[From iSource Business, August 2001] Bob Jones University might be a Bible-based liberal arts education facility, but its paper-based procurement system has long failed to stir faith in users. It's for this reason that the university recently turned to Verian Technologies for help conquering the task of modernizing its purchasing processes. The result is a campus-wide undertaking that promises a handsome return on investment (ROI).
The goal was to have one centralized purchasing system that could be used regardless of business discipline, says Bob Priest, project manager at Bob Jones University.
Unlike your typical corporation, Bob Jones University boasts a sprawling 225-acre campus just within the city limits of Greenville, S.C. Founded in 1927, the university hosts more than 5,000 students each year. An average of more than one building a year has been added to its 25-strong structural expanse since the 1940s, including a 3,300-seat dining hall, a 7,000-seat amphitorium and a 3,000-seat auditorium.
Given its scope and magnitude, Bob Jones University allots procurement dollars to a wide range of materials, including educational supplies, office goods, automotive parts, wood products, construction materials and hospital supplies. However, meeting the demands of disparate departments has meant that a time-consuming process, which spanned two weeks or more, was the procurement method used by the entire campus.
But all that stands to change as Bob Jones University ramps up its installation of Verian Technologies' e-procurement solution. Dubbed ProcureIT, the system aims to automate the entire purchasing and materials management process, lower resource costs and decrease cycle time.
Report Card Day
The university went live with ProcureIT in August of 2000, beginning with the automation of its warehouse, hospital and educational departments. The educational technology department and the university press are next in line to use ProcureIT for supply purchases from suppliers outside the university.
Users, currently the personnel from the buying and requisition departments, will soon encompass everyone from nurses to receptionists. And Bob Jones University eventually plans to install the system campus-wide, increasing its licensed user base from 160 to 700 authorized personnel.
The benefits are remarkable. The university has already detected a good ROI as requisitions issued for purchase orders are completed in just over an hour, thanks to the technologically enhanced approval process. Priest estimates the university's e-procurement system has created 25 percent cost savings over the original, archaic, paper-based procurement process.
And there are other links in the e-procurement chain that are destined to generate equally pleasing results. According to Patrick Romich, CEO of Verian Technologies, users of ProcureIT typically recoup 5 to 15 percent of their investment dollars from current purchasing spend, 20 percent from increased process and workflow efficiencies, and 40 percent from a reduction in inventory. Such returns have been known to appear within the first six months of the system's implementation.
When you have an archaic procurement environment and then put this type of workflow process in place, it can show immediate cost benefits, especially in supplier aggregation and renegotiating contracts, says Romich. Not to mention the fact that Bob Jones University did not have to burden its information technology department with time-consuming client workstation installations, thanks to ProcureIT's browser-based technology. In fact, the system can conduct any part of the procurement process from any desktop on the local area network. In addition, it allows users to locate products in stock or to request the purchase of a particular item by navigating a catalog of items in the university's extensive warehouse system. Each of these changes has resulted in far more efficient warehouse facilities management and a volume purchasing increase, according to Priest.
That's not to suggest, however, that ProcureIT is unaccompanied by implementation, maintenance and training costs, which are expenses that can easily offset the most promising ROI. According to Romich, services such as the licensing, installation, integration and customization of ProcureIT can range from $90,000 to $750,000. Maintenance costs typically account for 12 percent of the entire cost of the system, and the implementation process can range from 9 to 12 weeks.
Companies must also make allowances for the odd bureaucracy-induced delay, as well as the need to increase manpower in order to facilitate implementation. In fact, Priest says, it has not been uncommon for Bob Jones University to assign one to four part-time employees to implementation projects, or to assist in business analysis and technical alterations.
I've had to adjust my expectations because of additional integration interfaces we've had to put in place. I was really aiming for [a complete ROI] within approximately one to one-and-a-half years, says Priest. He has since tacked on an additional six months to his original timeline.
Works Well With Others
Red tape and unforeseen challenges aside, Priest says it is ProcureIT's user-friendliness that has helped to whittle down costs. After all, it is the ability to drive internal adoption of a new system that can render the implementation of an e-procurement process a delight rather than a disaster.
There's no operation within the [e-procurement] system that takes over six to seven hours to have someone thoroughly trained. That is one of the things that attracted us to the [Verian] system, says Priest, pointing out that previously tested systems amounted to literally weeks' worth of training time that can be better spent focusing on core competencies.
User-friendly and capable of serving disparate departments, Bob Jones University's new e-procurement system is moving quickly to the head of the class by not only eliminating paper problems, but producing a reasonable ROI. That makes for a report card you won't be afraid to take home to Mom.
Cindy Waxer is a freelance writer based in Toronto, Ontario.