Ontario Education Collaborative Marketplace

Leading Change in Supply Chain Management

Canadian Association of University Business Officers

June 20, 2006

Agenda:

OECM Overview – Franca Gemignani

e-Marketplaces Overview – Daniel Orenstein

OECM Progress Update and Next Steps – Renata Faverin

OECM Representatives and Contact Info

OECM Overview

e-Marketplaces Overview

OECM Progress Update and Next Steps

OECM Representatives and Contact Info

What is OECM? – Our key objectives

Who is participating in OECM? – The institutions currently involved

Why OECM? – The value for institutions, purchasing professionals, suppliers

OECM Overview

e-Marketplaces Overview

OECM Progress Update and Next Steps

OECM Representatives and Contact Info

OECM Overview:

What is OECM?

OECM is an electronic marketplace that connects buyers and suppliers together to facilitate more effective, efficient procurement

OECM is buyer-led (our institutions are key beneficiaries)

OECM’s longer term operating and governance models are currently under consideration

OECM initiative is being supported by the Ministry of Finance

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What is OECM? The Proposed Model June 20, 2006

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OECM MarketplaceOECM Marketplace

ContractManagement

SupplierPortal

SpendAnalysis

MarketplaceServices

Requisitions

Orders

Catalogues

Bids

Transactions / Enterprise Application Integration

BuyersBuyers

Browser

Purchasing System

SuppliersSuppliers

Browser

Order Management

System

What is OECM? The Proposed Model June 20, 2006

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All purchasing transactions (requisitioning / shopping cart to invoice entry) created, reside in marketplace

Invoice data sent to entity’s back-end systems (similar to PCard)

EduBuysPlus

Conduct reverse and standard auctions Notify subscribed suppliers of auction events

Auctions

Electronic management of RFIs, RFPs, RFQs and public posting of RFX documents (in parallel to posting at MERX)

Multiple users can collaborate on building electronic contracts

eRFX

Electronic analysis of purchasing data to determine spending patterns and trends for a given entity

Spend Analysis

Create, store, edit and manage any type of contract Monitor supplier contract compliance

Contract Management

Supplier integration services, catalogue hosting, automated validation Compare prices for catalogue items posted by multiple suppliers Add-on services (e.g. catalogue creation, invoice generation) available

Supplier Portal

Go-Live Functionality

Planned Functionality

Requisitioning / shopping cart and approvals processed in marketplace

Post-requisitioning processed handled by entity’s back-end systems Pricing, descriptions for goods / services through catalogues

EduBuys

Who is Participating in OECM? June 20, 2006

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Current OECM participating institutions generate an estimated $1.3B in annual spending:

Significant Buying Power

Ontario schools, colleges, universities represent approximately $2B in annual spending.

Who is Participating in OECM?

And the momentum is growing…

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Expressions of Support

• Brock University• Carleton University• Dufferin-Peel Catholic District

School Board• Fleming College• George Brown College• Georgian College• Lakehead University• Laurentian University• Queen’s University• University of Guelph• University of Windsor• Wilfrid Laurier University• McMaster University

Expressions of Interest

• Conseil scolaire catholique Franco-Nord

• Huron Superior Catholic District School Board

• Board of Governors of the Niagara College of Applied and Technical Arts

• Upper Grand District School Board

Why OECM?

Within the education sector, institutions have long been sharing ideas for better ways to manage procurement activities

Want to leverage procurement best practices, success stories from U of T and public sector, such as eVirginia (eVA)

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10Source: U of T Survey Feb 2003

3.46 hours

E-procurement is less time-consuming, more efficient, cheaper than traditional methods of procurement

0.33

29+7

$129$12

Hours / Order

Steps / Order

Cost / Transaction

E-procurement Traditional procurement

How $85M in Savings* Can Be Achieved

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Leverage Leading Practices

OECM

Legislative, policy compliance

Steps per transaction

Time per transaction

Unit cost via leverage with suppliers

Order accuracy (reduced returns) Contract compliance

Common contracts

Supplier consolidation

Data for better buying decisions

Selection at better prices

Supply chain tech costs / institution

Process Savings Cost Savings

* Savings are a combination of process savings of $75 per transaction as well as savings realized on the price of purchased items.

Why OECM? The Value for Institutions

Will meet the needs of the majority of institutions – regardless of size, governance, geography

Design, development and implementation of the marketplace are supported by the Ministry of Finance for institutions signing commitment letters

Institutions’ willingness to participate is very positively viewed by MoF, MTCU, MoE

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Coming this Fall 2006: Institutional Membership Campaign

OECM looks forward to welcoming new institutional members from universities, colleges and school boards! We will provide the Ministry of Finance with an updated membership list, as per its request.

Why OECM? The Value for Institutions

Maximize efficiency in the back office – make complex processes more user-friendly, less costly

Better buying experience for researchers, administrators, teachers, etc.

Improved leverage with suppliers – greater standardization, better processing services

Reduced supply chain technology investments for each participating institution

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What will you do with your share of the savings?

OECM is projected to result in process efficiency and strategic sourcing savings of over $85 million by FY 2009/2010.

Why OECM? The Value for Purchasing Professionals

Ensure purchasing policies are followed – OECM workflow will ensure applicable policies, legislation/approvals are followed

Free up time – OECM will simplify purchasing process, and reduce manual, paper-based tasks

Facilitate accountability, full audit trail – OECM will record actions, decisions taken for every transaction

Stretch budget dollars –

Automation will reduce cost/buying transaction

Stronger collective buying power will result in lower prices for those on the marketplace

$ reinvested in education

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OECM supports Ontario University Purchasing Management Association’s (OUPMA) missions and goals

OECM directly supports OUPMA’s mission to foster closer cooperation and exchange of information (e.g. purchasing best practices), AND goal of cooperative purchasing ventures to leverage institutional spending.

Why OECM? The Value for Purchasing Professionals

Receive goods & services sooner – e-Marketplace will reduce transaction processing time

Improve order accuracy via OECM online, supplier-maintained catalogues on the e-Marketplace

Find better products and services – OECM can connect institutions with a wider range of suppliers

Gain better insight into purchasing activities –

Order the right amount at the right time

Better leverage for contract negotiations

Better management reporting capability

Stay up-to-date – OECM will bring product updates/changes via supplier maintained catalogues

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Why OECM? The Value for Suppliers

Ability to grow revenues – common access point for universities, colleges, schools with $2B in total annual spend

Minimize cost of goods sold – OECM provides one common procurement process for all participating buyers

Improve competitive position – suppliers of all sizes, geographic locations can compete to supply same buyers

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One-Stop Access to a $2B Market

OECM’s significant value proposition to suppliers will facilitate larger product selection at the best possible prices for participating institutions.

Underlying Technology of e-Marketplaces

Evolution of e-Marketplaces (North America, Public Sector)

Case Study 1: eVA

Case Study 2: Quebec Hospitals

Key Implementation Challenges

OECM Overview

e-Marketplaces Overview

OECM Progress Update and Next Steps

OECM Representatives and Contact Info

e-Marketplaces Overview:

e-Marketplaces – Underlying TechnologyKey Components

Four key e-Marketplace technology components:

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Technology is an enabler for continuously

improving procurement

practices.

Provides marketplace functionality Supported by multiple servers and databases

Marketplace Applications

EAI tools connect marketplace applications to institutions’/suppliers’ back end systems

Ready-built templates available to expedite information transfer between marketplace applications and institutions’/suppliers’ back-end systems

Provides hardware/networks for n-tier architecture applications

Supports application, security and integration layers

Provides secure data transmissions, firewalls, virus and intrusion detection / protection and user authenticationSecurity

B2B / A2A Interface

Layer

System Infrastructure

Evolution of e-marketplaces (North America)

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Late 1990s

e-Marketplaces introduced with entry of viable e-procurement software offerings

2000 – 2001

e-Marketplace consolidation following Dot-Com bust

Late 1990s to 2000-2001

Private and public sector rush to establish e-marketplaces.

Marketplace segmented into: buyer-anchored marketplaces; supplier-anchored marketplaces;

and third-party marketplaces.

2000-2001 to Present

e-Marketplaces evolve from offering all services to all participants to offering set of services for key needs of participants.

Continuing emergence of marketplaces based on lesson learned from late 1990s, maturing of software technology.

Evolution of e-marketplaces (Public Sector)

Public sector a key beneficiary of e-procurement:

High total expenditure from distributed points of order

Can leverage total spend to get best possible prices

Deal with many suppliers at high degree of openness

Several examples of e-marketplaces, 2 cases provided here

Case Study 1 eVA

Case Study 2 Quebec Hospitals

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“The public sector potentially, and eventually, has the greatest benefits to gain from the use of electronic procurement, because they have a very high total expenditure and in general highly distributed points of order.”

Andy KyteVP B2B Research

Director, Gartner Group

Case Study 1: eVA

The Challenge

Procurement activities decentralized across 180+ entities (including schools, colleges and universities) – system and process redundancies

Procurement activities used variety of desktop applications, automated purchasing systems, manual processes

Collective buying power not leveraged

Lack of vendor and purchasing data reporting

Inconsistent use of latest technology, industry standards, best business practices

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Single Face for Procurement

In May 2000, Governor James Gilmore mandates the implementation of a new e-procurement system to establish a “single face for procurement” for Commonwealth users and vendors.

Case Study 1: eVA

The Solution

Automated procurement activities – entire process (point-of-need to award) streamlined, accelerated

eMall – buyers search, compare offers online; vendors get one-stop access to government market

Online vendor registration – eliminates multiple vendor registrations; buyers have single source for locating vendors

Integration with Commonwealth ERP systems – enables procurement system “plug-and-pay” with eVA for Commonwealth entities

Vendor and purchasing data warehouse – identify savings opportunities on common products, real-time financial information for decision-making

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Automated Procurement

Activities

eMall Online Access to Catalogues

Online Vendor Registration

Integration with Commonwealth ERP Systems

Vendor and Purchasing Data

Warehouse

Case Study 1: eVA June 20, 2006

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eVA Portal

Purchasing Transactions Warehouse

Vendor Data Warehouse

eMall

Push / Public Posting

Vendor Registration

VendorData

Bidding / Contracting

Auctions

Requisitioning & Ordering

Receiving & Invoicing

Authentication Integrity Efficiency Completeness

Agency Procurement System

Bids, Vendor Data

Orders, Solicitations

Vendors

Order Received

Real-time Catalogues

Bids Submitted, EDI Invoices

Case Study 1: eVA June 20, 2006

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$114M in savings

$36.5M in annual savings, cost avoidance

Reduced cost/purchase order by 50%

Reduced solicitation to award processing time by up to 70%

960,000+ orders processed

$8.8B in orders

983 catalogues

32,482 vendors

171 agencies, 492 localities

9,100+ users

The Results eVA is the most comprehensive e-procurement solution in the US, and the fastest state-wide procurement system rollout ever achieved.

eVA is repeatable.

Case Study 2: Quebec Hospitals

The Challenge

Five participating hospitals (11,000+ employees) using different infrastructures, legacy systems, process flow, business procedures – system and process redundancies

Purchasing process long, manually-intensive, duplication of tasks

Order errors due to manually-intensive re-typing

Lack of up-to-date product information

Collective buyer power not leveraged

Inconsistent use of latest procurement technology, industry standards and best business practices

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Case Study 2: Quebec Hospitals

The Solution

Implemented first SAP Application Service Provider (ASP) model in Quebec healthcare sector

Streamlined practices, proposed standardized processes

Implemented procurement best practices

Implemented marketplace and content management solutions and integration services using:

Global Health Exchange (GHX) Connect Plus

GHX Content Centre

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Case Study 2: Quebec Hospitals

The Results

Reduced order completion time from 2 days to an average of 10 minutes

Hôpital Sacré-Coeur anticipates savings of $1.8M in nursing hours over next 5 years, $1.2M in costs

Eliminated obsolete, duplicate, and inaccurate product information

Significantly reduced transaction errors by eliminating need to re-input documents

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Key Implementation Challenges

Defining functionality that meets critical needs of all participating institutions

Establishing, maintaining buy-in from a wide range of stakeholders (i.e. buyers, suppliers, government, and citizens)

Establishing governance, MOU between participating entities and the marketplace

Maintaining commitment, ongoing involvement of OECM steering committee

Obtaining credible e-Marketplace expertise to deliver OECM

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Effective change management – not technology – is the critical success factor in the successful implementation of e-marketplaces

OECM Progress Update

OECM Next Steps

Participating Institutions’ Representatives

OECM Key Contacts

OECM Overview

e-Marketplaces Overview

OECM Progress Update and Next Steps

OECM Representatives and Contact Info

OECM Progress Update and Next Steps:

OECM – Progress Update June 20, 2006

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March 2004

OntarioBuys is initiated

August 2005

OECM begins Phase 1 to evaluate potential for

implementation of e-procurement marketplace

April 2006

OECM Phase 2 funding of

$1.2M received

November 2005

OECM completes Phase 1, identifying

significant economic,

operational savings

May 2006

OECM begins Phase 2: Software

Selection and Detailed Design

March 2005

Small group of procurement

professionals from universities, colleges, school boards (SCU) develop joint funding

proposal to MoF

OECM – Next Steps

Spring/Summer 2006

Phase 2: Software Selection and Detailed Design begins (CGI engaged)

Develop communications and marketing plan to ensure all stakeholders are continually updated

• Website under development and will be ready by fall

• Newsletters being developed for the three sectors and will be distributed through Associations (NPC will be provided updates for CAUBO)

Develop buyer, supplier adoption strategies

Develop future OECM governance model

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OECM – Next Steps

Spring/Summer 2006

Develop Due Diligence Framework to:

• Validate the financial model and assumptions based on an independent review of the business case

• Validate the technology readiness of e-marketplaces in large, broader public sector environments

• Identify audit “e-paper trails” to satisfy all stakeholders

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OECM – Next Steps

Fall 2006

Deliver four (4) regional in-depth workshops to universities, colleges, schools on OECM project

Institutional Membership Campaign begins

Supplier Membership Campaign continues

Begin design of marketplace

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Participating Institutions’ Representatives June 20, 2006

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MEMBER PARTICIPATING INSTITUTION

DAVIES, John VP Administrative Services

Humber Human Institute of Technology and Advanced Learning

EVELYN, Allan Director, Financial Services, Seneca College

FAVERIN, Renata – Chair Director, Procurement Services, York University

HAYES, Lorraine Manager, Purchasing Services, Trent University

KYRITSIS, Terry Assistant Comptroller, Administrative Services

Toronto District School Board

MOORE, Bob Director, Purchasing, The University of Western Ontario

PITMAN, Wade Manager, Purchasing and Payment, Ryerson University

SBAHI, Abder Director, Materials Management Services, University of Ottawa

WHITTAKER, Stephen Director, Procurement Services, University of Toronto

OECM Key Contacts June 20, 2006

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Renata Faverin, Chair, OECM Steering Committee and Director, Procurement Services, York University (416) 736-5143

Franca Gemignani, Project Coordinator, OECMfmgeminan@rogers.com (416) 627-3489

Thank You