In any venue where clinical development outsourcing is being discussed, sooner or later someone always seems to wonder aloud if small companies can get the same attention from their providers that large companies do. What’s intriguing about this question is that if you put it to the people working in outsourced models you’re just as likely to hear a high level of satisfaction from those in small companies as from those at the largest sponsors. Interestingly, you may also hear from the largest sponsors that they’re not getting what they expected. For some of those large companies, the challenges in realizing their outsourcing goals have been so great that they’ve completely revamped their strategies in recent years. And whether an organization has made a strategic decision to outsource in a particular fashion such as functional service provider or full-service or has ended up with a patchwork of solutions, you’re likely to find both strong supporters and dissatisfaction even within that same company.
But our products are still getting to market, despite an atmosphere of increasingly high regulatory hurdles. So something must be working right for sponsors of all sizes. If a positive outcome from an outsourcing engagement isn’t necessarily related to how big the sponsor is or what outsourcing solutions they use, what factors do help ensure that your company will get the attention it deserves from your outsourcing providers? What are those satisfied companies doing right?
To get to that answer it’s important to understand that the underlying drivers for outsourcing are, in fact, largely the same no matter what the size of the sponsor. All organizations outsource for the same fundamental reason – because they lack the appropriate resources to conduct some critical piece of their work. What differentiates small, mid-size and large companies from each other is usually how they define "appropriate resources." For the smallest sponsors the issue is often as basic as just not having enough resources to do most parts of the job. As you move up the scale in sponsor size, the desire to do simultaneous global regulatory submissions often means the appropriate resources are not in the right place or in the right quantities to get the job done in the desired timeframe. And for the largest sponsors, appropriate resources may be, and more and more often are, expert talent who can perform the work at a lower total cost.
The same concept applies to deliverables. No matter what form the end product might take, all companies fundamentally want the same things – high quality of services and output at a reasonable cost. Are there different expectations about how we define "quality" based on sponsor size? While the overall answer is ‘no’ – we all have to meet the same regulatory standards and obligations – in reality, to some degree the answer is ‘yes.’ If you’ve worked at more than one company in our industry, whether on the sponsor or the provider side, you know there can be substantial differences in the way organizations interpret the regulations. A company where the culture is risk averse is going to be much more focused on checking the deliverables they receive. While this will be the case regardless of company size, larger companies are more likely to have people on staff whose job it once was to directly oversee the work when it was being done in-house. It’s a whole different skill set to manage quality when your job is no longer managing the process, and the natural tendency is to delve into the work as it’s being done and try to get some sense of assurance everything’s going okay. This gets exacerbated if there’s not a history of success or, worse yet, a history of disappointed expectations. In an effort to prevent unpleasant surprises –real or perceived– some sponsor personnel tend to see it as their responsibility to manage work processes at their providers. They try to create perfection at every step along the way instead of partnering to create high quality in the deliverables. Smaller sponsors might start out going down this road, but they’re not likely to have enough personnel to keep it up as long as larger sponsors do. They tend to learn sooner how to outsource more effectively because circumstances don’t give them much of a choice.
So what is it that’s going right? What are the successful companies doing differently from those that have repeated challenges with outsourcing? If we’re all outsourcing for fundamentally the same reason, which is to get access to talent that’s in the right place at the right time for lower total cost, how are those successful companies taking advantage of the experience and talent they have on hand?
The answer’s pretty simple. The advantage goes to those companies which invest in building the skills and talent pool needed to successfully outsource. One of the key weaknesses in our industry is the assumption that someone who has expertise in an area of clinical development will de facto be able to manage that area when it’s being done by an external resource. There is sometimes a collateral assumption that as long as that external party is using familiar systems and processes, that will simplify everything. But in reality it’s the managing that’s the missing link. Many sponsors don’t step back and evaluate the skill sets, behaviors and tools needed to manage outsourced activities – as opposed to micromanage or mismanage them – and put staff into this new role without adequate support or preparation. If the size of the sponsor gives any advantage at all, smaller companies may make out better just because they don’t have enough staff to shadow their providers every step of the way. But the objective of successful outsourcing is not to throw the project over the wall and hope for the best, so simply being smaller is not the key.
It also needs to be said that providers have their share of bad habits as well. Though I work for a sponsor organization I’m a big fan of my providers. I like and trust the people there. And let’s face it, I need them. Without them, our industry would come to a standstill for lots of obvious economic and operational reasons. But I don’t always get what I’ve been led to believe I can expect. I work at a company whose philosophy is to use best-in-class outsourcing practices (and where they don’t already exist, we create them.) We dedicated a lot of effort to finding providers who believe the same things we do about what best-in-class looks like. Even so, there are things that go wrong, sometimes dramatically so. I know it’s research, and the only thing one can expect with any certainty is the unexpected. But what I also know is that when things go right, my smallish company is not getting treated any differently than a large company would. And when things do go wrong, we’re sometimes getting treated better than other sponsors. Why is that?The answer looks fairly simple on paper. If you put the right processes in place for managing your outsourcing relationships (which starts with understanding that they are relationships), you’ll increase your probability of success and satisfaction. In practice, that requires a pretty substantial amount of work upfront. But anyone who’s lived through an unsuccessful outsourcing experience is likely to agree that upfront work is a worthwhile investment.
Here are some key things to think about before you start identifying providers:
Cultural Fit
Take the time to fully understand what you want from your outsourcing providers, not just what you need. In addition to the obvious – expertise, regional resources, adequate numbers of personnel – how much "face time" do you want with your provider’s staff? What’s the bottom line on your budget? How much of that company’s business do you want your company to be? How important is it to you for the provider to follow your processes? If the answers to those questions indicate that your company wants to retain a lot of control, don’t go looking for that big-name provider who has specific ways they have to work in order to cover their overhead costs. On the other hand, if all of the above are nice-to-haves but your company has a large portfolio of work that needs to be done simultaneously, can you really afford to have your staff managing multiple "high-touch" boutique firms?
Volume of Work
Do the planning about how much your company will have to spend on outsourcing over the next 3-5 years. Be honest about it. It won’t do your company any good to overestimate; providers have to make a profit to stay in business, and no matter how much spend you tell them you’re going to have, if you don’t actually spend that money with them they’ll have to allocate the resources to somebody else. Equally as important, once you have a robust estimate of how much you’re likely to spend (and it’s fine to put some caveats around that when you share it with the provider), be realistic about matching the size of your spend with the size of the provider. If you’re going to be less than 2% of some company’s income, it’s going to be a whole lot harder to get their senior management’s attention. On the other hand, if you’re going to be a big percentage of a company’s income, you want to be sure you can both handle that risk.
Realistic Expectations
Nothing leads to outsourcing distress more reliably than overestimating the benefits you expect to achieve. Be honest about the timing, cost and effort a project would take if you did it internally. It’s okay to demand the same of your providers, or even better, if they can demonstrate how they’re going to achieve that. But if you would predict that your own organization would have a hard time delivering on a project, why is that? Are the reasons something outsourcing can address? Don’t expect to achieve the impossible by giving the puzzle to somebody else to solve. Analyze the reasons you’re outsourcing and then do a robust RFI to find out if the provider marketplace can deliver on those.
Plan for Success
Give your outsourcing providers the information they need to succeed. They’re not your competitors, they’re working for and with you. If you don’t give your providers full disclosure, you’re setting yourself up for failure. Misdirection works for magicians, but their goal is to fool the audience.
In addition to your upfront work, there are a number of ongoing processes that will help guarantee the success of your outsourcing engagements no matter what the size of your company:
Governance
Most sponsor companies recognize that they want the attention of senior leadership at their providers. But you need the influence, authority and experience of your own key leaders as well. That’s the only way to ensure projects will get the resources and judgment calls they need to succeed. Your senior leadership should not be giving a lot of time to managing your outsourcing – that should be happening at the engagement level. But leadership should be prepared to devote a few hours every quarter to getting the pulse of what’s going on. They do the same thing for internally managed projects, don’t they?
Metrics
You can’t know if you’re succeeding unless you take appropriate measurements along the way. But don’t get lost in the Measurement Maze. Select 4-6 key measures that will give you an early warning if your project might be going awry. And make sure they remain relevant over the life of the project. If they don’t, revise them. Then help people focus their efforts around improving those.
Training
I can’t stress strongly enough how important it is to give your internal resources the skills and information they need to be managers of outsourced work. Being empowered with tools and processes will mean the difference between success and frustration, but the soft skills side of managing providers is not something many people can develop on their own either. Mentoring and role modeling come in very handy here.
Communication
Regular communications forums go a long way toward building long-lasting relationships. Newsletters and e-mail updates about important events involving your providers are always good. Regular face-to-face meetings are even better. In addition to project team meetings, try to schedule some regular general interest meetings. Leverage your providers’ expertise by doing things like having them give in-services for your staff on topics of relevance.
Commitment to Continuous Process Improvement
Hand-in-hand with communications is the opportunity to create joint process improvement teams. Host open discussions about what’s working, what could be working better, what best practices your provider uses with other customers. Create a mechanism to share learnings across teams. Recognize and reward great ideas.
Joint Team Philosophy
As part of the foundation for all your relationship activities, help your personnel to create and nurture the approach of "we are all one team." The reality is that both of your companies are working toward a shared goal. The sooner you can get rid of the feeling that it’s "us and them" the more smoothly you’ll achieve success.
Strategic Outsourcing Awards
More and more companies are moving towards a strategic approach to awarding their outsourcing work. This can take the form of program awards, award by compound or therapeutic area, or any other means that allows you and your partner to predict the flow of work, leverage knowledge and expertise around your pipeline, and recognize the efficiencies offered by repeat business.
The key thing to remember is that any outsourcing solution is a big investment of your company’s time and resources. The results aren’t going to be worth that investment if you don’t put in the time up front understanding what it is you want to accomplish and evaluating whether or not that vision can be achieved. Does that mean every outsourcing engagement must be strategic? Both large and small companies are using a broad menu of outsourcing solutions. Tactical outsourcing absolutely has value, but only if what you’re trying to do is meet some immediate needs. No matter what the size of your company, If you’re looking to establish a way of getting work done that involves standardization, long-term goals, building pipeline expertise or reducing oversight, you’re going to need an outsourcing strategy to get there. Until you’ve clearly defined what needs your solution has to satisfy you won’t be able to evaluate the best match for your company. It is important to bear in mind that specificity matters. Always match the provider to the need – if you’re doing focused, early phase trials or discrete work assignments, a big global CRO might not be the most desirable supplier. You’re very likely to get better results with a small, nimble partner. But if you need broad global reach, have an entire book of business to outsource, or need someone to custom-build solutions for you that involve expertise your own organization doesn’t have, a large full-service CRO might be your best bet. The most important thing to bear in mind is that there is no "right" strategy based on company size. The principles of relationship management are fundamental to achieving success for any approach to outsourcing.
Frances Grote is Senior Director of Clinical Outsourcing at Millennium, the Takeda Oncology Company. In this role she leads a team of outsourcing professionals focused on optimizing the value of supplier partnerships. Widely recognized as an expert in the field of global drug development outsourcing, Ms. Grote is a true believer that empowered joint sponsor/provider teams really can deliver increased efficiency and quality while reducing costs and cycle times. Prior to joining Millennium Ms. Grote headed up the Clinical Outsourcing and Development Strategic Sourcing groups at Bristol-Myers Squibb. In her spare time she writes fiction. Her debut novel, Fire in the Henhouse, has been receiving 5-star reviews.