ERP validation sounds complex, but really it is simple: Does the software perform as specified?
This is an important question for any company rolling out a new ERP system, because businesses want the system to perform the specified business processes properly and not in unexpected ways. A manufacturer wants to track materials and not have any input uncounted, for instance, or a professional services firm wants billable hours tracked by the 15-minute increment and not on a rolling basis.
Having ERP software perform as expected is even more important for businesses in regulated industries. All businesses should validate their ERP implementations for proper outcomes. But firms in regulated industries such as banking or life sciences have an extra incentive to validate their ERP system: The law requires validation.
Validating for Correct Configuration
Checking an ERP system for proper validation is not about seeing if an ERP solution meets compliance and business process needs. Most good ERP solutions will meet those needs, and any credible system will perform what is needed for validation. When a company validates its ERP software, it isn’t validating the software itself.
What validation is checking is whether the ERP solution has been set up properly. Is it configured for the documented processes outlined by a company and required by regulatory needs?
“The definition of software validation is that it is documented evidence that the system is installed and set up as intended,” says Archie O’Leary, vice president of sales for one of the leading life sciences validation firms, Arbour Group. “It is validation that the system operates as intended and that there are procedural controls in place for it's use and that people are trained.”
For the manufacture of a particular pharmaceutical drug, for instance, there is a particular formula that must be followed by the manufacturer. Validation checks that the right formula is listed in the ERP system. The drug formula calls for buying certain materials from a list of verified vendors, so validation checks that the system handles this correctly and does not allow the purchase of materials from non-approved vendors.
A drug must be manufactured in a certain way to meet FDA guidelines, too, produced at work centers that have been certified, so validation checks that the system requires it and is operational at these centers. The output itself must be tracked and traceable in case defects are discovered and a recall is necessary. The ERP system’s process for track and trace is checked. And there are many more validation tests.
“All of these are regulated processes,” says O’Leary. “The FDA doesn’t care about things such as the general ledger. They just want to make sure that certain processes are verified in the system.”
Fundamentally, the validation process is an audit of the documented processes that a company claims it is following and a verified third-party check to make sure that what the company says is happening within its ERP system is actually what is happening.
“We go in and test that things actually work as specified,” says O’Leary.
Why Prepackaged Industry Solutions Matter
Professional third-party validation as is required in regulated industries such as the life sciences is not a cheap process. But it is required, so ERP validation is just a cost of doing business.
What can greatly help with the validation process and reducing the cost of validation, however, is using an industry-standard ERP solution that has been preconfigured for the processes that must be validated.
Again, the logic is pretty simple: If you take an ERP system off the shelf and configure it for your business, you might configure all your processes correctly and pass through validation easily. But you might not.
With a preconfigured ERP system, that is built around your industry’s needs, there’s still the need for independent, third-party validation to document that the system performs as it must. The chances of success are much greater, however, because the ERP system is built specifically with the required processes in mind.
“Putting in an ERP system is expensive and painful. Let's just say it, okay?” says O’Leary. “So you want to reduce project risk and make sure it meets your requirements or you’re screwed in the beginning.”
There also are cost savings from a validation perspective when you start with an ERP solution built for your industry.
“We have pre-configured validation solutions for systems like SAP Business ByDesign,” he says. “We’ve done enough of them that we have a test-script library that represents the more prevalent functions in the manufacturing process for a life sciences company.”
So instead of Arbour Group having to develop custom tests for validation purposes, they can lean on “prepackaged tests” to handle many of the validation checks. This cuts validation costs, according to O’Leary.
“If we haven't seen it before, do we really care? No. But it's going to be expensive. It's going to take longer because we just have less experience with that particular solution,” he says. “For the market, I think prepackaged is the way to go.”
So understand the ERP validation process and realize that it is about configuration, not system validation. And if at all possible, look for an ERP solution that is preconfigured for your industry’s needs. It can greatly improve the speed and cost of validation.
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