Building a Business Case for Quality Management Transformation
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Watch the video here: bit.ly/qualitytransformation_ondemand Transforming quality management to make it easier to comply with regulations and enable faster and more informed decisions is disruptive – impacting people, processes, and systems. With a business case demonstrating anticipated benefits and savings, teams can justify the costs for change, gain stakeholder support, and ensure alignment. Many organizations have a fragmented system landscape and outdated or manual quality processes. Leading companies are migrating to modern, cloud systems to enable continuous improvement and accelerate transformation initiatives. They are also re-evaluating processes – adopting current best practices and optimizing investments in new technology. By watching this on demand webinar with quality experts from PriceWaterhouseCoopers (PwC) and Veeva Systems. You will learn how to build a business case to support quality management transformations including: • Getting a framework for developing business cases • How to move from a cost to value structure leveraging Quality 4.0 • Recommendations on calculating TCO with key considerations • Guidance on navigating complex organizations to gain support Who Will Benefit: • VP/Director of Quality and Compliance (QA or QC), Quality Systems • VP/Director of Information Technology, Quality Management Systems, Quality Systems • VP/Director of Manufacturing Operations/ Quality Operations/ Supply Chain • Document/Records Managers/ Directors • Director, Regulatory Operations/ Regulatory Affairs (CMC – Chemistry, Manufacturing, and Control) • IT System Administrators • Quality Training Coordinator Meet Your Presenters: Jan Paul (JP) Zonnenberg Partner, Pharmaceutical and Life Sciences Companies, PwC As a Partner and co-Lead for PwC’s Quality Management Systems Practice, JP’s concentration is in global operations and specifically in quality systems and QMS information technology within the Life Sciences Business Group. With over 28 years’ experience in pharmaceuticals, biotechnology, and medical devices & diagnostics, JP helps leading companies proactively think about developing next generation quality systems to ensure both effective and efficient organizations. Mike Jovanis VP Vault Quality, Veeva Systems As Vice President of the Vault Quality product suite, Mike is responsible for product strategy, customer engagement, and business development. Previously, he served as vice president of product management and strategy for Sparta Systems, where he was instrumental in the company's rapid growth, driving product development, vertical market strategy, and strategic partner alliances. Educated at Rutgers, he holds a bachelor’s degree in marketing and an MBA in strategy and global business.
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Building a Business Case for Quality Management Transformation
- 1. 1Copyright © Veeva Systems 2019 Business Case for Quality Management Transformation Wednesday, July 17, 2019 | 12:00-1:00 p.m. EDT Jan Paul (JP) Zonnenberg, Partner Pharmaceutical and Life Sciences Companies, PwC Mike Jovanis, VP Vault Quality Veeva Systems
- 2. 2Copyright © Veeva Systems 2019 Table of Contents Quality System Landscape 1 History of Quality System Investments 2 Drivers for Transforming Quality Management 3 Value of Quality 4 Building a Business Case for Transformation 5 Summary 6
- 3. 3Copyright © Veeva Systems 2019 Evolution of Adoption of Quality Systems Emergence of 21 CFR Part 11 Replacing home grown apps & manual processes Remediation of specific compliance challenges Fragmented, quality systems not viewed as strategic 1990 Present Day
- 4. 4Copyright © Veeva Systems 2019 Current Quality System Landscape is Fragmented
- 5. 5Copyright © Veeva Systems 2019 Challenges Systems are 25+ years old Do not provide a modern user experience Patchwork of systems Cannot support seamless, end-to-end processes Periods of investment and complacency Leads to inconsistency and risk Business processes implemented reactively Over correction and over built processes Mergers and acquisitions Compounds problem of fragmented systems
- 6. 6Copyright © Veeva Systems 2019 Rethinking Quality Investments
- 7. 7Copyright © Veeva Systems 2019 Historical Quality Solution Investment • Many incremental projects over long periods of time • Cyclical investment driven by compliance issues and overcorrection 1990 Present Day Investment Transformative Investment 20 years of smaller projects
- 8. 8Copyright © Veeva Systems 2019 Today’s Transformative Projects are Different Incremental Investments • Incremental, smaller investments over time • Fragmented landscape Large Transformative Projects • Singular, enterprise / global quality projects • Little experience building a transformative business case True Shift to the Cloud • Significantly different TCO footprint and a large investment Opportunity for Value • Great opportunity for creating value, quality is not just achieving compliance ?
- 9. 9Copyright © Veeva Systems 2019 Companies Are Engaging in Transformation Projects 10 8 2 Engaging Considering Not Now Top 20 on Quality Transformation • Cloud is being actively implemented to enable quality management transformation • Quality is viewed less as a cost-center and more as a way to deliver value to the business and gain competitive advantage • Enabling modernization with cloud is driving adoption
- 10. 10Copyright © Veeva Systems 2019 Drivers for Quality Management Transformation
- 11. 11Copyright © Veeva Systems 2019 Modern Systems Enable Unification and Simplification • Seamless interconnection with contract services partners • Elimination of a risky disconnect point • Industry cloud applications are delivered with robust best practices • Massive requirements definition and configuration is no longer required • Unification of multiple disparate quality applications onto a single platform • Large business process & efficiency improvements Standardization Unification External Engagement • Modern consumer inspired user experience • Always current with 3 releases per year • An appreciating asset over time Cloud
- 12. 12Copyright © Veeva Systems 2019 Value of Quality
- 13. PwC Quality is evolving from a compliance-centric to a product & patient-centric approach 13 Patient Centric Product Centric Compliance Centric Quality is focused on ensuring effectiveness of treatment, patient quality-of-life and driving revenue growth Quality is focused on designing and manufacturing highly reliable products with highly capable processes and driving tangible bottom line ROI Quality is primarily focused on meeting regulatory requirements and is considered a cost-of-doing business
- 14. PwC Organizational DNA / Culture Processes & Procedures Digital Quality Scientific & Operational Excellence This transformation requires a structured approach 14 Quality 4.0 framework Quality Outcomes The 4 Quality Elements Centered around the patient Patient Centric Product Centric Compliance Centric
- 15. 15Copyright © Veeva Systems 2019 Building a Business Case for Quality Management Transformation
- 16. PwC Measuring Quality Outcomes & Business Value 16 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply
- 17. PwC Measuring Quality Outcomes & Business Value 17 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Reduces Cost & Regulatory Risk
- 18. PwC Measuring Quality Outcomes & Business Value 18 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Reduces Cost & Regulatory Risk
- 19. PwC Measuring Quality Outcomes & Business Value 19 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply Speed to Market • LPO- Database Lock & CSR (by study) • LPO-1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Increases Revenue
- 20. PwC Measuring Quality Outcomes & Business Value 20 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Increases Revenue, Reduces Cost, Inventory & Regulatory Risk
- 21. PwC Measuring Quality Outcomes & Business Value 21 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping- Related Complaints • % Dual Sourced Supply Increases Revenue & Reduces Inventory
- 22. PwC Measuring Quality Outcomes & Business Value 22 Quality Outcomes Business Value - Return on Investment (ROI) Metrics Revenue Costs Inventory Reg. Risk Competitive Compliance • Culture & Employee Engagement • Audit & Inspection Observations • Recall & Deviation Rates • Supplier Risk Profile • Total Cost of Quality Compliance Risk Dashboard Innovation • Use of Modern Mfg. Processes & Analytical Automation • Use of Emerging Technologies (e.g.: AI, Analytics) • Adoption of Enterprise Quality Systems • Use of Adaptive Clinical Trial Design • Use of QbD, QRM, CPV, etc. Speed to Market • LPO – Database Lock & CSR (by study) • LPO – 1st Major MAA Approval • Protocol Amendment Rate • Serious Breach & Critical Data Error Rate • % Post Approval Changes approved on time Robust Products & Data • Product & Process Knowledge (data) • Brand Image (Patient perspective) • Release Cycle Time (& variability) • Yield, OOS, OOT, OEE, Cpk • Complaint Rate Product Quality Dashboard Reliable Supply • E2E Cycle Time (DS, DP, FG, Customer Shipment) • Manufacturing Schedule Adherence • Service Levels (on time, in full) • Shipping-Related Complaints • % Dual Sourced Supply
- 23. PwC Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply Calculating the Business Value (ROI) 23 Potential ROI for a $10 B Company 1% increase in revenue $100 M 25% reduction in cost of quality* $75 - 125 M Total annual benefit $175 - 225 M Market Capitalization @ 10x PE ratio $1.75 – 2.25 B 10% improvement in inventory turns** $90 M Cost avoidance of Warning Letter*** Cost avoidance of Consent Decree $5 - 50 M $ .2 – 2 B * Cost of quality is typically 3-5% of revenue, a 25% reduction equals 1-2% of revenue ** Increasing turns from 2 to 2.2 on COGS of 20% of revenue for a 1 time free cash flow *** PWC Estimates (including cost of remediation, cost of QMS transformation, lost revenue)
- 24. PwC Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply Calculating the Business Value (ROI) 24 Potential ROI for a $10 B Company 1% increase in revenue $100 M 25% reduction in cost of quality* $75 - 125 M Total annual benefit $175 - 225 M Market Capitalization @ 10x PE ratio $1.75 – 2.25 B 10% improvement in inventory turns** $90 M Cost avoidance of Warning Letter*** Cost avoidance of Consent Decree $5 - 50 M $ .2 – 2 B * Cost of quality is typically 3-5% of revenue, a 25% reduction equals 1-2% of revenue ** Increasing turns from 2 to 2.2 on COGS of 20% of revenue for a 1 time free cash flow *** PWC Estimates (including cost of remediation, cost of QMS transformation, lost revenue)
- 25. PwC The value of an integrated QMS 25 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply Reduced product withdrawals Introduction of new technologies (e.g.: gene therapy) Faster product approvals & launches (LPO to Filing) Brand reputation in developing markets More robust clinical studies and data Improved tender win rates Reduced product shortages Fulfill unexpected increases in demand Revenue
- 26. PwC The value of an integrated QMS 26 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply Total Cost of eQMS / eDMS Ownership Reduction in # of deviations, CAPAs & recalls Reduction in Operations and QA headcount Reduction in hours on training Reduction in serious breaches Reduction in protocol amendments Improved yields, Right First Time, OEE, Cpk Reduction in # of complaints Reduced capital expenditures Cost
- 27. PwC The value of an integrated QMS 27 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply In line, reduced testing reqs., modern / rapid testing technologies Shorter E2E cycle time from RM, API, DP, Packaged product in country available for sale Reduced testing, disposition LT, processing at risk, QP in country Inventory
- 28. PwC The value of an integrated QMS 28 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance Innovation Speed to Market Robust Products & Data Reliable Supply Reduction in Risk profile Reduced # of inspection days & findings Self identified improvement opportunities Reg. Risk
- 29. PwC The value of an integrated QMS 29 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance • Reduced product withdrawals • Total Cost of eQMS / eDMS Ownership • Reduction in Operations and QA costs • Reduction in # of deviations, CAPAs & recalls • Reduction in Risk profile • Reduced number of inspection days & findings Innovation • Introduction of new technologies (e.g.: gene therapy) • Reduction in hours on training • In line testing, reduced testing requirements, modern / rapid testing technologies, etc. • Self identified improvement opportunities Speed to Market • Faster product approvals & launches (LPO to Filing) • Reduction in serious breaches • Reduction in protocol amendments Robust Products & Data • Brand reputation in developing markets • More robust clinical studies and data • Improved tender win rates • Improved yields • Improved Right First Time • Improved OEE, Cpk • Reduction in # of complaints • Reduced capital expenditures Reliable Supply • Reduced product shortages • Fulfill unexpected increases in demand • Shorter E2E cycle time from RM, API, DP, Packaged product in country available for sale • Reduced testing, disposition LT, processing at risk, QP in country
- 30. PwC The value of an integrated QMS – Total Cost of Ownership 30 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance • Total Cost of eQMS / eDMS Ownership Innovation Speed to Market Robust Products & Data Reliable Supply
- 31. PwC The Value of an Integrated QMS – Cost Reduction 31 Quality Outcomes Business Value - Return on Investment (ROI) Revenue Costs Inventory Reg. Risk Competitive Compliance • Total Cost of eQMS / eDMS Ownership • Reduction in Operations and QA costs Innovation Speed to Market Robust Products & Data Reliable Supply
- 32. PwC CxO Talking Points Talking the language of the CxO 32 Improving the brand imageCEO COO CFO CCO CQO CSO Robustness of processes & products Improved yields & cycle times Reduction in overall cost of (poor) quality Total cost of ownership for eQMS / eDMS Speed to market & reliability of supply Competitive Compliance Higher compliance at reduced cost Reduced # of Protocol Deviations & Amendments Robustness & speed of clinical trials & approvals (Commercial) (Quality) (Science) (Finance) (Operation) (Executive)
- 33. 33Copyright © Veeva Systems 2019 Summary
- 34. 34Copyright © Veeva Systems 2019 Summary Opportunity to Create Value in Quality Building a Holistic Business Case Rethinking Quality Investments
- 35. 35Copyright © Veeva Systems 2019 Jan Paul (JP) Zonnenberg Partner Pharmaceutical and Life Sciences Companies PwC jp.zonnenberg@pwc.com Mike Jovanis VP Vault Quality Veeva Systems mike.jovanis@veeva.com
Editor's Notes
- Building a Business Case for Quality Management Transformation Transforming quality management to make it easier to comply with regulations and enable faster and more informed decisions is disruptive – impacting people, processes, and systems. With a business case demonstrating anticipated benefits and savings, teams can justify the costs for change, gain stakeholder support, and ensure alignment. Many organizations have a fragmented system landscape and outdated or manual quality processes. Leading companies are migrating to modern, cloud systems to enable continuous improvement and accelerate transformation initiatives. They are also re-evaluating processes – adopting current best practices and optimizing investments in new technology. Join us on Wednesday, July 17 for a live webinar with quality experts from PriceWaterhouseCoopers (PwC) and Veeva Systems. You will learn how to build a business case to support quality management transformations including: Getting a framework for developing business cases How to move from a cost to value structure leveraging Quality 4.0 Recommendations on calculating TCO with key considerations Guidance on navigating complex organizations to gain support
- The first slide should setup the industry drivers of why the first wave of industry adoption occurred It should have the context set that this was over a continuum of time from late 90’s until recent times. We could use a visual for this. Perhaps more of the real estate on the slide is a set of visuals that sequence in from left to right to set up these points. Emergence of 21 CFR Part 11 Necessity of replacing home grown applications & manual processes Remediation of plant and line of business specific compliance challenges Fragmented IT strategy --- quality systems not yet recognized as strategic
- Left is what is happening and the right is the impact / challenge
- This is the transition to the investment piece There should be two points, point one is sum of many smaller incremental projects over a period of 20 years setup in the last slide, the second point is the reality of cyclical investment that is based on compliance issues and individualized investments. This could potentially be one visual that covers both.
- New slide ---- What is different today Large transformative investments, singular implementations, not incremental overtime Many companies have never built business cases for singular, enterprise projects of this scope in the quality area True shifts to the cloud have a significantly different TCO footprint. Large amount of cost is Great opportunity for creating value --- not just achieving compliance This requires different thinking when it comes to building a business case
- --- cloud alternatives now exist and are being actively implemented, offer a transformative set of benefits vs. the legacy in place --- we may want to share market observations x/y top N companies engaging in transformative projects 2nd slide --- talk about how this is categorically different then the past ---large transformative implementations, not reactive to regulatory challenges but more positioned to deliver value to the business --- value driven, not drive by necessity of compliance or quality
- Enumerate cloud benefits ---- 3 releases per year, industry cloud notion of best practices across multiple dimensions, unification in and out of quality, standardization of process, integration of third parties Cloud All QMS elements brought together into a single system with standardized processes and data model Unification of disparate quality applications onto a single platform Interconnections between applications are standardized and maintained
- Exciting time to create value and transform quality management Larger transformative topics
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