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Purchasing
The eProcurement Equation
11/1/2007
What do you get when big schools roll out highly
effective eProcurement systems? Strategic
improvements and savings. College and
university administrators everywhere: Take note.
ePROCUREMENT SYSTEMS ARE hot again in higher ed, driven by unrelenting cost containment demands, along with industry shifts that have consolidated choices and brought top products to the forefront. What’s more, there are now a good number of eProcurement success stories out there, especially involving the bigger schools, and that makes it easier than ever for others to evaluate the leap to electronic purchasing.
That’s fortunate, since eProcurement promises substantial savings in several areas, including a) hard dollar cuts on purchases because better negotiations are generally possible with electronic contracts, b) savings on staff efficiencies across the board, and c) the ability to better analyze buying patterns after the fact.
At the 40,000-student University of Michigan, the biggest savings from the institution’s eProcurement system are coming from better-negotiated contracts, according to Judith Smith, director of procurement services at UM. The university, which spends a billion dollars a year on goods and services, is running a hybrid system consisting of Oracle PeopleSoft financials along with a hosted eProcurement system from SciQuest called HigherMarkets Express. (Earlier this year, CDW-G partnered with SciQuest, long a provider of on-demand supplier enablement solutions, to offer another SciQuestdeveloped eProcurement package to higher education. The CDW-G SciQuest solution is aimed at smaller colleges and universities and is not the system UM is using.) UM added the SciQuest eProcurement package as a standalone application in 2003; last year, the university integrated its purchasing data into its Oracle PeopleSoft financial package.
According to Smith, her biggest savings come from the ability to negotiate strategic contracts. That ability, she says, stems directly from the university’s eProcurement system. Because of the SciQuest system, she can add more vendors to the software setup—vendors with which she now has time to carefully negotiate contracts. "It’s not so much that we save time," says Smith, "it’s that we’re able to add many more vendors without having to add staff." She has doubled the number of vendors that users can choose from for their electronic ordering, and since the average savings from strategic contracts is 12 to 20 percent, "that’s the business case," she insists.
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