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November 2012

How Clinical Research Organizations Are Transforming in Today's Environment -- Part 2

The Solution for CROs

The previous blog in this series discussed the increasing growth rates and related issues seen the Clinical Research Organization (CRO) space due to strategic partnerships, globalism, and market consolidation from mergers and acquisitions. This kind of growth inevitably presents challenges for CROs trying to generate data from fragmented, non-integrated systems. There are high-cost pressures to integrate processes and information systems, while optimizing resources to lower costs.

The industry is working almost exclusively on paper with the need to enter data twice to check for inconsistencies. As is the case with most mergers and acquisitions, technology and process incompatibilities are leading to divergent data storage and availability. Furthermore, integrations are non-existent between applications specific to CROs, like clinical trial management systems and electronic data capturing, and corporate systems such as enterprise resource planning (ERP) and project portfolio management (PPM). The situation is resulting in significant inefficiencies, data inconsistencies, and process failures.

To remain competitive in a worldwide market, creating global data visibility and transparency while maximizing resource capacity has been imperative for CROs. This can be achieved only by first integrating processes and then integrating the systems that support those processes. CROs need to further advance and support best practice processes with state-of-the-art technology systems to appropriately utilize resources.

CROs depend heavily on resources (human and non-human) for both strategic and operational support and have a big impact on the cost of the studies themselves. Services Resource Planning (SRP) is an ideal application to optimize the use of resources and drive the cost of studies down, while enabling an organization to ensure:

  • More effective use of resources, such as clinical monitors, investigators, and research partners
  • Better communication and alignment across study sponsors, partners, and investigators
  • Improved resource budgeting and financial visibility between study sponsors and partners
  • Rapid response to changing circumstances that would otherwise consume resource time

Of course, organizational adoption of these processes and systems is an integral part of any new deployment and is supported by a SRP enterprise solution. SRP is purpose-built for project-driven organizations to enable optimization of global resource pools with best-in-class tools and techniques to increase revenue and maximize profits. For more on this topic, I invite you to read the IDC Executive Brief titled, Service Resource Planning: Systems for Effectively Managing a Project-based Business.

What solutions are working in your CRO? Share by leaving a comment below.

Related post: How Clinical Research Organizations Are Transforming in Today's Environment -- Part 1

13 Key SRP Metrics Vital to Profitability for Tech Services Companies

Having worked in the Professional Services industry for nearly 25 years, I have helped numerous PSOs and IT organizations utilize software solutions to manage their businesses. My extensive experience as both a management consultant and software design has given me a unique perspective into Services Resource Planning. As the need for it becomes increasingly prevalent, I am eager to share my insight.

Vital Metrics for Tech Service CompaniesServices Resource Planning (SRP) is critical for success for all service-driven companies, particularly in the technology services industry. Accurately identifying project requirements and optimizing resources to deliver those projects is essential. This two-part blog series will provide a high level overview of the types of metrics and dashboards that are commonly used in tech services organizations that have mastered SRP.

Fundamental to managing any services business is good visibility across a number of functional areas. Insight into how each area is contributing to or hindering profitability is vital. There are key metrics that need to be monitored from three perspectives: Enterprise-wide, Services and Client. Looking across the enterprise, the starting point is on the financial side. There must be a clear understanding of:

  • 1. Total Revenue – a sum of revenues from individual projects, including consulting revenue by service type and location
  • 2. Margin – revenue minus direct costs
  • 3. Overhead costs – indirect costs such as facilities and administration, etc.
  • 4. Profitability – margin minus overhead costs

From a services perspective, metrics should be broken down by service type, from implementation to training. Analytics will help determine:

  • 5. Revenue by each service
  • 6. Margin by each service
  • 7. Which services are driving revenue and growth
  • 8. Which services are under performing
  • 9. What factors may be driving margins down, such as revenue leakage and low billing rates

From a client perspective, the focus is always on keeping the client happy and buying additional services. Client retention is based primarily on client satisfaction, which can be measured with surveys and post-implementation reviews. To ensure client satisfaction and ongoing revenue, however, there should be tools in place that provide real-time access to:

  • 10. Project Status, including milestones, financials and risk
  • 11. Revenue & Margin from current and completed projects
  • 12. Demand for additional services reflected in the pipeline
  • 13. Cost of sale per client (effort taken to close a deal) – this can have a significant impact on the true profitability of a project

As previously stated, visibility into all areas of the business is paramount. Beyond the financials, resources are another major component to consider because tech services companies aren’t selling a product as much as the knowledge of their people. Employee satisfaction and turnover rates, in addition to utilization, are valuable metrics to observe since good, skilled people take their knowledge with them when they leave an organization. This puts the company at increased risk of being unable to deliver the expected service without interruption or modifications.

Decisions that change and improve a services business rely heavily on all of these metrics so their accuracy and reliability must be ensured. When companies understand what's driving the top level revenue and margin, they have greater control in boosting profitability across the business.

Do you have visibility into the metrics from the enterprise, employee and client perspectives? What are some of the key metrics that drive profitability in your organization? Share by leaving a comment below.

How Clinical Research Organizations Are Transforming in Today's Environment -- Part 1

The Challenges

There is a significant transformation underway in the clinical research organization (CRO) space. The CRO market revenue amounts to approximately $30 billion, which is primarily generated from its core business of conducting clinical trials required for drug market admission by regulatory authorities like the United States Food and Drug Administration (FDA) and the European Medicines Agency (EMA). Further revenue is generated by consulting services around market introduction and support in medical communications.

The CRO industry has seen significant growth and consolidation in recent years. This two-part blog series will discuss the challenges CROs are facing and what they can do to manage the growth.

Over the last 15 years, CROs have seen a 10-15% growth rate primarily because of increased outsourcing of clinical research from the big pharmaceutical companies and the emergence of numerous biotech companies creating new business. According to industry analysts, this trend is expected to continue.

Although growth may be inevitable, CROs remain challenged to adapt to this volatile environment. The emerging initiative for CROs is to form strategic partnerships with big pharmaceutical companies to obtain clinical research outsourcing resources like staff and facilities while merging processes as much as possible. Some examples of these partnerships are Eli Lilly with PAREXEL®, Sanofi with Covance, Astellas with INC Research®, and Pfizer with Icon and PAREXEL.

Adding to the challenges of rapid growth is the need for a global footprint to service international customers and market consolidation due to mergers and acquisitions. As a result, many CROs:

  • Are pressed to establish global, cost-efficient processes that provide corporate data of the operational business in a consistent way
  • Struggle with a desire to deliver studies quickly and with reliable results within the strict regulatory framework, yet are severely obstructed by fragmented, regional or partly existing processes
  • Have systems that aren't fully integrated, leading to duplicate data entry and inconsistencies

In the new CRO world, clinical data, general project data, financial management data, and planning data will be integrated more effectively and made readily available. The next blog will discuss how CROs can spearhead their existing global data challenges to effectively align resources to the right projects while improving financial visibility to drive better business decisions.

For more information on this topic, read Louise Allen's blog titled SRP -- Changing the Game for Services Driven Organizations. I'd like to hear from you. How are the changes in the clinical research industry affecting your organization? Share by leaving a comment below.