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Cloud-ERP in Regulated
Sycor Americas

Flexible despite regulations: Cloud-ERP in regulated industries

July 27, 2020

In industries characterized by strict regulation, such as the Life Sciences sector, business system processes must constantly adapt to new technology, laws, and compliance requirements. We explore how to navigate the jungle of ERP offerings and what an ERP system for highly regulated industries has to offer. 

The ERP market for new systems is largely saturated; hardly any company works without business software. Nevertheless, some system providers and integrators are recording double-digit growth rates. Most projects focus on modernizing the systems and platforms used. While in the past the IT environment was less important in the evaluation of existing ERP systems, the operating model, overall functionality and process efficiency are becoming more important, especially for younger IT professionals. Which processes were possibly well suited to ERP systems in the past and which processes should be provided more flexibly? In the past, ERP systems were usually designed exclusively for in-house use, but should at least allow external access later. Many companies in regulated industries are unable to master this innovation in ERP systems very well. In the life sciences sector, in particular, GxP systems are especially regarded  and simple interaction from outside is rarely implemented innovatively.

The gap between ERP and CRM

For a time, the process-related expansion of customer relationship management (CRM) systems seemed to be the key to circumventing the aforementioned paradigm, but system breaks between these solutions and the ERP system were usually the rule. However, the degree of process automation and industry maturity, as well as the process depth and functional diversity, has increased significantly for almost all providers over the last 15 years. So while the latter criteria were also important and value-adding for IT consulting in the last two decades, today there are functionally mature and industry-suitable systems available that can be implemented well in the standard, if carefully selected.

SAP and Microsoft

Among the major solutions in this environment are the SAP ERP suites and the Dynamics 365 Finance and Operations (D365 FO) ERP system from Microsoft. Both applications work in the cloud, offer a high level of functional diversity and depth, provide industry templates, and can be implemented comparatively quickly and easily. In addition, the cloud solutions of both manufacturers are designed to meet the requirements of high availability in regulated environments. While Microsoft's CRM (now D365 Customer Engagement) and D365 FO systems have long been established in Microsoft's cloud system, Microsoft's smaller ERP system (known as Navision, later Dynamics NAV and now D365 BC) has developed over the years into a nationally deployable ERP system with a focus on smaller companies.

In and on Azure

The term 'In and on Azure' was used by Microsoft for quite some time. Before that, the so-called 'in the cloud' usage merely indicated that the company was operating in the cloud. With the D365 FO and D365 CE systems, Microsoft has been consistently pursuing the path of exclusive cloud use for years. Both systems were tailored architecturally and in their integrations to this ecosystem and are constantly being developed further. An honest statement that they are OnPrem and equally well usable in the cloud is therefore not possible. The Ecosystem is initially based on a common data structure that allows for numerous and professionally usable integrations: as an app or as an individual integration. Azure - the Microsoft Cloud - also allows hybrid applications in combination with on-premise / in-house applications very well.

Competitive chance

The ecosystem is constantly evolving. This is probably the biggest advantage - and also the biggest challenge. Companies are always working in the most modern environment and investing in highly secure availability. This provides small businesses with the kind of powerful environments that were previously only available to large enterprises. In some industries, competitiveness is shifting to innovative and often much smaller companies. Systems that can only operate well in the Azure Cloud must be integrated into the rest of the ecosystem by hand. It is up to each user to evaluate the short, medium and long-term benefits of systems that rely fully on ecosystem integration (D365 CE and D365 FO). Tools such as Office, Teams, Power BI, Talent and HR illustrate the effects of this approach. And indeed, many companies are turning away from the best-of-breed approach and are turning to the cloud.

Cloud in regulated environments

The pharmaceutical industry is the pioneer in how to select and introduce complex systems in the GxP environment and keep them valid after implementation. The fine chemicals industry, the medical technology industry and, increasingly, the food supplement and cosmetics industries are subject to increasing regulatory influence and must validate numerous IT systems involved in value creation in the GxP sense. In addition to system suitability, which refers to security in the architecture and to functions and processes (keyword: requirements for computerized systems in the Code of Federal Regulations of the FDA, guidelines and directives for computer system validation, the Medical Device Regulation), the companies focus on essential validation contents and steps. In addition to the creation of a validation plan and risk analyses, the V-Modell with the steps DQ, IQ, OQ and PQ - assumed to be known here - is usually run through in a very process-oriented manner. In the Cloud, the focus is now on IQ. Specific know-how is required to map the IQ in the cloud successfully and in an auditable manner. Helpful and relevant here are the Microsoft compliance certificates (Microsoft Trust Center in relation to GxP and FDA). Successful implementations of D365 FO by Sycor prove that switching to the cloud is also possible in a regulated environment.

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