Will Cloud Computing Work for the Life Sciences Industry?

Will Cloud Computing Work for the Life Sciences Industry? Even in a regulated industry there are many opportunities to start seeding the Clouds Cloud computing refers to the idea of delivering information management computing power from centralized servers that share resources like storage, processing and bandwidth more efficiently by a cost factor of at least 5-10x. From a business perspective, Cloud computing delivers services for its computing needs in a simplified and economical way, providing unbounded scale and quality of service to foster rapid innovation, change and decision making. This is not a new paradigm in the computing world but a new pathway to making information management resources a commodity. With Biopharmaceutical development business model changing rapidly, can Cloud computing work for this industry to provide the dynamic computing environment it promises to deliver? Vikram Marla Compiled For Seventh Street Development Group May 2009

Contents What is Cloud computing 2 In-house vs. Cloud paradigm 3 Opportunities to start seeding 8 Regulatory & Validation requirements 10 Benefits and risk of Cloud computing 11 Cloud computing considerations 14 About the author 15 What is Cloud computing? Cloud computing refers to the idea of delivering Information Management (IM) computing power from centralized servers that share resources like storage, processing and bandwidth more efficiently. For a business, Cloud computing delivers IM services in a simplified and economical way, providing unbounded scale and quality of service to foster rapid innovation, change and decision making. Cloud computing is closely associated with web 2.0 and is also referred to as Software as a Service (SaaS), Hardware as a Service (HaaS), On-Demand or Utility Computing. Cloud computing permits businesses to access this resource from anywhere, anytime and from any device provided they have internet connectivity. The concept is often characterized as: Scalable Increase or decrease capacity in minutes Flexible allows the consumer to choose specification of individual computing power purchase Inexpensive no dedicated capital expenditure investment is required Reliable uses proven and validated data centers With Biopharmaceutical drug development business models changing rapidly, Cloud computing can provide dynamic computing capabilities as IM applications and services need not be tied to a single computing platform. But as we know, the Biopharmaceutical drug development business is complex, and its processes are highly regulated. The question is - can an open model be used as a platform and have business applications running off of the Cloud? In this paper we will answer that question by understanding concepts of Cloud computing, services available using Cloud and identify services that would be beneficial to the industry. Finally, we will discuss the merits, risks and what to look for when selecting an IM system using Cloud resources. Seventh Street Development Group White Paper Page 2

In-house vs. Cloud Computing: Before we start comparing, let s first look at different options businesses have to manage information resources and also understand the segments offered within Cloud computing. IM resourcing options: Deployment Options In-House Cloud Procured Software License (Traditional) Hosted (Hybrid) Leased (Hybrid) On-Demand License Subscription Pricing Options The industry is in the midst of a shift back towards centralized Cloud computing and away from Client-server computing The figure above shows different ways in which information management resources can be deployed and priced. In-house model: IM resources are procured and hosted in-house as a traditional model. This model typically needs huge up-front capital, internal infrastructure costs and IT staff to manage and maintain systems. On-Demand model: This deployment model is the opposite of an in-house model. This is modeled like a utility hosted in the Cloud ecosystem by service providers, and businesses pay a subscription fee to access its resources. We will be discussing this option in greater length in this paper. Leased hybrid model: Businesses at times choose to host IM resources in-house but pay for it as a subscription. This is more often an alternative payment option. Hosted hybrid model: Businesses that do not want to host anything in-house use this option to host their system within the Cloud ecosystem. System resources may be dedicated to the business. They may pay for the system upfront or sometimes as a subscription. This option is particularly attractive when a solution is not available as a service model but the business does not want an in-house IT infrastructure Historically, businesses have adopted the in-house model to setup corporate infrastructure. The solution recommended in this paper is a major departure from this method. However, a computing environment for a business is likely to have a combination of these models. Strategic planning and information management framework can provide a coherent strategy to help minimize the cost over the long run. Seventh Street Development Group White Paper Page 3

Segments of Cloud computing: There are three distinct market segments to Cloud computing. They are: infrastructure, platforms and applications. Applications Transactional Apps. (LIMS, EDC.) Applications Productivity Apps. (Word, Email,..) Platforms Directory Security Work Flow Collaboration Infrastructure Data centers Storage Computers Networking Applications Horizontal Apps (Financials, HR,.) Infrastructure seeding the Clouds: Infrastructure vendors provide raw physical capacity for Cloud computing. This may include any combination of hosting, a development environment, and/or storage. Companies such as Microsoft, Google, and Amazon along with many smaller vendors provide such capabilities. They provide you with complete control of your computing resources and let you run on a proven computing environment. Service providers change the economies of computing by allowing businesses to pay only for capacity that they actually use and is computed to an hourly level. Companies of all sizes are opting to use an infrastructure hosted by a service provider and it is even more appealing to small and mid-sized companies. Platforms seeding the Clouds: Platforms provide the underlying infrastructure, whereby new applications can be built by the business or by partner companies and deployed. Companies such as Google with its App Engine, Amazon with its EC2, Salesforce.com with its Force.com and Microsoft with Windows Live, have deployed platforms which, hundreds of vendors are building applications for business using their infrastructure. Even though larger companies are looking into platforms to deploy their next generation of applications, mid to smaller companies are overwhelmingly adopting it for 80% of their Seventh Street Development Group White Paper Page 4

applications. Cloud based platforms are ideal for storing, sharing, collaborating and developing work flows. They facilitate many of web2.0 features that can be instrumental for collaborative computing. Chart below indicates three quarters of the companies would use on-demand of one type or other Source: McKinsey & SandHill Enterprise Software Customer Survey, 2008 Applications seeding the Clouds: Applications sourced from the Cloud are also referred to as SaaS. This model is generally a subscription based service model offered in two different ways: Same application used by all customers on-demand This model is paid on a subscription basis Dedicated software that is hosted by a Cloud vendor application is dedicated to the business and is accessed via the internet. Hosted model is a hybrid model, where at times, cost of the resource is paid upfront or as a subscription. Functional features of the application are more in line with an in-house model. Hosted option comes at a higher cost than an on-demand model but less expensive than an in-house solution. SaaS has gained significant traction over the last five years as an alternative to traditional in-house software installations primarily for many productivity and horizontal applications. Seventh Street Development Group White Paper Page 5

Comparison of in-house vs. Cloud computing: Cost: The total cost of ownership of an application for in-house computing can be as high as 10x the cost of the software license. Additional costs include hardware, middleware, database, etc. On the other hand, an on-demand solution would be much The operating system for Cloud computing is in the Internet, not on the desktop PC. This provides Cloud challengers an opportunity to shift the center of gravity of the computer industry away from the desktop. lower rendering to 5-10x in saving. Both solutions would incur certain costs such as consulting, training and validation. However, it could be lower with the on-demand Seventh Street Development Group White Paper Page 6

solution. The example above compares the difference between an in-house vs. ondemand implementation of office productivity tools. Similar savings can be derived for application platforms to store and manage information. Architecture: In-house installation is a single ownership use of resources. Unused or underutilized resources are a waste of capital. In comparison, an on-demand setup is a multi-tenant usage. Resources are maximized for usage thus passing the cost saving to tenants. Community effects: Since on-demand is a multi-tenant ecosystem, setup of such environments would be much better engineered, validated and is better equipped. Access to these environments is web based and is very conducive to partners. Alternatively, an in-house system would need a lot more capital to equip it to the standards of a shared environment. Disaster recovery: Although an on-demand environment may withstand disasters better, any shutdowns would affect all users of the platform with users having no control of their environment. Users of an in-house environment can have a better control of planned shutdowns. Functional Utility: Application functions tend to be standard for all tenants of an ondemand environment. Whereas, applications in an inhouse environment can be customized giving companies a competitive edge. As shown in the diagram below, transactional systems that need customizations to accommodate specific processes tend to be customized and are hosted in-house. Horizontal applications that have similar functions across all industries are easy candidates for on-demand usage. Seventh Street Development Group White Paper Page 7

Opportunities to start seeding the Clouds within Life Sciences: The life science industry is a regulated industry. Testing and validation conditions are more stringent. However, that should not rule out the use of Cloud computing. In fact, reliability, disaster recovery and archiving capability is much higher with Cloud based systems as compared to in-house systems. Let s look at each of the three segments of information management that could be considered for Cloud computing. Multi-tenant architecture lets companies deliver their service through a common, shared technology infrastructure. It ultimately provides more reliability and redundancy, and greater leverage of personnel and data center investments. Infrastructure: There are many service providers providing various choices to accommodate infrastructure using the Cloud. Cloud based infrastructure provides the highest ROI and benefits among all segments of Cloud computing. Decision to use Cloud infrastructure is an easy one, however, the choice of platforms and application that use the infrastructure will ultimately substantiate your decision. The cost benefit should be analyzed for the entire solution. Platforms: As discussed earlier, platforms are development environments that can be used to deploy new apps, provided either by partners or the customers themselves. In addition to application development and deployment, platforms provide an excellent resource for information; capture, storage, sharing, archiving and control. The Biopharmaceutical drug development business is complex with possibly multiple players and partners dispersed geographically across different time zones. In such environments, collaboration and sharing of essential information is important. Platforms operating in the Cloud provide an ideal base for collaboration. Workflows along with electronic signatures can be developed to provide seamless access across the globe. Even though on-demand platform solutions are evolving rapidly, they fall short of inhouse platform solutions in terms of functional capabilities. As an interim solution, to lessen the burden of incurring huge in-house implementation expenses, companies can look into using platform solutions from a hosted environment. Applications: Application systems used to process information can primarily be categorized into; office productivity tools, horizontal systems and transactional systems. Office productivity tools: These are tools such as email, word or excel. There are few service providers who offer such tools over the web that can be accessed via the Cloud ecosystem. The functions and features of web based applications do not pair up to desktop based MS office tools. However, if your needs for such tools are not demanding, Cloud computing tools are the way to go. Alternatively, a hybrid model can be adopted where the tools can Seventh Street Development Group White Paper Page 8

operate from local desktops and the storage of documents can occur in a platform that is either hosted or accessed from the Cloud. Horizontal systems: These are systems such as CRM, payroll, financial systems, etc. Multiple service providers provide systems that accommodate Cloud computing. The functions and features pair up with in-house systems. Small or mid-sized businesses have a lot to gain by using an on-demand system as compared to implementing them in-house. Transactional Systems: Scientific processes during drug development tend to be complex and very data oriented. Most transaction systems capture, generate, process and manage information. The figure above shows common high level processes that generate specific data during drug development. Besides a few EDC systems, there not many choices available to adopt transaction systems using Cloud computing. Since life science R&D processes are complex, systems tend to be more suitable for in-house deployment and provide the benefit of customizations. In the interim, many service providers provide hosting of in-house solutions in a Cloud environment. As applications become available over the Cloud, mid-sized companies can start migrating towards such systems. Seventh Street Development Group White Paper Page 9

Regulatory and Validation Requirements: Quality assurance and validation activities are intense and expensive for every life science organization. A significant amount of time is typically spent by IT and QA personnel testing information systems, and authoring standard operating procedures and practices for its usage. Typically, regulatory requirements for office automation systems and horizontal applications are lower than a transactional system. However computer system validation (CSV) requirements such as reliability, disaster recovery, archiving and access control capabilities are important and Cloud system needs to comply with prescribed IT guidelines. Since most ondemand systems follow best practice guidelines, there is an added benefit of using such systems via Cloud platforms. Platforms solutions need to have archival, version management, electronic signature and work flow management capabilities. If an on-demand system does not qualify for such features, businesses will need to audit service providers for CSV compliance and qualifying the system that is being hosted in the Cloud. Most transactional applications used for process execution typically have higher QA and validation guidelines, and need to comply with 21 CFR Part-11 requirements. If such a system is hosted in the Cloud, businesses will have to perform regular audits of the vendor, and the system needs to pass through rigorous quality checks before implementation. Cost of testing and validation might end up higher than performing the same for an in-house system. Finally, Cloud computing provides a strong platform for infrastructure setup and operational compliance requirements. Seventh Street Development Group White Paper Page 10

Benefits and Risks of using Cloud Computing Cloud computing information management is based on subscription pricing. In addition to cost saving, there are many other benefits: 1. Replace upfront capital expenditures with low risk operational expenses - Acquiring new infrastructure and implementing virtualization can require large capital expenditure. Using a Cloud service allows a business to reduce capital expenditures, as well as transition virtual infrastructure management to a provider that has a core competency in managing efficient, resilient data centers. 2. This method of computing lets businesses use what they want and how much they want. Scope of such implementation can be scaled down to just the initial scope with the option of expanding later as the business grows. 3. Eliminate costs for in-house data center space, power and cooling. - Cloud computing facilities are typically highly efficient, low cost facilities with minimal operational expenses. Because Cloud services are designed to be multi-tenant, they ensure maximum utilization of computing resources and minimize data center real estate. 4. Reduce IT labor costs and speed of deployment - Easier to get IT operations established and less need for IT expertise at the company level. Businesses also find their speed of deployment is much quicker. 5. Utilize virtual automation and a self-service model - Virtual lab automation technology enables self-service virtual environments which vastly reduce the time to set up and tear down new virtual machine configurations. 6. Increase productivity by using integrated Cloud environments for distributed teams - Cloud-based IT environments solve many of the collaboration issues distributed teams face. Projects with shared virtual environments can be easily created in the Cloud with appropriate access controls and team administration. These environments can be replicated for new teams and then isolated from other systems as necessary to ensure separate work streams. 7. Increased visibility, access and search-ability of information Paperless and Seventh Street Development Group White Paper Page 11

collaborative platforms provide the benefit to store information at a single location that can be shared by key stakeholders across the globe. This allows access to information using hyperlinks and its contents can be searched using key words. This saves huge amounts of money from information rework, time and ease of use. Platforms provide the necessary controls to limit controls and mandate guidelines. 8. Improve cost transparency for IT Projects with usage-based reporting - IT organizations often struggle to allocate costs and bill internal groups for services. Cloud offerings are typically billed by usage directly to the business units. By adopting a Cloud solution, IT managers can leverage these reporting capabilities to better manage costs and allocate charges to business units based on actual consumption. 9. Reduce project management resources Project managers generally end up spending a considerable amount time hand-holding, tracking and coordinating information between stakeholders, rather than spending time planning and managing activities among various processes. A well setup collaborative IM system reduces paper chasing, meetings, lost paperwork, etc., thus saving cost for the sponsors or to let the contracting partner be more competitive. 10. Standardization of data using templates and guidelines When businesses operate globally with localization requirements, data standardization can be challenging. Often, countless time and resources are wasted in fixing non-standard data. Collaborative platforms can provide a basis for templates, guidelines and standards. 11. Elimination of paper based systems Sharing information among all stakeholders including contracting partners can eliminate the need for hard copies of information being faxed, scanned and sent via emails. For example, if a contractor is manufacturing a dosage form based on a BOM structure, the time taken to print a batch records, mailing/faxing to sponsors for approval/wet signature and to receive it back could be a 3-10 days turnaround time. With a centralized system and an effective workflow, the same can be accomplished in a few hours. This kind of efficiency translates to time, money and a faster drug development cycle. 12. Eliminate re-work by validating information at the source Businesses spend multiple weeks after completion of study to re-create legacy information, collate them to ectd backbone structure, re-validate, and create links and publish information needed for regulatory filing. These final activities can be minimized if information can be validated at the source and documents can be created as per ICH guidelines, saving money and time during final phases of development. 13. Reduce risk of having insufficient information about a study When a study trial is in progress at various sites and geographic locations, it is in the best interest of the sponsor and contracting partners to share critical study results at all times. Collaborative paperless information can help expedite decisions that can help sponsors manage project cost. Seventh Street Development Group White Paper Page 12

Podcast - Listen to what others have to say: There are several risks to consider before signing up for Cloud based services. These risks are not necessarily show stoppers or serious failures, but businesses must be aware before deciding whether Cloud based services are right for their needs and which of the available services is right for them. Governance and best practice guidelines can be put into place to mitigate some of these issues. Corporate Cloud computing risks and benefits ; 1. Vendor lock-in - Make sure there is an easy way to get your data out of the service. If you're using an infrastructure service, backing up the storage system and data should be relatively easy. If businesses are using platforms and applications from the Cloud, they should test for data archiving and portability and have that be a part of their validation plans. 2. Reliability Interruptions such as massive internet or hardware or software failure can disrupt the communication link with service providers. But most hardware or software failures should be managed using redundancies. For situations like this, it's better to choose a service provider who offers mirrored sites. 3. Performance Response time is dependent on connection speed, service provider resources and number of users using the system. In-house systems can be optimized to individual business needs but in a SaaS model, businesses do not have control over on-demand performance. This is one of the key reasons ondemand systems are still not ready for mission critical applications. Although applications accessed by life science R&D might not have a need for optimal performance, response time of every application should be carefully reviewed and tested. 4. Part-11 Compliance - Since some applications may need to operate under the guidelines of CRF Part-11 (Electronic record keeping and electronic signatures), Cloud computing might not be able to accommodate guidelines of Part-11 requirements. For such applications, Part-11 audits and validation should be performed on vendor s policies. An external audit of a SaaS provider is an important exercise that should take place regularly regardless of vendors size or maturity. These audits should be conducted periodically. Businesses should verify vendor policies for data exposure, access controls, backups, data retention and disaster recovery policies. 5. Going out of business Since the business of providing Cloud services is in the process of maturing, IM framework plans should consider contingencies if a particular vendor goes out of operation. If exporting your data is easy, then the possible shut down of the vendor shouldn't be that dangerous. Seventh Street Development Group White Paper Page 13

Cloud computing considerations: Could computing is a key component of web2.0 strategy and is a step in the right direction. For businesses, Cloud computing delivers services in a simplified and economical way, providing an unbounded scale and quality of service to foster rapid innovation, change and decision making. With Biopharmaceutical drug development business models changing rapidly, Cloud computing provides dynamic computing capabilities. SaaS solutions are, for the most part, built to deliver excellent security and performance levels. Large investments to ensure optimal service levels can be shared across many customers, and can often create better operational results than systems deployed in-house. Nonetheless, not all SaaS providers are created equal - being a service provider involves more than hosting applications - performance, scalability, compliance, and enterprise sustainability are important. For small and mid-sized businesses, Cloud computing inherently minimizes the costly process of procuring, provisioning, configuring, testing, validating and securing new applications. But not all costs can be eliminated. Moreover, not all information systems are available as a service. However Cloud computing is an excellent solution for research and development environments where scope of the product or business is not known for an extended period of time. Cloud computing allows a business to ramp up or scale down depending on the outcome of their R&D efforts without sinking in huge capital on information management, yet securing most of the benefits of an inhouse information system. For businesses that have in-house IM environments, they can start seeding the Clouds for newer projects and transition systems that have high maintenance costs. Provisioning information services is not a new paradigm in the computing world but a new pathway to making information management resources a commodity. Seventh Street Development Group White Paper Page 14

The Author: Mr. Vikram Marla has a proven record of success as a President, CEO & CTO for US, European and India Operations in the information management sector of the life sciences industry. He is currently working with NowPos, an R&D led technology company. In the past, Mr. Marla: has partnered with corporate leaders across a wide spectrum and developed enterprise level solutions, optimized business processes, and achieved operational objectives designed and developed Clinicopia product suite a clinical supply chain software solution to manage design and development of clinical drugs and supplies. Clinicopia is an industry standard clinical supply chain management system, is currently used by many of the large pharmaceutical companies in US and Europe. The product suite comprising of Forecasting, MRP, Electronic batch records, Planning, Packaging, Labeling, Inventory, QA and Distribution using a web and RF technology worked as an esolutions Architect who can look at the big picture, analyze processes, recommend and implement solutions, all with a focus on efficiency and ROI worked for Oracle Corp. in their commercial consulting practice and Westinghouse Medical systems designing EMR/PHR systems Mr. Marla has a Bachelors degree in Electrical Engineering and a Masters degree in Computer Science from University of Memphis. Seventh Street Development Group Lafayette, IN info@seventhstreetdev.com Tel: 765.650.4462 2009 Seventh Street Development Group. All rights reserved www.seventhstreetdev.com Copyright 2009 Seventh Street Development Group. All rights reserved. Seventh Street Development Group believes the information in this publication is accurate as of its publication date. The information is subject to change without notice. All trademarks used herein are the property of their respective owners Seventh Street Development Group White Paper Page 15