The eProcurement Equation

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Purchasing

The eProcurement Equation

11/1/2007

By Linda L Briggs

Another big benefit of a systemwide eProcurement system: the ability to properly track spending. "The biggest thing we’ve done is to look at the different ways people are purchasing things," Smith says. "We’ll look at a vendor and see: Are we spending money on a [purchasing card], on the eProcurement system itself, on what we call non-PO vouchers, or on one-off requisitions?" Analyzing those spending trends enables an institution like UM to institute program and policy changes to alter purchasing behavior.

Savings in Efficiency

Saving time for both staff and users is another big area of cost-cut benefits, although the bottom line can be hard to calculate. The University of Central Florida, which through rapid growth has become one of the largest universities in the nation, has introduced greater efficiencies throughout its main and regional campuses with its Oracle PeopleSoft financial management software. Savings have been significant enough that this fall, UCF will extend the system by rolling out Oracle’s eProcurement module, Oracle iProcurement, as well.

Savings in efficiencies through process automation are another typical eProcurement benefit, according to CDW-G’s Rotoli. That’s because purchasing software systems can cut out most if not all tedious mailing, faxing, and phoning-in of orders. According to Aberdeen Group analysts who have studied eProcurement benefits for years, in efficiencies alone companies can save an average of $33 per order.

At UCF, the university’s size requires a system that streamlines requisition and purchase order processes, enhances purchasing card and vendor tracking information, and minimizes redundant procedures. As an example of staff time savings, the vast system allows individual departments and employees to create online reports themselves, freeing IT staff for other tasks. The growing university, which serves over 46,000 students in the Orlando area, had an operating budget of $817.5 million in the 2005-2006 academic year. Managing such sizable dollars demands a big, flexible financial system, according to Rebecca Vilsack, UCF’s associate controller and project manager for Oracle PeopleSoft Financials.

In a bold move back in 2003, management first rolled out the entire Oracle PeopleSoft core financial system, all at the same time. That included general ledger, purchasing, accounts payable, and asset management modules. Partly because of UCF’s success with that approach, they will roll out the eProcurement module the same way this fall—in one fell swoop. The university’s ultimate goal: to move the entire purchasing cycle online, from procurement to payment. That will include a catalog of supplier networks inside the eProcurement system, with everything pushed along automatically as a purchase makes its way through the system. "We’d like to have a self-service portal for our vendors, where they can check the status of their payment. We’d also like to enable electronic payments to our vendors," Vilsack explains.