Beyond the Spreadsheet: Revolutionizing CRO Financial Management with Better Technology

In research, insufficient data leads to the wrong hypothesis. It’s akin to fitting a square peg into a round hole.

Excel is a square peg. It is the legacy platform that most contract research organizations (CROs) use to service their biotech, drug developer, and pharmaceutical clients. However, it was not built to manage the complexities of CRO business.

Excel can handle a lot of data, from research results to billing information. But most CROs admit Excel is their version of a make-do-with-what-you-have. But CROs have an alternative technology.

The CRO Challenge: Technology that Frustrates Clients

In 2022, McKinsey surveyed biotech companies to determine their satisfaction with their CRO partners. The timing was right; research showed clinical pipelines from pharma companies are declining while biotech expects to grow twice as fast. It’s a lucrative market, but the question was — are biotech firms pleased with the performance of these third-party partners?

The company polled 80 CRO customers and found that “biotech companies feel that CROs today do not deliver enough on their need for strategic advice and the integration of technology point solution providers.” The survey concluded by recommending that CROs adapt better “collaboration with technology players.” Legacy technology may hamper the opportunities brought about by a burgeoning biotechnology industry.

Consistently, we see CRO studies living in Excel in extensive, complex workbooks. Usage includes client and RFP management, building out the study requirements, reporting, and backend billing.

These studies offer customers a labor-based work product with unit deliverables. When handled via a spreadsheet, they can be hundreds of lines and multiple years long. Excel is a great tool for putting together the study and getting the client to sign off. However, where Excel fails is in executing the study. Because of its complexities, Excel can crash. As the challenges rise, Excel can become an impediment.

Here are other challenges CROs face:

Siloed Systems

CROs are excellent at what they do, providing their clients with the economies of scale they need to conduct go-to-market or other research. Behind the scenes, though, most CROs take a piecemeal approach to how they manage all the backend solutions that surround study startup, billing, and change order workflows. It’s particularly true when dealing with acquisitions, which can result in disparate systems across CRO IT infrastructures.

Project Bidding

Each RFP is a complex process with multiple moving parts.:

• Request for proposal (RFP) fulfillment
• Internal requirements assessment
• Proposal preparation
• Competitive pricing
• Proposal submission
• Evaluation and selection
• Contract negotiation
• Project initiation

Many CROs use Salesforce to manage leads, opportunities, and prospects. While Salesforce is a powerful customer relationship management (CRM) platform that offers functionality for managing sales, customer interactions and workflows, it may not efficiently handle the complexities of the CRO RFP process. For example:

• Complexity of RFP process: The CRO RFP process requires specialized features and workflows to manage the complexity of tasks, timelines and communications involved at each stage.
• Customized RFP templates: CROs often use customized RFP templates tailored to different client requirements and therapeutic areas. While Salesforce allows customization to a certain extent, it may not offer the flexibility to create and manage diverse RFP templates effectively.
• Collaboration and communication: The RFP process requires seamless coordination among various CRO stakeholders, including sales, project managers, subject matter experts and finance. While Salesforce provides communication tools, integrating them seamlessly with the RFP workflow and tracking interactions may require additional customization.
• Document Management: Managing documents such as RFP responses and supporting materials is critical to the RFP process. While Salesforce offers document management features, they may not be as specialized as dedicated document management systems tailored for RFP workflows.
• Analytics and Reporting: Effective RFP management requires tracking key metrics, such as win rates, proposal turnaround times, and resource utilization. While Salesforce provides reporting capabilities, CROs may require more specialized analytics and reporting to gain insights into RFP performance.
• Regulatory compliance: CROs operating in regulated industries such as healthcare and pharmaceuticals must adhere to strict regulatory requirements regarding data security, privacy and compliance. While Salesforce offers robust security features, ensuring compliance with industry-specific regulations may require additional customization.

Scalability

As a CRO considers growth, it might make sense to expand its revenue streams to include new disease areas or phases of the clinical trial process. However, strategic thought must also go into scalable technology to handle this growth.

Too often, the same IT tools apply to these new revenue streams, hampering true growth and even data accuracy that is so critical to success. These organizations may focus on other critical operational systems and fail to plan for the scalability of their legacy tools. As CROs expand their client base, take on larger projects or enter new markets, their IT infrastructure must accommodate increased demand.

Benefits of scalable technology include:

• Integration and collaboration: Scalable IT tools facilitate seamless integration with other systems, enabling CROs to streamline workflows, share data more efficiently, and collaborate with clients and partners effectively. Interoperability is essential for driving value-added services to clients.
• Competitive advantage: CROs that can scale their IT infrastructure quickly and efficiently gain a competitive edge. Scalable tools enable CROs to meet client demands promptly, take on new opportunities without delay, and deliver high-quality services consistently.
• Improved efficiency: Scalability enhances performance by ensuring system reliability under heavy workloads. Scalable technology ensures a consistent performance for clients, improving their satisfaction.

Change Orders

Change orders are standard, if not inevitable. They may happen more frequently than in the past because, since COVID, research has moved much faster. It makes sense that the client must react to market and competitor changes, which can lead to back-end and front-end headaches for the CRO. Each change order disrupts CRO workflows with potential changes to resource allocation, costs and approvals.

Change orders introduce an element of uncertainty to the stable RFP revenue channel, making the financial impact a moving target so that budgets, profit and resources are in flux.

The RFP process was already complex. Change orders make them more so.

Procurement and Inventory Control

CROs often use specialized equipment, materials, and services for the various projects they manage. Procuring these items involves navigating complex supplier networks, negotiating contracts, and ensuring regulatory requirements. When these processes are primarily done by hand, they become very time-consuming, error-prone, and unwieldy.

Additionally, these line items must translate to a balance sheet showing project profitability. Each project ties up inventory and FTEs, but visibility into the inventory lifecycle makes it easier to discern true project profitability. Overstocking ties up capital and warehouse space and understocking leads to project delays. It’s hard to find the balance with the technologies CROs most frequently use.

Billing and Forecasting

Accurately tracking billable hours, expenses, and other project-related costs is essential for billing clients and forecasting project budgets. However, manual time and expense tracking processes can be time-consuming, error-prone, and susceptible to inaccuracies, leading to billing disputes and budget overruns.

There currently isn’t a technology designed to handle unit-based billing. Consequently, most CROs turn to Excel. Given that manual processes often lead to human error, it throws the entire billing—and ultimately forecasting—into question.

Budget Management and Reporting

The complexity of project-based models and the need for accurate financial tracking and reporting cry out for better technology.

For example, estimating project costs requires transparency in resources and expenses. CROs must ensure that resources are used effectively to maximize project profitability and client satisfaction while minimizing underutilization or overallocation. Monitoring and tracking project expenses, including labor, materials, equipment, and other direct and indirect costs, requires robust systems and processes.

Manual tracking methods can be time-consuming and prone to errors, leading to budget and reporting inaccuracies. CROs must also effectively communicate with clients, assess change orders’ financial implications, and implement appropriate controls to mitigate risks and ensure their alignment with budgetary constraints. Accurately forecasting revenues, expenses, and cash flows is essential but challenging.

CROs can improve budget transparency, drive financial reporting accuracy and optimize project profitability with software designed to handle these tasks.

The Sikich Solution

To ensure competitiveness, CROs need to reduce their reliance on Excel or other generalized software platforms and consider a custom solution designed for the complexities and challenges of their industry.

The Sikich SuiteSuccess for CROs helps organizations manage:

• Sales
• Project management
• Procurement
• Inventory control
• Financials
• Budgeting
• Forecasting

This platform is a single-source solution for unit billing built within the Netsuite OpenAir financials platform. It is the one tool CROs need to address the challenges of their multi-faced businesses. With a unified database, CROs eliminate the hunt for information across siloed platforms. It reduces pricing complexities and streamlines the RFP process. The software keeps projects profitable and teams on track.

CROs now have a way to streamline business workflows without relying on Excel spreadsheets or technology that lacks industry-specific functionality. Contact our team today to find out how we can help.