DATA DRIVEN STRATEGIES: CASE STUDIES IN SHARED SERVICES FROM SYSTEMWIDE PROCUREMENTBILL COOPER – UC, AVP AND CPOT0M ROBERTS – CSU, DIRECTOR OF CONTRACTS

JULY 11, 2013

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Data Driven Strategies• Where were we a few years ago?

– Disparate systems– No meaningful business intelligence or analytics in procurement– Analytics required to set strategies, gain efficiencies, save money

• Projects developing over last few years enabled by increasingly sophisticated analytics– UC’s P200 program– CSU’s Procure-to-Pay project

• Where we are today• What’s next?

Procurement Statistics

UC• $5.6B in annual spend• 157,000 normalized

suppliers with >900,000 supplier records

• 1.0M Purchase Orders• 2.6M Invoices• 5.3M Transaction Lines• Over 250,000 systemwide

employees

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CSU• $1.3B in annual spend• 54,000 normalized suppliers

with an unknown number or supplier records

• Total Purchase Orders unknown

• Approx. 318,000 Invoices• 10,000 Suppliers Paid $1,000

each or less • 87,000 Invoices• Representing < 5% spend

• Over 44,000 systemwide employees

UC and CSU Procurement Organization• De-centralized Model

– UC and CSU - No system-wide Purchasing, Accounts Payable or IT– UC and CSU – Systemwide sourcing and contracting functions

• Procurement Departments – UC = 11, CSU = 24– Both with varying levels of Procure-to-Pay ownership and influence

• ERP Systems– UC – 9 ERP systems Peoplesoft, Banner, Walker, Homegrown/Legacy*– CSU – 1 instance of PeopleSoft financial ERP system

• eCommerce Instances – UC - 6 SciQuest, CommerceOne/PerfectCommerce, Homegrown– CSU – no eProcurement system

• UC and CSU - Fund Based Accounting– Many “buckets” of money, varying reporting needs

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Spend Analytics

• The process of data:– Collection– Cleansing– Normalization– Classification– Enhancement

• For the purposes of creating business intelligence to facilitate:– Reduction of procurement costs– Agency collaboration– Improvements in business efficiency

• Key Performance Indicators– Monitoring of compliance

• It is not necessarily a report generating tool

UC and CSU Procurement Reporting & AnalyticsBefore Spend Analytics

• Extremely Limited– Largely relied on incomplete and often biased supplier reported data– Most resources lacked easy access to their own data – No access to data at other locations

• Inconsistent– Lack of standardized systemwide data definitions, commodity coding– Disparate systems & processes

• Labor Intensive– Data requests to campuses with approx 1 month delivery lead time– Additional work & time needed to compile data– Suppliers not normalized– Spend not consistently classified

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TWO PROJECTS ENABLED BY “SPEND ANALYTICS”

UC’S “P200 PROJECT”

CSU’S “PROCURE-TO-PAY PROJECT”

WORKING SMARTER CHALLENGE:Within 5 years, the University will redirect $500 million from administrative costs

to the academic and research missions.http://workingsmarter.universityofcalifornia.edu/

The UC Challenge

P200 CHALLENGE:Deliver $200 million in annual cost savings across all funding sources through the sourcing, implementation, and utilization of competitive contracts and innovative supply chain strategies for procured goods

and services.

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Summary of P200 Program Initiatives

P200 Program Initiatives

P200 Program Projects

Sourcing Technology

Spend Analytics

Performance Management

UCOP Organizational Alignment

UtilizationStrategic Sourcing

Change Management

Program Management

Organizational Management

Initiated Project

Future Project

Key:

Completed Project

The projected ROI for the P200 program is 920%.

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TWO PROJECTS ENABLED BY “SPEND ANALYTICS”

UC’S “P200 PROJECT”

CSU’S “PROCURE-TO-PAY PROJECT”

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PROCURE-TO-PAY PROJECT

Data Driven Strategies

Deliver Efficiencies Through Synergy The CSU Challenge

• Implements a common business process approach across the university

RequesterUse Common

Front-end

eProcurementCatalogue

DirectPurchase Order

Full Service Purchase Order

Employee Reimbursements

Miscellaneous Direct Payment

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RequesterUse Common

Front-end

eProcurementCatalogue

DirectPurchase Order

Full Service Purchase Order

Employee Reimbursements

Miscellaneous Direct Payment

Data Driven Strategies

PROCURE-TO-PAY PROJECT

• Facilitates shared services• Relies on a more strategic procurement

environment• This relies on a highly adoptable

eProcuremnent solution

• Increase efficiencies• Uses many analytic tools

Spend Analytics

Performance Management Utilization

CSU and CSU Spend Analytics Programs - Similar Visions• Provide common infrastructure, data definitions, reporting and

analytics tools to address challenges with gathering accurate spend information at the local and system levels

• Phase 1: Implement the spend analytics solution• Phase 2: Build additional local and systemwide functionality

• Spend Analytics is the building block to managing systemwide performance and contract utilization

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UC and CSU Initial Focus: Four Simple Questions

1. Who is our Audience? 2. Who is buying?3. What is being bought?4. Who are we buying from?5. How are we buying?6. Bonus: How is my data filtered

What are we buying?

Who are we buying from?

How are we buying?Who is buying?

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UC and CSU Spend Analytics BenefitsEfficiencies

• Quicker and easier to pull data and prepare reports

• Standardized system wide definitions allow for increased inter- and intra-campus collaboration

• UC can leverage system wide data to perform price reasonableness checks and supplier negotiations

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Ease of Use

•Web based solution with a single system wide view of spend data

Cost Savings

• Spend visibility leads to development of sourcing, forecasting and planning strategies

What’s Next?

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UC• Spend Analytics phase 2

• Drive further spend classification accuracy and detail

• Revisit campus data to fine tune accuracy and gather additional data elements

• Performance Management• Creation of additional

systemwide data definitions• Additional data sources• Additional opportunities for

analysis• Contract analysis• Sustainability/Small

Business Reporting• P-Card Program• Operational metrics

CSU• Spend Analytics phase “next”

• Incorporate spend data on more frequent basis

• Quarterly beginning Q1 2013• Expand vendor and comparative

data enrichment • Expand training related to campus

savings assessments system collaboration tools

• Incorporate contract data in spend tool to monitor

• Continue identifying target commodity categories

• Development of support analytics as required by P2P project

• Incorporate performance measurement data in analytics

What if all campuses had consistent, robust and

actionable procurement information that could be

leveraged collaboratively in an effort to drive cost

savings and efficiencies system wide?

UC System Combined Annual

Spend > $5 Billion

What’s Next?

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Northridge

Pomona

San Marcos

Los Angeles

San Luis Obispo

San Bernardino Sonoma

Fresno

Stanislaus

Sacramento

Long Beach

San Francisco

San José

San Diego

Maritime Academy

Monterey Bay

Bakersfield

Fullerton

Channel Islands

Humboldt

Chico

Dominguez Hills

East Bay

CSU System’s Combined

Annual Spend > $1.4 Billion

Thank You