Implant maker fine-tunes with e-business suite

Australian manufacturer and supplier of implants for children who are hearing impaired, Cochlear Ltd is staging the rollout of a new enterprise resource planning system to both streamline communications across its international operations and upgrade its client support systems.

Founded in Australia in 1981, ASX-listed Cochlear has more than 36,000 implant recipients worldwide. Its network of support is available in more than 50 countries.

Leo Port, senior vice president of business systems, spoke to Computerworld about the process of assessing the rollout.

The manufacturer has operations in Australia, the US and Europe and all three are running on different network-based financial and distribution systems. In Australia, the office has been running an old system for about 20 years called Maxcim, currently owned by Computer Associates, Europe is running on Scala, a fairly well-known European system, and the US operation is using a small Macola system.

"None of these three systems communicates effectively with each other. There is a lot of time spent reconciling information," Port said.

Another factor behind the decision to implement a new ERP system was foresight, on Cochlear's part, of the needs of a continually expanding customer base.

"Most kids are implanted at the age of 12 to 18 months old and stay with us for the rest of their life. They are our customers forever," Port said.

"We currently have more than 36,000 patients. They use the devices up to 16 hours a day every day of their life. At some point they will need services or repairs. So it's a good time to think about how to provide this support in the future."

Port said there is a need for a strong CRM system as Cochlear's customers grow older.

"It's also important to be able to provide sales and service over the Internet", he said, adding that it is impossible with the current system to do this.

He said that now, when an implant needs a spare part, many of the recipients go to a clinic to buy it but handling such matters is not part of the prime training for clinic staff. Instead, the clinic or the recipient will be able to order a spare part over the Internet.

Cochlear also wants to use a single system to consolidate its global information, centralise its applications and data and leverage the Internet to improve its supply chain.

Port said that some Cochlear implant clinics manage many patients, "Sometimes more than 1000 patients".

"A small volume of sales go through the Internet, but there is no automated process behind the Web page. Instead, an e-mail goes to the purchasing department for a recipient to order a part."

Cochlear examined application offerings from JD Edwards, SAP and PeopleSoft, but in the end chose Oracle E-Business Suite for its ERP solution. With the suite, Cochlear will introduce a fully automated system so that when a clinic places an order, it is immediately reflected in the inventory and the system can tell a user which part is in stock. Cochlear will use most of the suite's modules, including discrete manufacturing, HR, CRM, sales, Internet procurement and financials. The manufacturer had implemented an Oracle database in early 2001, which means its entire operations will be based on the Oracle platform.

Complicating the simple vision, the company also runs two internal databases, designed in-house, which Port integrated with the new ERP system. One SQL-based database collects information on implant recipients and health care professionals from all over the world, as part of a legislative requirement in all countries. But Port said this process was slow and involved manual re-entry.

The second database is Lotus Notes based, extracts data from all three databases in the US, Europe and Australia, and is used by people in the field to see the accounts in regions of accountability.

"New patients register their devices in, [say] the US, and a couple of days later we get that information here. It's a non ERP system that we were obliged from a regulatory point of view to create," Port said. "Now we have already migrated these into our Oracle database, which means that whenever any registration occurs anywhere in the world we receive data within seconds into the main database in Sydney."

By integrating the databases with the new ERP system, Port hopes to increase the functionality of the databases beyond legislative requirements and streamline business processes. Currently, the databases have no touchpoint to financials, manufacturing or inventory. Port intends to make it possible for any clinic to look up registration or clinical information about patients and purchase a spare part for a patient simultaneously.

Also, integrating the customer databases with Oracle CRM products will link all customer interaction processes across the Web, e-mail, call centre and field channels, according to Port.

"Once the backend systems are deployed, the Oracle system will let us have smooth, Web-enabled dealings with recipients, their families, and everyone involved in the rehabilitation process," he said. "We will retain the Oracle based database system and just redefine the interface between them to minimise duplication of information."

To identify the least disruptive method to implement the suite, Port is using Oracle's planning studies to evaluate all aspects of the company's business. The Solution Value Assessment (SVA) will help Port investigate Cochlear's service capabilities and the Change Readiness Assessment (CRA) will identify which departments will be involved and the changes that may occur.

In the first stage, Cochlear will build a backbone financial system and Port said the company also plans to have order management and forecasting completed in the early stages. Then Cochlear plans to roll out the e-business component at stage two or three, after putting inventory, financials, and manufacturing in place.

"The purpose of the study is to define the timeline of a rollout so as not to disrupt the systems. The rollout is a complex issue that involves internal processes and communications, and regulatory processes, manufacturers, suppliers and clinics. And we want to maintain the level of service and support at all times," Port said. "When a kid needs an implant we can't say no we can't help you at the moment because we are busy with ERP," he added.

Calculating ROI is not as clear cut as saving money on hardware costs or support staff, Port said.

"It is difficult to measure. Part of the SVA is to identify the tangible benefits we can get," he said.

"For us, the main purpose is to build a technology platform upon which we can build in the future.

"E-business means different things to different people. To us at Cochlear, it means streamlining our business to enable our recipients to access information about devices, place orders and request services over the Internet. They will also be able to register their equipment via the Web, rather than use the current paper-based registration process."

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