Cost of LIMS: True Pricing includes more than Purchase, Implementation and Annual Licensing

The real benefit of laboratory information management systems (LIMS) is difficult to calculate. Let’s take a look at some key considerations, starting with the question of whether to build the LIMS yourself or buy a commercial LIMS…

Advocates for building a new LIMS themselves usually state that their lab is so unique, they cannot use a commercial LIMS. However, very few labs are truly unique — it is actually their products that are unique. Labs, in general, work the same way:

• They obtain a sample from somewhere. The sample may be external or internal. The latter includes, for example, raw material, R&D, production or study. This sample then may be split into several samples to be analyzed.
• Analyses are done in various labs based on sites, laboratory type or projects / products. Analytical methods may be manual or instrumental, and the manual ones may include what the sample looks or smells like. The instrumental methods may be virtually everything else that uses one or more instruments to obtain results.
• The result is often compared to specifications to see that the sample conforms. A manager approves or authorizes the results before the results are reported, often on a Certificate of Analysis (CoA).

In reality, the only things that are unique are that every lab has their own types of sample, sets of instruments, analytical methods and specifications; each of which can easily be implemented into a commercial LIMS.

Additionally, there are two main types of production: Batch production where you produce your products in discrete batches; and continuous production, like oil refineries where the products may be defined only after the production has been done to see when they conform to specifications for the various products. Most labs working in a batch environment usually also have their own continuous production of purified water, and time-based bacterial or cleaning-in-place check. While some LIMS systems may be better at one type of production than for the other, most will handle all types equally well.

Time and flexibility

Advocates of homemade LIMS also say that they can build a LIMS in a few months in an Oracle, Access or SQL database. Of course, this will be completely tailored to their needs and will be much cheaper than a commercial system. Let’s discuss these statements:

• It may be possible to build LIMS in a few months. However, this requires that there is a very, very good user requirements specification that covers everything the lab ever does — and will do in the future. Few are able to write such a specification, especially to include how they will work in the future. So, risks are very high that a home-made LIMS will not be flexible enough to allow for future changes.
• There is a good chance that programming a build-it-yourself LIMS actually will take a lot longer than a few months. By then, the users will likely have found many more things that should be included in the system, and these requirements will be added. We get what is generally called scope creep, and the result is inevitably that the project takes longer than anticipated. Bear in mind that a commercial LIMS includes several decenniums, or even centennials, of man-working days in its planning, programming and testing.
• If a programmer is brought in to build the LIMS, he will probably not know enough about laboratories to even ask the right questions when he is in doubt. On the other hand, if using a laboratory person, he will probably not know enough about programming to do a good job. And, unless either of these is very skilled in quality assurance, chances are that they will program without creating enough documentation, such as requirements specification, other specifications and plans, test plans, testing, reports, etcetera.

In any case, the lab would definitely have GAMP¹ Category 5 software. This means extensive validation, which will cost a lot more than a purchased Category 4 software. A homemade system will be frowned upon and scrutinized by the U.S. Food & Drug Administration (FDA) and European authorities — and probably not pass the inspection. Back to square one.

Very few companies build in-house systems these days. However, a few old systems are still in use. Regulators for e.g. the pharmaceutical industry scrutinize these systems, and find everything wrong with them. The question is whether the company is a pharmaceutical company or a software developer. Some companies have received severe ‘Warning Letters’ from the FDA² for their innovative programming and lack of system maintenance.

So you see, it simply does not make sense to create your own LIMS. Even if your IT people would love to create it for you “in only a few months,” don’t believe them. History has shown that, regardless of the amount of time spent programming an in-house system, it is never as good and as flexible as buying a commercial LIMS. In addition, in-house projects are very likely to suffer delays, and will invariably be more expensive than expected. It is better to spend your money on a commercial system and get what you need, instead of spending on a programmer from whom, if you are lucky, you will get some of the functionality you need, but not the flexibility, and at a much later time than expected. Chances are that, when you finally get the homegrown system, your needs will have changed, too, and the system is no longer what you want.

For all of the reasons cited above, I recommend that you kill the build-it-yourself thought immediately. You are not going to get a 100-percent system even if you build it yourself. So, you may just as well make do with a 90- to 95-percent system purchased from a commercial supplier. The LIMS suppliers have been in the business for a long time, and the LIMS systems are now mature, well understood, and not the least: very flexible to fit all labs.

The Real Cost of LIMS

It is difficult to calculate whether a LIMS is cheaper than a paper-based laboratory. This is a cumbersome assessment that needs to be done in each case, if cost is the main consideration for implementing LIMS.

Daily use without LIMS includes how much time is spent on writing (and often also finding) the lab notebooks and logbooks, performing calculations, writing results on results documents, controlling results and other items, and transferring the data from one medium to the other, and finally to the Certificate of Analysis.

Daily use with LIMS will definitely reduce labor time for these items. However, in order to get a workable LIMS system, a lot of time has to be spent implementing the static data, also called template data, into the LIMS. A LIMS is generally bought without any static data, and even the smallest measure unit has to be entered. It is possible to calculate the time spent on implementation, and the chosen supplier can definitely help using his experience. Implementation time depends on the number of instruments, products, laboratories, etcetera, that shall be implemented.

Initial costs: C+ I, where:

C =       Cost for the purchase of the system, including the supplier’s implementation time

I =        Internal training time, and implementation and validation time cost for the system itself and for all items to be implemented in LIMS. These are the implementation expenses until the system is taken into use. Any changes after the implementation phase will be included in the Maintenance of the system.

Annual cost/benefit: M + L + Tn – To, where:

M =      Maintenance cost per year for changes, qualification / validation, error handling, backups, helpdesk, etcetera

L =       License for the LIMS system. This is typically calculated as a percentage of the initial cost per year, and depends on the number of concurrent users.

Tn =      Cost of time spent by using the new LIMS

To =     Cost of time spent by using the old (paper-based) system. Tn and To can be calculated from an average batch type (or per time if a continuous process is used, e.g. oil refinery), and multiplied with number of batches (or time units) per year.

It would be simple if this was the whole story, but it is not. A LIMS will generally add quality to the products, by flagging problems, forcing people to do things in correct sequence and in the correct way. The cost of discarded products, recalled products, and so forth, is possible to measure if the numbers exist. It is more difficult to assess the value of potential loss of reputation due to bad quality.

The purchase price and license are the only items with a real price tag, and that is often what the boss wants to know. You usually pay for each hour the supplier sits in a meeting with you after the sales phase, but you may also have many of your own people in that meeting, usually at a much higher cost.

Another problem is that implementation of LIMS usually includes changes in work procedures, responsibilities, and a lot of other things. This may influence both the old and the new ways of working, as well as the quality of the result.

In heavily regulated industries like the pharmaceutical, the quality is more important than the actual monetary return on investment (ROI). For most industries, quality is an issue, and LIMS definitely helps ascertain the quality by flagging everything that is wrong — provided you have set that up in the LIMS. That includes e.g.:

• instruments with calibration and maintenance cycles
• chemicals in use in the lab with their expiration dates, bar coded to make sure that the correct chemical is used
• limits for instruments and analytical methods entered
• and, of course, sample specifications
• as well as potential other items that shall be checked before the sample is approved and released

Has anyone tried to calculate the real cost of LIMS?

I have three different examples:

• The first is a smaller pharmaceutical customer. They had a lab with some six to eight people, a relatively limited number of different products, and had a good overview of how much time each product would need in the lab. The conclusion was that the LIMS would break even in 2.4 years after the system went live, and add to the revenue after that. With the added quality that they could easily understand, the projects was definitely a “go-for-it” as soon as possible. I do imagine that the calculation would be about the same for a larger lab. Bigger number input and bigger number output would probably yield about the same result in break-even time.
• The next is the big oil industry. I was teaching a class on LIMS in Dubai, and among my students were a couple of men from the Arabic oil industry. Another man was from a local water treatment plant. When the water person asked me about the cost, the oil person simply said: In our case, it pays for itself the day LIMS prevents one single day of refining gone to waste. Easy calculation!
• The last example this time, is a pharmaceutical company that went directly from a totally paper-based lab to a totally electronic lab in one giant leap — the only company that I have ever heard of doing that. In their paper-based system, they had several layers of well-educated people with pharmaceutical and chemical Master’s degrees, who checked everything — and rechecked what others had already checked. With LIMS set up with all the controls that could be thought off, instruments and instrument IT systems connected to LIMS for automatic transfer of data, and everything validated, these well-educated persons were able to do a lot more interesting work than they had done before. They started developing new methods and product analytical technology (PAT) instead of checking what others had done. There were fewer people involved in the checking, thus saving the company wages in that part of the company.

But, before saying that LIMS will save people and wages, make sure that you have implemented and validated the LIMS! That will be a period with more people needed than before you start the LIMS project. Don’t lay off people so you can buy a LIMS. 

Conclusion

The price of LIMS actually is a lot higher than the stated prices for purchase, implementation costs and annual license costs. The monetary return of interest can be calculated, and may or may not be positive. However, the real benefit of LIMS is difficult to calculate: the added quality to the products. The cost of “unquality” is difficult to assess.

Can our company live without a LIMS? We certainly could not live without accounting software…..

References

1. GAMP 5 Good Automated Manufacturing Practice (GAMP) Guide for A Risk-Based Approach to Compliant GxP Computerized Systems, February 2008, International Society for Pharmaceutical Engineering (ISPE), Fifth Edition, ISBN 1-931879-61-3, www.ispe.org.
2. 2. See www.fda.gov for warning letters.

Note: This article is based on the book International IT Regulations and Compliance, by Siri H. Segalstad. Wiley 2008, ISBN 978-0-470-75882-3.

Siri Segalstad is Principal, Segalstad Consulting AS and the author of International IT Regulations and Compliance (Wiley-Blackwell, 2008). She may be reached at [email protected].