eProcurement

1. eProcurement University of Toronto HERUG 2002 Melbourne Australia Campus Business Connect ...to the point!

2. Agenda • Background • Where we are today • The Project • Things to watch out for Campus Business Connect ...to the point!

3. University of Toronto • 175th Anniversary • 29 Colleges/Faculties/Divisions • 278 Hectares – 262 Buildings • 3 Campus Locations • 2,979 Faculty • 10,000 Total Staff including 3,000 academics • 4,000 affiliated academics • >55,000 students • 12th Largest employer in Greater Toronto Area • Annual budget of >$1 billion • 370,000 alumni Campus Business Connect ...to the point!

4. Background • SAP R/3 Since 1995 • Financials 1995 • Funds Management 1996 • HRIS 1998 • Plant Maintenance 1999 • SAP Version 4.5B • SRM 3.0 Campus Business Connect ...to the point!

5. Problems for Purchasing • 8,615 Suppliers • 44,816 items (many duplicates) • 280,000 purchases annually • 195,000 purchase order transactions • 85,000 renegade buys • 15-27% higher cost • SAP purchasing difficult for casual users Campus Business Connect ...to the point!

6. University Non Salary Expenditures ($ thousands) Materials & Supplies $112,659 Services (e.g. Utilities) 64,918 Ancillary Services 54,823 Non Capital Repairs & Maintenance 32,554 Other Expenses 28,498 P-Card Purchases 6,738 TOTAL $ 300,190 $ 68 Million Campus Business Connect Investing for Savings ...to the point!

7. eProcurement Philosophy "Our goal is for eProcurement to become the purchasing method of choice for the University of Toronto. This will be achieved by creating the optimal purchasing experience for users while creating the optimal marketing channel for suppliers." S. Whittaker, Director of Procurement Services Campus Business Connect ...to the point!

8. Objectives • Best value using University leverage • Relevant content selected by user teams • Simple intuitive user interface • Better information • Integration with SAP R/3 • Funds Management – the evil step-child • Ability to define and apply local business rules Campus Business Connect ...to the point!

9. This MeansEnd user buy in • No incremental costs, no transaction fees • Engage users in solution definition, selection, configuration and testing • Solution has fewest “touch points” • Eliminate need for shadow systems • Initial focus on repetitive, non-strategic purchases Campus Business Connect ...to the point!

10. User Involvement • Focus Group • 40 U of T participants • Across all campuses • Business officers/researchers/management • Workshops and interviews • Review sessions • Constant feedback Campus Business Connect ...to the point!

11. Supplier buy-in • Get CEO buy-in to allocate resources • Leverage vendors existing eCommerce investment • Profile – “Founding partner” • Detailed project plan with milestones – collaborate, communicate, monitor • Exclusivity for non-strategic commodities • Terms of engagement – eProcurement pre-qualifier • Universal standards – OCI,XCBL • Payment terms Campus Business Connect ...to the point!

12. Savings and Benefits • Estimated 7% - over $4.76M annually • Reduce: vendors, items • Guide purchaser to prime vendor • Value Assured • Streamline administrative tasks • Savings directly to departments • Improved accountability • More time devoted to academic pursuits Campus Business Connect ...to the point!

13. Savings and Benefits • Easy to use • 24 by 7 availability • Eliminate requirement for multiple quotes • Eliminate spending limits • Alternative to traditional purchasing processes Campus Business Connect ...to the point!

14. Touch Points

15. Initial Plan • Aspect Development to provide: • Single unique university catalog • Aggregation of items and vendors • Proved costly • Transaction fees • University staff • Many vendors developing their own catalogs Campus Business Connect ...to the point!

16. New Direction • Not to use a unique UofT catalog • Use vendors catalogs: • UofT subset with UofT pricing • Leverage the vendors investment in eCommerce • Get access quickly to many catalogs with little investment by UofT • Concentrate on the end-to-end solution

18. Vendor Selection • After RFP Process selected SAP SRM: • Commerce One EBP • Provided best end to end solution • Understood integration issues with SAP and FM • Other vendors did not have a good track record, only been in business a short time

19. Timeline RFP to select vendor Decision to use SAP SRM Aug/01 Config. Version 2.0 Oct/01 First Transaction Dec 19/01 Upgrade to Version 3.0 Jan/02 Pilot Group Live April/02 2001 2002 2003 7 Suppliers 20 Suppliers 200 Users 500 Users Campus Business Connect ...to the point!

20. Upgrade to Version 3.0 • Tax code functionality within the shopping basket • Funds Management • Selection of the proper fund • Funds availability checking • Fix some bugs • Improve user friendliness

21. Implementation Team(Over a 3 months) • SAP Consultants 3.7 • AMS Staff 3.0 • Procurement Services 1.5 • Financial Services .5 • Others • Business Officer .25 • Researcher .25 Campus Business Connect ...to the point!

22. Budget • Consulting $ 381,000 • SAP and Clockwork • Hardware 200,000 • Training 29,500 • Miscellaneous 30,000 • Total Pilot Costs $ 640,500 Campus Business Connect ...to the point!

24. Hardware Overview

25. Important Notes • “even though the whole EBP table structure changed between version 2 and 3, this was one of our smoother upgrades” • Gains from the upgrade • Tax code functionality • Validation of FM objects added • bugs fixes Campus Business Connect ...to the point!

26. Things to Watch Out For: • Lack of experience on part of consultants • Modifications • Vendor Negotiations • Policy Requirements • Business Process • On-going maintenance Campus Business Connect ...to the point!

27. Consultants • Few experienced consultants • SAP sub contracted for the project • Consulting firms had the technical knowledge but had not implemented end to end solutions • Funds Management knowledge lacking Campus Business Connect ...to the point!

28. Modifications • Workflow • Not set up for independence of researchers • Set up UofT rules and approvals tables • Taxes • Tax codes not passed to the PO from EBP • Funds Management • Defaults and pick lists need to be developed for researchers • Funds availability checking not done at shopping basket • Rejected Invoices • Rejected invoices parked – price matching Campus Business Connect ...to the point!

29. Vendor Negotiations • UofT ahead of vendors • Vendors not ready with XML documents, to a large extent OCI compliant • Developed with UofT • Vendors eager to participate • Tax Codes an issue • PO’s must be returned with the correct tax codes • Pricing, freight and other additional charges • Configuration of tolerances • Delivery addresses an issue Campus Business Connect ...to the point!

30. Business Process & Policy • Audit requirements moving from paper to electronic documents • Policies on approvals, source documents, account reconciliations, documented procedures • New processes required in many areas: • Org. structure maintained in SRM • Invoices arriving before goods receipt • Monitoring processes Campus Business Connect ...to the point!

31. On-going Maintenance • Significant requirement • Maintenance of: • User set up and changes • Org. Structure changes – HR responsibility? • Monitoring process – who does it? Fixes? • Delivery addresses Campus Business Connect ...to the point!

32. In Summary • SRM was a good choice • Savings are achievable • User community committed • Vendors committed • Provides good foundation for further eProcurement initiatives • Catalogs for small vendors • UofT providing a Marketsite for other Cdn Universities and Colleges

33. UofT Contacts • Graham Kemp graham.kemp@utoronto.ca • Pat Heslin –Project managerpat.heslin@utoronto.ca • Anne Joiner –Manager Technical Servicesanne.joiner@utoronto.ca • Steve Whittaker – Director Procurement Services s.whittaker@utoronto.ca • Eddie Jin - ProcurementServiceseddie.jin@utronto.ca Campus Business Connect ...to the point!