AstraZeneca: Business Process Reengineering

Building Robust Business Systems

Working with Accenture in its former guise as Astra Pharmaceuticals, the company has simplified business processes across the whole of its United Kingdom operation, implementing a business infrastructure based on the SAP R/3 software.

Rapid growth, exacting regulatory influences and reforms within the health care market all present significant challenges to the pharmaceutical industry. AstraZeneca is a leading industry player that has recognised that building robust business systems are key to meeting these challenges successfully and enabling the organisation to take advantage of the wealth of opportunities available in this fast-changing environment.

Working with Accenture under its former identity, Astra Pharmaceuticals, the company has simplified business processes across the whole of its United Kingdom operation, implementing a business infrastructure based on the SAP R/3 software. The resultant changes and improvements to Astra's core processes mean that the company is well placed as it enters a challenging era in its history as part of the new AstraZeneca group. Astra and Accenture have partnered to demonstrate how committed business involvement; appropriate technical skills and focused project management can enhance operations and offer improved business visibility.

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Prior to the formation of the new AstraZeneca organisation, Astra Pharmaceuticals Ltd was the UK subsidiary of the Astra Group. Headquartered in Sweden, Astra Group was a global pharmaceutical business globally ranked 13th in sales and has experienced significant growth over the last 10 years, with group pre-tax earnings for 1998 at SEK 16,444m. The business focused on four main therapeutic areas; gastrointestinal (Losec, Entocort), respiratory (Turbohaler, Pulmicort), cardiovascular (Plendil, Seloken) and pain control (Xylocaine, Marcaine). Losec, Astra's anti-peptic ulcer drug, has become the world's top selling prescription drug.

The United Kingdom represented Astra's third-largest market worldwide, with a large research and development facility at Loughborough, a packaging and distribution site in Corby and marketing and head office divisions at Kings Langley. Maintaining Astra's responsiveness to the United Kingdom market, under pressure from continuing parallel imports and reforms to the structure of public health care, underpinned the need for operational change.

Astra Pharmaceuticals approached Accenture concerning the issue of investing in the company's business systems infrastructure, as a prerequisite for securing their growth and building a platform for the future development of the business. Representing Astra were Linda Kelly, managing director of the United Kingdom marketing business and Colin Reddrop, president of Astra Charnwood research and development business. Their objectives were to initiate a project to replace the business' old, non-integrated information systems, from heavily customised and increasingly difficult to support DEC VAX-based systems through to cumbersome spreadsheet systems that the business had outgrown. These systems had served Astra well through a period of remarkable growth, but now represented an unacceptable risk to continued operational effectiveness.

Updating legacy systems in this way, however, was about more than just implementing new technology. There was an opportunity to drive common business processes across all aspects of Astra Pharmaceuticals, simplifying operations and establishing best practices. In this way, a solid foundation would be created within the business' infrastructure, impacting the core operation of the company and enabling it to focus on its key business drivers; protecting and building market share of its existing product portfolio and enhancing the portfolio by bringing new products to market.

1) Selection and Mobilisation
A thorough selection process throughout the latter part of 1997 identified SAP R/3 as the most suitable package on which to base Astra's new Enterprise Resource Planning (ERP) system. The ambitious goal of replacing legacy systems supporting the business' core business functions across all its United Kingdom activities, including finance, procurement, logistics, sales and manufacturing functions during 1998 was set. Indeed, Astra Group has subsequently taken this decision a stage further, adopting SAP as its preferred ERP solution and creating a further program to manage the rollout of SAP across all Astra Group's global businesses.
Astra Pharmaceuticals and Accenture initiated the project work in March 1998. Confidence factors included Accenture's proven track record in delivering complex ERP solutions, the company's strong business integration approach and the innovative use of solution centres with deep SAP skills that would ensure a rapid and effective implementation and delivery.

2) Assessment and Planning
Over two months of intensive work, the team established a clear understanding of business process requirements across the business and how the SAP R/3 software could be used to support these processes. The breadth of business functions to be impacted required extensive use of the R/3 software's logistics and financials modules. Implementation of such a broad scope across very different business units in 10 months meant that project control was critical; standard SAP R/3 functionality was used, with some minor enhancements. Simple, pragmatic design solutions were developed on the understanding that further development of the system would follow the "go-live". Above all, there was clear recognition that the benefit to the business would be brought by a robust, integrated ERP system working with simple, effective business processes.

An important challenge for the pharmaceutical industry is to comply with the stringent requirements of the Medicines Control Agency, the United Kingdom regulatory body. During the assessment and planning phase, the implementation methodology applied by Accenture, along with strong quality processes were assessed to ensure that the needs of MCA validation would be met. A key factor in successfully managing the validation aspects of the project was the appointment of a dedicated Astra team member to ensure compliance with the approach.

3) Business Design and Prototype
With a January objective defined, configuring a prototype system was the next step to demonstrate to the business process owners how the system would take shape.

The process owners at Astra were the senior managers who carried a functional responsibility for the operation of key business processes that were to be supported by SAP. These individuals worked with the project team to review and agree project deliverables in greater detail than the steering committee could address for such diverse business operations. The original project working teams were extended and included analysts from Epic to capture the functional requirements for the SP3 package. A number of enhancements were identified to ensure that the requirements of the warehouse could be met.

4) Delivery and Assimilation
Project delivery was now fixed firmly at January 4, 1999; just 41 weeks after the project began. The work in design and prototyping had ensured that confidence was strengthened in the team's ability to meet this objective, despite the fact that it was still a challenging goal. Building and testing the system, developing and delivering training and the data conversion processes were all areas that had yet to be undertaken. At this stage, the size of the team was increased again, now numbering 21 Astra personnel and 16 Accenture staff.

The system build included:

• The configuration of the SAP R/3 and Epic SP3 software.
• Remote development by the Solution Centre of enhancements and interfaces.
• System test and user acceptance test.
• Development of process descriptions and incorporation of these into an on-line help tool, based on intranet technology.
• Development and delivery of training material, based on an expert-led approach.
• Conversion of legacy system data.

The enhancements required to the standard SAP software were allocated to a team at the Solution Centre and completed in just two months. Use of the Solution Centre shielded the project managers from some of the essential, but time-consuming complexity of application development, allowing them to focus on effective management control.

By the beginning of November 1998, senior end users experienced their first "hands on" access to the system. Training was delivered during December, as close to go-live as possible. This included training of the warehouse operators that was based on simulated picking of goods, packing and "put-away" transactions using radio frequency terminals. Training feedback was positive in all areas. This was a direct result of the decision to use an expert-led approach, with training course delivery undertaken by the Astra team members who were able to establish immediate, practical credibility with the trainees due to their own knowledge of the business.

The detailed planning was fully realised when "go-live" was successfully achieved on the morning of January 4, 1999. No visible disruption to business operations was experienced during the cutover to the new system, with project team members and key users working swiftly and closely to resolve any minor issues that arose.

With integrated functionality, the standardisation of processes within three different sites and a new way of doing business, this important milestone in the company's history was recognised by Peter Richardson, business development director and project director at Astra. "Everyone has been mutually supportive and I am sure this team spirit was a key factor in the project's timely delivery. We have a successful result and I fully appreciate that, despite the challenges, Accenture always ensured a high quality team was present on the project throughout. Continuity of key staff was a significant benefit; now our United Kingdom operation has a solid foundation on which to build our future business within our new organisation."

Simon Proffitt, finance vice president of Astra Charnwood, acknowledges being impressed by the benefits to be gained from an integrated ERP system. "We knew we needed new systems, but I now believe we are using the integrated power of SAP. I have real visibility of what's happening in our projects and have much better clarity and 'drill-down' capability into our research and development project costs, functional costs and substantial infrastructure projects."

Stabilisation of the system was achieved quickly, with handover to Astra's ongoing SAP business support team completed by mid-March 1999. An ongoing relationship with the Solution Centre has been established to participate in Astra's further development of the system. The whole project took just ten months from commencement to completion—bringing together three sites, two divisions and over 500 users. The areas of procurement, logistics and warehousing, sales and distribution, production and quality control and finance processes are all supported through SAP R/3. Accenture's partnership with Astra has resulted in improvements to Astra's core processes, contributing toward their plans for future growth.

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