ECommerce and Higher Education

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E-Commerce and Higher Education

• John Fruehe
• Online Consultant
• Dell Higher Education

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Agenda

• E-Commerce defined
• E-Commerce benefits
• Identifying your procurement practices
• Actually making it work
• E-Commerce case study
• Marketplaces
• The future of e-commerce

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What Is It and Who Is Doing It?

• E-Commerce is using the Internet to streamline
  the procurement process and make purchases online
• Some schools currently engaged in e-commerce or
  that have an e-commerce strategy include

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E-Commerce Defined
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Types of E-Commerce
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Understanding the Supply Chain
Consumer
Suppliers
Business
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E-Commerce Benefits
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Process Improvements

• Reduces double entry of orders
• Reduces processing time/cost
• Minimizes errors
• Accelerates the processing and receipt of orders
• Enables future B2B integrations with other
  vendors
• Extends the useful life of legacy systems while
  true online procurement solutions mature

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Potential Time and Cost Savings
Estimates based on Gartner Group/customer
study
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Procurement Opportunities

• Engaging with one vendor paves the way for
  engaging with multiple vendors
• E-Commerce delivers better tracking and control
  for your department
• Opportunity to get a better handle on your vendor
  relationships
• Opportunity to drive efficiency for lower
  long-term costs

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Identifying Procurement Practices
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Youre Not That Far Behind
Based on Customer Surveys of 122 Dell Public
Sector Customers
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Purchasing Models

• Centralized
• Decision-making from a central authority
• All purchase orders encumbered in on place
• Procurement enforces contract spend

• Decentralized
• Decision-making at the departmental level
• Purchase orders from multiple sources
• Procurement cards

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Optimizing Processes

• Map out your current processes
• System processes
• Manual processes
• Assign costs to these functions
• Determine steps that can be eliminated
• Redundant tasks
• Non-value-added tasks
• Exception-based tasks
• Identify the cost savings in both time and money

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Typical Manual Process
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Streamlining With E-Commerce
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Complete Automation With B2B
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Actually Making It Work
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B2B E-Commerce

• Tying customer ERP and supplier together,
  allowing electronic ordering over the internet
• Eliminating the need for paper-based processes
• Using standardized Internet protocols between
  disparate systems

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Protocols

• EDI
• Very standard but not very flexible
• Costly to implement
• XML-based protocols
• Much less expensive to implement
• Dont wait for the XML standard to emerge
• Picking the best translator is far more important
  than the protocol
• Proprietary
• Very costly to implement
• Tie you directly to a vendors products
• Requires integration partner when working with
  vendors

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Applications

• Legacy Systems
• Mainframe-based procurement applications are not
  going away any time soon
• The key is understanding how to import and export
  data into the system
• XML can usually be integrated into legacy
  environments
• ERP Systems
• Most have now or will soon have an internet
  procurement module
• Eventually all will have this functionality,
  translators will be less important
• Hosted Applications
• May limit your flexibility, may tie you to a
  risky business model

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Architecture XML Capable System

• If your procurement system has the ability to
  create and consume XML natively, integration is
  straightforward

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Architecture ERP Integration Module

• Your ERP system has an integration module
  available (SAP, PeopleSoft, Ariba, etc.) you can
  load the module and communicate with vendors

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Architecture Legacy Systems

• If you have a proprietary back-end or
  mainframe-based system, you can use interim data
  tables to exchange information with your vendors

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Data Mapping
DTD or Schema
Buyer
Supplier
ltPOgt
ltPOgt
ltAcctgt
ltCust_numgt
ltCost_Centergt
ltAddr1gt
ltAddressgt
ltCitygt
ltSKUgt
ltQtygt
ltStgt
ltZipgt
ltItemgt
ltQuantitygt
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E-Commerce Case Study
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Business Drivers

• The University needed to lower the cost of
  purchasing technology products
• An E-Commerce initiative was driven by university
  leadership to bring purchasing online
• A goal was set to drive all purchase requisitions
  to a new online system by the end of the year

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Challenges

• First public sector customer to engage with Dell
• Proprietary legacy system for encumbering funds
• Multiple vendors all engaging in B2B integrations
  simultaneously using different methods
• Multiple departments needed to be coordinated

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Process Flows
I N T E R N E T
WebMethods Server
Legacy Back End
WebMethods Server
Financial Forms Nirvana
DOMS
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Results

• Distributed purchasing processes have been
  streamlined through the integration
• The University has been steadily increasing their
  purchasing online by 10 per month
• Additional enhancements requested by the
  University have been added to the system

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Lessons Learned

• Schedules must be based on customers internal
  schedules
• Testing requires cooperation from groups outside
  of the typical customer control
• Clear communication should occur on a regular
  basis with senior management
• It is difficult to estimate back-end development
  work on a unique project
• A customer commitment to use the tool helps
  ensure success of the project
• The real challenges arent technical, theyre
  organizational

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Marketplaces
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Marketplace Growth Trends

• The previous growth of marketplaces is now being
  followed by failures and consolidation

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Losing Control

• Procurement is about controlling 3 factors What
  you buy, who you buy it from and at what price
• Marketplaces control
• What you buy you are only allowed to buy the
  products offered
• Who you buy from they decide what vendors do
  and do not participate
• What price you pay their supplier fees increase
  product costs, vendors see no aggregate cost
  savings

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Shifting the Costs
Product Costs
Hard Costs
Soft Costs
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Migrating Your Spend

• Marketplaces are only effective if you move 100
  of your spend to the market
• Not all your vendors will participate
• Not all products are suited to a marketplace
• Not all vendors have the technical expertise
• This forces you to have multiple systems and
  multiple payment mechanisms
• Inefficiencies are created
• IT costs increase
• No incentive for vendors to join marketplace if
  you are still generating traditional Pos
• Your team will default to the old process if all
  commodities are not available

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Questions to Ask

• How does the cost impact my vendors?
• Does the fee-based model change as new
  capabilities/features are added?
• What happens if you do not attract enough revenue
  to maintain the marketplace?
• How much business is currently being run through
  your marketplace?
• How much spend is required to meet your current
  run rate for spending?
• What percentage of your customers spend is
  online? References?
• What is the typical ramp-up? References?
• Who is responsible for signing up my vendors?
• Who services my vendors?
• How do you ensure no interruption in my vendor
  relationship?

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The Future of E-Commerce
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Changes in Education Procurement

• Process improvement focus will continue
• Education will come under greater scrutiny
• The push for more accountability and more of a
  business focus will continue
• E-commerce initiatives will drive policy but
  human factors will drive efficiency
• Supplier consolidation will be driven as a
  desired e-commerce outcome

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Changes in Technology

• Asingle XML wont emerge, multi-lingual systems
  will break down the barriers instead
• Existing mainframe technology gets a facelift
• Green screen vendors will put a web front end
  on their existing applications
• Development toolkits will greatly accelerate the
  rate of change
• Procurement systems will become web-enabled
• Point to point integration no longer required
• You will work with the majority of your vendors
  directly through your procurement system

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Questions?