Buying Power

Buying Power

E-procurement systems help districts save time and money.

Procurement can be complicated and time consuming, as everyone from librarians to teachers to administrators navigate through multiple printed forms, thick product catalogs, numerous vendors, time-sensitive price lists, as well as purchase order requests.

E-procurement-with its automated system and Web-based interfaces-provides relief from such drudgery and headache.

A district can create a homegrown system, for example, that puts bids into an online database and can work with a single vendor, such as Gateway, giving access to the company's purchasing system. But many districts prefer to use e-procurement providers, which can bring multiple vendors together and reduce the amount of in-house programming and support needed.

Although the strategy of e-procurement is still relatively new, and requires training and commitment to implement properly, its advocates believe that it can manage costs more effectively, streamline ordering, and prevent errors. As long as a district is willing to expend the time, energy and upfront costs, long-term savings will result.

Once a district has everyone involved, the advantages can be numerous, says John Kost, an analyst at Gartner, an international technology-related research company. Reports can be generated by superintendents, chief business officers, or treasurers who analyze purchasing trends; suppliers can be compared against each other during both purchasing and price negotiations; and audits can be much more easily handled, since data can be downloaded from digital storage.

"E-procurement has tremendous potential, but at times the school personnel aren't trusted with the process," says Kost. "There are checks and balances put in that take the power away from the people, like teachers, who should be doing the ordering. For it to work well, districts need to think about delegation of authority, which could require a large change from a centralized system."

Gaining Purchase

At a basic level, e-procurement allows what Kost says should be allowed. Anyone from a secretary or teacher to an instructional technology director who needs supplies can compare prices among vendors and then order goods. The approval process usually ends with the superintendent of schools or accounting office.

With a system like Gateway Select, a district can access an online procurement tool for Gateway's products and services that supplies information about products, quotes, product tracking, and purchasing histories. Support is included, and upgrades are unnecessary, since Gateway hosts the site.

Districts can also use a service company such as Epylon or eSchoolMall to bring together multiple vendors the same way. For example, Coventry Local School District in Akron, Ohio, started automating its business processes three years ago. The district uses a Web-based interface, using software that is hosted at eSchoolMall, an e-procurement provider, so the district doesn't need upgrades or software support.

Every faculty and staff member can input a purchase request, which gets routed through the online system. A teacher at Coventry High School might want to order laptops for his students. Usually, this request would start with the chief business officer and end with the board of education, and would have to be ordered by someone else.

But eSchoolMall lets districts decide in advance-such as at a board meeting or through a superintendent-what purchases are potentially allowed and puts the purchasing power directly in the hands of teachers, to speed up the process. A teacher can go to his computer and access the procurement site that's been created for the district.

If the district does not allow laptop purchases, for instance, those devices will appear under the technology section but will be "grayed out" as options that aren't appropriate for ordering according to someone's position. An IT manager could get laptops, for example, but a teacher might not be allowed. If the laptop option were authorized, however, the teacher could insert a purchasing request, which would get routed to the high school's secretary before being sent to the school's principal for approval.

From there, the request is forwarded to the assistant to the treasurer, Lee Ann Weisenmiller, who verifies that funds are available by looking into the technology budget.

Although the chain of command involves several individuals, the approval process-basically, one click and it's electronically forwarded to the next relevant person-can make the whole system very fast. If all the players are available, a purchase can go from initial order to approval within 15 minutes.

Online Catalogs Sort Products

The Coventry district's system is also typical of many e-procurement initiatives, which allow for comparison shopping among vendors. Districts can create a catalog of products (not just a single page of laptop options) from approved office supply vendors that offer food service maintenance and technology providers. Bringing all the suppliers together in an online catalog resembling a customized shopping site, for example, allows for more comparison shopping and can sort products based on best pricing or product availability.

For example, if a science teacher wants test tubes for an upcoming class, she can "browse" through what's offered by approved vendors. Rather than route her request to a secretary who must flip through several printed vendor catalogs to find the best rate, the teacher can just click along and compare options, then put in the order.

"Typically, it would take us a good three weeks to get a bid back, but now it's within two days." -Cordelia Hardin, chief financial officer, Jefferson County Schools, Louisville, Ky.

The districts and the e-procurement vendor create catalogs together.

With Web-based systems, electronic tools for vendors allow them to submit price quotes for common products such as school supplies and textbooks. When a vendor has products that meet a district's quality standards and are within the district's price range, they're added to a district's online catalog. Catalogs are created once and are changed when needed, rather than given annual overhauls or completely replaced every few years.

Tailored Strategies

Although every district can benefit from e-procurement, the way the systems are used can vary.

Because e-procurement firms can track vendor information, some districts depend on them to keep vendor databases and evaluate bidder capabilities. Hickman Mills C-1 School District, in Kansas City, Mo., asks all vendors to fill out an online information form and plugs the data into the Web site of an e-procurement firm, Onvia DemandStar.

The firm maintains an automated bid notification system that's organized by specific commodities and services, and issues an alert by e-mail whenever a district sends out an invitation for bid (IFB) or request for proposal (RFP).

Ramping up an RFP system allows for more extensive e-procurement.

Jefferson County Schools in Louisville, Ky., does not yet have a system like Coventry's, although it has automated its bidding process and hopes to begin automating its procurement soon. Last year, administrators realized its system of manually tallying bids was too labor intensive-four employees worked on it-and sought a technology-based alternative. Now two employees create and use an area on the district's Web site that features the bid specs. The district hopes to eliminate the positions altogether when the automated process is completed.

"Typically, it would take us a good three weeks to get a bid back, but now it's within two days," says Cordelia Hardin, chief financial officer of Jefferson County Schools. "We've got bidding and purchasing within the same system, so soon we're going to make the shift toward setting it up so that once the bid has been awarded, it will go into the purchasing side."

Hardin is compiling an electronic catalog of supplies that faculty and staff can use to purchase items directly, another potential time saver. The catalogs could spur more cost savings, since products can be compared directly. The catalogs would also show users what they are authorized to purchase from the 30 to 40 vendors in the system, reducing the traditional administrative wrangles involved when staff members seek to request supplies that might be inappropriate.

"If they want furniture and it's not from a vendor we're using, the system won't allow the purchase," Hardin says. "It's a great way to make sure schools are purchasing correctly, and that will definitely save us some money and reduce the hassles of procurement." Teachers can focus on teaching, not on this kind of paperwork, she adds.

And Minneapolis Public Schools recently started using an e-quote system from Epylon to replace its antiquated informal bid process, which reduced the steps required in the quoting process. Requisition to approval to purchase order went from 37 steps within two weeks or more to 15 steps in three days. The system also integrates into the existing financial system, and procurement tasks like assigning purchase order numbers can be done from a centralized interface, according to Greg Mead, director of public purchasing for MPS.

Maturing Technology

Despite the benefits, however, e-procurement was shaky when it was introduced in 1999, Kost says.

More than 20 startup companies saw the advantages that could come from matching K12 districts with e-procurement systems, but so much competition and too little solidity in business plans left e-procurement firms shutting down, leaving some districts stranded after they started the transition to purchasing through online systems.

Another difficulty came when early school adopters reported mixed results. Some thought integrating with existing back-office software wasn't always seamless and that the new systems were more time consuming than they had thought. Purchasing officers felt that placing an order online took just as long as it would via paper, and it was difficult to gauge cost savings when only some supplies were being ordered electronically.

Challenge Round

As with any major change, there are challenges. Often those who champion the technology find that it's not the Web-based interface or electronic forms that are most difficult. Instead, it's the mentality away from old-school patterns.

When the Coventry district started to automate its business processes, Weisenmiller discovered that automation could instill fear. "A lot of people looked at e-procurement and it scared them," she says. "People in other districts use that fear to say they can't afford to change, but I think you can't afford not to. We spend money on technology for our students, and yet we administrators do things in the most antiquated way we can. When we do that, we're not leading by example."

Initially, Weisenmiller encountered resistance, since the processes in place had been used for decades. She brought together people who would use e-procurement for frequent meetings but also for a chance to grouse openly about what they didn't like.

For it to work well, districts need to think about delegating authority, which could require a large change from a centralized system. -John Kost, analyst, Gartner

"You can't have a bunch of islands trying to struggle alone-they need to commiserate," she says. "Every time they get together, they might complain about one thing, but they walk out with new ideas, and at this point they're so cooperative with each other, it's very helpful."

Judy Huston, a district secretary, notes that workshops and asking questions of an e-procurement consultant were incredibly helpful. "Change can be difficult and frustrating," Huston says. "But overall, I think we've done well. We all understand the importance of the schools becoming technologically advanced."

The district is looking at more ways to extend the e-procurement system, including encouraging faculty and staff to use it for reimbursements. Receipts can be scanned and input into the system, making auditing even easier, Weisenmiller says.

A key plus of the system is that it eliminates human error, especially in math, she says. "It's also nice that it's integrated with state regulations, so it's instant encumbrance."

Use One Provider and Have Clear Goals

In general, Andy Flanagan, eSchoolMall CEO, recommends that districts contemplating e-procurement find a provider that has a strategic framework to incorporate all purchasing aspects. Having one provider for bidding, a second for facilities, and a third for curriculum materials will get confusing, he says.

In choosing one, the district should make sure to have control over all aspects of the e-procurement system, such as seeing warehouse availability of products, receiving updates on bid and quotes, and gaining access to co-op contracts, if groups of districts have banded together. Some districts, particularly smaller districts or those close geographically, have already experimented with increasing their buying power by acting as one purchasing agent, and e-procurement can help by putting them together electronically.

E-procurement projects must also have buy-in from district leaders. Although Kost supports decentralized purchasing, to give more power to those who use what's being ordered, he believes e-procurement requires a clear mission and a top leader.

And the goals should be clear from the beginning. Simply saying that the district wants to save money or streamline operations isn't enough, Flanagan notes. Where would the savings be the most dramatic in the short term? In what schools or departments is purchasing an issue? What are the back-end systems that need to integrate with the e-procurement environment, and how quickly can those get linked?

Many districts start using e-procurement where they can see results quickly, Flanagan adds. The success of a smaller implementation, such as setting up online purchasing for just one department, can spark enthusiasm in other departments.

If a district is in a huge budget crunch, however, Flanagan says it may be a good candidate for implementing e-procurement all at once, since administrators will see significant cost savings within about six months of rollout.

Elizabeth Millard is a freelance writer based in Minneapolis.


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