One way to justify investing in a LIMS is to do analysis in two categories: Quantitative and Qualitative. Quantitative measures are the easiest to determine because they have direct monetary numbers to relate to the Return on Investment (ROI). Qualitative measures are slightly more challenging because the justification is derived from an individual’s interpretation.
The Quantitative measures are the clearest to determine. They will provide direct monetary justification and measurable ROI figures. The Qualitative factors should not be ignored since these can be equally as compelling for your LIMS justification and have been known to tip the scale during an appropriation process.
Developing the Justification
The justification begins with Quantitative examination. Quantitative analysis is derived from time savings (i.e. efficiency gains) and ultimately cost savings that can be realized through implementation and utilization of a LIMS. When documenting these factors, look for bottlenecks and repetitive tasks in your laboratory workflows that can be alleviated or eliminated through LIMS automation. Classic areas to analyze are:
- Report generation
- Status updates on sample and tests
- Work assignment and load leveling
- Locating samples and results
- Manual entry of results
- Entry of information into other systems (i.e. ERP, Sample Inventory, Accounting, etc.)
- Results review, approval and release
- Regulatory information availability
- Reagent expenses associated to re-testing due to loss of sample or incorrect calculations
If you’ve already implemented a LIMS in your laboratory, some of the analysis areas may not apply. That said, consider if the analysis areas listed are useful because not all LIMS solutions improve efficiency to the level desired. Re-examination of potential monetary savings previously projected can support updating an existing LIMS or in working with a different LIMS partner.
Consideration of the potential monetary savings projected can support implementing an updated or different LIMS partner. Once how much time is spent on these tasks is known, the next step is to estimate how much time it would take to do each function with a LIMS implemented.
Subtracting the two will yield your time savings which are then extrapolated for a full year. Take the yearly time savings and multiply it by the fully loaded cost (i.e. salary and benefits) of the resources generally performing the tasks and you will derive the yearly cost savings of having a LIMS in use within your operation.
Be sure to include any production or manufacturing efficiencies or cost reductions (if applicable) reductions in time to market in your Quantitative justification category
To fully develop your ROI, you will need to develop the yearly costs of a LIMS including software and user licensing, software support, hardware, and personnel (system administrators, IT, etc.). Apply the yearly cost savings to the yearly costs of the LIMS and derive the ROI period. Most organizations target a 3 years or less ROI period for capital expenditures but check with your management to understand your company’s depreciation period. LIMS products are a large endeavor so many companies look at periods between 5-8 years.
Think of a LIMS as a similar endeavor to implementing an ERP. Most organizations stay with a selected ERP solution for 5+ years. In the same way, your selected LIMS should be your tracking solution for at least the next 5 years. It is important while going through the Quantitative justification process that you make it clear that you are not seeking to reduce headcount in your operation but to alleviate the repetitive and mundane tasks so that your scientists and technicians can do what they are really supposed to do – pursue science, improve healthcare, advance discovery
Qualitative justifications are more subjective, but these areas are often the factors that can make or break a business or business venture. Even though a hard cost savings number cannot be derived for these items, they are still valuable and often end up being the deciding factors in gaining your project approval. Some prime examples of Qualitative justifications include:
- Increased availability of information
- Increased innovation
- Increased collaboration
- Scientific effectiveness
- Market reputation for reporting delayed, incomplete or wrong results, often a % related to sample errors that will ultimately lose business in the coming years
- Client concerns in not having thorough and complete traceability of lab processes, often a % is used to estimate potential risk in gaining new customers
In no way are the Quantitative or Qualitative Justifications listed exhaustive when doing an ROI on LIMS Implementation. Most lab managers understand the total costs of performing and reporting a test result. Be sure to comprehensively analyze all costs and consider all areas where a LIMS can reduce those costs. And when considering Qualitative areas, consider your best outcomes but spend time thinking through the biggest risks and then think what the total cost of those outcomes could equate to.
It’s a scary thought, but what is the cost of reporting a single incorrect result that negatively impacted a Patient’s life? LIMS implementation doesn’t ensure that the risks are eliminated, but some LIMS systems offer more comprehensive solutions, therefore better reducing overall risk and protection against horrific outcomes.