IntuitiveSurgical

Eliminating Obstacles to Explosive Growth with SAP

ChallengeAstheundisputedgloballeaderintheemergingfieldofrobotic-assisted,minimallyinvasivesurgery,IntuitiveSurgicalhasbeengrowingattherapidrateofmorethan25%annually.However,thecompany’sexistingsystemsforhandlingcriticalbusinessfunctionslikemanufacturingoperations,qualitymanagement,complaintsmanagement,andservicerepairs—acombinationofanout-dated,heav-ilycustomizedlegacysystemandpaper-basedrecords—presentedobstaclestosustainingthisexplosivegrowth.

SolutionIntuitiveSurgicalrecognizeditneededafullyintegrated,scaleablesolutionthatwasnotonlycapableofsupportingthecompany’scontinuedgrowth,butthatwouldalsohelpimprove efficiency, streamline processes, and enhance compliancecontrols.ThecompanyturnedtoClarkstonConsulting,knownforitsextensiveexperienceinthemedi-caldeviceindustryanditswidelyrecognizedSAPexper-tise,forhelpwiththeeffort.Clarkston’steamofskilledanddedicatedconsultantshelpedIntuitivebolsteritsperfor-mancebymakingmajorenhancementstoitsexistingSAPsystemandtransitioningremainingcriticalbusinessfunc-tionstotheSAPplatform.

BenefitsByeliminatingtheout-datedlegacysystemandtrans-ferringtheseprocessestoitsscaleableSAPplatform,IntuitiveSurgicalrealizedimmediatebenefits,includingimprovedsystemreliability,bettervisibilityofproduction,repairandcomplaintsstatus,higherqualitydata,andgreateroperationalefficiency.Mostimportantly,ClarkstondeliveredasolutionthatsupportsIntuitiveSurgical’shighgrowthpotentialwellintothefuture.

“ The collaboration between the

team members on this project was

so strong it was nearly impossible

to differentiate between Intuitive

people and Clarkston people. That

said, Clarkston’s presence–with

its detailed knowledge of our

business and industry, its strong

project management skills, and its

deep knowledge of SAP–was felt

throughout the effort and played

a major role in our success.” Steve Lucchesi

VicePresident,InformationSystems IntuitiveSurgical

CASE STUDY

World’s first, only “surgical robot” fuels record growth IntuitiveSurgical,Inc.istherecognizedglobaltechnologyleaderinrobotic-assisted,minimallyinvasivesurgery.In2000,thecompany’sdaVinci®SurgicalSystembecamethefirstandonlysurgicalrobottobeclearedbytheU.S.FoodandDrugAdministration(FDA).Sincethen,thesystemhashelpedsurgeonsperformhundredsofthou-sandsofcomplexproceduressuchasopen-heartsurgerythroughincisionsassmallasonetotwocentimeters.

Theadvantagesofsuchminimallyinvasivesurgeryaresubstantial.Fasterrecovery,lesspain,fewercomplicationsandshorterhospitalstaysareaplusforpatientsandgoodforahospital’sbottomlineaswell.

Withsomanybenefitstooffer—andastheonlytechnologyofitskindintheworld—it’snosurprisethatthedaVinciSys-temisinhighdemand.Sincethesystemgainedapproval,Intuitivehasexpandeditsinstalledbasetomorethan1,000hospitalsaroundtheworld,generatingsustainedgrowthinexcessof25%peryear.Infact,fiscalyears2007and2008sawrevenuegrowthof61%and46%respectively.

Rapid growth brings challengesThistremendousgrowthwasaboonforthecompanyanditsinvestors.However,IntuitiveSurgical’sleadershipteamrecognizedthatitsexistinginfrastructurecouldnotkeepupwiththegrowingvolumeandcomplexityofitsproducts,andthereforewasanobstacletocontinuedgrowth.

Thankstopriorworkbythecompany’sInformationSystemsgroup,financials,salesorder,andinventorymanagementfunctionswerealreadyoperatingonSAP.However,anum-berofthecompany’sothercriticalbusinessprocesses,includingmanufacturingoperations,qualitymanagement,complaintshandling,andserviceandrepairmanagement,weresupportedbyacombinationofanout-dated,heavilycustomizedlegacysystemandpaper-basedrecords.

Althoughtheirlegacysystemhadservedthecompanywell,itnolongermetthedemandsofarapidlygrowingandevolvingorganization.Challengesincludedsysteminstabil-ity,highmaintenancecosts,lackofvisibilityintokeydata,andtheinabilitytoaccommodateadditionalfunctionality—atleastnotwithoutgreatdifficulty.Systemmaintenancerequiredspecializedknowledgethatwasbecomingin-

2

creasinglydifficulttofind.Inaddition,manyqualityman-agementprocessesweremanagedoutsidethesystem,creatingtheneedtomaintainextensivepaperrecords

Scaleable solution provides platform for future growthThecompanyknewitneededascaleablesolutionthatwould drive efficiency, streamline processes, minimize costs,enhancequalityandoffergreatercontrolwithoutlosingflexibility.ItalsowantedtoworkwithapartnerwithdeepexpertiseinimplementingSAPforlifesciencesor-ganizations,aswellasacompanyknownforitscollabor-ativeapproach.IntuitiveselectedClarkstonConsultingforhelpwiththedesignandimplementationofitssolution.

Theoverallgoalofthe2-phase,12-montheffortwastoreplacetheirlegacyapplicationwithSAPin4keyareas:manufacturingoperations,qualitymanagement,servicerepair,andcomplaintsmanagement.ClarkstonledtheimplementationofSAP’sProductionPlanning(PP),Qual-ityManagement(QM)andBusinessIntelligence(BI)mod-ules,aswellastheenhancementoftheexistingMaterialsManagement(MM),FinancialAccountingandControl(FI),andSalesandDistribution(SD)functionality.

TheeffortalsorequiredfurtherintegrationofSAPwiththecompany’sexistingAgilePLMengineeringdesignsoft-ware.TheAgilesystemwasenhancedtoalignwithSAP’s

©2009IntuitiveSurgical,Inc.

CASE STUDY | Intuitive Surgical

3

variantconfigurationdatamodeltosupportthegrowingcomplexityofthecompany’sproducts.Immediatelyuponreleaseofrelevantengineeringdocuments,theappropri-

atemasterdataiscreated/updatedautomaticallyinSAP.

ClarkstonandIntuitiveworkedcollaborativelytodevelopandintroduceanumberofnewbusinessprocessesintheareasof:complaintsprocessing;servicerepairprocessing;manufacturingexecutionandproductconfiguration;record-ingofqualityresults;inventorymanagement;productcosting;andprocessingofengineeringchanges.

Akeyfocusthroughouttheprojectwasachievingtherightbalancebetweencontrolandflexibility.Somecustomizationwas added to streamline user interfaces in areas where IntuitiveSurgicalwantedtoprovidegreaterease-of-usefor its employees.

Aswithmanylarge-scaleimplementations,acriticalsuccessfactorwastheincorporationofeffectivetraining.Clarkstonprovidedhands-onnavigationtraining,andhelpedIntuitivedevelopanddeliverdetailedtransactiontrainingtomorethan 300 users in affected departments.

Innovation in complaints managementOne of the more innovative aspects of the initiative was theuseofSAPtoautomateIntuitive’scomplaintsman-agementprocess.ClarkstonhelpedIntuitiveintegratetheirexistingfront-endcustomerrelationshipmanage-ment(CRM)application,Clarify9.0,withSAP.Nowwhenservice representatives enter complaint information from customersorfieldservicerepresentativesintoClarify,thedataisautomaticallytransferredandstoredinSAP,wheretheremainderofthecomplaintinvestigationanddocu-mentationiscarriedout.Requiredregulatoryreportingcanbegeneratedquicklyandeasilybythesystem.

“Akeyprojectchallengewasinthedesignofthecom-plaintsmanagementsolution,”saidRichFeller,associatepartner,ClarkstonConsulting.“Whilecustomerservicedepartmentsaredrivenbyhowquicklytheycanaddresscustomerissues,internalregulatorydepartmentsareconcernedwithgatheringasmuchdataaspossible related to the incident. Since these drivers can often beincompatible,Clarkstonworkedcloselywithbothgroupstodefinetheirrequirementsandfindabalanced solutionthatmeteveryone’sgoals.”

Key solution deliverables• Establishedfullyautomatedmanufacturingquality trackinganddevicehistoryrecord(DHR)documentation

• Createdcustomizeduserinterfacetostreamlineentry ofkeymanufacturingandcomponentdata

• AutomatedthecreationofSAPmasterdatauponengi-neeringreleaseofparts,BOMs,productionoperationsandinspectioncriteria

• AutomatedthecreationofcomplaintsandRMAsby integratingSAPwithCRMcallcentersystem

• Implementedprocesstocapturealldatarequiredtodeterminecomplaintreportability,aswellasautomaticgenerationofU.S.FDAmedicaldevicereports(MDRs)andE.U.Vigilancereports

• Streamlinedreturnandrepairprocessingwithall functionsdirectlyaccessibleviatheRMAdocument

• Enabledreal-timeintegrationofservicepartsinventorytransactionsbetweenSAPandfieldservicesystem

• Standardizedcategorizationofdefectsandfailure analysis results

• ImplementedSAPBIfortrackingcomplaint-and quality-relatedmetrics

Delivering immediate resultsThesolutiondesignedandimplementedbyClarkston ConsultingprovidesIntuitivewithoperationalimprove-mentsandcostsavingsnow,aswellasthefoundation toenableacceleratedgrowth.

SomeofthebusinessbenefitsIntuitiveSurgicalhasal-readyexperiencedinclude:

• Greatercontrolandimproveddocumentationofmanu-facturingactivities.Thesystemiscapableofpreventingmanufacturingdefectsbyensuringtherightpartsareusedontheproductionlineattherighttime.Inaddition,allproduction records are now automated and consolidated, givingthecompanyasinglepointofaccesstokeydata.

• AbilitytoindependentlyprocesscomplaintsandRMAs.Intuitivegainedbetterflexibilityandprocesscontrol,aswell as a foundation to support fully automated elec-troniccomplaintfilingsinthenearfuture.

• Improvedinventoryandrepairvisibility.Thecompanycantrack and value service parts inventory much more accu-

rately. Similarly, repair cycle time—a key measure of inter-nal performance—is now easily tracked and reported.

• Betterstabilityofinfrastructuresystem.Stronginterfacestothefieldserviceandengineeringdocumentmanagementsystemsyieldbetteroverallsystemreliability.Asaresult,Intuitivespendslesstimetroubleshootingandrepairingbrokeninterfacesandmanagingdatabetweensystems.

• StreamlinedprocessesfortheregulatoryandRMAgroups.ThedeploymentofSAPQMimprovedIntuitive’sabilitytomanagecomplaintsandreturnsaroundtheworld,as well as to capture and analyze data on product defects.

• Significantreductioninneedforpaper-basedrecords.Theconsolidationofelectronicdevicehistoryrecords(DHRs)minimizedtheneedforcumbersomefilesthataretime-consumingtomaintainanddifficulttosearch.Italsopre-sentedsignificantopportunitiestostreamlineprocesseswhileprovidinghigherqualitydataandbettercontrols.

• Improvedefficiencies.Thesystemhasreducedtimeas-sociatedwithprocessingcomplaints,productionordersand device history records.

• Manufacturingexpansion.Inconjunctionwiththeimplementation,IntuitivewasabletoleveragetheSAPplatforminordertobringanewMexicanmanufacturingplantonlinequickly.

Inadditiontotheseimmediatebenefits,thesystempro-videsafoundationforfutureenhancements.Forexample,itprovidesthenecessarygroundworktosupportfullyelectronicmedicaldevicereporting(eMDR)inanticipationoftheFDA’scompletetransitiontoelectronicfilingsinthenearfuture.Whilemanycompaniesaretakingawait-and-seepositionwitheMDR,Intuitiveanticipatessignificanttimeandcostsavingswillbeachievedbyconvertingtoit.

Supporting the missionWhiletheprimarydriverbehindthiseffortwasimprovingthecompany’sinternaloperations,attheendofthedayIn-tuitiveisfocusedontwothings:servingitscustomersandimprovingthelivesofpatients.Byoptimizingitssystemsand processes, Intuitive can continue to meet this mission. ImprovedRMAhandlingmeanscustomersreceivethepartstheyneedwhentheyneedthem.Betterintegrationoffront-endandback-endsystemsmeansfieldsupporthasbetteraccesstotheinformationtheyneed.AndlesstimemaintainingroutinedatameansmoretimetofocusonwhatIntuitiveSurgicaldoesbest:enhancingsurgicalcapa-bilityandimprovingclinicaloutcomes.

Business benefitsIntuitive’s expanded SAP system provides a robust platform to support its explosive growth and evolving business needs by:

• Automatingcomplaintsprocessing

• Improvingvisibilityintokeybusinessfunctionsanddata

• Reducingtimespentgeneratingregulatoryreports

• ProvidingafoundationforfutureelectronicMDR submissions

• Providingforsystematicdocumentationofquality- related data

• Reducingprocessingtimeforcustomercredits andrepairpurchaseorders

• Providingopportunitiesforcostsavingsby decommissioninglegacysystems

• Supportingaddedfunctionalityasit’sneeded

0285_0409

About Clarkston Consulting

ClarkstonConsultingisadifferentkindofmanagementandtechnologyconsultingfirm.

WedeliverauniqueexperienceformarketleaderswithintheConsumerProductsand

LifeSciencesindustries.Consideringprofessionalism,expertise,andvalueasprerequi-

sites,wetakeserviceastepfurtherthroughourunyieldingcommitmenttothesuccess

ofpeopleasindividuals,bothourclientsandouremployees.Bycombiningintegrity,

adaptability,andawhatever-it-takesattitude,wehaveachievedanextremelyhighrate

ofreferralandrepeatbusinessanda7-yearaverageclientsatisfactionrateof97%.2009

CASE STUDY | Intuitive Surgical