University of Pennsylvania: An Integrated Approach to Software
An integrated, Web-based financial and eCommerce system dubbed BEN, which is
short for Business Enterprise Network (and coined after the university's founding
father, Benjamin Franklin), has made it possible for the University of Pennsylvania
(Penn) to realize savings of more than $64.8 million in the purchase of products
and services. With BEN, the university has integrated and consolidated its purchasing,
accounts payable, and general ledger processes among 12 decentralized, semi-autonomous
schools and 20 disparate business units, allowing Penn to save millions of dollars
in procurement costs and overhead.
Laying the Groundwork
Penn turned to Oracle Corp. in 1996, when it implemented Oracle Financials,
a software application suite that manages and automates a company's financial
processes. Oracle Financials laid the groundwork for what would evolve into
BEN six years later. Based on its success with Oracle Financials and the Oracle
Database, which serves as the technological foundation for BEN, Penn decided
to leverage its existing Oracle investment with the implementation of Oracle
iProcurement in January 2002. Penn also introduced the Penn Marketplace, a private
online supplier exchange, at this time.
Penn Marketplace
Before the implementation of Oracle Financials, Penn's more than 1,700 administrative
staff members and researchers used paper-based requisitions to buy everything
from paper and pens to chemicals and microscopes from any local or nationwide
supplier. The purchase requisition would change hands multiple times before
the actual purchasing occurred. Additionally, because purchasing was not linked
to accounting, purchase orders needed to be manually checked against invoices.
With this fragmentation in purchasing power came ever-widening chasms of inefficiencies
and increasing purchasing costs—and the determination to find a solution, which
led to the creation of BEN.
At the heart of BEN is the Penn Marketplace, which allows Penn employees to
search dozens of supplier catalogs and complete purchases using a Web browser.
The Penn Marketplace currently contains over 550,000 products from 31 of the
university's preferred contract suppliers.
Using the Penn Marketplace, users quickly find goods and services, add them
to an electronic shopping cart, and follow a simple checkout process to make
the purchases. Behind the scenes, requisitions are electronically routed, approved,
and turned into paperless purchase orders. Purchase orders are then forwarded
electronically to the suppliers via electronic data interchange (EDI) or auto
fax, and invoices are received electronically via EDI or submitted directly
to the university's accounts payable department for document imaging, closing
the loop on the procurement cycle.
"Our previous purchasing process involved a lot of paper and a lot of manual
data entry," explains Stephen Stines, senior IT director for Penn. "Now the
entire purchase-to-pay process is automated. Our new system automatically routes
requisitions to the appropriate approvers, freeing up time and allowing our
staff to be more productive in their jobs. Invoices from suppliers are matched
to purchase orders and scheduled for payment—automatically."
The technology that enables this automation is Oracle iProcurement, a software
application that provides advanced self-service requisitioning capability.
Purchase Consolidation
BEN and the Penn Marketplace have had a significant impact on Penn's purchasing
efficiencies and costs. With indirect purchases amounting to approximately $500
million annually, an automated "procure-to-pay process" is definitely paying
off for Penn. Not only has the university saved more than $64.8 million in the
purchasing of products and services, it has also dramatically reduced the time
and effort related to purchase-order creation and has streamlined the entire
procurement process.
In addition to the significant cost savings realized by Penn, more than 53
percent of all purchase orders processed during 2002 were issued to the 31 participating
Penn Marketplace suppliers. Considering that Penn has more than 25,000 suppliers
in its approved supplier database, this type of purchase consolidation is a
remarkable accomplishment for Penn's Purchasing Services department, according
to Ralph Maier, associate director of Purchasing Services for Penn.
Purchase orders are also created in a fraction of the time it used to take.
Now, eight purchase orders can be created in the time it took to create one
order with Penn's previous system. Additionally, the cost of processing some
invoices has dropped from $1.25 to 2 cents.
Paving the Way
Other cost and efficiency benefits have been experienced in the area of reduced
maverick buying. By driving more spending to established vendor contracts, Penn
is lowering transaction costs while increasing its knowledge of what is being
purchased, helpful information for budget forecasting.
By adopting an inter-disciplinary approach toward applications, Penn is embracing
the technology standards used by industry-leading commercial enterprises around
the world.
"Most educational institutions still purchase supplies in the traditional manner,"
says Stines. "We feel we're paving the way and showing others how to use technology
to cut costs to potentially free up money for furthering the educational and
research missions of the University. That's what BEN is doing for us."
For more information contact Stephen Stines, senior IT director for the
University of Pennsylvania, at stines@pobox. upenn.edu.