higher education consulting e-procurement realizing benefits in higher education educause conference...

Higher Education Consulting

E-ProcurementRealizing Benefits in Higher Education

EDUCAUSE ConferenceOctober 30, 2001

Higher EducationOverview

Current Environment Traditional Procurement Process Higher Education Characteristics

Components of e-Procurement for Higher Education

Future e-Procurement Process E-Procurement Benefits

Preparing for your e-Procurement Implementation

Preparing your e-Procurement Strategy

Components of a Business CaseROI BenefitsROI Constraints

Key Implementation Challenges

Questions and Answers

Higher Education

Existing Procurement Application

University Buyers

University External Vendors

Manual /Paper

Manual /Paper

Manual /Paper

Vendors ‘in-line’

Traditional Purchasing Process

Higher Education

Unique Business Processes

Higher Education Characteristics

Unique business processes - different from Private Sector Decentralized business practices Diverse procedures - Organizations, Departments, Offices Major focus on vendor community Specific contract rules and regulations Distinct terminology Characteristic accounting regulations & integration needs Unique grant and project tracking / reporting needs Broad commodity mix and requirements Variety of workflow and approval requirements

Higher Education

EXCHANGES, COMMUNITY OR

DIGITAL MARKETPLACE

Where one or more

organizations come together to conduct real-time

transactions

Components of E-Procurement

Internet-based Procurement Automation

Integrated, Internet-based Bid/Quote Auction System.

Graphical Internet-based Electronic Catalog System on every desktop with current, negotiated pricing and approved vendors.

Integrated, Internet-based, self-service Vendor Management System.

1. VENDOR MANAGEMENT

2. BID / QUOTE & AUCTION

3. E-CATALOGS

Higher Education

Register online to conduct business with your University including vendor registration processing via the web

Register online to receive various ‘area of interest’ competitive bids and quotes for commodities without burdensome administrative efforts of Procurement personnel

Receive automatic, instant notification of bid / quote opportunities in specific areas of interest via e-mail, fax and the web without Procurement personnel interaction

Review and respond to bids and quotes online with little interaction by Procurement personnel while complying with University business rules

Communicate online with Procurement Personnel regarding various procurement issues

The Internet changes the way Procurement interacts with Vendors. Using the Internet, you can attract new vendors, both large and small, and provide them with a fair and efficient way of doing business with you.

Vendors can accomplish the following through a self-service, secure, Internet-based system:

Vendor Management

Higher Education

Instant, electronic bid/quote and RFP notification based on ‘areas of interest’

Online retrieval and review of bids, quotes and RFP’s Secure, interactive, online bid / quote response form including compliance

checking and enforcement of all University competitive-bidding business rules

Locked repository for compliance of ‘sealed bid’ requirements Online publication and notification of bid / quote and RFP awards Automatic, online availability of purchase orders for awarded bids and

quotes Automatic invoicing from on-line purchase orders Full integration with internal Procurement System or ERP

Internet-based competitive bidding and solicitation automation transforms manual, time-intensive, bid/quote creation, distribution, acceptance and evaluation into a streamlined, paperless model with a drastic reduction in administrative work-load and bid-to-award cycle time.

Some features of Internet-based Bid & Quote automation include:

Bid & Quote Automation

Higher Education

Internet-based Electronic Catalogs provide you with a mechanism to make controlled yet non-restrictive term-contract and other catalogs available on every desktop with negotiated pricing from approved vendors. Empowering end users

with freedom while providing guidance will result in higher compliance levels.

Some features of Internet-based Electronic Catalogs include:

Vendor maintained catalog content and updates with full compliance to negotiated pricing

Availability on every desktop and to every user without major infrastructure requirements

Enhanced requisitioning and approval process with graphical content and product configuration tools

Full central control over catalog content and approved vendors. Enhanced application of University business rules Electronic order generation to selected vendor(s) upon final purchase

approval Electronic invoicing from vendor after product / service delivery Full integration with internal Procurement System or ERP

Electronic Catalogs

Higher Education

E-Procurement Modules

University Procurement VendorsProcurement

Personnel

FIR

EW

AL

LBids

Responses

Campus Personnel

InternetIntranet

Vendor Organizations

Future E-Procurement Example

Campus Personnel

Catalogs

Orders

Inquires

Higher EducationBenefits of E-procurement

Cost Reduction Significant cost reduction on externally procured goods and services

through increased use of volume buying, better negotiated pricing and reduced off-contract (or maverick) buying

Reduced procurement cycle time Shorten requisition to order cycle for term-contract purchases Shorten bid-to-award cycle time for competitive bidding process

Reduced administrative workload and costs Reduction in vendor management administrative efforts Reduction in competitive bidding administrative efforts Reduction in term-contract creation and distribution administrative efforts

Higher EducationBenefits of E-procurement

Increased control with simultaneous end-user freedom Tighten control over off-contract or maverick purchasing by empowering

end users with desktop goods/services catalogs and using technology to simplify the procurement process

Establish a controlled yet non-restrictive procurement process Ability of users to easily comparison shop online in a controlled

environment

Enhanced negotiation of reduced goods and services costs Improved data gathering and reporting on all procurement processes

More efficient business model Re-assign procurement professional from administrative to strategic

Higher EducationWhat we are hearing …

It’s not only about cost Supplier willingness and ability to participate - “No suppliers; no e-procurement

system” Realization of benefits - Balancing institutional culture with contract compliance End User acceptance – e-Procurement may be viewed as restrictive Ability to negotiate an appropriate funding model – major budgetary implications

“Timing is Everything” Market stability – the e-procurement software and services vendors appear

vulnerable Immaturity of the current e-procurement solutions

Higher Education is Unique Catalog strategies – One size does not fit all Integration to ERP and legacy systems – Funds Checking, Encumbrance

Accounting Supplier Diversity Programs - Balancing strategic sourcing with expanded (non-

restrictive) vendor participation Sponsored Programs – Allowability of Costs and Reporting Requirements

Higher EducationWhat we are seeing …

Content Management Strategy Supplier Managed – Buyer Approved

Catalog Management Strategy Distributed Seller (“Punch-out”) External Marketplace Internal Marketplace (typically for multiple campuses)

Deployment Strategy Full Organizational Roll-Out Focused Strategic Sourcing Efforts Pilot Suppliers

Settlement Strategy P-Card EFT

Make vs. Buy Buy – Leverage existing Solutions

Integration Efforts ERP Legacy Financial Systems

Higher Education

Preparing Your E-Procurement Strategy Current State Assessment

Document general business and technical requirements Access change readiness

Value Proposition - ROI Develop a business case that outlines major advantages Identify major investment estimates Provide funding alternatives and final recommendation

E-Procurement Solution and Architecture Solution alternatives Catalog content management strategy Architecture components and blueprint Catalog hosting alternatives

E-Procurement Implementation Considerations

Address major implementation considerations Provide implementation recommendations

Higher Education

TechnicalSelf-service infrastructure,

low cost of ownership

FinancialReduce costs and

improve cash flow (ROI)

Strategic Increase focus and Decrease risk

Operational

The Business Case is More Than Cost Justification!

Process improvements, customer satisfaction

Components of a Business Case

Higher EducationReturn on Investment

Forecast Reduction in Costs of Goods and Services Analyze goods and services by commodity category Identify key commodity groups Identify future relationship with key suppliers Determine strategic sourcing goals and objectives

Forecast Reduction in Processing Costs Analyze transaction trends and practices Benchmark current transaction costs Quantify reduction of processing costs Quantify increase in productivity due to re-focused staff

Identify Potential Opportunities for Revenue Generation Increased P-Card rebates

Higher EducationReturn on Investment - Constraints

Total Cost of Ownership Software costs Hardware costs Implementation costs Customization costs Maintenance fees and upgrade costs

Time to Benefit Time to deploy solution Time for strategic sourcing activities

Potential Risk Solution Fit/Gap analysis Implementation methodology Change Management efforts (“user buy-in”)

“In November 1998, Aberdeen undertook research focused on the experiences of early adopters of Internet-based Procurement Automation…..Our analysis of the results indicates that the benefits of Internet Procurement Automation are very real - with early users realizing reduced prices for goods and services; shorter transaction and fulfillment cycles; lower administrative costs; and, improved control over off-contract purchases.”

- Aberdeen Group

Higher EducationKeys to Project Success

Create clear and realistic goals based on organizational objectives

Know your scope

Develop metrics to evaluate project goals

Measure post-implementation results

Focus on end-user satisfaction

Higher EducationScope Definition

Business process scope

Deployment scope

Target suppliers/catalogs

Functionality to be implemented

Major product gaps and potential solutions

Interfaces and potential adapters scope

Reporting strategy/scope

Technical infrastructure scope

Change management and business process reengineering

Higher EducationYour Future

You can do it.

You have a tremendous opportunity in front of you that may change the future of your organization.

Create an environment for success by planning!

Have fun !!!

Higher EducationQuestions / Discussion

Alicia KaramManaging Director

[email protected]

Susan BsharahManager

[email protected]

Copyright KPMG Consulting, Inc., 2001. This work is the intellectual property of the author. Permission is granted for this material to be shared for non-commercial, educational purposes, provided that this copyright statement appears on the reproduced materials and notice is given that the copying is by permission of the author. To disseminate otherwise or to republish requires written permission from the author.

higher education consulting e-procurement realizing benefits in higher education educause conference...

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