E-Procurement The Administrative Application That Could Anthony Rotoli

E-Procurement The Administrative Application That Could Anthony Rotoli Channel Sales Manager Sci. Quest, Inc. Copyright Anthon Rotoli 2004. 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

Agenda About Sci. Quest Tactical vs. Strategic Procurement Higher. Markets Solution Case Studies 2

What is the innovation supply chain? About Sci. Quest 3

About Sci. Quest's secure on-demand solutions integrate organizations with their suppliers to enable comprehensive spend management for the life sciences and higher education markets. Sci. Quest's suite of modular applications helps to automate the source-to-settle process. When used with the Sci. Quest Supplier Network, these solutions reduce redundant tasks and maintain data integrity throughout the cycle of finding, acquiring and managing goods to increase efficiency, reduce cost and provide total spend visibility. 4

Sci. Quest Customers Life Science § Glaxo. Smith. Kline § Schering-Plough § Amgen § Biogen § Memorial Sloan Kettering § Corixa § Theravance § Aventis Pharmaceuticals § Burnham Institute § Boehringer Ingelheim § Lexicon Pharmaceuticals § Genentech § Ciba Vision § Inspire Pharmaceuticals § Dendreon Corporation § Ambit Biosciences § The Salk Institute § Epix Medical § Roche § Enanta Pharmaceuticals § OSI Pharmaceuticals 5 Higher Education § University of Chicago § University of New Mexico § Rensselaer Polytechnic Institute § University of Edinburgh § Emory University § University of Michigan § University of Notre Dame § University of Arizona § Indiana University § University of Nottingham § University of Nevada Reno § Pace University § Moody Bible College § University of Pennsylvania § University of Kentucky § Arizona State University § Penn State University Industrial Research § Air Products § GE Corporate Research § Johnson & Johnson

Current State of Higher Education DECREASE IN BUDGETS Dramatic reductions in state and federal funding INCREASED COST PRESSURES Plunging endowments and restricted grants Increased Demands on Campus Services INCREASE IN STUDENTS Serving more people with less resources 6 INCREASE IN REGULATIONS Patriot Act regulations, increased EPA fines, threat of bad press

Traditional Approach FIND BUY Manual searches Limited selection of suppliers No integrated visibility into inventory Manual requisitioning High volume of orders to multiple suppliers No tracking beyond receipt Increased cost of goods Increased Processing Costs Overall Increase in Indirect Spend 7 MANAGE Separate process from purchasing Redundant purchases Manual tracking, limited chemical information Manual compliance reviews and reporting Increased Risks & Inventory Costs

Integrated Solutions for Higher Education Inv ed eg rat Integrated Processes Maximize productivity, minimize risk. 8 ng rci ou Cost of Goods Processing Costs Inventory Costs Change what they buy, not just how they buy. d. S Int e rat MANAGE eg The smartest purchase is the one that isn’t made. Int en tor y FIND BUY

What is the innovation Reaching Your Strategic supply chain? Procurement Goals 9

Tactical vs. Strategic Procurement TACTICAL STRATEGIC § Focused on transactions § Set and achieve short term goals § Set and achieve long term goals § React to departmental purchasing needs § Proactively working with departments and suppliers § Perceived as a cost center 10 § Focused on spend management § Perceived as a value creator

Procurement Continuum MOST TACTICAL ARE STRATEGIC HERE § Managing manual processes effectively § Disparate data § Desire to make an impact § Using human resources to fullest capacity 11 § See opportunities for improvement § Unsure of the best approach

What is the innovation supply chain? Bridging the Gap 12

What’s missing? E-Procurement TACTICAL INCREASED EFFICIENCY IMPROVED PRODUCTIVITY 13 BETTER INFORMATION BETTER DECISIONS RIGHT TOOLS STRATEGIC RIGHT RESULTS

E-Procurement Enables Best Practices Improve Productivity Better Decisions Capture Comprehensive Data Right Results 14 Automate Manual Tasks Influence Buyer Behavior

Automate Manual Tasks SPEND DIRECTOR REQUISITION MANAGER ORDER MANAGER SETTLEMENT MANAGER • Enable and Configure Catalog and non-catalog suppliers • Select and Compare Products • User friendly shopping experience • Electronic Routing • Approval Workflow • Order Parsing & Distribution • Process Orders • Receiving • Electronic Invoicing Gain more resources to devote to strategic initiatives 15

Capture Comprehensive Data Purchasing Data Supplier Data Transaction Data Better data helps you make better decisions 16

Influence Behavior How end users buy What they buy Who they purchase it from Achieve your strategic goals by helping end users 17

The Experts Agree… • Aberdeen Research survey concluded the typical post-implementation benefits of eprocurement include: • 5 --10% reduction in indirect / non-production spend • 73% reduction of costs per purchase order ($114 to $31 per order) • Andersen Consulting estimated that the typical organization will reduce its indirect spend by 7% by using e-procurement • Giga predicts e-procurement solutions will deliver 5 -15 percent cost savings in the first year. • Gartner estimates that small and mid-tier life science companies can achieve savings of 15 -20% annually by using e-procurement solutions “that help researchers make smarter buying decisions. ” 18

E-Procurement Solutions Deliver Financial and Productivity Savings Increase contract compliance § Promote preferred vendors in search results § Promote “Organizational best buys” § Provide detailed data for auditing user and supplier compliance Identify new savings opportunities § By Supplier and Commodity using detailed spend reports Realize significant productivity savings § Increase efficiency of end users and procurement § Minimize IT commitments 19

Spending Trend With Preferred Suppliers 54. 4% Began using preferred positioning for key suppliers 61. 6% (7. 1% increase) Preferred positioning of key suppliers increases on-contract spending and 20 decreases materials purchase by 10 -20 %

Order Distribution Trend with Preferred Suppliers Began using preferred positioning for key suppliers Preferred positioning also consolidates client’s supplier base by 20% 21 resulting in less work for accounts payable

Productivity Savings Avg Cost* of a PO: Avg E-Procurement PO Cost: Savings with e-procurement: = $114 (per NAPM/ISM) = $31 (per Aberdeen) = $83 per PO * Primarily based upon total allocated labor costs from sourcing through payment Example: 2, 000 orders per year x $83 savings per order $166, 000 productivity savings (~ equivalent to recouping the productivity of two to three staff members) By minimizing the unproductive time that users spend sourcing, requisitioning and procuring products, they will have more time 22 for value-added activities such as research and negotiating savings.

What is the innovation Introduction to supply chain? Higher. Markets 23

Connect with Existing Systems & Suppliers SCIQUEST SUPPLIER NETWORK SPEND DIRECTOR REQUISITION MANAGER ORDER MANAGER BUSINESS INTELLIGENCE ON-DEMAND TECHNOLOGY PLATFORM 24

Flexible Supplier Enablement Options SUPPLIER NETWORK Your Preferred Suppliers Your Local Inventory Approved Network Suppliers Hosted Configurable Catalog 25 Key Supplier Punch-outs

Partnership with SCT Jointly develop and market “Higher. Markets for SCT Banner” Fully-integrated, comprehensive procurement solution Works with Banner Finance 6. 0 and Luminis Data Integration Suite 26 SCT is the leading global provider of technology solutions for colleges and universities of all sizes and complexity. The Company supports more than 1, 300 client institutions worldwide with administrative and academic solutions.

Higher. Markets for SCT Banner Luminis Data Integration for e. Procurement Sci. Quest Higher Markets Adapter Higher Markets for SCT Banner 27 Luminis Message Broker Luminis Message Gateway SCT Banner

Integration with Luminis Data Integration LDI for e-Procurement is a built on LDI’s Publish and Subscribe architecture LDI for e-Procurement is standards based (JMS, HTTPS, XML, IMS Enterprise Specification, Open. EAI, etc. ) Higher. Markets for SCT Banner and LDI for e-Procurement allows these systems to behave as if they were one application Leverages the current investment into Banner Eases burden on IT staff and resources An open, interoperable, and extensible solution 28

Higher. Markets Benefits All Stakeholders End Users Procurement • One-stop shopping experience • Control and visibility of spending • Freedom of choice: wide range of suppliers and products from which to choose • Contract compliance • Fast, easy requisitioning Senior Management • Reduced materials costs • Increased purchasing and user productivity • Better budgeting information 29 • Paperless process • Error-free requisitions Information Technology • Low maintenance software • Secure, reliable access • Straight-forward integration

What is the innovation Higher. Markets Product supply chain? Introduction 30

Search Hosted Catalogs or Punch-Out to Suppliers Use parametric criteria to search hosted catalog content Punch-out to suppliers’ ecommerce Web sites 31

Quick Order Enter catalog number or SKU and immediately add to cart 32

Favorites Manage personal favorites Administer organizational “Best Buys”, approved items and supplier specials 33

Search by Keyword Refine searches by limiting searches to specific subcategories Search using parameters 34

Product Re. Sources Antibody Re. Source Column Re. Source Chemical Re. Source with structure searching Oligo Re. Source also available 35

View Search Results Refine search by supplier or category Basic product information with your contract pricing. Access to complete product descriptions Search results from preferred suppliers appear first Select multiple products to compare 36

Side-by-side Product Comparisons Add to cart from product compare screen Compare detailed product information 37

Accurate Requisitions Pre-populated item information from shopping cart Pre-populated ship to/bill to information 38

Customized Approval Workflow End users can preview approvals Customize approval workflow based on any requisition field 39

Track Order Status Access all order online Track order status 40

What is the innovation supply chain? Case Studies 41

University of Pennsylvania Challenges: Supplier enablement User adoption Solution: Spend Director Supplier Promotion Module Location: Philadelphia, PA Enrollment: 18, 913 Client Since: 2003 ERP: Oracle 42

University of Pennsylvania Results Campus-wide implementation to 1, 600 users Enabled 75 preferred suppliers, representing 3 million SKUs and cover 68% of all transactions within 120 days Realized $2. 1 million in documented cost savings from 16 renegotiated contracts 43

Rensselaer Polytechnic Case Study Challenges: Inefficient purchasing processes Inability to control “maverick spending” Solution: Spend Director Requisition Manager Order Manager Sci. Quest Supplier Network Business Intelligence 44 Location: Troy, NY Undergrad Enrollment: 5100 Client Since: 2001 ERP: SCT Banner

Rensselaer Return on Investment YEAR PROCESS SAVINGS TOTAL SAVINGS 1 $130, 000 $40, 000 $170, 000 2 $220, 000 $65, 000 $285, 000 3 $370, 000 $110, 000 $480, 000 4 $525, 000 $155, 000 $680, 000 TOTAL 45 CONTRACT SAVINGS $1, 245, 000 $370, 000 $1, 615, 000

Conclusion E-Procurement should be a critical component of an e-business strategy Benefits are real § Cost Savings § Process Efficiency § Renegotiated Contracts Integration with ERP can extend value 46

Questions Q&A 47

"What people need to realize is that purchasing can have a direct impact on the bottom line. The economy is very bad, the state institutions are not getting funded, and there are cutbacks. But there’s a multiplier effect through smart purchasing: Every dollar we save though smart purchasing translates to 10 or 15 dollars that’s not needed in revenue. …You really can’t afford not to pursue an e-procurement initiative. ” Tim Gibney Assistant Vice President for Procurement Services University of Notre Dame 48 “Taking the Pain Out of Purchasing, ” University Business. April 2003