Presented by Rensselaer Polytechnic Institute Paul Martin, Assistant Vice President for Administration Kelli Hudson, Assistant Vice President for Finance/Controller Ron Moraski, Director of Procurement Services Obtaining Investment in Procurement to Help your Institution Cope with Budget Reductions 1 Annual Meeting April , 2013 Orlando, Florida

Rensselaer: A Journey of Transformation Annual Meeting April , 2013 Orlando, Florida 2

Agenda Long-Term Vision to Transform Procurement Short-Term Trigger that Forced Transformation The Path to a Solution Senior Management Approval and Funding Obtained Three Prong Approach 1.Strategic Sourcing – Transactional to Strategic 2.Travel and Expense Management 3.Complete Procure to Pay Process Annual Meeting April , 2013 Orlando, Florida 3

Envisioned Long-Term Procurement Transformation Purchase/Travel Card Integrated with ERP – 1996 E-Procurement Implementation via SciQuest (HigherMarkets) – 2006 Minimize Purchase Card Program and Implement Sourcing Program Annual Meeting April , 2013 Orlando, Florida 4

Trigger for Transformation Elimination of P-Cards Annual Meeting April , 2013 Orlando, Florida 5

Cancellation of P-Card Program  May 2010 – cards were cancelled overnight Annual Meeting April , 2013 Orlando, Florida 6 P-CardsNo P-Cards Number of Cards Number of Requisitions 11,00046,000+ Number of PO’s Processed 5,70016,000+ Number of Direct Pays 8,80026,000+ Rebate $$ $100K$0

The Path to a Solution First Task – Crisis Management: “How do we deal with all the orders and all the invoices”? Hired VCU to help us get started We formed SMART – Small Procurement Assessment and Recommendation Team Conducted a needs assessment of campus Benchmarked Best Practices within Higher Ed and Private Industry Evaluated current E-Procurement system Annual Meeting April , 2013 Orlando, Florida 7

Findings and Best Practices We found best practices in higher education and industry included: – Strategic Sourcing – E-invoicing and E-Settlement – Continuous Audit – Minimal P-cards – Automated Travel Management Annual Meeting April , 2013 Orlando, Florida 8

Objectives Once we knew best practice, we needed to determine our outcome objectives: – Mitigate Risk – Provide Robust Controls – Streamline and Automate Processes – Become State-of-Art in Industry – And Obviously… Annual Meeting April , 2013 Orlando, Florida 9

Collaboration Was the Only Way To accomplish this the Procurement and Payables Offices that reported to two separate VP’s needed to join forces Annual Meeting April , 2013 Orlando, Florida 10 Not an easy task…..

Three-Prong Approach 1.Strategic Sourcing Initiative 2.Automated Travel Management 3.Complete Procure to Pay Process Annual Meeting April , 2013 Orlando, Florida 11

Approval of Funding – Savings Promised Annual Meeting April , 2013 Orlando, Florida 12 Start-up CostsOngoing Annual Cost P2P135,00025,000 Travel Management28,500187,340 Strategic Sourcing530,000447,800 Totals693,500660,140 Estimated Savings Per Year P2P245,000 Travel Management370,000 Strategic SourcingUp to 800,000 Totals1,415,000

Strategic Sourcing Annual Meeting April , 2013 Orlando, Florida 13 Transforming Procurement into a Strategic Operation

Procurement Recommendations Implement Strategic Sourcing and move away from 1- off Purchasing Grow Preferred Vendors to maximize buying power and streamline campus use - minimize exception purchasing Maximize use of front-end controls available in E- Procurement System Create dashboards utilizing the data to monitor strategic direction, publicize cost savings and enhance auditing Create hands-free system from procurement through settlement including e-Invoicing and e-Settlement Annual Meeting April , 2013 Orlando, Florida 14

Overlapping Activities – 15 Months Analytics/Sourcing Supplier Enablement Cost Containment Organizational Assessment of Procurement Services Director of Procurement Internal and External Communications Annual Meeting April , 2013 Orlando, Florida 15

Strategic Sourcing Project Partnerned with Consultants (ESG) to assist with: Annual Meeting April , 2013 Orlando, Florida 16 1.Organizational Assessment and Transformation 2.Spend Analytics 3.Performing Institutional Price Reviews 4.Developing and helping implement a Strategic Sourcing Plan 5.Marketplace Supplier Catalog Content Enablement

Process Details 1. Organizational Assessment and Transformation Developed the following Job Descriptions: – Director of Procurement Services – Associate Director of Procurement Services – Strategic Sourcing Managers – Systems Manager – Systems Support Analyst – Support Staff Developed the process in the following: – Procurement Services Performance & Staff Development Plan – Procurement Department and Individual Scorecards Annual Meeting April , 2013 Orlando, Florida 17

Process Details 2. Spend Analytics Collected, analyzed, and categorized full Rensselaer spend Performed pricing analysis on key category and supplier-specific spend Utilized this information to aid in the development of a Strategic Sourcing Plan 3. Conducting Institutional Price Reviews 11 E&I contracts have been adopted and enabled on the Rensselaer Marketplace Supplier Announcements with Contract Summary created and released to campus community Annual Meeting April , 2013 Orlando, Florida 18

Process Details 4. Developing and Executing a Sourcing Strategy Plan Combined strategies (>$17M opportunity): a combination of RFPs, negotiated contracts, E&I contract adoptions and reverse auctions for new contracts. 5. Marketplace Supplier Catalog Content Enablement Performed system-related activities between Rensselaer Systems and SciQuest for integration efforts and (15) individual enablements Annual Meeting April , 2013 Orlando, Florida 19

Concurrent Themes and Deliverables Annual Meeting April , 2013 Orlando, Florida 20 1.Project Planning & Management 2.Policy & Procedure Review 3.Training/Mentoring of Campus and Suppliers 4.Campus Communications 5.Developed a Cost Containment Reporting Tool 6.Developed Performance Management Metrics (Scorecard)

Successes So Far Through December 2012… # of newly awarded master agreements (39) # of new contracts through spend analysis (13) # of new marketplace suppliers (12) # of newly enabled e-invoice suppliers (6) Annual Meeting April , 2013 Orlando, Florida 21

Successes So Far Total through December 2012: – Documented Cost Savings $1,588,471 – Purchasing Revenue As a result of these numbers, our President has approved an increase in the project budget Annual Meeting April , 2013 Orlando, Florida 22

Successes So Far Campus Buy-In Respected Procurement Team 23

What Did We Learn? 24 Small $ Position Greater investment needed in e-Procurement tools Stronger analytical skill-set needed for reporting Time gave us a better understanding of needed administrative support roles Additional short term resources needed to get over the workload “hump” Campus Communication is critical

Travel Management Annual Meeting April , 2013 Orlando, Florida 25

Travel Recommendations Implement a system that provides Strong Business Analytics and Built-in Controls Provides Efficient and Automated Processes from booking to expense reporting Implement the use of one travel agency for all campus users Use of virtual credit cards for payment Annual Meeting April , 2013 Orlando, Florida 26

Travel Management Started with RFP for both Travel Agency and Management System Looking for seamless end-to-end solution for both travel and expense Automation was key Selected as subsidiary of Travel Leaders – Child/Albany Travel as agent Selected Concur as management system Annual Meeting April , 2013 Orlando, Florida 27

Implementation Process We formed a small travel implementation team (4 people) – key decision maker on team was very important Implementation took approximately 8 months from start to finish Gained feedback from campus during testing phase Provided extensive up-front training program before the system went live We’ve been live since August 2012 Annual Meeting April , 2013 Orlando, Florida 28

Challenges of Implementation Mandated the use of agency and system for all travel booking and expense submission Workflow No credit cards for RPI – challenging but not impossible (Concur systems main control is based on credit card use) Students and Visitors – should they use system or not? Higher Ed is “different” – Concur has recognized this and formed a Higher Ed vertical to work through some of the challenges facing the industry Annual Meeting April , 2013 Orlando, Florida 29

Results l OVE i T ! Complete automation Complete automation Visibility into travel habits and spend Visibility into travel habits and spend We know where everyone is at all times We know where everyone is at all times Capturing savings Capturing savings No P-Cards No P-Cards Annual Meeting April , 2013 Orlando, Florida 30

Procure to Pay – P2P Annual Meeting April , 2013 Orlando, Florida 31

Procure to Pay Process Original Goals… – E-invoicing/E-Settlement – Raising the performance bar – Change Order Workflow Integration – Comprehensive Payable Solution – Consider limited use of virtual cards for needed online purchasing Developed RFP and Banking Partner was selected Partner put project on hold Currently re-evaluating the use of one of our current partners – SciQuest or Concur Invoice Annual Meeting April , 2013 Orlando, Florida 32

Overall Project Success Original P-Card Rebate$100K New Savings:>$1.5M – Sourcing – Travel – P2P Annual Meeting April , 2013 Orlando, Florida 33

Q&A Obtaining Investment in Procurement to Help your Institution Cope with Budget Reductions 34 Annual Meeting April , 2013 Orlando, Florida