E-Procurement Gathers Speed: E-Procurement Brings the Experience of Amazon.com to the Purchase of Academic Supplies and Equipment-And It's about Time. (Technology)

By Warger, Tom | University Business, October 2002 | Go to article overview

E-Procurement Gathers Speed: E-Procurement Brings the Experience of Amazon.com to the Purchase of Academic Supplies and Equipment-And It's about Time. (Technology)


Warger, Tom, University Business


After some spectacular false starts, e-procurement systems are off and running. In 2001, the collapse of Commonfind (after fewer than six months in operation) and demise of Simplexis (one of the first online purchasing companies to concentrate on higher education, acquired by PublicBuy) raised questions about the viability of massive online purchasing enterprises in the higher education marketplace. But other e-procurement systems products and application service providers have succeeded, and that success forecasts little short of a revolution in how colleges and universities will purchase goods and services in the future.

The dot-com bust and general recession of 2000-2001 gets some of the blame for what went wrong with e-procurement rollouts. Funding for new ventures, and confidence in new technologies fell with the economic downturn. And in some instances, suppliers had not come to the new endeavors with much enthusiasm, fearing that e-procurement was geared primarily to give buyers leverage against sellers. What's more, integrating the new online buying systems with existing campus financials systems proved to be more difficult than predicted. But let's face it: In general, the soft economy has led enterprises of all kinds to sharper questions about the return on investment for new IT ideas--and it's led them to defer adoption of those ideas when the business case is not compelling.

NOT JUST PURCHASING

The best of centralization and decentralization. E-procurement is more than just a new, more efficient way to process purchase requisitions. It combines central management of the policies and procedures for acquisitions with decentralization of actual purchases. Institutions of higher education that have developed their own e-procurement systems gradually, such as the University of Delaware, began with procurement credit cards and later added online catalogs of merchandise from preferred vendors. And at many colleges and universities, p-cards have evolved into "ghost-cards"--credit account authorization identifiers referenced in online transactions. But procurement systems began to take their final shape once purchase transactions could be piped directly through an institution's accounts payable system. From requisition forms to the general ledger, the means now exist to control and monitor purchases to an extent never approached under the former, paper-based processes.

Various purchasing modes. College and university personnel authorized to make purchases typically buy most items by consulting an online catalog, where merchandise and prices have been negotiated in advance by the institution. Expensive or special items are put out for bid and are sometimes acquired through a "reverse auction," where suppliers compete online to offer the lowest price and win the business.

UNPRECEDENTED EFFICIENCIES

Streamlining. Online order forms and approvals replace multipart paper forms in e-procurement systems. Approval for many transactions is automated according to purchasing rules and account balance information, removing the need for time-consuming reviews and authorizations by purchasing-office staff. In fact, the most striking characteristic of e-procurement is the drastic shortening of the cycle time from order to receipt of goods. The Glendale Unified Schools District (California) reports approval times reduced by a factor of 100, times to place the order two or three times faster than by paper, and delivery times shortened from as much as three weeks to one or two days. Rules-based and automated transactions via electronic communications eliminate the delays caused by passing paper documents and waiting for approvals and forwarding by staff.

DEEPER CHANGES

Staff changes. E-procurement brings the experience of Amazon.com to the purchase of academic supplies and equipment. The standard of ease and speed of acquisition has been set for all by the model pioneered in the public experience by Amazon and the dot-coms. …

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