Yes, Virginia! There is More to e-Procurement than Software
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Yes, Virginia! There is More to e-Procurement than Software Conference: Commonwealth of Virginia – Forum 2008 Presentation Dates: November 18 th , 2008 Conference Duration: 60 Minutes
Transcript of Yes, Virginia! There is More to e-Procurement than Software
Yes, Virginia!
There is More to e-Procurement than Software Conference:
Commonwealth of Virginia – Forum 2008
Presentation Dates:November 18th, 2008
Conference Duration:60 Minutes
Yes, Virginia!
Central ThemeProcess Before Technology, Collaboration Before
Results!
Yes, Virginia!
Creating the technology to operate such a marketplace (Covisint) turned out to be more difficult than expected, while suppliers remained hesitant to compete for business
online. (12/31/2003)
75% of all such initiatives (e-business) will fail
despite the benefits to all transactional stakeholders. (2001)*
* Dale Neef – e-Procurement: From Strategy to Implementation
Yes, Virginia!
Ford Scraps Oracle-based procurement system“Not all of our suppliers touched a piece of Everest . . . Ford
felt it was in its partners’ best interests to make this decision.” (8/18/2004)
In August 2001, Ford hired Covisint to develop and host the next generation of the Ford Supplier Network . . .
. . . Covisint has also come to be considered a failure across the auto industry. (8/18/2004)
Yes, Virginia!
73% of all implementations result in partial or total failure. (2/2005 )
FORTUNE MagazineExecs Tell Software Makers: “Some
of You Are Doomed.” (2/5/2005)
Yes! Virginia
Financial Executive MagazineRobert A. Rudzki
April 1st, 2006
New technology is of value only if it provides a suitable financial return . . . Unfortunately the benefits claimed are often unrealistic and unsubstantiated.
This leads to significant creditability issues . . . And to a lack of confidence . . .
http://www.fei.org
Yes, VirginiaEconomical Technological User
Low cost of ownership Ease of integration with back-end ERP
Ease of use (Training & Support)
Good budget fit Reliability (Responsiveness)
Increased efficiency
Fast ROI (Productivity) Minimal support requirement (Support)
Achieve performance objectives (Expedited Delivery)
Quantifiable savings Standardization Reliability
Flexibility Best “value” Real world visibility
Standardization Enhanced supplier engagement
Yes, Virginia!
Economical Technological User Suppliers
Low cost of ownership
Ease of integration with back-end ERP
Ease of use (Training & Support)
Ease of use
Good budget fit Reliability (Responsiveness)
Increased efficiency Non-invasive technology
Fast ROI (Productivity)
Minimal support requirement (Support)
Achieve performance objectives (Expedited Delivery)
Convenience and speed
Quantifiable savings Standardization Reliability Business intelligence
Flexibility Best “value” Real world visibility Maintain or increase revenue
Standardization Enhanced supplier engagement
Non-adversarial
Yes! Virginia
Financial Executive MagazineRobert A. Rudzki
April 1st, 2006
World-class supply practices boost shareholder value: a focus on both direct and indirect spending, including smaller items, can have a powerful
effect on corporate performance. Top companies involve their procurement group and other internal functions, plus suppliers, to boost
competitive advantage.
http://www.fei.org
Yes! Virginia
Purchasing.comPaul E. Teague
December 20th, 2008
CPOs and CFOs are on the same page, but speak a different language
http://www.purchasing.com
Yes! Virginia
• Less than 20% of CFOs consider the work of CPOs and their staffs as having “a very positive impact on competitiveness.”
• Of the 11.9% of average annual identified savings only 3.2% actually gets booked, a difference of 73% from ID identification to realization.
• On average only 46% of CFOs feel that the procurement team has contributed to enterprise growth, while just 57% feel that procurement contributes to enterprise profitability.
Yes! Virginia
CFO’s report that their efforts to drive savings and boost profitability are being stymied, in part, by non-compliance.
(Supply & Demand Chain AMEX Survey 2005)
Yes! Virginia
Of the 45% of customers who have contracted vendors, 33% of their purchases are from non-contract suppliers. In Canada, 79% of all purchases are from non-contracted suppliers. (2004)
Yes! Virginia
Business Process Improvement Is IT's Main MissionBy Allan E. AlterOctober 4, 2006
One of the most important lessons from the last 25 years of business computing is that you can't throw technology at a problem and expect it to go away, or fling a
system at an opportunity and expect the dollars to rain down.
Ziff Davis Media28 East 28th Street
New York, New York 10016www.ziffdavis.com
Yes! Virginia
Results Speak!• An increase from 1% of the Commonwealth’s total $3.5 billion spend
being processed through the system in 2001 to over 80% in 2007
• An increase in the number of registered suppliers from 20,000 in 2001 to 34,000 in 2007
• An increase in the distribution of Commonwealth contract awards to suppliers from 23% in 2001 to more than 46% of the total supply base in 2007
Virginia's Total e-Procurement Solution
Yes! Virginia
How Did They Do It• Reversed direction after realizing the degree of stakeholder
resistance to a “shared services” platform.
• Recognized that government is “not just a single business but is actually comprised of many different lines of business.”
• Government “goes beyond a mere org chart.”
Virginia's Total e-Procurement Solution
Yes! Virginia
How Did They Do It• Senior management actively sought, and ultimately
understood the “special needs, special rules and special challenges” at the department and agency level.
• Communication is actually a desire and not a skill!
Virginia's Total e-Procurement Solution
Yes! Virginia
How Did They Do It• Recognizing the flaws with a shared services strategy,
Virginia’s team had the courage to change course.
• Avoided the trap of eVA becoming a software (IT) project.
• Shifted focus from application (ERP) compliance and cost justification to one of process understanding and refinement.
Virginia's Total e-Procurement Solution
Yes! Virginia
How Did They Do It• Recognized that success was not dependent upon a
particular vendor or technology.
• Virginia was one of the first to successfully leverage the Software as a Service (SaaS) pricing models.
• A win-win scenario for all stakeholders.
Virginia's Total e-Procurement Solution
Yes! Virginia
mySAP 10 year, $15 million contract
Part of a $23 million system of streamlined business processes
Additional $8 million on hardware interfaces, conversion services and software, project management support and additional staffing
Options to implement SAP’s E-procurement and business warehouse reporting applications
Yes! Virginia
Standardize the city’s administrative functions across all departments
Project to fundamentally change how the city handles key business and admin. functions
A significant change for the city
Yes! Virginia
“But no cost savings estimate is complete yet, so officials are not sure how much Houston will save because of efficiencies.”
(Government Computer News 12/16/05)
Yes! Virginia
Oracle 6 year, $95 million computer contract
Dept.’s of Finance, IT and General Services signed-off on the project
No independent analyses was done, savings est. provided by Oracle
“Nearly site unseen”
Yes! Virginia
Oracle est. that the software could have saved California as much as $163 million
The consultant (Logicon) est. a savings of $111 million
State auditors found that to be “wildly inaccurate”
The state est. that the contract would cost taxpayers $41 million
At the time of the audit, no state workers were actually using the Oracle product
Yes! Virginia
Process (Communicate & Collaborate)
Technology (Align & Assign)
Results (Identify & Quantify)
Yes! Virginia
Process (Communicate & Collaborate)
Do not confuse collaboration with shared services Collaboration is driven internally, involving all key stakeholders . . . and
takes place outside of the framework of a particular vendor or technology Shared services within the public sector is in reality an outsourcing
arrangement in which responsibility for structure and implementation is transferred to the selected vendor . . . less internal involvement, and more external control
Yes! Virginia
Technology (Align & Assign)
Misalignment is linked to the agenda of the vendor and is usually driven by the desire for continuity or compatibility with an application (ERP system)
Technology is a supporting player – accelerating process efficiency, not defining it
Under a SaaS model, the vendor assumes the proper share of the risk
Yes! Virginia
Results (Clarify & Quantify)
Clarify and verify what can be achieved by leveraging technology to accelerate process (CAPS 2003 Study/Humber College)
Understand how the financial imperatives of the program will “translate” projected savings into tangible bottom line results
Savings realization – think in terms of months instead of years
Yes! Virginia
Technology-centric Approach
Increasing cost, questionable results over a long period
Process-centric approachReducing cost and increasing
results in a short time period
Yes! Virginia
Central ThemeProcess Before Technology, Collaboration Before
Results!
Procurement Insights Blog
Your Link to Thoughtful, Leading Edge Procurement Insights by and for Procurement Professionals URL Link
http://procureinsights.wordpress.com/Yes! Virginia Posts
Yes Virginia Revisited! Why some e-procurement initiatives succeed and others don’t! *(A Summit Simulpost) – October 23, 2007
Yes Virginia! There is more to e-procurement than software (Part 2) -September 20, 2007
Yes Virginia! There is more to e-procurement than software (Part 1) - September 12, 2007
Yes! VirginiaOther Conferences with Jon Hansen
The Changing Face of Procurement (2-Day Seminar) Dangerous Supply Chain Myths (2-Day Seminar) The Evolution of the Public Sector Procurement Practice (2-Day
Seminar) The Shifting Sands of the ERP Vendor Landscape (2-Day Seminar) The Purchasing Professional – Making the Transition from a
Functional Role Player to a Strategic Leader (1-Day Seminar) Sustainability Facts and Fiction: Linking Green Idealism and
Practical Business Application
http://procureinsights.wordpress.com/2008/02/04/new-seminars-for-supply-chain-professionals/
© 2007-2008 Hansen Consulting & Seminars Inc.
Resource Index 1
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index 2
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
Resource Index 1
• AMMG http: //www.ammg.ca/
• Beyond Referrals http://www.beyondreferrals.blogspot.com/
• Canadian Public Procurement Council http://www.cppc-ccmp.ca/index.php
• Contingency Workforce Solutions http://www.cwsolutions.ca/
• Enterprising non-profits http://www.enterprisingnonprofits.ca/
• Future Path http://www.futurepath.com/dnn/ • Grand & Toy
http://www.grandandtoy.com/sites/corp/default.aspx • IACCM http://www.iaccm.com/ • MERX http://www.merx.com/ • Print Vision
http://www.slideshare.net/piblogger/print-vision-presentation-august-2008-presentation
• QStrat http://www.qstrat.com/index.html • Smarter Solutions http://www.smartersolutions.com/ • Summit Magazine
http://www.summitconnects.com/index.htm • Toshiba http://www.toshiba.ca/web/home
Resource Index 2
• Baxter Planning Systems http://www.toshiba.ca/web/home
• Bellwether Software http://www.bellwethercorp.com/
• CABiNET http://www.cabinet-business-network.ca/
• COUPA http://www.coupa.com/
• ecademy http://www.ecademy.com/?xref=
• Katzscan http://www.katzscan.com/
• Network Global Logistics http://www.nglog.com/
• Source One http://www.sourceoneinc.com/
• Next Level Purchasing http://www.nextlevelpurchasing.com/
• VIADOR http://www.viador.com/
• WHY ABE http://www.whyabe.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
Resource Index 3
• PurchSearch http://www.purchasingcourses.com/2008/10/forget-google-try-purchsearch.html
• eWorld Purchasing & Supply http://www.eworld-purchasing.com/
• IBX http://www.ibxeurope.com/
• LM3 online https://www.lm3online.org/Default.aspx
• Zycus http://www.zycus.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
The resource index was created as a means of responding the increasing number of audience questions regarding various services, solutions, associations as well as information resources.
The listings include direct links to the resource web sites.
To access Resource Profiles, Reports, PowerPoints, Videos and White Papers visit the Procurement Insights Blog at: http://procureinsights.wordpress.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index 1
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index 2
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
Resource Index 1
• AMMG http: //www.ammg.ca/
• Beyond Referrals http://www.beyondreferrals.blogspot.com/
• Canadian Public Procurement Council http://www.cppc-ccmp.ca/index.php
• Contingency Workforce Solutions http://www.cwsolutions.ca/
• Enterprising non-profits http://www.enterprisingnonprofits.ca/
• Future Path http://www.futurepath.com/dnn/ • Grand & Toy
http://www.grandandtoy.com/sites/corp/default.aspx • IACCM http://www.iaccm.com/ • MERX http://www.merx.com/ • Print Vision
http://www.slideshare.net/piblogger/print-vision-presentation-august-2008-presentation
• QStrat http://www.qstrat.com/index.html • Smarter Solutions http://www.smartersolutions.com/ • Summit Magazine
http://www.summitconnects.com/index.htm • Toshiba http://www.toshiba.ca/web/home
Resource Index 2
• Baxter Planning Systems http://www.toshiba.ca/web/home
• Bellwether Software http://www.bellwethercorp.com/
• CABiNET http://www.cabinet-business-network.ca/
• COUPA http://www.coupa.com/
• ecademy http://www.ecademy.com/?xref=
• Katzscan http://www.katzscan.com/
• Network Global Logistics http://www.nglog.com/
• Source One http://www.sourceoneinc.com/
• Next Level Purchasing http://www.nextlevelpurchasing.com/
• VIADOR http://www.viador.com/
• WHY ABE http://www.whyabe.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
Resource Index 3
• PurchSearch http://www.purchasingcourses.com/2008/10/forget-google-try-
purchsearch.html • eWorld Purchasing & Supply http://www.eworld-purchasing.com/
• IBX http://www.ibxeurope.com/
• LM3 online https://www.lm3online.org/Default.aspx
• Zycus http://www.zycus.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Resource Index
The resource index was created as a means of responding the increasing number of audience questions regarding various services, solutions, associations as well as information resources.
The listings include direct links to the resource web sites.
To access Resource Profiles, Reports, PowerPoints, Videos and White Papers visit the Procurement Insights Blog at: http://procureinsights.wordpress.com/
© 2007-08 Hansen Consulting & Seminars Inc.
©
Procurement Insights Blog
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