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© Accenture Australia Ltd 2001, Confidential
eProcurement & eMarketplaces in the Public Sector
UQ E-Commerce Seminar Series
22 October 2001
Presented By: Simon Porter
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
Who is Accenture?
Accenture is the world's leading provider of management and technology consulting services and solutions, with more than 70,000 people in 46
countries delivering a wide range of specialized capabilities and solutions to clients across all industries.
Accenture operates globally with one common brand and business model designed to enable the company to serve its clients on a consistent basis
around the world.
Under its strategy, Accenture is building a network of businesses to meet the full range of any organisation's needs -- consulting, technology, outsourcing,
alliances and venture capital.
The firm generated revenues of US$9.75 billion for the fiscal year ended August 31, 2000 and US$5.71 billion for the six months ended February 28, 2001.
Its home page is www.accenture.com.
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
Typical Issues• Poor information available to end-
consumers regarding pricing, availability, preferred suppliers
• Multiple process handoffs before orders are placed
• Little or no facts available regarding true demand
• Minimal service level tracking• Slow, paper-based processes• Inconsistent processes/policies or lack
of knowledge about them• High levels of rework, errors
Poor Results• Purchasing volume not effectively
leveraged• Poor service levels to business
consumers• Slow, unreliable supply chains• Excess overhead costs
($100 per PO)
SBU
Business Consumers Suppliers
Office Supplies
Industrial MROBusiness Systems
Operations
Organization Unit, e.g.
Purchasing Professionals
Freight Carrier
Business Systems
What Is eProcurement?
Typically, in a traditional purchasing environment, there are many inefficiencies which lead to higher costs and inadequate service levels.
© Accenture Australia Ltd 2001, Confidential
Business Consumers Suppliers
Office SuppliesPreferred Supplier
Industrial MROPreferred Supplier
Business Systems
Business Systems
Improvements• Online catalogs reinforce use of
preferred suppliers• High accessibility via the intra/internet
enables company-wide usage• One shared supply process for each
spend category• Involvement by “purchasing” not
required • Corporate supply managers supported
by common system• Complete process automation and
guidance, across companies• Logistics imbedded into supply
process, leveraged to preferred carrier
Improved Results• Better compliance and usage deliver a
richer fact-base which enables fully-leveraged deals
• Improved service levels reduce overhead ($10 per PO)
• Faster, more reliable processes reduce inventories, freight costs
Shared SupplyProcesses
Internet
CorporateIntranet
CommoditySupply
Managers
PreferredLogistics Provider
eProcurement provides direct and efficient process linkages between the business consumers and suppliers, enabled by new class of networked
solutions.
SBU
Operations
Organization Unit, e.g.
What Is eProcurement?
© Accenture Australia Ltd 2001, Confidential
One of the most valuable uses of eProcurement is in non-production resource purchasing, which is typically poorly-managed or sub-optimized within most companies.
Procurement CharacteristicsProcurement Characteristics Requires supplier interaction 20-50% of spending is out-of-contract Economies of scale are not leveraged
effectively 80% of purchasing transactions Mostly paper-based Enterprise Resource Planning software
generally not best suited for this
Operating ResourcesOperating Resources Industrial Supplies Business Services Temp help Production services Technical services Facilities,
maintenance
Information technology Contractors Internal admin/support
services Office supplies Utilities
Corporate SpendingCorporate Spending
Source: Killen & Associates
Value Proposition for eProcurement
© Accenture Australia Ltd 2001, Confidential
Benefits are sustainableBenefits are sustainablewith eProcurementwith eProcurement
Time
Phase ofContract:
Negotiate Deal ImplementContract
Manage Compliance
BenefitsCaptured
eProcurement Improves Compliance
eProcurement adds an easy-to-use, self-documenting infrastructure to solve the measurement and compliance issues that plague most sourcing efforts.
Contract Savings Decline Contract Savings Decline Over Time Due to Over Time Due to Compliance/Measurement HurdlesCompliance/Measurement Hurdles
Impact of eProcurement
© Accenture Australia Ltd 2001, Confidential
AdditionalNegotiatedPrice Reduction
Fact-BasedNegotiation
It is important to know that eProcurement also reduces costs for suppliers. Smart purchasing professionals can use this knowledge at the negotiating table to further increase their savings.
Negotiate for Your Share of the Supplier’s Savings
Supplier savings• Increased Sales Volume• Automated Order Mgt.• Faster time to pay• Lower inventory and
service costs
Impact of eProcurement
© Accenture Australia Ltd 2001, Confidential
eProcurement In The Public Sector
• There are real differences in how the public sector purchases:– Routine purchase order transactions tend to be for
smaller amounts– More use of tenders and competitive trades– Emphasis on the process being seen to be fair &
transparent – probity– Emphasis on engaging & supporting smaller suppliers,
local suppliers etc– Approval & sign-off processes expressly designed to
provide tight control on spending
© Accenture Australia Ltd 2001, Confidential
eProcurement In The Public Sector
• Our experience is that eProcurement can save:– Approx 4% on the cost of goods
– Approx 90% on the processing costs
• So eProcurement can reduce the cost of procurement in the public sector by 5 to 15%
• For a procurement spend of $1B, then that is $50+M per annum
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
For Buyers For Sellers
Value propositions for both sides
• Access to a global selling base
• Ability to competitively pit sellers against each other
• Increased price transparency
• Greater product visibility
• Ability to manage inbound inventory more effectively
• Define industry practices
• Ability to find new markets for scrap and obsolete materials
• Access to a larger buying base• Ability to present more product
detail • Real time product description and
specification updates• Enhanced accuracy of order
taking• Advance industry practices in
areas that have traditionally been led by buyers
Both must WIN
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
• Federal Government• State Government • Local Government• Higher Education
• No coordinated approach
What’s happening in Australia?
© Accenture Australia Ltd 2001, Confidential
One Government’s Vision
Supplier 1Supplier 1Department ADepartment A
Department BDepartment B
Department CDepartment C
CatalogueCatalogue
CatalogueCatalogue
CatalogueCatalogue
Supplier 2Supplier 2
Supplier 3Supplier 3
Supplier 4Supplier 4
Supplier 5Supplier 5
A State Government
Service Providers
© Accenture Australia Ltd 2001, Confidential
2001 2002 2003 2004 2005
Years
ePro
cure
men
t D
eplo
ymen
t
Start Smart
Think Big
Scale Fast
G2B and B2B marketplaces
Start with an end user and supplier driven vision
Consider all possibilities
Natural expansions of function, scope Increase number of users, transactions Back end systems integration
Minimize risk of disruption Demonstrate proof-of-concepts with “quick wins” Answer frequently asked questions Get something up and running to build momentum 2
1
3
Think Big, Start Small, Scale Fast
• Federal Government• State Government • Local Government• Higher Education
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
Smart State
© Accenture Australia Ltd 2001, Confidential
Smart State
EnergexErgonCS Energyetc
© Accenture Australia Ltd 2001, Confidential
Suppliers
Buyers
Web Server
Commerce Services NetworkBuyer
Transaction Servers
Intranet InternetExtranet
EDIFormat
Workflow PRs to POs to Suppliers
Buyer
eProcurement Architecture
WebBrowser
WebBrowser
WebBrowser Fax
ERPSAP/
Mincom/Aurion/Oracle
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
Epylon
© Accenture Australia Ltd 2001, Confidential
A Brief Intro To Epylon
• Epylon provides an eProcurement solution– Both services & technology– Adjusted to each organisations own needs– Backed by a marketplace with over 1,600 suppliers
• Specific to the public sector– Understands the public sector’s requirements– In use with the states of California, Michigan, North
Carolina & the District of Columbia• Fully owned subsidiary of Accenture
– Accenture started with a 25% holding in March 2000– Purchased Epylon outright in June 2001
© Accenture Australia Ltd 2001, Confidential
The Epylon Solution - Value-Add Services
Pre-Purchasing Purchasing Post-Order
Strategic Sourcing Tendering RFQ Requisition-Order-Receive Invoice Reconcile Pay
Suppliers
Buyers
ASP hosted software
Config & Upgrades
Integration to ERP
Help desk & tech support
Training materials
Limited training
Community functions
ASP hosted software
Training materials
Supplier inbox
Supplier aids
Buyer council
Supplier council
Additional training
Process redesign
Logistics
Catalog creation
Supplier recruitment
Supplier training
Payments
Strategic sourcing
© Accenture Australia Ltd 2001, Confidential
Epylon Requisition
© Accenture Australia Ltd 2001, Confidential
Epylon Approval Workflow
© Accenture Australia Ltd 2001, Confidential
Supplier Network
© Accenture Australia Ltd 2001, Confidential
North Carolina @ Your Service
© Accenture Australia Ltd 2001, Confidential
North Carolina eProcurement
© Accenture Australia Ltd 2001, Confidential
North Carolina Supplier Benefits
© Accenture Australia Ltd 2001, Confidential
Presentation Overview
The case for eProcurement
Accenture’s solution
So what should Queensland be doing?
Questions and Close
What makes a successful eMarketplace?
Who is Accenture?
What is Australia doing?
The information contained in this presentation is the exclusive property of Accenture and may not be disclosed or reproduced in whole or in part without the prior written consent of Accenture Australia Ltd.
© Accenture Australia Ltd 2001, Confidential
eMarketplaces in the Public Sector
UQ E-Commerce Seminar Series
22 October 2001
Presented By: Simon Porter