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Case Study

 

Lilly Brings Process Consistency to a Diversified, Global Organization

by Dave Hannon | insiderPROFILES

April 1, 2011

With over 20,000 employees stationed throughout the US and 73 other countries, it makes financial, logistical, and technical sense that Eli Lilly and Company is making the move to a single ERP system. Learn about the pharmaceutical giant’s experience with streamlining the migration to SAP ERP, and discover how the combination of automation and a shared services model lead to efficiency gains for the company.
 

In recent years, pharmaceutical giant Eli Lilly and Company has made cost reduction a top priority. In September of 2009, the company announced a goal to reduce annual operating expenses by $1 billion and headcount by 5,500 by the end of 2011. For the financial component and a large portion of IT, this strategy hinges on moving to a shared services model in which common processes are centralized at a regional level — or outsourced completely — to eliminate redundancies and cut costs. From an IT perspective, retiring dozens of disparate local and regional IT solutions is paramount to achieving a lower operating cost.

“And the only way to make all of that happen is with a common IT platform,” says David Lane, Global IT Design Lead at Lilly.

With over 20,000 employees — approximately half of the company’s total workforce — stationed outside of the US and spread throughout the 73 countries in which the business operates, moving to a unified system and centralized process model makes financial, logistical, and technological sense. To that end, the business is expanding its use of the existing SAP footprint to its global sales, manufacturing, and research facilities, replacing its legacy financial, order-to-cash, purchase-to-pay, accounting, and inventory management systems and creating a single IT platform that regional shared services organizations can manage. By early 2011, Lilly has already extended its single global SAP instance to 18 of its largest countries, and has 40 more countries to go.

As Lane explains, this move to a single ERP system has been the enabler for the business to adopt a shared services model. In a legacy environment, business processes in one country don’t have to match those in another because the IT systems are customized to fit local process deviations that have arisen over time. But standardizing on a single IT platform brings process discipline, consistency, and efficiency along with common data definition and usage to a diverse, global organization like Lilly.

“For example, if 40 different local controllers are coordinating and executing the month-end closing process on 40 different systems or system variations with different data standards, there are inherent redundancies and inefficiencies,” Lane says. “With regional shared service centers performing this activity — in a centralized, coordinated fashion with fewer resources — you get process efficiency, commonality, and predictability, which is good with respect to quality reporting results and knowing exactly what went into each account on a given financial statement.”

Lilly team

(L to R): Chris Miller (HR Global Data Steward and the first Winshuttle user at Eli Lilly), Senthil Rajaratnam, David Lane, Scott Sanneman, Kelly Wikman, and Bev Collier

Streamlining the Migration to SAP ERP

With so much legacy-to-ERP migration taking place, Lilly’s IT organization saw both a challenge and an opportunity. After moving 18 countries onto SAP ERP, the IT team realized its process for migrating the data was time-consuming and, in Lane’s words, “high-touch.” And with the clock running on its savings goal deadline, there wasn’t any time to waste.

“Historically, in our classic high-touch manner, quite often we had our data stewards write a functional specification, which was then handed over to the technical development team to write a custom program to load the data because standard tools did not fully meet our needs,” Lane explains. That customized process involved a lot of people and a lot of steps. With 40 more countries still to roll out, Lane set out to find a faster way to migrate the data. The result was a two-part strategy.

The strategy’s first part focused on the process and roles for migrating data. Sending a single team to each of the 40 countries one or more times just wasn’t practical. Instead, the project team opted to delegate some of the migration work — including the data cleansing — to the local affiliates, since it could be done in multiple regions simultaneously.   

“We told our affiliates that they would need to handle the data cleansing, such as removing duplicate and inactive vendors and customers from their legacy master data lists,” says Lane. The centralized team would then drive other parts, such as data mapping, transformations, and loading.

The second part of the strategy involved tasking and enabling the global data team to operate from the global headquarters and be self-serving throughout the data-loading process, which is the most time-consuming part of the testing preparation process and a primary focus of the business cutover to production. For that solution, Lane turned to an SAP partner Lilly was familiar with: Winshuttle.

David Lane


 
 
 
“If our customer service staff spends less time entering samples orders, they have more time to address situations where a distributor, pharmacy, or medical facility needs assistance that requires interpersonal interaction. This automation allows us to have more responsive and streamlined operations.”
David Lane, Global IT Design Lead, Eli Lilly and Company
                                                                   

Discovering a Seamless Solution for Data Migration

Winshuttle provides a suite of applications that let non-technical business users work with SAP solutions directly from a familiar desktop application. Using Winshuttle, users create templates that record the steps taken to complete any SAP transaction and then map the relevant SAP fields securely to a Microsoft Excel spreadsheet. And because no programming is required, developers can turn their focus to areas where technical development is required, such as output forms and electronic data interchange (EDI) transactions with logistics service providers.

Lilly had been using a Winshuttle application for several years to load HR data and perform some configuration tasks that require data entry to many lines in a table. The 50% improvement in output and the simultaneous headcount reduction seen in the HR area led Lane to see if Winshuttle could automate the legacy data migration to SAP ERP. After viewing a demo of its latest products at an SAP-focused conference and talking with HR colleagues, he saw that the solution could, in fact, automate Lilly’s legacy-to-ERP migration work and dramatically reduce the time required to upload data.

“Winshuttle is very intuitive, so if you’re familiar with SAP and Microsoft Excel, you could sit down and record a basic Winshuttle script after half a day’s work,” says Lane. “In a 40-country ERP expansion project, we’re dealing with a high number of disparate legacy systems that contain data in many different formats. But now, it’s a matter of recording a Winshuttle script and using Microsoft Excel to convert the data into the correct format before it’s loaded into SAP ERP.”

Lane says developing a standard and partially automated process for migration “allows a data steward or power user in the centralized team to become self-serving with respect to data transformation and data-loading tasks without the involvement of IT staff. It is a tremendous enabler that empowers our centralized data team.”

Now, rather than working with the data in a spreadsheet file and then moving it somewhere else to upload the information, the process is seamless, according to Lane. “You can easily transform data fields to calculate percentage increases or decreases for threshold values or customer credit limits,” he says. “Winshuttle uses the power of Microsoft Excel to make some of those activities easier and self-contained. And the answer is right there in front of you. You simply push a button, and the data loads into the SAP system along with providing a verification and rejection file. Winshuttle also uses standard SAP security to verify maintenance authorization.”

Shared Services + Automation = Efficiency Gains

As more of its global operations standardize on SAP ERP, Lilly can centralize more of its processes at regional shared service centers, which have a common goal of standardizing processes, sharing best practices and efficiencies, and reducing redundancies enterprise-wide. Currently, the business has the North American center up and running, with the next series of go-lives in Europe scheduled to begin in April of 2011.

The benefits of a shared services model are already emerging at Lilly. For example, using a Winshuttle script, the North American shared service center has automated the process for entering requests for samples of its diabetes products, rather than having customer service representatives key in the orders. The result has been an 80% improvement in productivity. Similar, manual order-entry processes are occurring all across Lilly, so it’s an early return on investment that will soon be replicated in the other shared service centers.

“With a single global instance and the same order types across the globe, this is a ready-made opportunity,” Lane says. “If our customer service staff spends less time entering samples orders, they have more time to address situations where a distributor, pharmacy, or medical facility needs assistance that requires interpersonal interaction. This automation allows us to have more responsive and streamlined operations, which is our end goal.”

Going Forward, Looking Back

With some early wins already registered, Lilly continues to strive toward its cost-reduction goal. The company has many more countries to check off its ERP expansion list, but with well-defined processes and the right data migration solution, each migration gets a bit more efficient.

“At times, it’s difficult to see a link between what we do in IT and the benefits to the business processes, but in this overall project and the samples ordering situation, the benefits we bring are easy to see,” says Lane.

Looking back, Lane says that if he had to do it over again, he would change only one thing. “I wish we had the current Winshuttle product for the first 18 implementations,” he says. “We would have saved hundreds of thousands of dollars by now.”

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