by the SAP Support team. It could be X percentage of total work orders in a quarter is solved through Harmonized Solution. Guidelines should be developed that all requirements should be solved using solution which is scalable and flexible to be deployed for all sites for the same requirement. Exception should be approved by the relevant design authority and that too for regulatory compliances. Guidelines would be extended to Development standards, Configuration naming convention and support process documentation that are used by the SAP support team for providing solution. The Ticketing tool should be amended to capture the solution type that is used for the work order. Harmonized solution can be of the three types: a) SAP standard solution for a given requirement   b) organization`s core solution for a specific requirement and such requirements would remain same across all geographies and c) regional solution used for regional requirement and all sites in a given region should use the same. The SAP Support team should fill in the relevant solution type for a given Work Order.  Thus reporting metrics for the Harmonized solution KPI can be prepared and Support Managers can monitor and track the same. More harmonized solution will translate to increase in process and solution standardization. Over a period of time, if the SAP Support team is providing harmonized solution to more than 60% of the workorder for a given period the dream for business solution harmonization would be achieved.

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Global Pharma Researh & Development (R&D) spend has witnessed the annual growth rate of about 10% each year in the last three years but for next three years it is forecasted to grow annually at mere 2%. On an average, the Pharma companies annually spend 20% of their sales revenue on R&D activities. The growth in annual sales revenue will be under pressure on account of patent expiry of money spinner drugs in next couple of years.  For example, patent for Lipitor (Cholesterol management drug) often referred to as billion dollar pill is set to expire next year. Inspite of the challenges, Pharma companies are planning to sustain to the almost same levels of annual R&D budget with minor yearly increase for next three to four years. Clearly there is a growing concern and strategies are being put in place to derive more mileage from R&D.

Pharma companies have to innvoate the R&D strategies to include new ideas. One such idea is the joint drug development through alliance or consortium of Pharma companies. Though the idea may seem counter productive as Pharma companies are competitors to each other in global market but it may make sense to explore it on selective basis to limit the R&D spend and achieve better results through sharing of resources. Not only it will speed up the time to market but will also offer better return on investment for the participating companies. High Investment research areas  like developing technology for targeted therapies using nanotechnology are the potential areas. Once technology is developed the participating companies can use it individually or jointly to develop drugs for specific treatments. Gene therapies are other possible candidates for shared research as it is foreseen to be the treatment of future.

Other idea  would be to include developing drugs for neglected diseases. This segment can be potential revenue source as increased awareness and information influences affected population to seek treatments. Lifestyle diseases and localized regional diseases froms part of this segment.

Outsourcing of research activities is also seen as one of the way to speed up the research and development activities. Established and non- confidential parts of the research process can be outsourced. This trend will continue to gain prominence as Contract Research Organizations (CROs) in low cost economies like India and China have emerged as mature entities to cater to the research and managing clinical trial needs from Global Pharma companies. R&D outsourcing will reduce time to market for the new drugs and will free internal resources to focus upon core function of new drug discovery and development.

Increased uses of technology and advancements in computing have proved useful in drug development and related simulations. Increased use of CAD/CAE in rapid and virtual prototyping Pharma companies should continue to invest in this realm and be at the forefront of the latest technology. The key visibility from management perspective will be to track R&D spend, Performance of R&D Programs and Projects, Process & Product Lifecycle Management. In one of my next blog, I will discuss how IT can be used effectively for bringing efficiency in R&D processes.

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Security design is very critical in any SAP project. Most of projects will have major security issues during go-live,hyper care & steady state with incorrect authorization analysis,design and frame work. The security role authorizations frame work is important for compliant user provisioning for any project and in particular for business transformation projects.

SAP security is robust and well defined as compare to other ERP systems. In Business transformation projects, the SAP security shall be new to the end users and they should be given good training. The security awareness sessions shall be part of training.

Few important design points will be covered in this blog.

 In this blog (part-1), we briefly touch the SAP Role and Authorization Design Framework driving factors and implementation steps.
Typically, SAP Security design shall be necessary during business transformation and during acquisitions/merging of two or more company ERP systems. Sometimes, R/3-ECC upgrade and audit remediation (SOX compliance) will drive the security redesign (depends on seriousness of CIO, CFO).

We will discuss briefly for security design process for business transformation scenario. In a typical transformation process, the legacy process will be modified and mapped to SAP ERP business functions. The process teams will identify the main/core business processes important for the company in SAP ASAP (Accelerated SAP) methodology first phase (Blueprint phase).The key performance indicators (kpi) shall be identified. In case of global projects, the process modeling tool (ARIS) shall be used for generation of SIM line diagrams and generation of the associated SAP transactions in the process, sub process, functions, and sub functions level. A global Template framework shall be developed for various regions (like Asia Pacific, Continental Europe, and North America including Latin America countries).The template shall be rolled-out region by region.
The process teams will provide the slim line diagrams and the core business processes and the associated job roles will be generated and synchronized with solution manager in ARIS modeling tool. Logical grouping of organizational access (e.g., plant code, sales org, business unit, purchasing org) shall be done based on key performance indicators and the core process documentation.

The security design will be based on the process teams' documentation on various business processes, functions and business job roles. SAP security was robust as the ABAP programs were developed and thoroughly tested for various authorization checks. Hence, the functional testing for authorizations is very critical in security redesign projects.

We can discuss more on the global process oriented approach in part 2 of this blog.

Posted by Raghu Duggirala at 9:59 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

What has helped retailers eliminate costs, manage assets and provide self checkout facility to customers? What has eliminated multiple resource requirements for handling and tracking packages and parcels in transport industry? What has off late reduced the burden of manual intervention at the toll gates?

No reward for guessing and it is RFID (Radio-frequency identification). Simply put, RFID (also sometimes referred to as Auto ID) outlines a technique of identifying an entity relevant to business, by use of radio waves (with the help of RFID tags and tag readers). Now various industries have seen multi faced utility of RFID. Let's assess its usage in Pharma Manufacturing with focus on regulatory compliance.

Taking a step back, we already see the usage of RFID in Pharma in various pre-manufacturing phases of product lifecycle, such as handling manufacturing raw material and in Supply chain management. Asset management, tracking the candidate artifacts, warehouse management are areas where we already see the usage of RFID in terms of tracing the materials, tracing its locus within the storehouse and manufacturing units, etc. Apart from this, RFID has also added value in Supply chain management in terms of tracking orders, maintaining reorder levels, accuracy of orders, quality control and warranty / maintenance of the same.

RFID has spread its tentacles into various other related forums of importance to business. Post manufacturing for example sees the importance of RFID in terms of ensuring shelf availability of popular products, self checkout facility for the customer, checking theft and tracks product returns and recalls. This has made several organizations realize the benefit and huge potential of RFID technology even with experimental partial implementation and it's ROI.

Joining dots from Asset management, Supply chain management and Consumer we would like to assess how manufacturing can leverage RFID technology. In particular, let's see how RFID can help in Pharma Manufacturing from the compliance perspective.

Firstly let's get to know what makes Pharma manufacturing special and different from other manufacturing industries. Apart from many other differences, Pharma manufacturing comes with a burden of catering to various regulatory and incorporation of best practices to the process and thereby provides sufficient proof to the assessing / auditing regulatory authority of the foolproof manufacturing of the products. Investment that goes into ensuring the same is enormous and as these are being done manually or semi-manually, there are a lot of areas where automation of processes with non-intervention of manual workforce can maximized.

Apart from many other generic advantages, RFID can go a long way in enforcing and facilitating implementation of regulatory compliance guidelines and CGMP (Current Good Manufacturing Practice).

· RFID could be a technique to ensure that an entity in inventory has passed all phases of quality check that would ensure adherence to the regulatory standards

· To track and report to control systems, various phases of processing that the raw materials have passed which could formulate the proof of quality check

· To synchronously link up various systems like control systems, execution processes and production units.

· Facilitate compliance to 21 CFR Part 11 compliance with complete tracking, verification, and validation process

· Bring in precision in manufactured product tracking and genealogy by collecting historical information by referring to product ID, time stamp of manufacturing, production batch number, at each phase of manufacturing process, and across different manufacturing units. This will help automate reporting and labeling process as well.

· To track reusable assets and store details of the location and visibility of such assets

 Some critical Techno-functional steps involved in conceptualization and implementation of the solution are as under:

 · Blueprint a well thought out Technical architecture that weaves well with the existing infrastructure. More the deviation, more is pinch from investment and integration standpoint

· A lot of sub-systems will get affected in the process. Changes are rarely standalone and hence, middleware, wrapper applications, devices, ERP systems, reporting and control systems are to be integrated

· Budgetary plans need to incorporate support and maintenance of the system in an ongoing process that co-exists with rest of the IT infrastructure.

· This will affect the scope of regulatory assessment and audit. Hence SoPs, guidelines and custom thumb rules for RFID related processes is a must. A lot of documentation changes to the existing regulatory artifacts are inevitable.

Deploying RFID technology in Pharma manufacturing cannot adopt a big bang method. This involves a conscious assessment of impacts on various aspects, units and entities involved in manufacturing and the investment made on information systems presently. However, integration of the new information captured by RFID into existing systems needs to be a carefully thought approach and needs a lot of visibility into the adaptability of the same. Yet this can mean a better cost effective compliance, broader visualization of plant floor and information infrastructure that lead to minimized costs and uninterrupted production cycle.

Posted by Anand Krishna Sharma at 6:10 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

The blog discusses how Electronic Prescription will influence the pricing decisions of the Pharma companies which are already reeling under the margin pressures owing to patent expiry of most of the blockbuster prescription drugs in next 1-2 years. Reforms are being planned by the governments to rein in the rising cost of the healthcare and to bring it to affordable levels for the masses.

One estimate indicated that in the USA, the Pharmacy has to call back treating physicians for 30% of the prescriptions for clarification. Thus electronic prescription evolved as a way to streamline the prescription process. The primary role of e-prescription is the transfer of electronic prescription from the treating doctor`s computer to the to the pharmacy computer.It is aimed to bring reduction in prescription errors and upfront identify drug interactions and thus contribute to increased patient safety.Healthcare Systems in developed countries are in the process of implementing the e-prescription system. USA is fast to adopt e-prescription where the National Council for Prescribing Drug Programs has laid out the policy, standards and various formats. Other developed nations are also in various stages for implementation of electronic prescription system.

Increased pressures to control the healthcare costs has made the e-prescription system to be looked in the new light.The system can be used to control the drugs and medicines available for prescription.Healthcare Payers will be in a position to influence doctors with clinical and relevant information on various less costly drug alternatives, generics or medical insurance plan preferred medicine which can be prescribed instead of a high cost patent drug.
  
Pharma companies will be under pressure to adjust the premiun being charged on the patent drugs prices where the alternatives drugs are made available in the e-prescription system.Price pressure will be felt more where the multiple patent drugs are available from different Pharma companies for the same disease.Pharma companies need to be innovative on the patent drug pricing aspect in the years to come.They may even have to collaborate with Healthcare Payers with data points and other relevant information on why the patent drugs should be the preferred choice of treatment over the other drug alternatives.One thing is sure, wherever drug alternatives exist and provides same efficacy and safety for the patients, the days of commanding un-realistic premium for patent drugs will soon be over for the pharma companies.

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Pharma companies are trying to outsource more and more manufacturing activities to contract manufactures so that they can focus on core activities of drug discovery and marketing. One estimate pegs the annual revenue from contract manufacturing and research activities to approximately 180 Billion USD for year 2010 with the annual growth rate of approximately 11%.There is a rapid rise in the pharma contract manufacturing organizations in India and China in recent years and this will further aid to the growth of the contract manufacturing industry. The blog explorers various challenges that CMOs are likely to face in medium to long term timeframe.

The Pharma Contract Manufacture Organizations (CMOs) needs to reinvent themselves for the challenges that lie ahead. From the traditional role of providing cost efficiencies, capacity, labor and machinery the CMOs have to get ready to the more complex process technology that would be required to manufacture new drugs. The challenges of stringent process control and increased automation will require further skills and new ways of working. Also, it is foreseen that specialty drug administration will have an element of information technology in it as controlled dosage would be required to be released at a targeted spot in patient's body. Though the technical know-how will be supplied by the pharma company but the CMOs have to invest both in technology and people to meet this challenge. To achieve efficiencies and to beat the competition, CMOs would have to invest in IT Application in areas of ERP, MES and Industrial Automation.
 

Adoption of GAMP (Good Automated Manufacturing Practice) will help CMOs to build in quality in every process step apart from having it in a batch of a pharma product. GAMP will ensure that quality is covered on all aspects of production for e.g. technical equipments, staff hygiene, raw materials etc. GAMP coupled with cGMP (current Good Manufacturing Practices) will yield better compliance of manufacturing installations, processes and related systems. Since the products are sold in global markets, it will be important for CMOs to have Quality system that meets the regulation of the various markets and of the pharma companies. Documentation compliance will be important as process is evolved and confirmed during trials.

CMOs will have to invest in project management skills as project scope would be exposed to scope changes owing to manufacturing complexity and various trial manufacturing runs and subsequent revisions during Lab to Plant Scale-up phases.
 

It will be interesting to know about other challenges as well. Please highlight any other

challenges that in your opinion will impact CMOs. 

Posted by Deepak Kumar at 9:51 AM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

 Businesses become successful, doing what they have been doing over a period of time and hence the question - why change something which aint broke?Transformation programmes generally struggle to achieve desired results, HR transformation programmes more so. All efforts are made to ensure that the IT application landscape and solutions meet the desired scope, adequate training is put in place, but even then calling out a success story is constantly elusive. What ails them, despite serious and well intentioned sponsorship from the top management? The answer to this question may be as many as consultants who have worked on these programmes, but as all would unanimously agree that the strength of the change management made or marred the initiative.

What makes change management so critical in this whole game of business transformation? We need to realize that any change, application, technology, business process or organizational makeover is ultimately delivered by human beings and for human beings, and hence resistance to change will always be there. The primary idea of delivering change management is to make people aware of the change that is going to happen, why it is happening, and what it will eventually lead to. Change management experts have debated this communication over the years, in order to identify any behavioral aspects that would make it easier to deliver the message, and improve compliance. For the recipient of this communication, what simply matters is the understanding of how this change will influence his/her daily existence. Lack of a direct answer, has the genesis of underachievement of transformation programs. The vehicle to deliver this message is clear communication which has the capacity to inform and allay uneasiness about the daily existence. Organizations use town halls, print & electronic media as well as portals to spread this message, but what needs to be considered is also the involvement of direct line managers as employees trust them the most. Besides the message gaining legitimacy, it can also be conveyed in a manner which the employee understands. End to End process is a concept only for consultants and managers. Employees generally know only about the parts of the process that they do on a regular basis, and hence the communication about job roles makes little sense to them. In the previous programs, it was observed that people who were successful in the end user training examinations, were the one's who understood best how to do their part of the process most easily on SAP and also their line manager's understood the impact of the end to end process.
This communication channel has to stay open all the time, even when the transformation program has ended and steady state has been achieved. As per the change management experts, a learning organization is one which has an ongoing change management initiative and has the capacity to disseminate this information adequately and consistently. Change management also involves re-writing and updating the policy manuals, procedure documents which are available in the public domain, and this generally gets neglected against the backdrop of end user documentation and training materials made available by the System Integrators.
We have to make an effort to convert the line managers as regular change agents, and to provide them the required information to communicate with adequate forums to ensure that the message reaches the right people in the right time to provide the right results and thereby generate the value that transformation programs target to achieve.

Posted by Jitendra Chakravarty at 7:41 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

The concept 'Service Introduction' is gaining rapid popularity in IT world as an 'effective tool' to introduce a new application/service into an established system.

In short, Service Introduction is the management of activities to ensure that applications/systems being developed to meet all operational requirements before getting introduced to 'Production or Live' environment. It also has to ensure 'Maintenance teams' are comfortable in providing the required services from the day one.

Key Stakeholders:

Typically the SI team needs to work closely with the following stakeholders...

• Application Development Team (functional/technical team)
• Project Manager - Application Development
• SI Lead/POC - Client Team
• Contract Management team
• Sales/Client facing group
• Client SMEs
• Project Managers - Third party tools/systems (if involved)
• Application Maintenance -Client team
• Application Maintenance- Service provider
• End users

Key SI activities and Deliverables:

Here are some of the key activities and deliverables from SI manager / team in the relevant Project life cycle phases.

a. Justify & Initiate phase - Receive Purchase order and provide initial response to   Statement of Work (SOW)

b. Plan phase - Identify and finalize the 'Service Acceptance Criteria' for the introduction of the new application/service

c. Design Phase -

• Produce Final and Firm commercial response and estimates
• SI work plan
• Support Impact Statement ( A comprehensive document, which talks about the support team's understanding of the new application/service getting developed)

d. Build Phase -

• Review Testing Approach, plan and schedule of AD team
• Identify KT topics along with AM team

e. Test Phase - 

• Publish KT plan and Schedule
• Coordinate KT and Reverse KT activities

f. Deploy Phase - 

• Review of Test results /Test report
• SAC review and Go/No Go decision
• Finalize 'Warranty timelines' and 'Support Model' during warranty

g. Close Phase - 

• Observe ticket/issues pattern during warranty
• Closure of pending SAC & other SI activities
• Work on other PMO docs like 'Lessons learned' etc

To have a successful 'Service Introduction' of new application, it requires maximum possible support from all stakeholders. Here are some of the responsibilities of Application Development and Application Maintenance teams.

Application Development Team's responsibilities:

• Intimate and communicate appropriately incase of any change in project scope, deliverables and timelines etc.
• Place all project deliverables in applicable place holders
• To work with client SMEs to identify key business scenarios to be included as part of testing
• Complete comprehensive and detailed KT sessions with concerned support teams
• To make sure all 'Must Have' requirements have been met as part of application development
• To close all open tickets as part of testing phase
• To work proactively for the closure of SAC
• To work with End users and Third party tool/service providers for the benefit of overall solution

AM (Support Team's) responsibilities:

• Through review of basic project documents like User Requirement specification, Business blueprint and Configuration rationale.
• To identify the key personnel to work on SI activities of the development project
• Review the testing approach, plan and schedule of AD teams and to provide the inputs as required.
• Indentify KT topics and duration of KT
• Prepare and present Reverse KT activities
• Review Test scripts and results
• Proactively involve in resolution of issues/tickets identified in testing phase.
• Make sure relevant Support roles are in place and resourced in advance of the 'Service commencement' into support
Practical Implications:

Successful 'Service Introduction' into support functions isn't that easy as it appears, simply because of involvement of

• Multiple stakeholders
• Different vendors
• Customer specific requirements
• Organizational change management aspects
• Budget and time constraints and
• IT related technical aspects

Conclusion:

Each organization can have its own approach towards 'Service Introduction' but prime focus on some of the key activities like, thorough understanding of priorities of multiple stakeholders/vendors, defining the SI responsibilities of each team, effective monitoring & review mechanism and quantifiable SI deliverables are important for success.

Needless to say right people in right places can only enhance overall system.

Posted by Virupaksha Gopala Krishna Kalaga at 12:44 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Financial Supply Chain Management (FSCM) in simple terms means managing demand and supply of cash/cash equivalents. SAP has come out with SAP FSCM functionality or suite of applications to manage this more effectively and efficiently thus helping companies to manage the costs associated with this process better. In this posting we will look at what are the features and functionalities available in SAP FSCM and how it can be leveraged better for the benefit of business.

Key business areas where SAP FSCM functionalities can be leveraged are input for more efficient working capital management, receivables management and cost management of payments.  SAP FSCM functionalities are enabled by SAP Netweaver technology to enhance the reach and better integration - both within and outside the organization applications as well as integrated within SAP ERP Financials.

SAP Financials is broadly organized in 4 broad functionality areas to support all financial management processes as well as integration with other business processes:

• Financial and Management Accounting
• Financial Supply Chain Management
• Treasury and Risk Management
• Corporate Governance

Prior to ECC 5.0 most of the functionality supporting business processes related to claims, dispute, and credit management were handled outside SAP application using legacy systems or handled manually. Integration with the Account receivable and cash management was more of a manual activity in most of the cases.

With ECC 5.0 SAP introduced SAP Financial Supply Chain Management (FSCM). Key objective is to bring business processes on the receivables and collection side within SAP solution thus providing more value. It helps in tying all the loose ends around receivables, collections and cash management within the organization thus leading to better integration and last step connect with the customers.

As with other SAP products this has also evolved over a period of time. Initially Cash and Treasury Management were also part of FSCM due to close integration needs but today they are part of Treasury functionality. Though some of the functionalities were available in previous versions but benefits were limited. Most of the other functional areas are well established and mature from functionality perspective while FSCM is a new functionality with very limited knowledge and implementation experience available in the market.

Key functionalities/applications within FSCM are:

• Electronic Bill Presentment and Payment - This application provides a better and more real time interfacing with the customers and vendors with added benefit of self service to view the accounts as well as make electronic payments. It is mainly caters to presenting the invoices and account statements to the customer and vendors over the internet. Key benefit is reduction in  overheads and cycle time associated with this process for both - organization as well as its customer and vendors.
  
• Collections Management - This application provides the functionality to manage the collections more efficiently and effectively. This is similar to the collection management functionality already present in SAP FI-AR component with added features like sending payment reminders, portal catering to collection agents, devising collection strategies and managing agreements related to payments from customer.
  
• Credit Management -   Provides with functionality to manage credit policies and risks associated with the receivables centrally - even for scenarios where the business is supported by multiple instances across the globe. Thus helps in implementing uniform credit policies and rules across the globe as well as have one view for a customer who is dealing in multiple countries. It also brings in functionality of managing complex customer credit account hierarchies and rules associated with it.
  
• Dispute Management - Facilitate and automate a lot of manual activities involved in handling disputes related to payments related to receivables in electronic form. This also leads to better integration and flow of information across multiple stakeholders involved to resolve the disputes.

Some of the key benefits SAP FSCM brings in are:

• Last step integration with customers and vendors with minimal infrastructure requirements from customer or vendor side thus leading to higher adoption rate
• Reduction in manual activities, communication and co-ordination efforts thus leading to reduction in overall cost of managing and doing activities in the receivables related process areas
• Usage of business partners across multiple functionalities provide more flexibility as well as streamline the m data maintenance across the landscape
• Information available almost in real time to better manage the working capital and receivables thus reducing the cost associated with it

In subsequent posting on this topic we will understand in more detail each of the application areas in SAP FSCM in more detail.

Posted by Anoop Jain at 5:36 AM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )