© accenture australia ltd 2001, confidential eprocurement & emarketplaces in the public sector...

© Accenture Australia Ltd 2001, Confidential

eProcurement & eMarketplaces in the Public Sector

UQ E-Commerce Seminar Series

22 October 2001

Presented By: Simon Porter


Presentation Overview

The case for eProcurement

Accenture’s solution

So what should Queensland be doing?

Questions and Close

What makes a successful eMarketplace?

Who is Accenture?

What is Australia doing?

The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.


Who is Accenture?

Accenture is the world's leading provider of management and technology consulting services and solutions, with more than 70,000 people in 46

countries delivering a wide range of specialized capabilities and solutions to clients across all industries.

Accenture operates globally with one common brand and business model designed to enable the company to serve its clients on a consistent basis

around the world.

Under its strategy, Accenture is building a network of businesses to meet the full range of any organisation's needs -- consulting, technology, outsourcing,

alliances and venture capital.

The firm generated revenues of US$9.75 billion for the fiscal year ended August 31, 2000 and US$5.71 billion for the six months ended February 28, 2001.

Its home page is www.accenture.com.






Questions and Close


Who is Accenture?




Typical Issues• Poor information available to end-

consumers regarding pricing, availability, preferred suppliers

• Multiple process handoffs before orders are placed

• Little or no facts available regarding true demand

• Minimal service level tracking• Slow, paper-based processes• Inconsistent processes/policies or lack

of knowledge about them• High levels of rework, errors

Poor Results• Purchasing volume not effectively

leveraged• Poor service levels to business

consumers• Slow, unreliable supply chains• Excess overhead costs

($100 per PO)

SBU

Business Consumers Suppliers

Office Supplies

Industrial MROBusiness Systems

Operations

Organization Unit, e.g.

Purchasing Professionals

Freight Carrier

Business Systems

What Is eProcurement?

Typically, in a traditional purchasing environment, there are many inefficiencies which lead to higher costs and inadequate service levels.


Business Consumers Suppliers

Office SuppliesPreferred Supplier

Industrial MROPreferred Supplier

Business Systems

Business Systems

Improvements• Online catalogs reinforce use of

preferred suppliers• High accessibility via the intra/internet

enables company-wide usage• One shared supply process for each

spend category• Involvement by “purchasing” not

required • Corporate supply managers supported

by common system• Complete process automation and

guidance, across companies• Logistics imbedded into supply

process, leveraged to preferred carrier

Improved Results• Better compliance and usage deliver a

richer fact-base which enables fully-leveraged deals

• Improved service levels reduce overhead ($10 per PO)

• Faster, more reliable processes reduce inventories, freight costs

Shared SupplyProcesses

Internet

CorporateIntranet

CommoditySupply

Managers

PreferredLogistics Provider

eProcurement provides direct and efficient process linkages between the business consumers and suppliers, enabled by new class of networked

solutions.

SBU

Operations

Organization Unit, e.g.

What Is eProcurement?


One of the most valuable uses of eProcurement is in non-production resource purchasing, which is typically poorly-managed or sub-optimized within most companies.

Procurement CharacteristicsProcurement Characteristics Requires supplier interaction 20-50% of spending is out-of-contract Economies of scale are not leveraged

effectively 80% of purchasing transactions Mostly paper-based Enterprise Resource Planning software

generally not best suited for this

Operating ResourcesOperating Resources Industrial Supplies Business Services Temp help Production services Technical services Facilities,

maintenance

Information technology Contractors Internal admin/support

services Office supplies Utilities

Corporate SpendingCorporate Spending

Source: Killen & Associates

Value Proposition for eProcurement


Benefits are sustainableBenefits are sustainablewith eProcurementwith eProcurement

Time

Phase ofContract:

Negotiate Deal ImplementContract

Manage Compliance

BenefitsCaptured

eProcurement Improves Compliance

eProcurement adds an easy-to-use, self-documenting infrastructure to solve the measurement and compliance issues that plague most sourcing efforts.

Contract Savings Decline Contract Savings Decline Over Time Due to Over Time Due to Compliance/Measurement HurdlesCompliance/Measurement Hurdles

Impact of eProcurement


AdditionalNegotiatedPrice Reduction

Fact-BasedNegotiation

It is important to know that eProcurement also reduces costs for suppliers. Smart purchasing professionals can use this knowledge at the negotiating table to further increase their savings.

Negotiate for Your Share of the Supplier’s Savings

Supplier savings• Increased Sales Volume• Automated Order Mgt.• Faster time to pay• Lower inventory and

service costs

Impact of eProcurement


eProcurement In The Public Sector

• There are real differences in how the public sector purchases:– Routine purchase order transactions tend to be for

smaller amounts– More use of tenders and competitive trades– Emphasis on the process being seen to be fair &

transparent – probity– Emphasis on engaging & supporting smaller suppliers,

local suppliers etc– Approval & sign-off processes expressly designed to

provide tight control on spending


eProcurement In The Public Sector

• Our experience is that eProcurement can save:– Approx 4% on the cost of goods

– Approx 90% on the processing costs

• So eProcurement can reduce the cost of procurement in the public sector by 5 to 15%

• For a procurement spend of $1B, then that is $50+M per annum






Questions and Close


Who is Accenture?




For Buyers For Sellers

Value propositions for both sides

• Access to a global selling base

• Ability to competitively pit sellers against each other

• Increased price transparency

• Greater product visibility

• Ability to manage inbound inventory more effectively

• Define industry practices

• Ability to find new markets for scrap and obsolete materials

• Access to a larger buying base• Ability to present more product

detail • Real time product description and

specification updates• Enhanced accuracy of order

taking• Advance industry practices in

areas that have traditionally been led by buyers

Both must WIN






Questions and Close


Who is Accenture?




• Federal Government• State Government • Local Government• Higher Education

• No coordinated approach

What’s happening in Australia?


One Government’s Vision

Supplier 1Supplier 1Department ADepartment A

Department BDepartment B

Department CDepartment C

CatalogueCatalogue

CatalogueCatalogue

CatalogueCatalogue

Supplier 2Supplier 2




A State Government

Service Providers


2001 2002 2003 2004 2005

Years

ePro

cure

men

t D

eplo

ymen

t

Start Smart

Think Big

Scale Fast

G2B and B2B marketplaces

Start with an end user and supplier driven vision

Consider all possibilities

Natural expansions of function, scope Increase number of users, transactions Back end systems integration

Minimize risk of disruption Demonstrate proof-of-concepts with “quick wins” Answer frequently asked questions Get something up and running to build momentum 2

1

3

Think Big, Start Small, Scale Fast

• Federal Government• State Government • Local Government• Higher Education






Questions and Close


Who is Accenture?




Smart State


Smart State

EnergexErgonCS Energyetc


Suppliers

Buyers

Web Server

Commerce Services NetworkBuyer

Transaction Servers

eMail

Intranet InternetExtranet

Print

EDIFormat

Workflow PRs to POs to Suppliers

Buyer

eProcurement Architecture

WebBrowser

WebBrowser

WebBrowser Fax

ERPSAP/

Mincom/Aurion/Oracle






Questions and Close


Who is Accenture?




Epylon


A Brief Intro To Epylon

• Epylon provides an eProcurement solution– Both services & technology– Adjusted to each organisations own needs– Backed by a marketplace with over 1,600 suppliers

• Specific to the public sector– Understands the public sector’s requirements– In use with the states of California, Michigan, North

Carolina & the District of Columbia• Fully owned subsidiary of Accenture

– Accenture started with a 25% holding in March 2000– Purchased Epylon outright in June 2001


The Epylon Solution - Value-Add Services

Pre-Purchasing Purchasing Post-Order

Strategic Sourcing Tendering RFQ Requisition-Order-Receive Invoice Reconcile Pay

Suppliers

Buyers

ASP hosted software

Config & Upgrades

Integration to ERP

Help desk & tech support

Training materials

Limited training

Community functions

ASP hosted software

Training materials

Supplier inbox

Supplier aids

Buyer council

Supplier council

Additional training

Process redesign

Logistics

Catalog creation

Supplier recruitment

Supplier training

Payments

Strategic sourcing


Epylon Requisition


Epylon Approval Workflow


Supplier Network


North Carolina @ Your Service


North Carolina eProcurement


North Carolina Supplier Benefits






Questions and Close


Who is Accenture?




eMarketplaces in the Public Sector

UQ E-Commerce Seminar Series

22 October 2001

Presented By: Simon Porter

© accenture australia ltd 2001, confidential eprocurement & emarketplaces in the public sector...

Documents

confidential presentation

business consumers slow

business model

simon porter slide

end consumers

leveraged poor service

inadequate service levels

high levels of rework