In 2014, Merck’s analytics practice helped the company identify and deliver more than $600 million in value. “We achieved that, in part, by sourcing a high-quality data source through our ERP program,” says Richard Branton, CTO at Merck. “This high level of data quality is powerful—enabling our business leaders and data scientists to pose questions in order to gain visibility and insight like never before. We are only just beginning to translate these insights into real value for the company.” These powerful data metrics are the culmination of a decade committed to business optimization.
Value identified and delivered by Merck’s analytics practice in 2014
Merck’s worldwide business being done over a unified single-instance ERP program
Merck’s current analytics project traces its roots to 2005, when its board of directors initiated the implementation of a single instance ERP program. “Historically, Merck had run itself in a very distributed and autonomous way,” Branton says. “So each market or manufacturing site around the world was free to implement business processes as they chose.” Over time, that autonomy resulted in a host of communication, data, and process inefficiencies. “The goal of this new program was to focus on driving common business processes, supported by common information across the enterprise,” Branton says. Merck’s first market was launched in 2007, and today more than 80 percent of Merck’s global business is integrated into one of the largest single instance SAP environments across the industry. Branton attributes the accomplishment to top-level executive support. Support starts with the CEO, a capable diversified team led by a talented director, and a formal approach to process integrity and data quality. It certainly doesn’t hurt that Branton has twenty-eight years of experience across Merck’s diverse IT landscape.
Perhaps surprisingly, value-generating analytics were not the focus of the ERP project’s original business case. “The benefits were largely built on doing more with less people,” Branton says. Merck also expected to see a payout from increased inventory oversight, supply-chain management, and the retiring of hundreds of outdated systems. “But driving value through business analytics was the Holy Grail,” Branton adds. “We couldn’t yet quantify it or really articulate it; we just knew it would show up if we got everything else right.”
Instead, the focus was placed on implementation of data governance, information stewardship, and transactional standardization. As Branton’s team predicted, purifying the flow of incoming data eventually yielded a deluge of actionable analytics. Then the 2014 analytics program was launched—independent of the ERP platform.
Forensic analytics, unique to the pharmaceutical industry, offered the organization unique value. To detect fraud, Merck uses specialized algorithms to sift through mountains of employee expense data and detect anomalies. “The system could detect someone who is submitting mileage for their car when they already have a company car,” Branton says. “These are things that a human would never catch, and our hit-rate significantly exceeds anything we achieved with manual audits.”
Electronic audits also mean Merck isn’t spending money on outside forensic experts. “On the manufacturing front, we are able to apply advanced mathematical modeling to some of our production capabilities,” Branton says. Production factors such as temperature, origin, and the age of bulk ingredients can all affect the yield of complex biopharma production processes. Precise analytics can direct an operator towards the appropriate bulk products for optimum yield.
The incredible power of analytics is rapidly transforming the business landscape. While Merck’s single-instance ERP program is almost complete, its analytics program has just begun. “The sky is the limit,” Branton says. “We’ve only scratched the surface with respect to the power of data standardization, data harvesting, and analytics across the entire health-care ecosystem in which we compete. We’re at the beginning of that journey, but the opportunities are boundless.”