The University of Western Ontario overhauls its procure-to-pay system
From the February 2016 print edition
When it comes to procurement transformations, handling the people involved is as important as any new system an organization puts in place. Adopting tools, technology, workflows and methods means change management becomes a primary focus.
So it was with a procurement transformation at the University of Western Ontario in London, ON. Revamping the school’s procure-to-pay system kicked off in 2007, says Elizabeth Krische, director of procurement services at Western, when Lyn Logan took over as the new associate vice-president of finance and facilities. Logan realized the existing P2P system needed an overhaul, notes Krische. At the time, Western was paying vendors late, while staff spent too much time following up on those payments rather than negotiating or establishing innovative contracts.
Krische started in 2008 with a mandate to look at and improve processes. At that time, Western processed roughly 120,000 invoices, mostly manually. It was behind on paying vendors and didn’t have enough staff to keep up.
Shortly after Krische arrived, Western began overhauling the procure-to-pay process. The institution would improve both the end-user experience and that of procurement and accounts payable (AP). The project would streamline pushing orders through to payment and the procurement, financial systems and AP teams worked together on the task. From 2008 to 2010, Western revamped three main areas: low-value purchase orders and p-cards; the AP process and workflow; and improving communication between purchasing and AP.
With the university’s existing system, users needed multiple screens open to create a voucher. The institution’s systems team put together a new screen including all relevant data. “AP could go in very quickly and see if the invoice had all the right information and whether they’d be able to process it quickly,” says Krische. “If they couldn’t, they would put it off to a pile—it was basically a triaging system.”
Western established a new p-card program that focused on when the cards could be used rather than “don’t-use-your-card-unless” situations. This, Krische says, represented an enormous change. For example, the institution raised card spend from about $3 million to $30 million by taking low-value purchase orders out of the system and putting them on p-cards. By changing the workflow within AP, Western got the vendors back to being paid on time.
Communication between procurement and AP improved, Krische notes, but multiple systems still existed through which staff placed orders. So the university began searching for a new e-procurement system while identifying what needed to be fixed with the existing system.
Procurement began a collaborative RFP process for a solution that would be available to all Ontario universities. Western led that RFP, with Queen’s University, the University of Ottawa and the University of Toronto participating. The RFP was issued in 2012 and, after an extensive process, SciQuest was chosen. Their solution offered research-intensive solutions, and Western needed workflows that were different for researchers, Krische says. For example, the system needed catalogues with not only a particular reagent (substance or compound used to cause a chemical reaction or to see if one occurs) but also chemical breakdowns. “SciQuest had spent a lot of time researching the Ontario market and what some of our pain points were,” Krische says. “They were able to really identify in their proposal how they dealt with all of those pain points for us.”
The university also needed a solution that was easy for vendors to opt into, she notes, rather than one that they’d have to pay to participate in. SciQuest delivered.
The solution, which Krische calls a “one-stop shop,” has about 50 catalogues with all of Western’s preferred vendors that make sense to be in catalogues. The homepage showcases those vendors. SciQuest provides form ordering, allowing end-users to makes one-off purchases (which get tracked), she says. Orders then go through whichever workflow process the end-user wants. There are now separate workflows for areas like facilities, the research enterprise, housing operations and janitorial operations. “The SciQuest tool allowed us to reduce a lot of the purchase orders that came through to procurement where we really didn’t add any value,” Krische notes.
As well, the system allows for self-approval, Krische says. An end-user with, for example, $10,000 in signing authority need not send a PO to anyone, she notes. SciQuest automates much of AP, which was manually processing many of its orders, Krische says. Now, roughly 50 percent is electronic. The vendor can kick off the invoicing process and the university’s AP clerks don’t have to key anything in. SciQuest also helped the university gain spend visibility, allowing procurement to be more data-driven. Krische notes it was “embarrassing” to have to go to vendors and ask for a transaction report because she otherwise lacked details into the number of SKU’s purchased. “It’s powerful to be able to share that (data) with vendors, but also to have that information when I’m negotiating to renew contracts—it gives me a ton of data to work with,” she says.
Officially, the system kicked off last June, Krische says, with much of the training starting in July. The institution hasn’t yet had a full year of spend through the system—it’s at about 90 per cent of normal annualized volumes—as it didn’t shut off the previous requisitioning system until last November. “The feedback we’re hearing from our end-users has been tremendous,” she notes. Researchers report the system has cut order-processing time between 30 and 50 per cent, Krische says.
Under the Ontario Broader Public Sector Accountability Act, the university must have a contract management system as well as assurance that anyone buying has proper approval authority, Krische says. Western’s previous system had only rudimentary control. Now, there’s the ability to manage contracts better. “That mitigates risks in terms of making sure you know exactly who owns the contract, when the contract expires, and it gives you the flags as to how many months in advance do you need to start renegotiating the contract so that you don’t get back into an auto-renew clauses,” she says.
SciQuest used a program management methodology called the Agile methodology for implementation, Krische says. The project plan consisted of 16, two-week “sprints,” with certain deliverables to be completed during each sprint. That not only kept the process on track, but clarified what needed to be finished and when. Sprint reviews were held, and report cards reviewed how teams performed. The university focused on change management and training strategies and SciQuest’s help made for a smooth implementation. “I’ve been involved in a lot of implementations,” Krische says. “It’s probably the best systems implementation I’ve ever participated in. I can’t say enough about SciQuest and the methodology they brought.”
Krische says about 50 per cent of invoices are now done electronically, and the university continues to identify vendors to convert to the electronic process. End-users once had to sign in to hundreds of different systems—maintaining separate log in IDs and passwords—but can now do that through the catalogues. Procurement sees about half the POs it once did and plans to reduce that more.
Procurement has far more data and is learning to use it effectively, Krische says. SciQuest offers Spend Radar, a data analytics tool that breaks down information by who is buying on contract and who isn’t. “It gives you that detail and helps direct you to where you want to go in terms of both end-user, as well as vendor compliance,” Krische says, noting they’re looking into adopting the tool.
If other organizations are considering e-procurement, Krische recommends an open mind. Don’t replicate existing manual processes with an automated system, she stresses—it won’t deliver the savings and final outcomes. “Change management becomes a huge part of what you’re doing when you’re implementing a system like this,” she says. “Stakeholder engagement, focus groups, pilot groups—those are all such critical elements of the implementation of a big system like this.”