March 28, 2005

Pharmaceutical services company opens door to open source

Author: Tina Gasperson

EXP Pharmaceutical Services Corp. of Fremont, Calif., is finding freedom from huge licensing fees and increasing its ROI thanks to a recent migration from Windows and a proprietary software infrastructure to Linux and open source solutions.EXP specializes in the reverse distribution of expired prescription and over-the-counter drugs. Medicines usually ship from a pharmaceutical company warehouse with an expiration date and a warranty of some kind, so that when the products remain unsold past the expiration date, the retailer can recoup some of its losses or have the product replaced with "fresh" medicine. EXP works on behalf of retail pharmacies and drugstores to facilitate the return process.

When Brent Siler joined EXP in June 2003 as its director of information technology, he immediately launched an evaluation of the company's systems, especially those that directly interfaced with EXP's customers. "Anytime you come into a new organization, you have to look at the assets," Siler says, "and you have to understand the pain points the company is having."

For EXP, the goal was to have better interaction with its customers. When Siler came on board, the company operated in what he calls a "closed environment," meaning that all the information and reports that customers needed on a day-to-day basis, such as inventory forms and reimbursement reports, were generated internally and on paper. The reports had to be produced, photocopied, and mailed to the proper recipients -- labor-intensive tasks that were costly in terms of staff time.

Siler says he undertook the evaluation knowing that EXP's competitors already had Web initiatives. He wanted to find out what they were doing and how they were doing it, and then surpass those accomplishments. So he conducted surveys with EXP's customers and potential customers to find out what they wanted from their pharmaceutical returns company.

Siler found out that what clients wanted most was to be able to pull down real-time information about what they could expect in terms of refunds, credits, and replacement products. They wanted to have tools that would allow them to fill out inventory forms online and generate PDF files on the fly.

Siler had a choice to make. To provide the Web service applications that pharmacies were asking for and move EXP to a higher level of customer service, he could stay with Oracle and add that vendor's portal product to EXP's existing Oracle databases. He could go with another big name vendor such as IBM. Or he could go open source and engage the services of a startup called Gluecode.

Gluecode's portal system allows users to interact with disparate systems in a personalized and secure manner from any Web-enabled computer. The product is licensed either under the Apache open source license, with no support provided, or via a binary-distributable agreement that allows licensees to purchase support subscriptions.

When Siler looked at the potential financial impact and the eight-month timeline involved in setting up and getting trained with Oracle or another big company and compared it with the 60-day setup and greatly reduced license fees associated with Gluecode's product running on Red Hat Linux, he was easily able to convince his superiors that open source was the way to go.

"There was no resistance, because once we did a cost-benefit analysis, the numbers really spoke for themselves," Siler says. "Looking at the ROI numbers, with Gluecode and Linux we had a 19.5-month ROI. If we'd went with the other products, the ROI was 28.25 months. It really made fiscal sense to go with this tool, seeing that we were going to get exactly what we needed in order to provide the solution the customers wanted."

Siler has been so pleased with the five servers running Red Hat Linux that EXP is planning a full company migration to Linux as it ports its entire production system to Java. He looks forward to the day that the Java interface is done. "My ROI will be increasing again, because then I can move [Linux] out onto my shop floor and run the new production system on it, and I won't have to continually pay licensing fees or for a software assurance program where every two years I have to pay them a stipend just to have the latest and greatest software."

Siler plans to begin the migration to Linux on all 110 EXP workstations in March of next year.


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