E-ProcurementThe Administrative Application That Could

Anthony RotoliChannel Sales ManagerSciQuest, 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

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Agenda

About SciQuest

Tactical vs. Strategic Procurement

HigherMarkets Solution

Case Studies

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What is the innovation supply chain?About SciQuest

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About SciQuest

SciQuest's secure on-demand solutions integrate organizations with their suppliers to enable comprehensive spend management for the life sciences and higher education markets.

SciQuest's suite of modular applications helps to automate the source-to-settle process. When used with the SciQuest SupplierNetwork, these solutions reduce redundant tasks and maintain data integrity throughout the cycle of finding, acquiring andmanaging goods to increase efficiency, reduce cost and providetotal spend visibility.

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SciQuest Customers Life Science

GlaxoSmithKline 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

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

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Current State of Higher Education

Increased Demands on

Campus Services

DECREASE IN BUDGETSDramatic reductions in state and

federal funding

INCREASED COST PRESSURESPlunging endowments and restricted grants

INCREASE IN REGULATIONSPatriot Act regulations, increased EPA fines, threat of bad press

INCREASE IN STUDENTSServing more people

with less resources

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Traditional Approach

FIND BUY MANAGEManual searches

Limited selection of suppliers

No integrated visibility into inventory

FIND BUY MANAGE

Overall Increase in Indirect Spend

Increased cost of goods Increased Processing CostsIncreased

Risks & Inventory Costs

Manual requisitioning

High volume of orders to multiple suppliers

No tracking beyond receipt

Separate process from purchasing

Redundant purchases

Manual tracking, limited chemical information

Manual compliance reviews and reporting

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Integrated Solutions for Higher Education

Integrated Sourcing

FIND

BUYMANAGEIntegrated Processes

Inte

grat

ed In

vent

ory

Cost of GoodsProcessing CostsInventory Costs

The smartest purchase is the one that isn’t made.

Maximize productivity,minimize risk.

Change what they buy,not just how they buy.

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What is the innovation supply chain?Reaching Your StrategicProcurement Goals

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Tactical vs. Strategic Procurement

Focused on spend management

Set and achieve long term goals

Proactively working with departments and suppliers

Perceived as a value creator

STRATEGICTACTICAL

Focused on transactions

Set and achieve short term goals

React to departmental purchasing needs

Perceived as a cost center

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Procurement Continuum

See opportunities for improvement

Desire to make an impact

Unsure of the best approach

STRATEGICTACTICAL

Managing manual processes effectively

Disparate data

Using human resources to fullest capacity

MOST

ARE

HERE

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What is the innovation supply chain?Bridging the Gap

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What’s missing?

STRATEGICTACTICAL INCREASEDEFFICIENCY

BETTERINFORMATION

RIGHTTOOLS

BETTERDECISIONS

RIGHTRESULTS

IMPROVEDPRODUCTIVITY

E-Procurement

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E-Procurement Enables Best Practices

Improve Productivity

Better Decisions

Right Results

Automate Manual Tasks

Capture Comprehensive Data

Influence Buyer Behavior

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Automate Manual Tasks

Gain more resources to devote to strategic initiativesGain more resources to devote to strategic initiatives

SPEND DIRECTOR

REQUISITION

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

ORDER

MANAGER

SETTLEMENT

MANAGER• Receiving

• Electronic Invoicing

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Capture Comprehensive Data

Purchasing Data

Supplier Data

Transaction Data

Better data helps you make better decisionsBetter data helps you make better decisions

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Influence Behavior

How end users buy

What they buy

Who they purchase it from

Achieve your strategic goals by helping end usersAchieve your strategic goals by helping end users

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The Experts Agree…

• Aberdeen Research survey concluded the typical post-implementation benefits of e-procurement 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.”

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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

E-Procurement Solutions Deliver Financial and Productivity Savings

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% of Spend to Preferred Suppliers / Month

55.5% 52.5% 55.2%

65.4% 67.3%62.0% 59.3%

54.3%

63.0%56.9%

61.0%64.5%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

54.4% 61.6% (7.1% increase)Began using preferred positioning for key suppliers

Preferred positioning of key suppliers increases on-contract spending and decreases materials purchase by 10-20 %

Spending Trend With Preferred Suppliers

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-

20

40

60

80

100

120

JAN

FEBM

ARAPR

MAY

JUN

JUL

AUGSEP

OCTNOV

DEC

48.0%50.0%52.0%54.0%56.0%58.0%60.0%62.0%64.0%

# Suppliers Receiving Orders Per Month

% of Orders to Preferred Suppliers

Began using preferred positioning for key suppliers

Preferred positioning also consolidates client’s supplier base by 20% resulting in less work for accounts payable

Order Distribution Trend with Preferred Suppliers

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Avg Cost* of a PO: = $114 (per NAPM/ISM)

Avg E-Procurement PO Cost: = $31 (per Aberdeen)

Savings with e-procurement: = $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

for value-added activities such as research and negotiating savings.

By minimizing the unproductive time that users spend sourcing,

requisitioning and procuring products, they will have more time

for value-added activities such as research and negotiating savings.

Productivity Savings

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What is the innovation supply chain?Introduction to

HigherMarkets

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Connect with Existing Systems & Suppliers

ON-DEMAND TECHNOLOGY PLATFORM

SPEND DIRECTOR

REQUISITIONMANAGER

ORDERMANAGER

BUSINESS

INTELLIGENCE

SCIQUEST SUPPLIER NETWORK

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Flexible Supplier Enablement Options

YourPreferred Suppliers

Key Supplier

Punch-outs

Hosted Configurable Catalog

SUPPLIER

NETWORK

YourLocal

Inventory

ApprovedNetwork

Suppliers

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Partnership with SCT

Jointly develop and market “HigherMarkets for SCT Banner”

Fully-integrated, comprehensive procurement solution

Works with Banner Finance 6.0 and Luminis Data Integration Suite

                              

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.

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SciQuestHigher Markets

HigherMarkets for SCT Banner

HigherMarketsAdapter

LuminisMessageBroker

SCTBanner

LuminisMessageGateway

Luminis Data Integration

for eProcurement

Higher Markets for

SCT Banner

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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, OpenEAI, etc.) HigherMarkets 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

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HigherMarkets Benefits All Stakeholders

• One-stop shopping experience

• Freedom of choice: wide range of suppliers and products from which to choose

• Fast, easy requisitioning

End Users

• Control and visibility of spending

• Contract compliance

• Paperless process

• Error-free requisitions

Procurement

• Reduced materials costs

• Increased purchasing and user productivity

• Better budgeting information

Senior Management

• Low maintenance software

• Secure, reliable access

• Straight-forward integration

Information Technology

                                               

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What is the innovation supply chain?HigherMarkets Product

Introduction

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Search Hosted Catalogs or Punch-Out to Suppliers

Punch-out to suppliers’ e-commerce Web sites

Use parametric criteria to search hosted catalog content

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Quick Order

Enter catalog number or SKU and immediately add to cart

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Favorites

Manage personal favorites

Administer organizational “Best Buys”, approved items and supplier specials

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Search by Keyword

Search using parameters

Refine searches by limiting searches to specific subcategories

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Product ReSources

Antibody ReSource

ColumnReSource

Chemical ReSource with structure searching

Oligo ReSource also available

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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

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Side-by-side Product Comparisons

Compare detailed product information

Add to cart from product compare screen

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Accurate Requisitions

Pre-populated ship to/bill to information

Pre-populated item information from shopping cart

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Customized Approval Workflow

Customize approval workflow based on any requisition field

End users can preview approvals

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Track Order Status

Access all order online

Track order status

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What is the innovation supply chain?Case Studies

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University of Pennsylvania

                              

Location:Philadelphia, PA

Enrollment:18,913

Client Since:2003

ERP:Oracle

Challenges:

Supplier enablement

User adoption

Solution:

Spend Director

Supplier Promotion Module

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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

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Rensselaer Polytechnic Case Study

Location:Troy, NY

Undergrad Enrollment:

5100

Client Since:2001

ERP:SCT Banner

Challenges:

Inefficient purchasing processes

Inability to control “maverick spending”

Solution:

Spend Director

Requisition Manager

Order Manager

SciQuest Supplier Network

Business Intelligence

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Rensselaer Return on Investment

$1,615,000$370,000$1,245,000TOTAL

$680,000$155,000$525,0004

$480,000$110,000$370,0003

$285,000$65,000$220,0002

$170,000$40,000$130,0001

TOTAL SAVINGS

PROCESS SAVINGS

CONTRACT SAVINGS

YEAR

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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

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Questions

Q & A

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"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 GibneyAssistant Vice President for Procurement Services

University of Notre Dame

“Taking the Pain Out of Purchasing,” University Business. April 2003