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Academic freedom is a wonderful thing - unless you're the procurement manager for a university or research institution. Higher education is one sector where spending mandates are nearly impossible to enforce, according to Max Leisten, market director with Cary, N.C.-based SciQuest, Inc.
Leisten recalls one procurement director who likened the word "mandate" to a four-letter word. High-end faculty and researchers can pretty much buy supplies and equipment from whomever they please. If they're unhappy with the rules set down by a particular university, they can take their grants and go elsewhere.
That peculiarity hasn't stopped university procurement managers from attempting to impose a measure of discipline over their staffs. In fact they've had a good deal of success in that effort, helped by new technology and a determination to control costs.
The University of Colorado went looking for a system to automate its procurement about six years ago. At the time, the school had several competing priorities, including the need to rein in travel expenditures. So it wasn't until May 2011 that the university went live with a strategic procurement and supplier-enablement system from SciQuest.
The goal was to make the best use of existing resources, and to boost spend compliance to the highest degree possible, says Sandy Hicks, assistant vice president and chief procurement officer at the university's Procurement Service Center. "We were looking at not just moving the way we did business over to a new system, but transforming our processes," she says. Hicks and her staff saw an opportunity to streamline the procure-to-pay (P2P) function, make the most of whatever mandates the department was able to enforce, and entice free-wheeling professors to buy from contracted suppliers.
Up-front planning ensured that things went smoothly from the start. The project kicked off in September 2010, one month before SciQuest showed up with its product. The time was spent working with Huron Consulting, which helped to revamp processes, configure the system and clarify the university's goals in acquiring the technology. "It really helped us to jump-start the project," says Hicks.
User Input Sought
University staffers were invited to offer their input in the form of focus groups, a move that also allowed procurement to share its thoughts about the initiative. A limited number of buyers were selected for piloting the software prior to a full rollout of the system. The idea, says Hicks, was to get end users accustomed to the role of "shopper," with access to a central site for all authorized purchases.
In essence, says Leisten, the SciQuest system creates an Amazon.com-like marketplace for the university's community. At the same time, the tool gives procurement insight into what was purchased and where orders are in the pipeline at any given moment.
In a world without strict mandates, it's vital that the procurement department educate users about the system's benefits. Faculty members need to be shown that a centralized site for purchasing makes their jobs easier, freeing up more time for research. Other big pluses include the elimination of manual data entry and paperwork. Leisten claims that some SciQuest customers have reduced their write-to-order time to less than a day.
SciQuest spread the word in an educational webinar with Stanford University, in which it demonstrated the use of the software and highlighted its advantages. At the University of Colorado, Hicks got into the act by producing a two-minute infomercial, which she posted on the Procurement Service Center's homepage (www.cu.edu/psc).
The program was coordinated with the May pilot launch of the CU Marketplace, involving five major departments. Eventually, the university intends to deploy SciQuest throughout its campuses in Boulder, Colorado Springs, Denver and the Anschutz Medical Campus in Aurora. The system will be linked directly to CU's enterprise resource planning system from PeopleSoft, guaranteeing that spend data is instantly accessible by the financial department.
The university's previous system involved the use of procurement cards with a $5,000-per-transaction limit. It does about $100m of business annually under that program. Total spend is around $550m a year.
The ease of policing spend depends on the items involved. Office suppliers are easy to track, information-technology peripherals more difficult. Hicks says the university has seen fairly good compliance with its purchasing directives, even under the old system, but there's plenty of room for improvement. It's especially vital to rein in rogue spend where large-dollar contracts are involved. CU can't negotiate better terms unless it knows exactly how much its staff is spending with each certified supplier. At a time of budget crunches and soaring educational costs, buying against contract becomes crucial.
The level of compliance will always vary with the commodity, but Hicks believes she can hit an average target of around 85 percent. Leisten has seen educational institutions go from 20 or 30 percent to as high as 90 percent with adoption of the SciQuest tool. But implementation across an entire institution can be tough, he acknowledges. "When you roll out a project of this size, it's like herding cats. Some departments are ready, others aren't." Maximum compliance from the very start is almost impossible to achieve, he says.
Hicks expects all departments at CU to go live on August 1. After that, she plans to install a solicitations and contracts module for even better control over supplier selection and negotiation. That portion of the system should be in place by the end of this year, or early in 2012.
The next step is likely to be a revamping of CU's payment process, which isn't as mature as the purchasing side. In January 2011, Leisten notes, SciQuest acquired an information-management system that will help users to qualify and on-board suppliers. Customers in higher education have already expressed interest in the enhancement.
Hicks says SciQuest welcomes feedback from customers as a means of developing optimal systems. She expects to be talking to the vendor about acquiring new functionality over the summer. "We will definitely be an active customer," she says.
CU Procurement Service Center
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