The goal is not to supplant high-security, industry-dedicated tools, but to give pharma companies the option of employing lower-cost, easy-to-use alternatives to ERP and content management systems. "The historical monolithic application, the über-application that does everything, isn't going to really work anymore," says Paul Mattes, enterprise sales and industry strategist for Microsoft. "Because to the extent that you need to orchestrate business processes within your organization, as well as across organizational boundaries, those applications start to break down and are not as flexible as they could be. So what we're trying to do is say, 'OK, from an interoperability perspective, how can we open those things up?'"

The People Challenge What is the biggest obstacle companies face in adopting technological solutions to regulatory compliance? To Judy Hanover, senior research analyst for the research and consulting company Life Science Insights, the answer is people. "There are a lot of personalities in a drug company," she says, "and getting those people to accept electronic processes is a huge issue. The value proposition in a lot of cases is still unclear. You're asking companies to invest with an uncertain return, and there are horror stories out there. I think things like that have caused a lot of reticence in the industry."

On the other hand, Hanover says, pharma companies have long given regulatory compliance blank-check treatment. The stakes are too high if they don't. As a result, over the next few years, compliance may become the driver that gets pharma companies to adopt technology, with improved business practices as the real payoff. Sarbanes-Oxley, by forcing companies to keep track of how their financial records are calculated, will make it easier to make detailed comparisons. Content management systems will not only preserve an audit trail, but have the potential to speed the creation of clinical trial protocols and regulatory applications through the use of templates, libraries of boilerplate language, and "smart documents" capable of interfacing with ERP systems and databases. State-level reporting requirements on marketing expenditures will put companies face-to-face with the facts of how effective their marketing efforts are.

An example: SAP's software has the ability to track pricing, but did not traditionally offer capabilities for tracking and reporting on prices offered to US government agencies—a crucial factor in dealing with Medicare and Medicaid. SAP and its preferred systems integrators—Accenture, Capgemini, and IBM Global Services—worked with a San Francisco-based revenue-management firm, Model N, to develop a government pricing solution to help manufacturers deal with the whole range of federal government pricing requirements: establishing policies, calculating, analyzing, validating, and filing with the appropriate agencies.

"There are very specific compliance requirements around governmental reporting and around the reimbursements associated with government programs," says Steve Zocchi, Model N's vice president of marketing and sales. "There are business requirements placed on the company to provide the most favorable terms to the government, and terms that are consistent with the reimbursement policies of each individual state. And there's a real challenge with managing the data, managing the calculations and policies, and having an auditable, reproducible history in case the government is interested in finding why I've made any of the submissions I've made."

In the absence of a product that specifically addresses government pricing, many companies have gotten by with Excel spreadsheets or with home-grown software. "That's what we did in order to get to where we are today," says Eric Bloom, vice president of information technologies at Endo Pharmaceuticals. "But it's very expensive and very time consuming and makes updates and modifications in our application much more cumbersome than if you just actually have a system that's designed to work well together." For Endo, the home-grown solution, made by SAP, has become increasingly unattractive because of two factors. First, Endo's business has grown rapidly, increasing the complexity of tracking pricing data. And second, SAP's recent upgrades to its products have increased the difficulty—and cost—of updates.