Bigger isn’t better, smaller isn’t better. Only better is better.

The past year has seen considerable turmoil in the vendor spaces generally considered “clinical IT”: EDC, CTMS, ePRO. While there continues to be new vendors (which in the EDC space is somehow miraculous), the notable occurrences have been changes in ownership and/or near bankruptcies. For those of you not keeping score at home:

• Oracle, now has not one but two CTMS’, having inherited Siebel’s eClinical as a side-effect of the Siebel parent acquisition (their other CTMS being the acquired SiteWorks).

• PF acquired a collection of what marketers call “line extensions”, including LabPas for Phase I studies (the company was called Green Mountain Logic), and Clarix for IWRS (interactive web response), plus announcing various partnerships for imaging and such.

• Parexel (under the Perceptive Informatics umbrella) acquired ClinPhone, which gave them a trifecta of overlapping new stuff: like Oracle, they now have two CTMS’s (they already had IMPACT, and ClinPhone brings the very recently acquired TrialWorks); a second attempt at EDC (the old Datalabs, also very recently acquired by ClinPhone; SiteBase being Parexel’s first EDC go-around in the 1990’s); and of course more IVRS/IWRS capabilities, which was what Perceptive already offered, in addition to imaging.

• Meanwhile, Datatrak and etrials have their stock values teetering on the edge (again), while lots of new EDC players fearlessly turned a blind eye to history and entered the market fresh.

The question for clinical trial professionals, all of us increasingly dependent on the software made by these vendors, is, does any of this matter? In theory, of course, it matters very much. And even in practice I think it can matter; the question is whether it matters positively (as the “new” vendor incarnations will assure you), or negatively (as skeptics will automatically and unfairly assume). Let’s look at why it may or may not be good for you.

The Good

Merging eClinical vendors brings the potential for several improvements in clinical research IT:

• The more individual application niches (EDC, CTMS, IVRS, etc.) that one company owns software for holds out the hope that these tools can finally be meaningfully, functionally, integrated – a nirvana devoutly sought by all.

• Moving beyond getting current software to talk to each other, one company covering multiple niches could actually develop tools offering completely new functionality exploiting all the features we need from a singular design point-of-view.

• Bringing software under one roof could bring improved account servicing and coordinated project management.

• Fewer vendors is probably better, especially in the EDC space, considering the resources vendors commit to hacking their way through the forest of today’s multitudinous vendors.

• Theoretically, the acquirer is financially stronger, has more feet on the ground, and is administratively more competent.

• More revenue to the acquirer should further strengthen the acquirer.

• Sponsors look favorably at larger vendors as being more stable, long-term partners (although the average large trial budget is much larger than the annual income of almost any eClinical vendor).

Overall, the advantages of these mergers are mostly speculative, and so far we’ve seen more good intentions than tangible benefits from any of the moves in the eClinical marketspace.

The Bad

Few companies in any industry do mergers and acquisitions well. There is a myriad of personnel issues, financial structure compatibilities, product line clashes, strategic differences, executive egos, geographic considerations, and pricing turmoil which accompanies every such move, and clinical IT vendors are not immune. Most of these problems have plagued every clinical IT company maneuver in the past decade. A handful of companies have emerged stronger, albeit usually despite their suboptimal handling of the problems, while a larger number have been severely handicapped. So as new moves are announced, sponsors should view them first with trepidation and many, many questions.

Readers could flood the phone lines with their personal experiences dealing with newly merged or acquired vendors. And unfortunately these experiences are not speculative or theoretical, as the benefits are. The problems range from confused sales presentations, as product decisions twist in the wind, to serious stumbles in product strategy. Those who are closest to the customer – salespeople and project managers – are usually the most likely to leave for a more stable environment or be let go if they are substandard. And while this may make sense to the vendors, it hurts their customers the most.

But the worst of the merger mania is the false hope it creates that things will be different – that vendor performance is somehow by definition improved by being bigger and acquiring additional talent. This has not proven to be true. Instead, the biggest complaint of clinical IT users is that the owners comes and go, but the problems remain: poor project management; poor product quality:

• The project managers change often, and the new ones are not well trained

• The software has a fatal performance error in some obscure but critical, unexpected spot in the workflow, and the fix is months in coming

• Data goes missing, or those easy ad hoc reports are rocket science after all

• Pricing seems irrational, mysterious, opaque, and by default therefore, too high.

It’s nearly 2009, and this performance is simply unacceptable. And at no time has a larger, or re-financed, company made a difference in these ongoing flaws. Indeed these flaws continue to be exhibited by all clinical IT companies across the spectrum of size, age, nominal experience, or self-proclaimed innovation.

The Ugly

In the Sergio Leone film of the same name, the “ugly” characters were not necessarily “bad,” and so too the results of these vendor mergers and acquisitions might be good but ugly, or ugly but good when the film ends.

What continues to be ugly is the project management skills of the software vendors. Why does this matter to a software vendor? If they can get the product out the door, so what? Ah, but most software in the clinical IT space is offered in “ASP” (application service provider) mode. ASP services create the steady revenue stream and customer dependencies that build attractive public companies. So while vendors always say they are ready to support customer in-house adoption of their software and vendor independence, they are actually loathe to see it happen.

Clinical research IT vendors really do seem to be understanding the software functionality part of their business (something not true in the 90’s), and if they just stayed software vendors, that would be fine. But they, like CROs and consulting companies, are all hungry for the outsourcing dollar, greatly encouraged by biopharma’s willingness to budget and spend those dollars. So the money is coming in way ahead of the skill development, and this is where it is really ugly. Software vendors have not had the time, understanding or inclination to build the clinical development skills or basic data management/trial management expertise to execute reliably. One has to wonder if they should back off of what they don’t really know and let the industry they serve do what they (presumably) know.

What Are You Going to Do About It?

As always, sponsors are intimately entwined with the good, the bad and the ugly. Sponsors need to become much more savvy about what to expect from, and how to manage and monitor, their software vendors. They need to think hard about the cost of outsourcing in all its dimensions (full-service, EDC study builds, CTMS report writing, ePRO logistics, and everything in between), and not just assume the benefits are captured in moving around budget line items.

Sponsors can help the newly merged or expanded vendors greatly. I have long argued that in the small world of eClinical information technology, sponsors need to pick vendors and nurture them, not just sit back and excoriate them when they fail. But as the years go by and the vendors continue to come and go, these choices of whom to nurture, and when, and why, and for what, become harder and more mission-critical.

As enterprise decisions get made, necessarily, by enterprise-level managers, the decisions, necessarily, are made that much farther away from the front lines. Executives and professional contract managers think they are signing on a CRO partner when they pick a software vendor, and decide on the basis of similar criteria (or should we say instincts, or platitudes?). Unfortunately, while clinical IT vendors may try to sell to pharma customers as if they were CROs, theirs is actually still a software business, with engineering on the inside, wrapped in a shell of a very special kind of project management. And so these vendors survive by seducing an unprepared level of decision-maker, sticking the operational staff with the consequences.

Of course the vendors also have much to account for. They should be doing much more about the effectiveness of their internal operations in management across the board, in project leadership skills, in honest and timely communication with their customers, and so on. Like most mergers in all industries, little time or money is spent on the critical need to evaluate staff skills and workflow processes carefully for the best in hand. Vendors shouldn’t brag about these ownership changes if they don’t really know what has happened to their product, staff, or service capabilities.

What should be clear to anyone making a decision based on this generation of newly merged or emerging vendors is this: bigger isn’t better, smaller isn’t better. Only better is better. It still remains a case of caveat emptor, and we emptors have a lot to be wary of.