When a life sciences company first starts out, the business often moves at a really fast pace. The business focus is completely zeroed in on innovation. While you know in the back of your mind that it’s important to develop strong business processes, right now the life sciences startup phase is all about innovation, especially since you’re working with a lean team. As a result, everyone on this small team has to wear many hats across the organization.
For example, in finance, you may have one person handling all of the books. That one person books all of the journal entries and pays the bills. You might also have a business model that outsources all of its IT services.
So with individuals wearing many many hats, here’s also a multitude of business processes. Since these processes are not yet clearly defined, different individuals may be handling similar tasks differently. At this point, you know it’s okay, because your transaction volume is light. With that, manually processing your transactions is okay.
Common Business Systems in the Startup Phase
Ironically, life sciences organizations in startup don’t choose an ERP as a business system first. When they do choose an ERP system, but they choose it because it’s an easy and the transaction volume is light. So what we see most often in use is QuickBooks. Additionally, we often see organizations using Excel in an ERP-like fashion to fill in the gaps that QuickBooks doesn’t have.
The problem with QuickBooks is that organizations often outgrow it faster than they anticipated. This leads organizations to needing to identify or jump into a new system selection process. The organization will have to identify what areas QuickBooks lacks for their needs as well as start to think about where they are going as a business.
The latest trend we’re seeing in the industry is to move to a more upmarket ERP system sooner than we’ve seen in the past. Folks are starting to realize the benefits of an ERP system like NetSuite far earlier in their business life cycle than before.
From an FP&A perspective, a startup company still have the same same sort of FP&A requirements that larger organizations do, yet on a much smaller scale. So again, this leads folks to make the decision to leverage a tool like Excel to mean things like budgeting, forecasting, financial reporting, and departmental burn rates. At this point in the game, it’s most commonly a finance function that’s maintaining these FP&A type requirements. At the startup phase, this is fine, but it won’t be once the company moves out of startup.
From a procurement perspective, we’re seeing probably the largest deviation between life science organizations.
We’ve noticed that BioProcure is the most popular system in the New England area, and we at Sikich have formed a very tight partnership with BioProcure.
The other options are focused largely on scientists and labs suppliers to make it easy for those small companies to get their purchasing up and going in the most automated fashion. We know that those scientists at this point in the game are extremely busy working on their their startup drugs’ permit approval process. This is largely a very menial process at this stage, and most organizations do develop a relatively complex approval matrix, even early on. So once again, this is handled by manual elements such as email communication and paper sign-offs.
The Value of Sikich Suite Success for Life Sciences
Moving to an ERP system sooner rather than later brings massive value to your life sciences organization in terms of time. Our Sikich Success for Life Sciences is more than just an ERP product. NetSuite is the product, and Sikich Success for Life Sciences gets into the methodology leading practices. We’re really focused on getting your ERP in place as quickly as possible, so we’re pushing a six-to-eight week timeline instead of the typical three-to-six MONTH implementation.
We base our implementation on leading practices specifically for the life sciences or the biotech industry. One example of these practices includes how you manage approvals from a purchasing standpoint both on the services and/or lab supply routes. Sikich Success for Life Sciences automates business processes to handle high AP transaction value, and you’ll be able to accurately report G&A versus R&D spent. And then you’ll be able to take that one step further to track a program or project spending at a more granular level.
We constructed Suite Success for Life Sciences on top of the NetSuite platform to achieve these goals and meet the expectations that come with implementing a new ERP system. Sikich built this solution like how one builds a house, with Tier 1 of the solution being the foundation and Tier 2 carrying additional functionality meant to support your organization throughout the life cycle.
Tier 1, the foundation of this house that Sikich built, contains the following elements:
- Company Structure
- Segment Strategy and Automation
- Approval Processes
- Role Management
- SEC Financials
- System Auditin
- Vendor Study Management
- Prendio Connector
- Vendor On-boarding
Since Tier 2 builds upon Tier 1, it is possible to go live after implementing Tier 1 and build Tier 2 later. Of course, you can do both Tiers and then go live, but Tier 2 is really all about procurement and bringing procurement in-house into NetSuite. All of this includes implementing purchase orders, approval processes, collecting bills, paying bills, and purchase change orders. So when you’re buying lab supplies, if you need additional supplies, you typically issue a new order. But when it comes to service agreements, there’s a need for tracking change orders and the approvals that go along with that.
In a nutshell, Tier 2 contains the following elements:
- Purchasing Change Orders
- Document Management
- Expense Management
- Fixed Assets
- Item/Product Management
After the startup phase for life science organizations comes the IPO phase, which will be covered in the next post. Have any questions about the startup phase for life sciences? Please reach out to us at any time!
Other posts in this life sciences life cycle series: