Benefits of Cloud Computing for Compliance Learning

Benefits of Cloud Computing for Compliance Learning

By Paul McFadden, VP of Technology, UL EduNeering In this paper we will cover how companies can benefit from the Cloud Computing Learning Environment to manage compliance learning programs for multiple parties: employees, suppliers, sales agents, clinical sites, customers and other third parties. The findings in this paper are based on UL EduNeering s 12 years of experience providing cloud computing LMS solutions to Life Science, Health Care, Energy and Industrial sectors. While cloud computing represents the most discussed IT topic lately, rarely does the discussion of compliance learning enter into the discussion. But the benefit is hard to ignore: building a centralized platform from which compliance training can be automated across all parties both employees and nonemployees, and can improve training effectiveness and audit readiness of the entire organization, at a lower price per learner than traditional learning systems. Until now, HR, Learning and Quality executives have relied on the server-based Learning Management System (LMS) to address their learning and development objectives. Selecting a LMS in the Cloud Computing Learning Environment can effectively centralize all organizational learning activities across the enterprise, meeting the needs of employees in multiple locations, as well as third parties. This singular approach provides tremendous cost savings that are inherent in the cloud computing model, while also removing training management redundancies. Defining Cloud Computing Cloud computing is now the IT phrase de jour, and depending on whom you ask, the definition varies. Nearly every IT analyst, cloud computing provider and even the National Institute of Standards and Technology, have weighed in on what the phrase actually entails. We found that Forrester s definition of cloud computing delivers the all-encompassing scope that seems appropriate for this paper: A standardized IT capability, such as software, app platform, or infrastructure, delivered via Internet technologies in a pay-per-use and self-service way. 1 Page 2

But while cloud computing has been covered in length, rarely does the cloud computing discussion focus on how it can improve compliance learning for an organization while reducing costs associated with compliance. And while there are three types of services that fall under cloud computing, Software as a Service (SaaS) is the most well known. SaaS represents an out-of-the-box business application that provides specific functionality through a web browser. Among the SaaS software categories, customer relationship management (CRM) is most utilized, and Salesforce.com is the most popular CRM provider in this space. The other two services under cloud computing are cloud Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Given these are more focused on application development and computing resources, this paper will focus on SaaS, which we will refer to in this paper as the Cloud Computing Learning Environment. Lessons from Those Hit Hardest by Noncompliance While each industry has its own unique regulatory requirements, there are commonalities that span across all markets: ethics-related activities (anti-bribery, code of conduct, fair competition), environmental, health and safety (EPA, OSHA, DOT etc.), and internal policy and procedure compliance ( this is how we do business ). Nearly every company has compliance training requirements that must be delivered and tracked for audit purposes and as part of performance programs. Perhaps no segment has a larger compliance burden, as it relates to regulatory enforcement and risks of noncompliance, than the Life Science industry. Companies that manufacture pharmaceuticals, medical devices, biologics and the various suppliers within this network can risk heavy fines and work stoppage if they don t meet the regulations that govern manufacturing, clinical and marketing (FDA GMP, GCP and DDMAC regulations in the United States, for example). In 2009 we compared the cost efficiencies that could be gained by Life Science companies when selecting a Cloud Computing Learning Environment. We built our analysis on our years of experience supporting 120 Life Science customers through ComplianceWire, our cloud-based LMS, our proprietary online courses and assessment tools. We have not only gained a deep understanding of our customers compliance and quality goals, but we have observed the cost savings they have realized in terms of faster deployment time, reduced IT costs and reduced hardware investment. KEY TOPICS: Defining Cloud Computing Lessons from Those Hit Hardest by Noncompliance Benefits of Compliance Learning on the Cloud: Centralized Learning Focus on Life Sciences Validation in the Cloud Identifying Implementatio Cost Savings Identifying Pricing Benefits Key Questions to Ask About the Cloud Computing Learning Environment Summary And as with other industries, Life Science companies need to share knowledge across the entire supplier network. A typical Life Science company may not have the same sophisticated supplier network as a similar-sized company in the automotive, aerospace and technology field, but the demand for compliance may be greater than in those other markets. The common, oft-repeated quote from the FDA speaks to its enforcement focus in 2011: You can outsource your operations, but you can t outsource your responsibility. And so it is across other regulated industries. The energy industry faces a Page 3

WHITE PAPER number of safety, environmental and transportation compliance challenges, especially given the tragedy in the Gulf of Mexico in 2010. And nearly all companies, across all industries, train employees and contractors on ethical business practices. But how can compliance learning get more attention when the capital infrastructure budget gets cut? One of the most cost-effective ways to solve this challenge is through learning automation, that is the need to remove paper-based and desktop-centric compliance management and recordkeeping systems with an enterprise-wide learning system that can distribute and track learning for each individual, regardless of whether that individual is an employee or contractor. The extended virtual workforce includes those not on the company s payroll. As companies continually reassess talent needs, non-core jobs are often outsourced to contractors, consultants and temporary workers. That s the underlying benefit of the Cloud Computing Learning Environment: the organization can share confidential and proprietary knowledge with users, whether or not these users reside inside the organization s internal firewall. Without a cloud computing model, organizations must divide electronic learning programs into employees and nonemployees, thus driving up total cost of ownership (TCO) and in effect doubling the costs of implementation, configuration and ongoing administration. Benefits of Compliance Learning on the Cloud: Centralized Learning The Cloud Computing Learning Environment ensures that the organization s training process becomes standardized and consistent, whether the training is being directed to employees or nonemployees who fall outside the firewall. Firms are starting to realize that nonemployees should be as familiar with a company s compliance and quality programs as employees. According to a 2009 PwC survey, 35 percent of CEOs stated that they outsourced a business process or function and 35 percent entered into a new strategic alliance or joint venture during the downturn to help deal with the spiraling business environment. 2 From a learning perspective, the global workforce that includes employees, contractors, suppliers, providers and clients demands a centralized training platform to ensure consistent learning and streamlined recordkeeping. Further, from an HR perspective, such a consistent platform for learners can improve employee engagement and reduce turnover rates. For supply chain executives, establishing such a program fosters a mutual knowledge transfer between client and providers, suppliers, etc. For sales and marketing executives, a client-focused training program ensures more reliable product usage, strengthens the client relationship and grows revenue. Page 4

Five BENEFITS OF using CLOud COmputing: 1 Improving time-to-application deployment. Cloud computing gives you the option of developing and deploying new applications on existing infrastructure as quickly as desired. Traditional platforms can take up to three or four months to procure, install and configure, stalling the application deployment process. Speed to implementation can also play a key factor in calculating cloud computing ROI, as noted in a recent InformationWeek article: What s it worth to be able to add and integrate a project management system in 120 days, not 220? Is there a competitive value you can place on off-loading batch processing jobs to the cloud in three weeks? 3 2 3 4 5 Aligning IT budgets with application demand. How many web applications does your organization deploy without knowing exactly how popular they ll be or how much capacity you ll need to accommodate that popularity? Providing a safety valve for peaks in demand for data center capacity. Cloud computing is also good for handling episodic spikes in demand for computing, storage and network resources, such as big batch jobs. Delivering applications without raising capital expense budgets; application development and delivery can all be handled using operating expenses only. Sharing without putting the data center at risk. Many of the early adopters of cloud computing are looking for an inexpensive and easily accessible way to share information. Medical researchers are an example. Cloud computing lets these organizations host data on public clouds rather than having to punch new holes in their organization s firewall to make it available to external parties. 4 Page 5

WHITE PAPER Focus on Life Science Validation in the Cloud Unlike other industries, Life Science has an extra layer of effort: to bring any application used by the organization into compliance with FDA requirements. This extra layer can be summarized in one word: validation. The effort is a necessity within the FDA-regulated and FAA-regulated industry. Validation is a formalized, documented process for testing computer software and systems, required by a specific Code of Federal Regulations (21 CFR 11.10.a.). That means that the Quality, Compliance and IT teams must take these steps: 1. Validate the software and system 2. Data verification checks 3. Time-stamped audit trails Onboarding new workers will take on more importance as the economy recovers, enabling companies to streamline the red tape of the hiring process and ramp employees up to full productivity more quickly. Technology will help employees assimilate learning faster, collaborate more effectively, and keep their skills and knowledge in sync with rapidly evolving products and markets. 4. Electronic signatures 5. Archiving with confirmation The FDA requires validation to demonstrate that computer systems are in compliance with all regulations for electronic data management systems. Failure to validate systems can lead to a FDA 483 Observation or even a Warning Letter. To be compliant, Life Science companies must validate all of their software, databases, spreadsheets and computer systems, and develop the appropriate documentation for all phases of the Software Development Life Cycle (SDLC). Following the initial validation of the system, the organization must maintain the validated state. Upgrading an on-premise application (typically referred to as service packs) can drive up overall cost of ownership. We have known Life Science customers that have let on-premise application upgrades lag due to a heavy implementation/migration schedule. For this reason, the Cloud Computing LMS can generate real cost savings over an equivalent on-premise application when viewed across a five-year span, and this is related to the reduction of effort for the IT and validation teams. For example, the traceability matrix of the SaaS can be leveraged to ensure that customerspecific requirements have already been tested via the Core Application, thus reducing the validation effort. Page 6

Identifying Implementation Cost Savings Through our experience, we have noted typical costs associated with both a server-based LMS and cloud-based LMS implementation: UL s Cloud Computing Learning Environmnet can provide cost savings in the following areas: WHITE PAPER 1. Project Management: The consulting costs covering the management of the selection and implementation of the system, including travel and expenses. For an on-premise installation, the project management is the responsibility of the customer. For the Cloud Computing Learning Environment, the project management related to deployment effort shifts to the provider. 2. Configuration Activities: Consulting costs associated with setting up the application for the organization, including System Configuration and Installation, Training, Load Testing, and Travel and Expenses. For the Cloud Computing Learning Environment, these activities are minimized greatly, especially when there are dozens of remote sites to consider. 3. Interface Development: Primary costs associated with consulting for integrating the LMS with the Human Resource systems and Document Management Systems. A Cloud Computing Learning Environment, when designed correctly, can minimize the costs associated with integrations. 4. Organizational or Site Implementations (migrations): Consulting costs associated with migrating data into the application for use by the organization, and include data migration and training. A Cloud Computing Learning Environment provider should have tools to make migration and training cost-effective. In the coming years will see the delivery of a range of cloud service approaches that fall between these two extremes cloud implementations that deliver the vendor s public cloud service technologies (software and/ or hardware) and methodologies (i.e., best practices to build and run the service) in a form that can be implemented inside the consumer s enterprise. 5. IT Resources: A server-based implementation requires significant IT effort, and companies should factor in the costs associated with IT employees, especially as this relates to ongoing upgrades, bug fixes, etc. Because the cloud computing provider is responsible for maintenance, not the customer s IT department, IT costs are greatly minimized. Page 7

WHITE PAPER One can conclude that it is probable that using a cloud computing model will pay for itself within the first two years. Identifying Pricing Benefits The cost associated with a server-based LMS is front-end loaded and generally higher across a five-year period than the Cloud Computing Learning Environment. Another benefit of cloud computing is a more consistent and predictable expense, as renewal subscription rates allow for the cost of the system to be spread across a multi-year period. Typically, start-up costs for the server-based LMS requires 45 percent of the investment to be budgeted in the first year, compared to 29 percent for the Cloud Computing Learning Environment. This difference can be critical, as the budget of a server-based LMS suggests that companies may spend almost as much in the first year of the project compared to all costs for five years of a cloud computing LMS. Maintenance fees are another consideration that must be evaluated. With a server-based LMS, IT departments may pay annual license and maintenance fees of about 20 percent of the initial software license fees. The Cloud Computing Learning Environment eliminates the traditional maintenance fees associated with server-based applications. The significance of cost in the ROI model is an important factor to consider. The lower cost, and more importantly, the dependable expense of the cloud computing LMS, provides a superior break-even point that will almost assuredly occur within the first three years of the five-year plan. Our calculations do not take the time value of money into account, which would make the homogenous cost model of the Cloud Computing Learning Environment even more attractive as a financial investment. One can conclude that it is probable that using a cloud computing model will pay for itself within the first two years. Key Questions to Ask About the Cloud Computing Learning Environment To gain the compliance and operational efficiencies of the Cloud Computing Learning Environment, customers should ask these questions of the provider: 1. How Secure is the Environment? The cloud computing provider should be able to demonstrate that its networks are protected by multiple state-of-the-art firewall systems; and that its data center network is automatically monitored for intrusion detection and other malicious activity including viruses. The cloud computing partner must also demonstrate that it has multiple layers of security to protect inbound Web traffic, and include layers of redundancy among all key networking components routers, firewalls, Web servers, database servers and data arrays to remove single points of failure. 2. How is the Data Protected? The Cloud Computing provider should be able to provide evidence that the data are backed up daily and stored onsite in a fire resistant vault. Weekly backups should be made and stored off-site in a fire resistant vault. Page 8

3. Can Compliance Roles Be Defined for Better Grouping? In most cases, compliance learning must be segmented among dozens of groups: employees, suppliers, providers, contractors, etc. The cloud computing provider should enable you to parse employees and nonemployees by job function or role, to ensure accurate training and well-defined reports; today, many learning management systems focus on individual learning plans, but in the world of compliance, the role trumps the individual, especially when you need to generate reports for an auditor or as part of an enforcement inquiry. 4. Can Training Contents Be Stored on an External Server? This will be critical for employees when they re training outside of the company firewall, and for any nonemployee. Training assignments should link directly to these critical documents, and that means they can t simply remain inside the organization s network server or document management system. Nonemployees should be able to access these documents on the cloud computing partner s secure server, so they can take training from any remote location, without interfering with your company s IT policies. 5. Can the LMS Interface with Key Applications? Interoperability with the sponsor s existing infrastructure, including HR, document management (DM) and customer relationship management systems, delivers a seamless process to communicate with nonemployees. With these interfaces in place, the organization gains several benefits, most notably a reduced administrative effort. That s because automated workflow between the systems will trigger the new training process. A new hire entered in the HR system will be automatically placed into the proper learning group in the LMS, to cite just one example. Or a compliance policy document updated in the DM system automatically gets updated and assigned in the LMS, ensuring that learners receive the right training in real-time, without any administrative intervention. WHITE PAPER the Cloud Computing Learning Environment provides a pricing model that enables customers to benefit from a pay as you go subscriber model that reduces the annual maintenance fees typically associated with traditional server-based applications. 6. Can Assessments Be Linked to Document Training? The cloud computing system should enable administrators to build assessments on document training, so that the learning experience isn t simply a read and understood exercise. Learners should be able to demonstrate that they ve read the documents, which leads to improved performance and behavior change. Additionally, the cloud computing system should enable experienced personnel to test out of specific course content, to ensure a satisfactory learning experience. Page 9

Summary: Many companies must show positive Return on Investment in some period of time (typically no later than the third or fourth year of the project). The intrinsic value of the LMS initiative must demonstrate an improvement in meeting regulatory obligations, as well as an improvement in overall business processes, such as smarter workforce planning. Based on our budget analysis, the compliance project manager who evaluates the recurring costs over a five-year period would conclude that the company is budgeting two times as much for a server-based LMS over the Cloud Computing Learning Environment. That s because the Cloud Computing Learning Environment provides a pricing model that enables customers to benefit from a pay as you go subscriber model that reduces the annual maintenance fees typically associated with traditional server-based applications. The Cloud Computing Learning Environment must be able to demonstrate functionality that addresses business and compliance goals, while also demonstrating the ability to demonstrate a stronger ROI through a faster implementation time and less time for the IT department. The result is significant cost savings over many years, without any sacrifices in functionality or user experience. What s more, the automation provided by the Cloud Computing Learning Environment enables those in quality, human resources, and learning and training management to devote more time and resources to defining more targeted compliance-related content, as well as measuring the impact the system has had on the financial performance and compliance goals of the organization. Sources: 1. Forrester, Q&A: By 2011, CIOs Must Answer The Question, Why not Run In The Cloud?, August 14, 2009, by James Staten, Ted Schadler, John R. Rymer, and Chenxi Wang, Ph.D. 2. PWC, Managing people in a changing world... Key trends in human capital, a global perspective, 2010 3. InformationWeek, 11 Steps To Calculate Cloud ROI, January 15, 2011, by Michael Healy 4. Forrester, Trends 2010: HRM Processes and Applications, December 9, 2009, Paul D. Hamerman Page 10

About UL EduNeering UL EduNeering is a business line within UL Life & Health s Business Unit. UL is a global independent safety science company offering expertise across five key strategic businesses: Life & Health, Product Safety, Environment, Verification Services and Enterprise Services. UL EduNeering develops technology-driven solutions to help organizations mitigate risks, improve business performance and establish qualification and training programs through a proprietary, cloud-based platform, ComplianceWire. For more than 30 years, UL has served corporate and government customers in the Life Science, Health Care, Energy and Industrial sectors. Our global quality and compliance management approach integrates ComplianceWire, training content and advisory services, enabling clients to align learning strategies with their quality and compliance objectives. Since 1999, under a unique partnership with the FDA s Office of Regulatory Affairs (ORA), UL has provided the online training, documentation tracking and 21 CFR Part 11-validated platform for ORA-U, the FDA s virtual university. Additionally, UL maintains exclusive partnerships with leading regulatory and industry trade organizations, including AdvaMed, the Drug Information Association, the Personal Care Products Council and the Duke Clinical Research Institute. Page 11

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