ERP/Finance Solutions for Biotech Companies: Door Number One or Door Number Two?
Early stage biotech companies, especially those needing to meet SOX requirements, have few options when it comes to ERP/financial systems. It used to be there were at least five to choose from. Now there are two.
Door number 1: Oracle’s NetSuite.
Or.
Door number 2: Microsoft’s latest Dynamics iteration, D365 Finance and Supply Chain. (Note: The D365 enterprise version used to be the AX solution which has been converted to HTML5 and made deployable in an Azure data center environment. IMO, they’ve made this way too confusing)
Short Term (NetSuite) versus Long Term (MS D365)
Why is NetSuite a short term solution for a biotech company that uses CMOs (contract manufacturers) and 3PLs? Because you can’t validate Netsuite for intended use and their inventory managment functionality is limited. NetSuite doesn’t meet generally accepted industry standards. (The longer term option here is Oracle’s Fusion product which just makes me cringe.) (Update Feb 3, 2023: after a Netsuite implementation at a biotech company in 2021 with a Jan 1, 2022 go live, I don’t even think NetSuite meets minimal procurement/financial requirements in the life sciences space.)
There are many uncertainties with early stage biotech companies, not to mention resistance to adopting to technology, that make it difficult for management to choose financial and distribution systems based on a longer horizon. I can appreciate this.
But in choosing a financial-only solution, you are almost guaranteeing that at some point in the next 3–5 years (if not sooner), you will be implementing a new ERP/MRP solution to accommodate inventory tracking for inventory management, lot traceability, CMO management, and cost management. Especially if there are a lot of moving parts (i.e. multiple CMOs and storage locations, purchasing raw materials for API production, etc.).
System Scope: Financials
My clients are generally migrating from Quickbooks to more sophisticated, cloud-based (SaaS) solutions that easily integrate with other best-of-breed tools like Concur or Expensify for expense and travel management.
The scope for Financials for early stage biotech companies (clinical phase 2 and earlier) generally includes:
— Requisition and approval routing
— Purchase orders and receipts
— AP automation including international payments and approvals
— 1099 data capture and reporting
— General ledger accounting including journal entries, approvals, and allocations
— Financial reporting (GAAP, IFRS)
— Consolidations (multi-entity, global)
— Fixed Assets
— Basic treasury management including ACH, reconciliation, and positive pay
— Mulit-currency
— Project accounting
System Scope: Beyond Financials
The following are generally not in scope for the initial implementation of Financials (Note: Some are considered in a second or third phase and others, not at all):
— Inventory management including lot traceability and costing
— Manufacturing (process or discrete) for costing and tracking
— Budgeting or integration with budgeting solutions (BPM/EPM) like Planful (formerly Host Analytics) and Adaptive Planning (formerly Adaptive Insights)
— Localization and multi-language
— HRMS (aka human capital systems), payroll, QMS, contract management, CTMS, RIMS, eDMS, CRM, performance management, recruiting
— Automated integrations with these other systems (noted above)
— Contract management (e.g. ContractPod)
— Equity management (Carta, e-Trade)
— Time tracking (for allocations)
— Month end close management (automated solutions)
How Do I Decide What to Recommend to My Clients?
It depends. Some things to take into account:
— The company’s timeline (Phase II, Phase III, close to commercialization, SOX requirements)
— Funding
— Organizational and management sophistication and maturity
— Organizational complexity
I highly recommend generating a technology (and compliance) timeline based on (and in alignment with) corporate objectives and the organizational timeline. This timeline should be revisited quarterly and updated annually.
While business and enterprise systems tend to be an afterthought (if given any thought at all) within life sciences companies, especially biotech companies, waiting until the last minute to implement, or not implementing at all, will create business and compliance headaches.
These systems aren’t cheap. The implementation projects, and subsequent use, will impact organizational productivity, so planning ahead is key.
Need Some Help? Not Sure if You Do?
Feel free to reach out if you have any questions or want to learn more. I can be reached by email at terri.mead@solutions2projects.com. To learn more, visit our website at Solutions2Projects, LLC or check out a blog post on our service offerings Solutions2Projects, LLC.
Other Resources: Blog Posts
Failed IT Implementations Are Expensive: Here’s How to Avoid Them
SaaS Systems: Validating for Intended Use
SaaS Adoption Will Lead to Compliance Issues for Life Sciences Companies
