The Functional Service Provision outsourcing model can be an extremely efficient and cost-effective solution for trial Sponsors. It can also be a rather risky endeavor to engage in a mid to long-term strategic relationship with a provider. On one hand, the FSP model allows Sponsors to seek out resources for specific functions and/or to cover specific workload trends. On the other hand, like any long-term relationship, how can the parties involved ensure it will work as time goes on? Challenges specific to FSP outsourcing will surely arise over time, therefore it is important to establish the success parameters in the beginning.
Which critical topics should you address up front in order to achieve success?
The provider should guarantee ‘sustained’ quality to ensure a long-term sponsor/vendor relationship. Starting a relationship with high expectations by placing key experienced personnel who deliver high quality deliverables then, in an effort to achieve a target margin, reducing the quality of deliverables by bringing in less experienced resources will lead to sponsor disappointment. There should be an agreed quality level, monitored using appropriate metrics an sustainable in the medium/long term.
The cultural fit between the pharmaceutical company and individuals in the FSP team is important. The Sponsor should screen to ensure there is a cultural fit with the individual and not just technical suitability. Character profiling is often overlooked in the need to meet demand. It’s important that individuals can work to the values and mission of the Sponsor. Sponsor involvement in building the FSP team can be beneficial in aligning expectations and building trust.
Communication is crucial. If a communication plan and KPIs can be agreed upon in the area of communication both parties can agree on their expectations. Typically, the team will be located in different offices and different countries. This can be acceptable in the knowledge that the Sponsor may get the necessary blend of high/low cost with some team leads that are local to their own for regular communication. The mix could be 40% high cost, 20% medium, 40% low and the geographical spread may enable the appointment of more experienced resources in each country. Including expectations of how to work across time zones is important to achieve essential day-to-day communications and placement of the FSP manager at any given location is critical to the relationship.
Technology-wise it’s efficient for the provider team to access and understand the Sponsor’s technology environment remotely and work within it. One person or a small group can be trained directly by the sponsor who in turn can train others, using the “Train the Trainer” model. Management on both sides of the relationship should monitor quality and productivity, sharing KPIs at regular governance meetings.
Team attrition can play a role in hindering on-going quality of service. If the team is located in an unattractive location, attrition typically increases, therefore geographical location is a factor to consider when putting teams together. Also the team lead plays an important role in keeping individuals motivated and happy in their place of work. Salary is a key factor, so if the provider has agreed to a 5-year price deal that is unsustainable due to demand and salary increases for a particular skill set, then attrition only increases as employees are lured to higher paid positions in other companies. Pricing models should be questioned to ensure they are sustainable in the long term. Knowledge workers, such as you would find in these FSP teams are also highly motivated by ability to learn and progress, a successful FSP team will account for these needs and ensure they are met.
When evaluating a vendor, it is important to obtain some evidence of their ability to ramp up to meet the Sponsor’s pipeline plans. Often evaluated is how many resources the provider has in the particular functional area. The answer may be a high or a low number, but whatever the case, it doesn’t bear any relation to the number of resources available to the sponsor. No provider has idle staff in great numbers, instead the focus should be on the ‘ramp-up’ period, with a credible ramp-up plan, preferably with some previous track record of success.
A blend of low cost resources with medium/high cost ones ensure a competitive overall price but it’s important to build in inflation if the pricing is modelled over any time greater than one year. If the bid is via an on-line reverse auction, robust models should be built to quickly calculate margin at different prices. The downside of this procurement method is the significant risk to the ability to sustain quality if the price is driven too low. It can become impossible to recruit the right level of resource, setting the vendor up to fail and leaving the sponsor with an urgent problem to solve to avoid pushing out study end dates.
In summary, there are a number of factors that lead to a successful FSP relationship, but addressing the longer terms aims with regards to quality, pricing and team structure will lead you to decisions regarding the importance of each of the other factors and allow you to establish a relationship based on long term success, over short term wins.