Medical Device Link.

INFORMATION TECHNOLOGIES

The Enterprise Information Portal: Gateway to Market Strength

An e-business innovation gives medtech companies a time-to-market edge.

Amy Valley

Feeling the relentless pressure to bring new products to market before the competition, medical technology companies are always looking for an edge. The reason is simple economics: being first with a product that has the potential to yield significant margins—such as a drug-coated stent or next-generation pacemaker—can translate into millions of dollars in earnings per month. Some organizations already enjoy an edge in time-to-market that comes from a new technology called the enterprise information portal (EIP). An EIP is a single Web-based interface combining numerous applications that is designed to improve internal and external project collaboration.

Medtech companies traditionally have focused more on revenue growth than on cost reduction or maintenance of market share. Today's marketplace won't stand still for such an imbalance of emphasis, however. The innovative EIP concept is important because the portals facilitate the simultaneous achievement of all three goals by—among other benefits—increasing productivity so that medtech organizations can more quickly implement studies, complete clinical trials, and obtain engineering results.

One way that EIPs bring about all of these benefits is by optimizing the e-procurement function. Firms that take advantage of this new e-procurement strategy improve their chances of being market winners. Those that don't, risk being losers.

This article spotlights the business advantages of EIPs, showing how they function, how they optimize e-procurement, and why that is critical. It concludes by discussing how medtech companies are gaining a competitive edge through EIPs.

Three Big Business Benefits

Medical technology organizations are using EIPs to augment their traditional goal of increasing revenue by also reducing costs and maintaining market share. These “big three” business benefits serve to enhance competitive advantage and provide for an accelerated return on investment.

Cost Reduction. EIPs help medtech companies reduce the cost of laboratory supplies in several ways. By using an EIP to coordinate tightly with their public- and private-sector engineering partners, companies can more rapidly compare available suppliers and create links with electronic marketplaces in order to receive the best possible prices and levels of service. In addition, by cost-effectively matching supply with demand through EIP-hosted collaborative planning tools, they can reduce inventories of such items as lab supplies without impairing their ability to meet unexpected demand or respond quickly to other market shifts.

Cost savings can be realized by speedily ordering direct or indirect supplies from on-line catalogs rather than keeping supplies on hand for extended periods. Together, these time and cost reductions can improve procurement productivity and shorten the time it takes to bring a new product to market.

Revenue Growth. EIP technology provides for more-efficient external and internal collaboration that ultimately supports revenue growth. For instance, a medtech company can share its design specifications through permission-based folders made available on its portal. By giving designated stakeholders from manufacturing, R&D, and other areas of the enterprise convenient, secure access to important information whenever they need it, the firm can optimize its planning and execution processes.

• This optimization has external as well as internal reach. The benefits of seamless collaboration and an enhanced workflow include:
• Quicker responses to demand.
  
• Reduced order-cycle times.
  
• Improved use of assets (such as collaborating with a consulting engineer on-line and in real time rather than scheduling a physical meeting for sometime later).
  
• Avoidance of unnecessary capital expenditures (such as collaborating on-line with a product-testing company rather than purchasing test equipment and performing tests in-house).

All of these suggest how EIP technology can help a medtech organization bring new products to market more quickly and at lower cost.

Figure 1. Typical links that can be accessed from a medtech company's enterprise information portal (EIP), including both internal and external information sources. (click to enlarge)

Retention of Market Share. The improved planning accuracy made possible by an EIP can enable a medical technology company to provide higher-quality customer service and thus retain valuable market share. For example, customers can check detailed order-status information in real time by opening folders stored on the EIP. A hospital procurement officer who has placed an order for defibrillators might log in to the EIP and get the latest delivery information from the hospital's dedicated folder.

With the ability to meet customer requirements particularly rapidly through personalized interactions, a medtech organization can hold onto existing customers while working to improve market share by acquiring new ones.

How EIPs Function

An EIP may have the look and feel of a standard Web site, but it effectively functions as an on-line socket into which medtech organizations can plug existing e-procurement applications and services in order to customize their use (see Figure 1). Collaborative tools thus become more useful to employees within and beyond an organization. This can improve supply-chain functionality and enhance the value of the company's internal and external resources.

An EIP can function simultaneously as an intranet portal accessible only within the organization and as an extranet portal available to outside parties (see Table I). Key applications such as e-procurement are integrated with the portal. Medtech employees enter the intranet through their company's network to use the portal for purchasing direct or indirect materials and use the collaborative tools for strategic, tactical, and operational planning. Medtech organizations can grant access to the extranet exclusively to designated parties in order to ensure the security and integrity of the information being provided and exchanged. Business partners and suppliers most often will use the extranet to access collaborative tools that facilitate checking orders, viewing engineering designs, and other functions. With the necessary controls in place, the EIP can benefit the medtech company tremendously by giving all participants in the e-procurement network a single point of access for collaboration, a streamlined workflow, and any service they need.

EIP as an Intranet Portal. The intranet allows various functional groups within an organization, such as manufacturing, R&D, marketing, and sales, to work together smoothly not only on developing products but also on tracking and responding to their reception in the marketplace. The greatest value of the intranet is that it provides a standard platform for collaboration and workflow across the enterprise. For example, an R&D group working on a new product launch can, as a benefit of the streamlined, real-time workflow that an EIP provides, more efficiently inform the regulatory team—as it works on the FDA application for the product—that the product is experiencing problems in the lab. This way, the regulatory team will adjust its plan to file with FDA accordingly.

EIP as an Extranet Portal. The extranet enables customers, trading partners, and other outside parties to collaborate with the medtech company and to share and receive information. Customers can use it to check account information and personalized-order status (for example, a hospital checking on its order for a medical device) and to exploit collaboration tools (for instance, a battery manufacturer using up-to-the-minute information to determine how many units it needs to deliver to the company and when).

The extranet portal also can allow trading partners to participate fully in product development by streamlining the review of design documents, specifications, and marketing materials. If during new-product development a semiconductor chip needs to be redesigned or adjusted, or if FDA needs more information on the product, the challenge can be met quickly through the real-time collaboration made possible by extranet portals.

The trend in the medical technology industry is for an organization to first master internal collaboration by means of an intranet before it seeks to share information beyond the enterprise through the EIP as an extranet. This two-stage process helps ensure that the firm has established effective security measures and developed best-in-class collaboration tools that can be used when working together with outside parties. The EIP can be rapidly configured to support this shift through the addition of permissions for designated external participants.

Optimizing E-Procurement

From their desktops, via a single sign-on capability, EIP-equipped medtech employees can order materials and services on the basis of negotiated company contracts, can update purchasing records, and can engage in other activities—all without leaving the portal. Use of this new technology enables an organization to eliminate inefficiencies and improve its e-procurement processes by:

• Reducing off-contract supply purchasing.
  
• Maximizing the value of enterprise resource planning (ERP) systems and other back-office applications.
  
• Improving employees' sense of ownership and morale.
  
• Condensing multiple sources of data and points of contact across disparate systems.

Fewer Off-Contract Purchases. A medtech company can strategically source from one or two laboratory supply vendors, for example, to ensure that it is receiving the best price and delivery terms. A certain medical device manufacturer has developed an e-procurement system with EIP that enabled it to implement an effective strategic sourcing system. Contracts with the company's vendors have been optimized and renegade purchases of laboratory supplies throughout its global operations have been curtailed. The new e-procurement operation has helped the organization improve alignment with office and computer equipment vendors, leverage high-volume purchases, and reduce off-contract buying through a system that enforces standards, automates requisition and purchasing processes, and Web-enables paper-based forms for its end-users. As a result, the company rapidly reduced maverick buying by 27%.

Enhanced Back-Office Operations. EIP technology optimizes the utility of ERP and similar management systems by allowing medtech employees to define how financial, human-resource, and operational data are managed. For example, every time a company's neurology division purchases lab supplies through the EIP, the division's cost center is electronically updated with that debit immediately. By contrast, a manual, paper-intensive process might take weeks. The portal affords executives a real-time view of where the organization's costs reside.

The EIP is not just another layer of technology that fails to interact with or enhance the effectiveness of back-office systems. On the contrary, the portal streamlines operations by allowing the e-procurement function to update cost centers so that company managers can discern at any time whether the organization is on budget for a particular project.

Sense of Employee Ownership. When employees can use an EIP to collaborate more easily with others involved in the procurement process, from suppliers to engineers, and to participate in real-time decision making, they will be more efficient. A sense of personal efficiency keeps morale high. And improving efficiency leads to greater productivity. A sense of employee ownership can be critical in accelerating the entry into the marketplace of products that take years to develop.

Integrated Communications. An EIP can reduce the likelihood of information being lost and errors being made when employees from different functional areas of an organization exchange data with each other and with outside parties. By enabling the separate engineering initiatives involved in designing a complex electronic medical device, for example, to be coordinated and integrated via a common portal, EIP technology promotes effective collaboration.

Bottom-Line Advantages

Medical technology organizations can employ EIPs not only to optimize e-procurement but also to collect and distribute strategic data among all relevant areas of the enterprise. For example, executives need up-to-date information about ongoing clinical trials. A company's chief information officer can employ an EIP as an instrument panel that provides a daily view of how the business is progressing. This can help executives to identify and possibly eliminate obstacles to project completion such as delays in component supply, significant clinical trial problems, and adverse competitor intelligence issues (for example, a competitor has just brought to market a next-generation product like the one under development). In addition, the enhanced visibility of operations enables the organization to communicate more accurately with its external partners, particularly with respect to broader business issues such as possible mergers and acquisitions.

An EIP can also be used to provide the finance department with better insight into how assets are being deployed. By accessing real-time status reports through the portal, medtech executives can more effectively determine the optimal use of available capital and thus reduce waste. This capability is critical for medical technology decision makers who need complete, up-to-date information about activities in the R&D pipeline in order to manage regulatory challenges successfully and bring the right product to market at the right time. Millions of dollars can be saved early in the development process if products that may not be showing any significant therapeutic benefits are cut out of the pipeline. Likewise, projects that display promise can be accelerated. Senior management needs the kind of enhanced, real-time awareness of the company's business activities that an EIP facilitates to be able to make these sorts of decisions widely.

Conclusion

As the metaphorical single socket into which a medtech company can plug diverse applications in order to achieve high levels of consistency and efficiency, an EIP allows the organization to move beyond the traditional supply-chain solution by extending collaborative tools across the enterprise and outward to its suppliers and partners. True collaboration via the portal creates a networked supply chain in which suppliers, distributors, and customers share information dynamically, working together toward a common goal. The payoff could be a critical competitive advantage resulting from increased productivity and rapid speed-to-market.

Amy Valley is a managing director in the life sciences practice of KPMG Consulting Inc. (McLean, VA).

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