1. 1 What is the innovation supply chain? E-Procurement at the University of Notre Dame CUMREC 2003 Dan Traub Director, Procurement Systems, University of Notre Dame Dorrian Porter Vice President, SciQuest 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.

2. 2 e-Procurement in higher education How Notre Dame arrived at the e-Procurement decision Making the case for an ASP Functional and technical highlights Keys to a successful implementation Questions and discussion Topics Covered

3. 3 Working Definition of e-Procurement Supplier Enablement Requisition Management Order Management Settlement Management Sourcing Management Spend Analysis Institutions will approach e-Procurement with different perspectives, needs and capabilities. Extending ERP to achieve e-Procurement.

4. 4 Procurement became a larger area of focus for higher education administrators in 2002 Chronicle of Higher Education cited e-Procurement as an important area of cost savings in June 2002 One of the “Hottest” Technologies at October 2002 EDUCAUSE Conference and 2003 SCT Summit Top Business Priority cited by University Business in December 2002 Experience in the market in 2002

5. 5 SAVINGS CONVENIENCE SPEED SELF-HELP Why e-Procurement? Online catalogs with negotiated prices to the end-users Automated end-to-end process (requisition to approval to order) accessible anywhere anytime Automated approvals and electronic connections to supply base Intuitive, web-based experience

6. 6 What some universities are doing University of Michigan Complemented its existing Web-based requisition system with online shopping Expanded its existing catalog initiative to achieve up to 1,000 vendors capable of web-based ordering Building a comprehensive e-Procurement and chemical management process ARIZONA STATE UNIVERSITY

7. 7 Different groups have different priorities Spend more time on research activities Reduce redundant processes Discover more, with less resources Researchers, Faculty & Staff Reduce or prevent loss Reduce liability Decrease processing turnaround time Improve inventory control Improve QA/QC Increase regulatory compliance EH&S, Facilities & Curators Quick implementation and user adoption Integrate with existing systems Expandable architecture Information Technology Drive cost savings Eliminate paper processes Improve contract compliance Procurement & Business Admin.

8. 8 Arriving at the e-Procurement decision Executive VP initiative – McKinsey & Co - Make purchasing a strategic function Changes Recommended -Conduct fact-based analysis to find savings opportunities -Lower TCO by understanding all cost drivers -Build spend analysis tools to support decision making -Develop campus-wide vendor agreements -Deploy at-the-desktop solution across campus to: -Enable users to easily access campus-wide contracts (hard $$$ savings) -Streamline the entire shopping through payment process (soft $$$ savings) GOAL: DELIVER WORLD-CLASS PROCUREMENT SERVICES TO OUR CAMPUS

9. 9 Application Service Provider (ASP) decision e-Procurement is not just another software application Externally hosting the application made sense due to: -Significantly lower up-front costs -Increased speed to campus roll-out -Extended support hours -Access to expertise -Connectivity to vendors -ERP initiative Service is key -You need assistance with supplier enablement -Emerging features mean regular upgrades

10. 10 Ongoing collaboration Collaboration among all parties Long-term solution linked to ERP strategy Measuring baseline and tracking progress Leading to longer term collaboration with other universities ND SciQuest ND Suppliers

11. 11 e-Procurement as a core process Procurement touches nearly every faculty and staff member of a campus At Notre Dame, support groups impacted include –Procurement services –Accounts payable –Risk management and safety –Internal suppliers or campus stores –Capital management –Central receiving Primary impact on the departmental purchaser and multiple layers of financial approvers, especially: -Research units -Facilities

12. 12 Project approach One e-Procurement project with 3 major releases All requirements defined during the initial planning sessions –basic e-Procurement functionality –integration with legacy systems –reporting requirements –enhanced functionality as identified Develop campus-wide standard processes using “vanilla package” approach; compatibility with future ERP Create prioritized vendor enablement plan synchronized with our rollout plans for campus departments

13. 13 Sample project team organization

14. 14 What capabilities are in scope? Shopping process – Hosted Catalogs, Punchout vendors Requisitioning process –Workflow routing, configurable requisition layout, business rules embedded in the flow Approval process –Online approvals of requisitions Purchase Order Delivery –Electronic order delivery, fax, email Receiving –Desktop Receiving Invoicing -Manual invoice entry and cXML invoice receipt 3-Way match -Post payment transactions to financial system

15. 15 Supplier enablement Know the current state of the industry – build a flexible approach Develop a repeatable process Use spend analysis to drive decisions on supplier enablement planning Include needs of target pilot users as key inputs to the decision too Consider supporting non-catalog purchases from a wider variety of vendors who do not yet have catalog integration capabilities Service provider must deliver ongoing support and technical expertise during supplier enablement process

16. 16 Integration requirements Authentication – LDAP integration Account Code Validation Account Code Synchronization Supplier Synchronization Encumbrance Data Payment Information (3 way match)

17. 17 Key challenges and opportunities Defining a true campus baseline  For approvals and workflow  For accounting variations  For internal requisition creation processes  For reporting and analysis Understanding which functionality is best approached in which of your systems Working through the gaps - understanding the journey User acceptance & determining rollout sequence

18. 18 Observations e-Procurement becoming a “PULL” roll-out instead of “PUSH” Vendors are getting it and are ready to do business in an integrated way The success of user adoption is driving us to the return on investment

19. 19 What is the innovation supply chain? Q & A